The Dark Side of Customer Focus, CRM, and Customer Experience

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What is the cost of putting profits before customer interests?

This week one of the UK’s largest insurance brokers got hit with a £7.4m fine. Why? This is what Tracey McDermott, the FCA’s director of enforcement and financial crime, is reported to have said:

Swinton failed its customers. When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit.

At the FCA we have been clear in our expectation that firms must behave in the interests of consumers. Today’s outcome shows our approach in action and will act as a deterrent for other firms tempted to put profit figures above the fair treatment of customers.

The Dark Side of Customer Experience

Is Swinton the only organisation where people in the business put revenue and profits ahead of treating

customers fairly?Not according to Monique Reece:

The dark side of customer experience is the way in which some companies take advantage of their most loyalcustomers. For example, if you are a loyal cable subscriber, you may very well be paying more for your service than a new customer who just got a deal for switching carriers. Or if you are a magazine subscriber, you might asked to renew your subscription at a much higher price than if you just let the subscription lapse and subscribed as a new customer.

Dark patterns: carefully crafted user interfaces that trick users

Is the limit of the dark arts that companies use to fleece customers? Here’s what Michael Hinshaw says in a recent post of his:

According to darkpatterns.org, a dark pattern is “a type of user interface that has been carefully crafted to trick users into doing things.” Put another way, firms that employ dark patterns trick their customers into buying/signing up for things they almost certainly don’t want.

It can be as egregious as getting rental car customers to buy insurance they don’t want or need, or signing up for recurring shipments, billed monthly, when all they want is a single purchase…..You get the drift. Dark patterns get customers to do things they wouldn’t typically choose to do, if they were presented the options in a straightforward manner.

What does Michael Hinshaw recommend? He recommends finding the source of these “bad profits” and taking the necessary action:

So, ask yourself: does your company ever try to “trick” your customers? If the answer is yes, put up your hand and “out” the practice, pushing your firm to do something, well, better. There’s always an alternative to using dark patterns.

Is customer focus the antidote to these dark practices?

Time and again I have called attention to the ‘extraction’ context that lies hidden underneath the content of customer relationships, CRM, customer focus, customer experience, and customer-centricity. And it has occurred to me that I have been a lone voice spoiling the customer love fest. Not anymore.

I share with you selected passages from Bruce Kasanoff’s latest post which shows up for me as being the best post I have ever read when it comes to customer focus and/or customer-centric business:

The vast majority of “customer-focused” initiatives reek of a taker mindset.…. They do not think of customers’ interests first. They do not give major new benefits or services to customers. They seek to take more money out of people’s wallets.

In short, these initiatives were designed by takers, and if you are a giver it is enormously frustrating to deal with the hypocrisy that surrounds you: your company says it wants to help customers, but its policies and procedures are designed to take from customers, not give to them.

The taking mentality creates systems that make it so hard for customers to stand up for themselves that it’s easy for companies to “legally” lie, cheat and steal from them.

Putting takers in charge of customer experience is like asking a bear to guard your honey.

If you really, truly want to grow your company faster than your competitors, hire, promote and empower givers.

Givers are people who think of other people before they think of themselves. They are the people who should be designing and running customer-focused initiatives. They are the folks who have the vision and ability to grow revenues, because they are focused on the needs of others.

As I have said before, an authentic shift towards customer-centric business requires a genuine shift in consciousness. A shift from a “You OR Me” context to a “You AND Me” context. A shift from shareholder capitalism to conscious (stakeholder) capitalism. A shift from maximising short-term profits (at the expense of people and planets) to maximising long term wellbeing for all. A shift from calculating mind towards a generous heart. A shift from taking-keeping-excluding to giving-sharing-including.

What do you say?

Republished with author's permission from original post.

Maz Iqbal
Independent
Experienced management consultant and customer strategist who has been grappling with 'customer-centric business' since early 1999.

4 COMMENTS

  1. ….especially in that, if a company culture can’t be altruistic enough, intelligent enough, and profit-motivated enough to put customers ahead of short-term gains, it will reap the rewards of both high defection rates and impaired brand reputation and image. And with that kind of approach to customers, employees can’t – and probably shouldn’t – be expected to behave in more positive ways. We’ve also seen instances, particularly here among the Colonials, where unenlightened retailers have taken ‘bait and switch’ actions by unceremoniously dumping customer loyalty programs: http://www.customerthink.com/blog/seduced_and_abandoned_customers_and_lost_insights_eliminating_customer_loyalty_programs_and_the

  2. Whatever term you use, the fact is that good business requires give and take.
    * Companies can’t take take take because customers will leave.
    * Likewise, companies can’t give give give because the business will go under.

    The problem is not taking or giving, it’s when they’re out of balance.

    In my research, I find the taking or “value extraction” thinking dominates. Most often “CRM,” marketing, and selling are terms used to describe this sort of thinking. Even customer service initiatives, when they are primarily about contact avoidance and cost reduction, are about taking.

    Such companies can profit so long as their competitors all do the same. The best taker wins! So load up on technology, improve your targeting, closing techniques etc., and maximize your return.

    If you look at large banks, cell phone companies, cable providers — generally industries with the worst customer sat/loyalty ratings — that’s what you’ll find. It doesn’t matter whether you call it CRM, CEM or customer-centricity.

    But these leaves an opportunity for (generally) smaller and more innovative firms to focus more on giving or value delivery. The innovators in retail banking are most small firms like Metro, First Direct, Umpqua, etc. Giving firms listen more, try harder to “delight” their customers and deliver innovative solutions.

    Firms can remain in the “taker” stage for a long time because it works and they don’t see a need to change. But some will evolve over time, as this diagram depicts here.

    I don’t see “taking” as a dark side but more like adolescence. Target customers as “assets” and extract as much as possible. I say let’s focus on helping companies grow up and learn that giving is the key to long-term relationships, and survival.

  3. Hello Bob

    When you say that “The problem is not taking or giving, it’s when they’re out of balance.” I find myself in total agreement with you. It occurs to me that the way of nature and of health is balance: The Middle Way. In the realm of relationships this can best be described by the value of fairness.

    As human beings we value fellow human beings who treat people fairly. Those who are fair in their dealings acquire a reputation. This is how the Quakers ended up being very successful in the UK during the industrial revolution. People were looking to do business with business folks who could be counted on to be fair, to be trustworthy, to be ethical. And these values were uncommon, in the age of “buyer beware”, except when it came to the Quakers.

    I do not find myself to be in agreement with you when you say “taking” is just an adolescent stage of development. It occurs to me that taking is the context from which business shows up and operates. No growth is required to shift to the context of “giving”, “sharing”, “the middle way”. What this shift takes is courage and it takes courage from all of us, not just the people at the top.

    The more i think of it the more I like the word “Sharing”. Imagine if the vision of the enterprise was shared by all the key stakeholders. Imagine if the direction and management of the enterprise was shared. The value creation was shared. And the financial value that was created was shared amongst all the stakeholders. It occurs to me that John Lewis to date has been a great example of a company that does well by sharing. It shares with customers by through the quality of its products and the high level of customer service. It shares with the people inside the organisation by involving the employees in decision making processes and the financial rewards earned by the business. It shares with suppliers by treating them fairly and where possible sourcing from local suppliers with good reputation. It shares with the community by paying its taxes….

    I say if you look deeply you will find sharing at the heart of all great relationships. We share our knowledge, we share our skills, we share our emotions, we share sadness, we share joy, we share by taking and listening.

    All the best
    maz

  4. Thanks, Maz. I’m struggling to find the best way to describe the stages of customer-centric maturity.

    You’re right that “adolescent” doesn’t quite work because it implies young. That’s not what I meant.

    Some companies start off very customer-centric and innovative, grow and lose their way. Others do the opposite. Some recover and others goes out of business.

    It’s not a neat progression that is necessarily related to age. I actually think it’s more related to competition. Intensely competitive industries are more likely to create customer-centric leaders, because it’s a way to stand out if not survive.

    I need to think on this a bit more, but for now I’ll just say that “taking” is a more common pattern in companies lacking the leadership and competitive stress needed to support change.

    Said another way, taking is easy. Giving and sharing is hard. It’s human nature to walk what seems likes the easier path.

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