How You Get Beyond Words and Truly Become Customer-Focused: An Interview With Jim Barnes

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Throughout his years consulting, teaching and writing on marketing strategy and metrics, Jim Barnes has found that organizations sometimes merely “talk the talk” when it comes to customer-centricity. He also finds that they neglect very basic steps, such as interviewing their own customers. In this Inside Scoop interview, CRMGuru founder Bob Thompson talks to Barnes about his new book, Build Your Customer Strategy: A Guide To Creating Profitable Customer Relationships (John Wiley & Sons, September 2006) and the insights it offers to business leaders who truly want to “walk the walk” and build a real customer strategy.

This transcript of the interview, conducted Aug. 24, was edited for clarity.

Bob Thompson

I’d like to welcome to Inside Scoop Jim Barnes, the principal of Barnes Marketing Associates. He’s an expert in customer relationship strategy and has been a very valuable member of the CRMGuru panel for several years now. Jim, welcome to our program.

Jim Barnes

Thanks, Bob.

Bob Thompson

We’re going to be talking, Jim, about your new book, Build Your Customer Strategy: A Guide To Creating Profitable Customer Relationships. I’ve got a number of questions I want to get into about it. But first, would you tell us a little bit about your current position, what your firm is about and what kind of work you’re focusing on these days.

Jim Barnes

I’d be happy to. Mostly these days, I’m doing a lot of work with a relatively small number of clients that I am very close to and really helping them do what the book suggests, namely, build a customer strategy. The focus of my work, from a consulting perspective, is really on building a customer strategy and the requisite measurement systems that have to be in place in order to allow a firm to determine whether it’s on strategy or off strategy.

The focus is customer strategy and measurement, in addition to which I do the usual speaking engagements. And I deliver a lot of management workshops and seminars internationally, and I am still doing some university teaching.

Bob Thompson

Can you tell us a little bit about your university work?

Jim Barnes

I’ve been teaching for well over 30 years and have taught at a number of different universities on a visiting basis. I’m at Memorial University in Canada, and these days I teach mainly courses at the MBA level in marketing strategy and services marketing.

Bob Thompson

Terrific. I read your book cover to cover, and it’s really an excellent follow-up to the last book you wrote [Secrets of Customer Relationship Management, (McGraw-Hill Companies, 2000)], which was on a similar topic. But in that book you talked more about the importance of understanding how customers feel—their feelings and emotions. Let’s talk about this book. Why did you write it and who did you write it for?

Jim Barnes

This book came about based on the experience that I’ve had over the years in working with various companies. I realized that, while most companies these days are focused on customers—or, at least, will tell you they are—I find they really don’t come at the customer from a particularly strategic perspective. It’s become quite commonplace these days to suggest that a company is customer-focused or customer-centric. But in fact, the companies that I have been exposed to, for the most part, are often lacking a strategy that’s focused on the development of customer loyalty or relationships. So they’re not coming at it from a strategic perspective.

And secondly, I think many firms tend to treat very simplistically what are, in fact, quite complex concepts. When you talk about value or quality or customer experience, all of which are pretty hot topics in management these days, many firms seem to me to not to devote to those subjects the depth of examination and understanding that they really deserve.

So I’m really targeting a number of different levels of managers within organizations. I think there’s a primary market for senior and mid-level managers in larger companies who are really wrestling with exactly how they can become more customer-focused. I think also there’s a segment of people in management positions who are probably a little bit disillusioned with CRM as it’s been sold and practiced in many larger companies, in particular. They may be fundamentally uncomfortable with CRM as a technology solution and may, in fact, have been burned by an implementation that hasn’t gone well.

I think they’re looking for different ways to reach the hearts of customers. There’s a number of different groups out there, I think, who might find the book interesting and useful in building stronger bridges between their companies and their customers.

Bob Thompson

With all the different books that have been published on CRM, customer loyalty, etc., it’s obviously a hot topic. What’s really the one differentiating quality of this piece of work that you’ve done in the last year or so?

Jim Barnes

I think what I’ve tried to do, Bob, is step back and challenge the reader, challenge people to complicate things just a little bit, to not accept superficial or simplistic views of the world but, rather, to say: Well, what does it really mean to generate customer loyalty? What do we mean by a customer experience? And more importantly, what does “customer” mean?

Rather than treating things simplistically or superficially, I’m really challenging people to step back and truly understand what those concepts are all about, because I don’t believe you can be customer-focused or customer-centric as a company without truly understanding customers. There’s a real theme through this book that basically says, unless you can honestly say you understand your customers from their perspective, you’re really not going to be successful in building that long-term relationship.

Customer strategy

Bob Thompson

Let’s get into your book a little bit. Give us a quick definition of exactly what a customer strategy is. You’re advocating building one, so what are we talking about here?

Jim Barnes

I think we’re looking for a basis to put in place various programs and initiatives and interactions with customers and having a rationale for it. To me, that’s what a strategy is all about: It’s having a really good reason for doing something. The opposite of strategy is seat of the pants or ad hoc or fly by night or whatever you want to call it.

But I think a strategic approach to things implies that you have a really good, justifiable reason for doing something. And unless a company’s approach to its customers is based on information and insight and understanding, most of what they’re going to be doing, it seems to me, is going to be ad hoc. It’s going to be, “Let’s try this and see if it works.” So I’m challenging organizations to build a strategy that is fundamentally based on an understanding of their customer, because I think if you don’t have that, you’re never going to be a strategic organization.

Bob Thompson

Most executives would say they have a customer strategy of some sort or that they’re customer-centric. And you’ve implied in not only this forum but others that, in many cases, that’s just not true. Why do executives fall short of really accomplishing what they say they’re setting out to do? And maybe a more difficult question to answer is: How can they know if they’re just talking the talk but not walking the talk, if you know what I mean?

Jim Barnes

Fundamentally, I think most companies are well-intentioned when they say they are customer-focused or customer-centric. The problem is that they are customer-centric from their perspective, rather than the customer’s perspective. And I think it’s sort of ironic, but many firms that I meet seem to have a company-centric view of customer-centricity.

Bob Thompson

If I could just interrupt you for a second. We picked this up in some of our research. It seems like the company view, in general, is: We’re customer-centric if we’ve figured out how to make money on customers.

Jim Barnes

I think you’re absolutely right.

Bob Thompson

But not necessarily with an appreciation for what customers get out of the equation and what they want and how they behave.

Jim Barnes

I think that’s often the way it is. What I find is that many companies are focused on customers, insofar as they can sell them more stuff. And that the focus ends if the customer’s deemed no longer to be valuable. I mean, that’s one of the things that bothers me a great deal about so-called customer-centricity, that companies are really centered on or focused on those customers who are likely to drive the greatest short-term payback to the company.

Now, it sounds naïve for me to argue against that because that makes a tremendous amount of business sense. But it’s usually viewed with an extremely short-term perspective. And that’s one of the problems that gets in the way of what I might call long-term customer-centricity, that these days companies inherently are mandated to have a short-term financial horizon. And many executives simply can’t wrap their heads around the notion of a payback from some of these softer kinds of things that I advocate.

Bob Thompson

Well, what is the payback for taking more of the customers’ point of view and aligning your activities around serving their needs? If I’m the CEO and I’m just trying to be responsible to my shareholders, why do I need to do that?

Jim Barnes

Because I think the long-term payback is going to be far greater than a short-term payback. And those CEOs who are truly oriented towards customers have taken a longer-term perspective on where that payback is going to come from and when it’s going to be realized.

Bob Thompson

Can you share an example of a company in the market, either that you’ve researched or worked with, that you feel has taken more of this long-term, truly customer-oriented attitude?

Jim Barnes

There are two that come immediately to mind, both of whom I have been fortunate to work with. One is IKEA, and IKEA has a decidedly long-term view of customers. It is driven largely by the fact that that’s the kind of people they are. And unbeknownst to many people, IKEA is still a privately owned company. It’s not publicly traded. They can, therefore, have a great deal more flexibility, in terms of how they view the customer and so on. So IKEA’s mandate is extremely long-term, and their view of the customer reflects that.

The other, which is publicly traded, but has been equally successful, is Tesco, the U.K.-based supermarket chain that I’ve done some work with. That company just eats, sleeps and breathes long-term customer relationships. For both of them, the payback has been phenomenal, and they are both extremely successful financially and will continue to be so.

It’s rather simplistic to say this, but it should be rather obvious. It is, certainly, to me, and I’ve proven it through my research over the years. The longer you cultivate customer relationships and the stronger those relationships are, the payback comes directly through longevity of customer contact and increased share of wallet and all of those predictable outcomes. It also comes through word of mouth and referral business. The problem is that most companies have yet to begin to quantify those things.

Leap of faith

Bob Thompson

Well, it is tough to quantify it, from everything I’ve been reading. Does it take a certain type of senior executive CEO or business unit head to really believe—I don’t want to say it’s totally a leap of faith—but to have some level of belief that it’s going to pay off, as opposed to being able to prove it all with a spreadsheet?

Jim Barnes

Absolutely. And I don’t think it’s incorrect to describe it in some organizations as a leap of faith. Progressive-thinking, broad-minded, right-brained executives are far more likely to take that jump and are far more likely to want to develop the kind of customer strategy that I advocate in this book. The problem in many organizations is that they are inclined towards the left side, to the functional or left-brain view of the world, which is all about short-term financial payback: How have you done this quarter? Have you met quota?

That truly gets in the way of the customer-strategy orientation. The companies that are more flexible are those that are led by executives who get it and who understand this fundamentally and who are in the position to exercise the kind of behavior that they need to exercise in order to get there. In other words, they’re not terribly constrained by the financial analysts looking over their shoulder at every turn.

Bob Thompson

I’d like to spend a few minutes and explore the concept of value because you wrote quite a bit about that in your book, and I thought it was really an excellent perspective. One thing that jumped out was this concept of meaningful value. I know you’ve written that there’s a difference between functional value and emotional value. But you’ve taken that further with this new book and said companies need to figure out what is truly “meaningful value” to their customers. Can you explain what you mean by “meaningful value” and what can companies do to figure out what that means to their customers?

Jim Barnes

My view of meaningful value is something that is a concept that has developed in my mind over the years as I’ve continued to do research on customers, and that is that certain things mean something special to customers and other things don’t. The ordinary, while it may create value in a functional sense, is not sufficient to differentiate the company or set it apart from the competition. In order to do that, you have to strike a chord with customers. You have to mean something special to them so that when meaningful things happen to customers, they appreciate that. And that means, in order to have that meaningful connection and to create meaningful value, companies really must understand the customer inherently.

You’ll find in this book that I’m a big advocate of what I call “customer insight.” One of the failings in organizations today is a reliance on conventional forms of market research. And there are many reasons why market research is transforming itself these days and authors are writing about that. But I firmly believe there’s a fundamental difference between conventional market research and what I call insight. In order to create meaningful value for customers, we have to be truly insightful in terms of how we approach the value creation exercise.

Some forms of value are just not that valuable. The kind of value that really strikes a chord with customers and cements a relationship is the kind of value that really means something special.

Bob Thompson

Sometimes what’s valuable to a customer is almost a little strange. It’s not part of the product or service. It can be something that seems like it’s off the radar screen of companies.

Jim Barnes

Precisely.

Bob Thompson

Can you share an example of something you’ve uncovered in your research that was in this category of meaningful, but maybe not ordinary, type of value?

Jim Barnes

Sure. I don’t want to sound terribly negative because there are a lot of companies out there doing a lot of really great things for their customers. But a conventional view of the world is one that focuses on value, mainly in terms of value for money. And it’s a very left-brain functional view of how we add bells and whistles to products or we create value for money or whatever. But I think one of the biggest forms of value that we create for customers is in the form of the surprise factor. The element of surprise is extremely important, in terms of creating value for customers. So it’s whenever you have an organization that says, “Look, let me look after that for you. I understand you have a problem. I can see you’re frustrated by something. We’ll take it off your plate. We’ll do that for you.”

Suddenly, you’ve got meaningful value created. But that lies, as you suggested earlier, outside the conventional bounds of marketing as we’ve defined it. And it really gets us into another area that I’ve become a big fan of. And that is the insight required to understand the context in which the customer is operating. And customers are constantly operating within a context. So we need to know more from an insightful perspective about what’s going on in the lives of our customers. What’s happening today that I might be able to do something about?

Bob Thompson

Right, but let me challenge that for just a second, Jim. In today’s modern world, everyone’s moving faster and faster.

Jim Barnes

Yes.

Bob Thompson

We’re automating things until they scream. And there’s this push toward efficiency. Customers are driving it; companies are driving it. And it seems like part of the challenge that companies have is they have a true interest in getting inside their customers’ heads and understanding their key problems. How do you actually find the time and get this information when everybody’s kind of rushing around, trying to be as efficient as possible?

Creative value

Jim Barnes

I think getting the information is not that difficult, Bob. I think there are several proven types of approaches. I mean, I do a lot of one-on-one in-depth interviewing with customers of my clients. I’ll do two-hour interviews in people’s homes or in offices. If you structure the interview properly, you can get a tremendous amount of insight about what customers are going through, what problems they’re facing, etc., etc., rather than coming in and saying, “How can we improve our product?” That’s very left brain. That’s very obvious. That’s very functional. But if I can identify a problem a customer’s having and come up with a creative solution to that problem, then I’ve probably got a customer for life—or if I can think of some way to impress that customer by doing something that he or she simply would not have expected from a company in our industry..

One of my favorite stories in the book is about a furniture retailer. Most furniture retailers, when they deliver a child’s bed, will simply set up the bed and leave. They’ll make sure they haven’t scratched the floor, etc., etc. But there’s one furniture retailer who delivers a balloon, a helium-filled balloon, to this 2-year-old with her name on it. They’re surprised. The parents love it. They’ve suddenly created a different kind of value. But you generally won’t find that kind of approach in conventional marketing books.

Bob Thompson

So this idea of surprise, the point of it, is to generate a pleasant emotion in the customer’s mind, correct?

Jim Barnes

A positive emotion.

Bob Thompson

A positive emotion. So can you expand on that just a little bit? Why are these emotions so important if you’re trying to build a truly customer-centric relationship?

Jim Barnes

Because I think relationships, themselves, are fundamentally emotional concepts. When you think of relationships in an interpersonal context, then these are things that are inherently emotional. The challenge in a business-to-business or a business-to-consumer relationship is to build upon that emotional connection. Some organizations are better at it than others. But I think it truly is all about the kinds of feelings that are generated in the interaction between a company and its employees, on the one hand, and the customer, on the other.

I’m not advocating turning every interaction into emotional marching bands and a whistle-blowing experience or even a “wow.” I’m talking about, in some cases, merely addressing the negatives, so that they don’t occur. So whenever a customer says, “Well, that’s one less thing I’ve got to worry about,” you’ve created an emotional connection. It doesn’t have to be a lot of very positive “wow” emotions. You can actually enhance an experience by removing the negatives.

Bob Thompson

And it’s not necessarily, if I understand you correctly, about trying to inject a surprise or emotion into literally everything. For example, I have a fairly complicated relationship with my bank, and a lot of the individual transactions are either online or at the ATM.

Jim Barnes

Sure.

Bob Thompson

And I don’t, particularly, want to interact with anybody. I’m not looking to be surprised. I just want to get it done. But we have more complicated things. When we go into the bank, they actually have a banker who knows us and gives us some personal attention. I do have a positive emotion about the bank, but most of it is because the stuff that’s supposed to be mundane and automated works reliably.

Jim Barnes

Exactly.

Bob Thompson

But when things are complicated, there are people there that actually seem to give a damn about taking care of us.

Jim Barnes

Right. And you know, I think that, to a very large extent, sums up the kind of relationship that most people would love to have with their banks because banking has become, along with a whole bunch of other services, very mechanized, very technology-driven, very automatic and commoditized—which has caused banks a lot of problems because banks don’t see their customers nearly as often as they used to. So the opportunity to create positive emotional connections by a bank these days is much less than it used to be.

Steps to customer-centricity

Bob Thompson

The last question I have is really more about your advice for the process of building a customer strategy. I know your book is not designed as a cookbook. This concept that we’ve been discussing is fairly complex. But I wonder if you could give some high-level tips about the process of going about building a customer strategy. Can you break it down into two or three major phases of how you would approach it, for example, if you were working with a client?

Jim Barnes

Yes. In fact, while the book, as you suggest, is not a cookbook, it does have a clear format in the sense of taking the reader through a series of steps. And at the back of the book, I actually have a customer strategy template that shows exactly what you’re suggesting, which is to move people through a series of thinking processes so that at the end of the day, they will have a completed customer strategy.

To begin with, [there are] some fairly basic business strategic decisions around brand positioning and the customer segments that a company is targeting. Secondly, there has to be a process of gathering that insight that I’m talking about so that we truly understand where the customer is coming from and what kinds of value we could possibly create for her.

And then it’s a matter of going through discussions around some of the key concepts that I talk about in the book. What are customers’ expectations? How can we address and exceed those expectations? A lot is thinking about value creation and how we will go about creating value for customers in its various forms because, as you said earlier, there are many, many different ways to create value. I think you have to have a fundamental understanding of the role of emotions and where they fit in and what kinds of emotions it’s going to be possible to create.

The book talks about a hierarchy of emotions, both negative and positive, and how we need to minimize the occurrence of negative emotions and optimize or increase the occurrence of positive emotions. Then there’s a need to explore the whole notion of customer experience because there’s a lot being written on that these days, and it’s often unclear to me what kinds of experiences customers actually want or would be impressed with.

I think each company has to understand and appreciate the kind of experience it is creating for its customers because I think each customer experience is going to be unique to that company. It’s all very well to talk about best practices, but I’m a real fan of creating your own best practices. I don’t think, just because a competitor is doing it or somebody else in another industry is doing something, that that, necessarily, is going to work for your company. So I think firms have to go out and understanding what kind of experience we have to create. And then, finally, I talk about a series of building blocks. These represent 12 approaches to customers that a company can employ that I call the Twelve Building Blocks of Customer Relationships. If we address each one of those, then I think we will have a strategy in place that will drive customer loyalty for the long term.

Bob Thompson

I read your book completely, and it really addresses, for me, what we’ve found in our research in CRMGuru and is one of the fundamental feelings of so-called CRM programs. Probably 80 to 90 percent of the programs that we’ve studied are tactical. There isn’t truly a customer-centric strategy behind it. And those that do tend to have a customer-centric strategy tend to be more successful.

You’ve written one of the best books that I’ve ever read about really getting to the heart of developing this customer-centric strategy. So congratulations on that and thanks very much for sharing a few thoughts with us today about how to build your customer strategy. I certainly encourage CRMGuru readers to go find a copy of Jim’s book, Build Your Customer Strategy: A Guide To Creating Profitable Customer Relationships, at Amazon.com or your local bookstore.

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