Empathy in Action: Sustaining Success with Customers

“The purpose of business is to create and keep a customer.”

“The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”

Peter Drucker

Its not difficult to find support for what appears to be an ultimate truth; customer-centricity is THE central element of business success.  Since virtually every business leader espouses this truth, it must be great to be a customer!

Unfortunately, in practice, fragmented roles and accountabilities for the wide range of activities associated with “being in business” tend to create issues.  Surprisingly few organizations actually behave in a way that’s customer-centric and, as you know, being a “customer” is often frustrating.    According the national reporting body for the American Customer Satisfaction Index (ACSI), customer satisfaction “continues on the path it has been for quite some time now: in the aggregate, it is going nowhere.”

 

Issue:  Customer – Object versus Person

After having the chance to work with the leaders of many dozens of companies, I’ve noticed a distinguishing feature of organizations that engage with customers in a way that fuels continued innovation and economic success.   It starts with how leaders and people throughout with organization think about and talk about their customers.

According to dictionary.com, customer means…

1. A person who purchases goods or services from another; buyer; patron.
2. Informal.  A person one has to deal with: a tough customer; a cool customer.

The foundation of this definition is “person.”   A customer is a person or, in the case of business-to-business, often a network of people.   A distinguishing characteristic of organizations that sustain success with customers is their ability to engage with customers as people.   This seems like it should be easy.   However, even casual conversations with leaders in many businesses reveal that the organization is focused on customers not as people but as objects.

According to dictionary.com, “objectify” means…

1. To present or regard as an object
2. To make objective, external, or concrete.

Objectifying people generally involves intentionally or unintentionally treating them as a means to an end, without any deep, visceral understanding of their lives, feelings, priorities or preferences.    As a result, organizational behavior tends to be at best – reactive, and at worst, self-serving and manipulative.

There are several indicators of businesses that objectify customers.  People in leadership positions don’t spend much time in open dialogue with customers about what they need and what’s working and not working about their experience.   Insights about customers tend to be surface-level descriptions.  Conversations about customers tend to be abstract and removed rather than concrete and personal.   People on the front line may be following the process but, at best, “pretending to care.”  The company might measure customer satisfaction with the company’s touch points but doesn’t really know what customers do end-to-end, how they make choices, and how the overall experience makes them feel.

These characteristics stand in stark contrast to businesses that appear immersed in their customers’ lives and, as a result, deliver a very personal, human experience.   As consumers, we recognize these businesses.  They range from the small and local (e.g., your favorite restaurant or local retail establishment) to the larger scale businesses of which my favorites include Chick-fil-A, Zappos, Nordstrom, Umpqua Bank, and Apple.

Personifying Customers:  Empathy in Action

In order to create real loyalty and sustain customer-focused innovation, organizations need to adopt a discipline for personifying customers.   This is even more critical as organizational transparency increases.  Personifying customers includes structured ways to embed empathy in the core processes of customer discovery, design and delivery.   Empathy is the identification with or vicarious experiencing of the situations, feelings, thoughts, or attitudes of another.   The core processes include:

• Empathic Discovery.  Most of what companies know about their customers tends to be descriptive and data driven:  who they are, where they live, what they’ve purchased, how long they’ve been a customer, etc… There may be a segmentation analysis that groups customers by attitudes, etc… However, in most cases, there is no rigorous framework for personifying customers in a way that builds empathic understanding.  This includes structured ways to answer:  who are these people, what are the situations they’re in, what’s important to them and what are they trying to accomplish, how do they evaluate alternatives and make choices, what do they do outside of the limited set of contacts with our business, and what emotional states influence behavior?  
• Empathic Design.  Empathic design leverages empathic discovery in order to create products that allow customers to more easily accomplish the goals that are important to them.  This includes designing products and services that customers love because they’re meaningful and make them feel good.  This often includes the design of products, services, or modes of interaction that customers don’t even know they desire or, in some cases, solutions that customers have difficulty envisioning due to lack of familiarity with the possibilities offered by new technologies or because locked in a old mindset.
• Empathic Delivery.  Customer service is a monologue; it’s about technical delivery, standards, and execution.  The company decides what to do and how to do it.  Well-designed and executed customer service usually does a good job of meeting customers’ baseline needs and expectations.  On the other hand, empathic delivery is a dialogue.    It’s about watching a customer’s experience with every sense and following up with a thoughtful and appropriate response that demonstrates that you really care and are on their side.   It enables the organization to surround products and programmatic services with personal touch.

Unfortunately (and fortunately for competitors), empathic delivery is rare in the business world.  Processes, policies, metrics, resource constraints, as well as more deeply entrenched unwritten rules often get in the way.  Since empathic delivery cannot be fully scripted, it leads to significant implications for the employee experience.  Employees must have enough “elbow room” to do the right thing for customers.  This requires a deliberately designed pattern of interventions in the employee experience including recruiting, incorporating, training, communicating, measurements, and rewards.  It also involves surfacing the unwritten rules that may be driving employee behavior inconsistent with the desired customer experience.

Integrating Customer and Employee Experience

Not surprisingly, putting empathy into action requires a tightly integrated perspective on customers and employees.   You can’t treat customers with empathy without doing the same for employees.   This is one of the reasons that many of the companies that appear on Fortune’s list of best places to work are businesses that deliver a very effective customer experience.   However, as covered in several previous posts, a highly engaged workforce is necessary but not sufficient.  (See:  A Break in the Service Profit Chain:  Why Increases in Employee Engagement Don’t Improve the Customer Experience).  In addition, if you’re interested, please feel free to check out the white paper titled:   “Getting the Employee Experience Right:  Creating Employee Experiences that Drive Business Growth.”

Customer Innovations works with leading brands to “embed empathy” into the design and delivery of experiences that are both positive for customers and profitable as well as strategically relevant for the business.

Getting the Employee Experience Right: Creating Employee Experiences that Drive Business Growth

As many businesses are beginning to look towards economic recovery, we’ve seen a growing recognition of the importance of the employee experience.   I suspect this may be a recognition of the vast amount of stress in the workforce.   For many companies, significant portions of the employee base are facing deep economic hardships.  Employees have been working harder than ever in an effort to keep their jobs and pick up the slack as their companies have cut positions and reduced spending.   As the economy and the job market improves, these employers may be facing latent turnover of some of their best people.

At the same time, companies interested in making more strategic investments to accelerate growth will need to have a highly engaged and aligned workforce.   Over the past several years, we’ve been working with a diverse set of of clients on a rigorous integration of customer and employee experience design.

Here is a summary of what we’ve observed and what to do about it:

Observations:

• The experience customers have with any organization is the product of behavior that emerges from a complex organizational system.
• Every organization is strongly predisposed to deliver the current customer experience based on deeply entrenched legacy effects, beliefs, values and unwritten rules. These legacy effects are reinforced by employee experiences at every level of the organization.
• Most customer experience efforts significantly underestimate the difficulty of shifting legacy effects. In some cases, organizations create a vision for the desired customer experience that is fundamentally at odds with the character and culture of the organization. As a result, their initiatives fail to produce a noticeable shift in the customers’ actual experience.
• Any effort to fundamentally improve the customer experience must first decode how and why the organizational system produces the current experience. This understanding allows executives to identify what changes are feasible and what specific interventions are necessary. Without this understanding, efforts to change the behavior of the organizational system are likely to be naïve.
• Delivering a substantially different customer experience requires a holistic, end-to-end perspective on the employee experience. Within that holistic perspective, targeted employee experience interventions must address and rewrite any “unwritten rules” that produce behavior inconsistent with the intended customer experience.
• By creating a strong linkage between the customer experience required to drive profitable growth and the employee experience required to generate this customer experience, a company can justify and prioritize investments in the employee experience.

Recommendations

• Describe the experience you intend to deliver to customers. Describe what customers are trying to accomplish and map the end-to-end activities customers follow to accomplish those things. Then detail the experience you want them to have. What do you want customers to feel after their interactions with you? What are the company’s ultimate goals for delivering a powerful customer experience beyond the transaction itself – for example, additional sales, word-of-mouth marketing?
• Identify the organizational and individual behaviors required to generate that customer experience. What do people and the organization need to do consistently to create the intended customer experience? What specific changes in behavior are needed? What must front-line employees do differently, and what decisions should front-line employees be empowered to make to solve customers’ problems? How do the work and behaviors of behind-the-scenes employees, plus their interactions with the front line, affect customer experience?
• Identify the business processes, practices and unwritten rules that have to change to produce the required behaviors. Diagnose how and why your company generates the current customer experience. This must be based on rigorous examination of the experience from your customers’ perspective. Identify where bottlenecks in service occur, where the smooth flow of customer interaction is interrupted. Measure alignment of customer-facing processes, roles, measurements and rewards, and surface the unwritten rules that drive individual and group behavior related to the customer experience. What exactly do the unwritten rules encourage people to do, and how do the resulting behaviors facilitate or interfere with the intended customer experience?
• Design specific employee experience interventions that remove the barriers and rewrite the unwritten rules. Map the end-to-end employee lifecycle and identify what your employees experience along the way. Model and segment employee populations, measure their fit with “ideal employee profiles” for different roles and correlate with customer experience and business performance. The appropriate interventions may be in how you attract, incorporate, engage, retain or enrich employees’ work. Because useful interventions can be made anywhere in the employee lifecycle, you must be rigorous in determining where to intervene and where to invest in employee programs. The goal is not just to design a compelling customer experience, but to enable employees to understand their connections with the customer experience and feel empowered to deliver the designed experience.

These observations and recommendations are described in more detail in the following white paper:   CI – Getting the Employee Experience Right 2011

You can also check out the following related blog posts:

• How Employee Experiences Drive Organizational Behavior
• Integrating Customer and Employee Experiences
• A Break in the Service Profit Chain: Why Increases in Employee Engagement Don’t Improve the Customer Experience
• No Matter What Business You’re In… You’re in the Hospitality Business

The Anatomy of Wow!

Over the past year, I’ve had the chance to post a wide range of thoughts on the ways that organization’s can leverage a deep understanding of their customers in order to design and engage customers in experiences that drive the growth of their business.  I recently took the opportunity to step back and reflect on the most important things I’ve learned over the past 25 years.  This post summarizes those most important things.  I’ve tried to make this concise… but will provide links to other posts that provide more insight.

 

Designing Influential Experiences

Wow Experiences exert a powerful influence on how people think, feel, decide, and act… because they’re designed from the mental model of the experiencer not the mental model of the provider.  Wow experiences create a high level of commitment, energy, and “word of mouth” by improving peoples’ lives.

1. Wow Experiences change how people feel and are designed from a deep understanding of what people desire.  People don’t buy products or services, they buy Desired States.  What Emotional Outcomes should the experience generate?
2. Wow Experiences deliver Innovative Solutions to people’s underlying, end-to-end problems. Finding these solutions requires getting below-the-surface of existing touch points.
3. Wow Experiences generate viral stories.  Prime the story people will tell around an influential Experience Storyline.
4. Wow Experiences resonate with the seemingly irrational ways people decide.  Design experiences that shape Preference Construction and overcome Behavioral Barriers.
5. Wow Experiences are pleasantly surprising.  Design a small set of highly differentiated Signature Experience Elements.
6. Wow Experiences are engaging and personal.  Enable people to Co-create and Personalize the experience, as well as, Influence and Collaborate with others.
7. Wow Experiences recognize everything communicates!  Eliminate negative cues and align positive cues to influence the story and how you make people feel.

 

Delivering Influential Experiences

Customers’ experiences with any organization result from the behavior of a self-reinforcing, deeply entrenched organizational system.  Traditional approaches to defining and implementing a new experience fail because they underestimate limits imposed by legacy mindsets, processes, systems, and culture.

1. Wow Experiences start with clear description of the intended experience – from the customers’ perspective. Align on an Experience Specification that describes the customers’ emotional & rational outcomes.
2. Wow Experiences rely on Experience Value Management to focus improvements on fundamentally shifting the economics of customer relationships.
3. Wow Experiences require shifting organizational behavior. Surface the Unwritten Rules that predispose the organization to deliver the current experience.
4. Wow Experiences require specific employee experiences not just “engagement.” Diagnose how employee experiences reinforce Unwritten Rules and design specific Employee Experience Interventions to shift those Unwritten Rules.
5. Wow Experiences require the holistic design of enabling Processes, Structures, and Management Systems.
6. Wow Experiences have a limited shelf-life. Continually Refresh and Preserve a differentiated experience.
7. Remember that, no matter what business you’re in… You’re in the Hospitality Business!

 

Here are a selection of links that provide some more insight into the points summarized above:

Why Customer Experience Initiatives Fail?

The Customer Experience Does Not Happen at Your Touchpoints

Cognitive Ergonomics: Designing Experiences that Fit the Customers’ Mental Model

Personae-Driven Customer Experience Design

Optimizing the Most Critical Elements of the Customer Experience: Customer Choices 

Cognitive Ergonomics: Customer Experience and Our Search for Meaning

No Matter What Business You’re In, You’re In the Hospitality Business 

Helping Customers Lose Wait

How Employee Experiences Drive Organizational Behavior

Influential Experiences and the Psychology of Escalating Commitment

Would you decide to just go out and spend $15,000 on tools to do a little work around the house?  Are the improvements to your backyard worth the $12,000 you ended up spending?  Would you decide to invest $3,000 on repairs to your old, unreliable car, even though it was only worth about $4,000 in the first place?  Or, is your prize collection of beanie babies, figurines, watches, or ­­­­­________­­­­___ (fill in the blank) really worth the thousands you’ve spent on it over the years?

If these were single, rationally considered decisions, you probably wouldn’t have made them.  However, as psychologist Robert Cialdini observed, a person’s commitment to a particular course of action sometimes “grow legs.”   Once we become clearly committed, we have a strong tendency to gradually increase our level of commitment to that course of action.  In doing so, we often lose sight of the original reasons and justification for choosing that course of action in the first place.

For example, it’s not unusual for the owner of an old car keep incrementally spending money on repairs as things break down… first the brakes… then the muffler… then the transmission… etc… hoping that each of these repairs will be the last.  As the bills mount, the owner often becomes even more determined, “I’ve already spent more than $2,000 repairing this thing.  I’m not going to back down and, in effect, throw that money away.”

This very common pattern is called irrational escalation and describes situations in which people make seemingly irrational decisions in order to justify the decisions they’ve already made or the actions they’ve already taken.  Irrational escalation shows up in a wide variety of situations including:   bidding wars that occur during auctions or corporate takeovers; military strategy (consider the Vietnam and Gulf wars); corporate or market investments that wind up “throwing good money after bad;” “collector” behavior; or the escalating cycle of retribution and punishment that occurs when a husband and wife become locked into a contentious divorce.  In addition, clever salespeople or fundraisers often employ “foot in the door” techniques that take advantage of people’s tendency towards irrational escalation as small initial commitments eventually build towards large commitments.

Although much of the research on commitment has focused on this negative behavioral cycle, the escalation of commitment is not always negative! Whenever we commit our time, energy, hearts, and minds to a worthy cause, it can have a very positive influence on our identity and our future behavior.  Over time, under the right conditions, we eventually have a hard time letting go; our positive behavior becomes less about “what we do” and more about “who we are.”  The positive escalation of commitment can describe how people adopt healthy behaviors like getting regular exercise or engaging in wellness programs… or become involved charity work and community service.

Recently, I’ve been studying the process people go through as they increasingly commit to energy conservation behaviors or “green” causes.  It seems that people typically adopt a conservative or green attitude in baby steps.  As they take each step, it reinforces their focus and awareness, as well as, their sense of identification with an aligned set of underlying values and beliefs.

Many utility companies are starting to more actively promote energy conservation or demand management (shifting use to off peak times) programs.  The effectiveness of these programs is highly dependent on the careful design of offerings, communications, and feedback mechanisms that get a “foot in the door” and build customer commitment incrementally from there.  Effective programs make it easy for customers to get started and then carefully reinforce a gradually increasing level of association with being a conservative, ecologically and economically minded consumer.  These programs can amplify customers’ commitment by providing positive feedback and by making the customer’s commitment publicly and socially visible.

Effective design of influential energy conservation and demand response programs is highly customer personae dependent. Obviously, not every customer has the same beliefs, attitudes, priorities, and behaviors related to energy use, conservation, the environment, and social responsibility.  In many ways, the adoption of energy conservation programs is similar to the adoption of wellness programs.  Some people readily adopt these programs because they fit with the way they already think.  For example, some customers have an “independently healthy” or “naturalist” personae related to their health.  On the other hand, some customers will never engage in a wellness program; they might have more of an “avoider” personae regarding their health.  However, there are several personae that are more influenceable.  The most effective programs must be designed to resonate with the mental model of these customer personae.

Cognitive Dissonance… Driving the Escalation of Commitment

One of the factors that drives the escalation of commitment is cognitive dissonance.  Cognitive dissonance was first identified in the 1950s by psychologist, Leon Festinger (see:  The Theory of Cognitive Dissonance and When Prophecy Fails).  Since that time, it has grown to become one of the central theories of social psychology.  A great, more recent book on the topic is Carol Tavris‘ and Elliot Aronson’s Mistakes Were Made (But Not by Me):  Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts.

Cognitive dissonance is a state of tension that occurs whenever a person simultaneously holds conflicting ideas or beliefs.  Because holding two conflicting ideas or beliefs creates an unpleasant tension, people are naturally motivated to reduce it.  Dissonance reducing behavior is ego-defensive; by reducing dissonance, a person gets to maintain their positive self-image; an image that depicts them as a good or smart person.   Cognitive dissonance often produces behavior that is apparently irrational; although, to the person, it may seem very sensible.

Understanding and leveraging cognitive dissonance is a powerful tool for designing customer or employee experiences that positively influence a person’s thinking and behavior… and drive the escalation of commitment:

• Justification and Filtering. Following a decision, especially either a difficult one or one that involves a significant amount of time, effort, or money, customers almost always experience dissonance. Did they do the right thing? The chosen alternative is seldom entirely positive, and the rejected alternatives including the “do nothing alternative” are seldom totally negative. After a significant decision, customers typically seek reinforcement that their decisions were good ones by seeking information that is reassuring. If at all possible, they try to convince themselves and others that it was a logical and reasonable thing to do. They avoid thinking about either the negative aspects of the choice they’ve made or the positive aspects of the un-chosen alternatives. In designing customer or employee experiences, it is important to arm customers with the story they’ll tell themselves and others. In many cases, it makes sense to continue marketing after the sale in a way that provides people with the ammunition they need to justify the decision they’ve made.
• Responsibility. Dissonance effects are greatest when (1) people feel personally responsible for their actions and (2) their actions have serious consequences. If there is a significant amount of external reinforcement or incentives, we may not “own” the decision. For example, offering rewards to individuals for performing even the most pleasant activities decreases the intrinsic value of those activities and reduces the individual’s responsibility for having done it. This is why “incentive programs” not only don’t build permanent behavior, but may undermine it in some cases.
• Consistency and Escalation. In the absence of strong conflicting signals, dissonance reduction will reinforce actions consistent with earlier commitments and behavior. In addition, once a small commitment is made, it sets the stage for ever-increasing commitments. The behavior needs to be justified, so attitudes are changed; this change in attitudes influences future decisions and behavior. When customers commit themselves in a small way, the likelihood they will commit themselves further in that direction is increased. This process of using small commitments to encourage people to accede to larger commitments has been dubbed the “foot in the door” technique. It is effective because having done the smaller favor sets up pressures toward agreeing to do the larger favor; in effect, it provides justification in advance for complying with the large requests.
• Irrevocability and Inevitability. Two of the most important characteristics that effect cognitive dissonance are the relative irrevocability and inevitability of the decision. Irrevocable decisions always increase not only the dissonance but the motivation to reduce it. Once we’ve committed ourselves to an irrevocable course of action, it’s in our best interests to justify the decision we made and avoid conflicting information. In addition, research shows that a person’s dissonance is reduced with choices they see as inevitable.

In summary, designing influential experiences requires an understanding of cognitive dissonance and, in particular, how cognitive dissonance drives the escalation of commitment.   More on this in future posts.

Roadmap to the Customer Innovations Blog

I’ve received several requests to put together a “roadmap” to the Customer Innovations blog posts I’ve done.   Here is an organized path through the material I’ve posted so far.  I haven’t tried to be all inclusive but have just the most substantial posts.   Grab a venti dark roast and enjoy!

Customer Experience Strategy:

• Customer Innovations: Creating Experiences that Drive Measurable Business Results
• Customer Experience and Why It’s Important?
• 2008: The Year of the Customer (NYSE CEO Report 2008)
• Putting the “Customer” in Customer Experience Efforts
• Characteristics of an Outstanding Customer Experience
• Your Company Doesn’t Have Customer Experiences
• Whose Experience is it Anyway?
• Why Customer Experience Initiatives Fail?
• Overcoming Customer Experience Program Stress Points
• Experience Management Maturity: Moving from “Experience by Default” to “Experience on Demand”
• Customer Experience Specification
• Centers of Gravity: Levers for Shifting the Customer Experience
• Most Efforts to Improve Customer Relationships are Misdirected
• Optimizing B-to-B-to-C Performance: From Channel 1.0 to Channel 2.0
• Channel 1.0: Foundational Capabilities for Optimizing B-to-B-to-C Performance
• Channel 2.0: “Collaborative Ecosystem Management”
• Rapid Revenue Retention: A “Swarming” Approach to Keeping Customers During Recessionary Conditions
• Delivering Winning Experiences for the Recessionary Customer Mindset
• When the Going Gets Tough… The Tough Get Closer to Their Customers

Evocative Experience Design:

• What is an Experience Anyway?
• Designing Experiences that Fit the Customers’ Mental Model
• Experience Miner: Creating Profitable, Evocative Experiences
• Effective Experiential Storytelling
• Making Experiences Memorable
• Great Customer Experiences are Music to My Ears…
• Experiences (Mis) Remembered
• Getting Beyond the Voice of the Customer
• Observation and Elicitation: We Like to Watch
• Cognitive Affective Experience Design
• What is the Difference Between Personae and Segmentation?
• Personae-Driven Experience Design in Retail Financial Services
• Understanding Basic Drives and Experiential Temperament
• Automatic Behavioral Scripts: Don’t Overestimate Your Customers’ Interest in Having an “Experience” with You
• Novelty Seeking and the Design of Differentiated Customer Experiences
• Customer Experience and Our Search for Meaning
• Helping Customers Lose Wait
• How Customers React to Violations of Justice
• Choice Architecture: Designing Experiences that Influence Customer Behavior
• Optimizing the Most Critical Elements of the Customer Experience: Customer Choices
• Designing for Customers’ Reactive, Deliberative, and Reflective Experiences
• Framing and Priming the Customer Experience
• Influential Experiences and the Psychology of Escalating Commitment
• Designing “Socially Influential” Experiences
• Miswanting and the Pursuit of Unhappiness

Integrating Customer and Employee Experience:

• No Matter What Business You’re In, You’re In the Hospitality Business
• A Break in the Service Profit Chain: Why Increases in Employee Engagement Don’t Improve the Customer Experience
• Human Sigma: Strong on Description; Weak on Prescription
• Integrating Customer and Employee Experiences
• How Employee Experiences Drive Organizational Behavior

Other:

• Creating the Conditions for Outstanding Experience in Your Life
• Using Predictive Modeling to Optimize Customer Relationships
• Adaptive Customer Profiling: Integrating Quantitative and Qualitative Customer Analytics

How Employee Experiences Drive Organizational Behavior

As I’ve discussed in previous posts, the key to a consistent and differentiated customer experience is a set of deliberately designed employee experiences.  The experience that customers have with most businesses is the product of very complex organizational behavior.  The experience that employees have within the organization is the driver of that behavior.  In addition, the nature of employee experiences has a profound impact on the organizational agility required to make improvements to the customer experience.  This post will explore the connection between employee experience and organizational behavior.  But, first things first…

What is an employee experience?

I believe the most productive way to define “employee experience” is as something that resides with the employee rather than being a characteristic of the organization.  Its how the employee “experiences” things rather than what the organization does that is most important.

The working definition of employee experience we’ve been using is as follows:

The employee experience is how employees react rationally and emotionally… to the how their organizational and external environments… enable them to achieve goals and satisfy needs that are important to them.

I consider this a working definition since I’m sure we’ll end up tweaking it as we continue to learn.  However, there are three things that have made this definition productive in our employee experience design work:

1. The context for an individual’s experience starts with what they are trying to accomplish; what’s important to them.  We’ve found that different employees tend to have significantly different “experiences” of the same set of organizational conditions dependent on their goals and needs.  As a result, what an organization does to create effective employee experiences cannot be “one size fits all.”
2. An employee’s experience is influenced not only by what happens within the organizational environment but also by external factors like the economy, the job market, world events, etc…  Although these factors are outside of the control of leaders within the organization, they cannot be ignored because they have a significant effect on employee’s moods, priorities, and behavior.
3. In addition to the individual goals described above, employees have rational and emotional reactions that are driven by an underlying set of beliefs and temperaments which can be characterized by different “employee personae.”  For example, BSG Concours’ research has shown that an employee that can be described as a “self empowered innovator” will have a fundamentally different experience of the same situation than an employee that can be described as a “fair and square traditionalist.”

In the end, all of this becomes strategically relevant when employees’ rational and emotional reactions produce behavior that either enables or gets in the way of the organization working together to deliver a customer experience that allows them to win in the marketplace.  Organizational behavior generated by employee experiences can be described at two levels:  Operating State and Unwritten Rules.

Employee Experience and the Operating State of the Organization

Operating State is a way of diagnosing and describing how people work together.  It has a profound impact on the agility that any workgroup or organization has in the face of changing business needs.  Based on work done with CSC Index and DiBianca Berkman, Operating State describes how people relate around four things:  Power, Identity, Contention, and Learning.  As you read these, I’m sure they’ll resonate with experiences you’ve had in organizations that you’ve been part of.

• Power. Do people have the power to accomplish what is important to the organization and to themselves? The state of power within any organization can range from Possibility to Resignation.
  • Possibility. At one end of the spectrum, some organizations seem to be unstoppable. Employees have experience which encourage them to be ambitious, resourceful, to take risks, and to accept accountability.
  • Resignation. On the other hand, many organization seem be in stuck. Employees experience the organization as an immovable object. As a result, they are can be highly frustrated, easily stopped, and, as a result, avoid risks and accountability.
• Contention. How do people deal with disagreement or misalignment? In some ways, this is the most critical element of how people work together in a changing business world. Contention within an organization can range from Safety and Resolution to Fear and Suppression.
  • Safety and Resolution. Ideally the experience that employees have within the organization encourages them to surface and address differences of opinion ; to safely challenge the status quo or prevailing thinking. The experience reinforces “straight talk” rather than submerged disagreement.
  • Fear and Suppression. Alternatively, many organizations have a hard time with conflict. People avoid saying “what’s so” for fear of being seen as “not on board” or “not a team player.” Many times there are subtle “kill the messenger” reactions that lead to distrust and issues that become undiscussable.
• Identity. Do people identify with the mission and the commitment of the organization as a whole or do they identify more narrowly with their function or department? The state of identity within an organization can range between connectedness to separateness.
  • Connectedness. When an organization is operating from the state of connectedness, holistic thinking prevails. People work hard to optimize the performance of the organization as a whole rather than just the performance of their function. As a result, it’s possible for the organization to take coordinated action and be responsible for cross-functional and cross-divisional objectives.
  • Separateness. When an organization is operating from a position of separateness, narrow thinking prevails. Employees primarily consider the requirements for success within their function or role. This naturally leads to sub-optimal overall performance. People take independent action that is in many cases misaligned and, as a result, there can be a lot of finger-pointing.
• Learning. Learning is the way an organization maintains its differentiation. In order to move forward, organizations must be open to learning about the changing needs of their customers, their real strengths and weaknesses versus competitors, and the ways the organization must change in order to continually improve the experience for customers. Commoditization is a by-product of the lack of learning. Learning within organizations can range from Inquisitiveness and Receptivity to Arrogance and Defensiveness.
  • Inquisitiveness and Receptiveness.  Ideally the employee experience reinforces an environment in which people are open to new ideas, look for new possibilities, challenge existing mental models, try new things and learn from their failures.
  • Arrogance and Defensiveness. However, in many organizations, people have a hard time safely challenging the existing thinking. Many times employees trust and follow the “authoritative view” of their superiors. In addition, some organizations reinforce critical thinking that leads employees to “look for the fatal flaw” in the ideas of their colleagues. People are distrustful of ideas that come from outside their group or organization. In many situations its hard for the organization to learn from failures because they have a hard time admitting failure.

As you can probably, tell each of these interconnected components of an organization’s Operating State can have a profound impact on the organizations’ ability to navigate change and improve the quality of the experience customers have.  These Operating State components are strongly reinforced by the experience employees have within the organization.  Based on our work with clients to shift these conditions, it’s first necessary to understand how the employee experience reinforces these components before you can develop meaningful and well-directed interventions.

Employee Experience and the Unwritten Rules that Drive Behavior

Regardless of the formalized policies, processes, and procedures, the actually behavior of people within an organization tends to be driven by a set of unwritten rules that, to employees, seem like the sensible ways to behave.  There are many Unwritten Rules that result from and reinforce the Operating State components described above.  For example, common unwritten rules might include:  “Don’t admit you’ve made a mistake,” “Regardless of the overall mission of the organization, you need to satisfy your boss,” “Don’t disagree with your superiors in public,” “If you question a major program, you won’t be seen as a team player,” etc…The unwritten rules within any organization are unique and have a lot to do with long legacy effects; how the organization has dealt with change in the past and what strategies have worked.

These Unwritten Rules are reinforced by the existing set of employee experiences and have a significant impact on the organizations’ ability to deliver a highly engaging and differentiated customer experience.  As I covered in the post, Why Customer Experience Initiatives Fail?,  Unwritten Rules are one of the primary reasons why customer experience efforts often don’t produce the desired results.

Every company has Unwritten Rules that are just inconsistent with delivering the kind of customer experience they would intend to deliver.  This ranges from Unwritten Rules like, “The stars are out getting new customers, not serving the existing customers,” “We need to compete against other divisions for the customers’ attention,” “We talk about customers but ultimately you get rewarded for making your numbers,” etc…  The list is potentially endless.

Ultimately, the experience customers have with your business is the product of organizational behavior… that organizational behavior is a product of the Unwritten Rules and Operating State of the organization…. the Unwritten Rules and Operating State are reinforced by the experience that employees are having.

As a result, designing meaningful and relevant improvements in the experience involves the following steps:

1. Describing the experience you intend to deliver to customers
2. Identifying the organizational and individual behaviors required to generate that experience
3. Identifying what current Unwritten Rules and Operating State components must change in order to produce those behaviors
4. Determining how these Unwritten Rules and Operating State components are reinforced by the employee experience
5. Designing specific employee experience interventions that address those barriers.

In practice, employee experience interventions can include changing:  target hiring profiles, recruiting practices, new employee incorporation, mentoring, performance management, measurements and rewards, communications, management expectations, executive alignment, etc…  While many of these are things are done today, this more holistic perspective allows you design these interventions in a way that is much more directed and effective.

For a complementary perspective on employee experience, I would encourage you to check out one of my colleagues, Tammy Erickson’s, interesting blog post:  http://www.bsgalliance.com/convs/show/1398-intensifying-your-firm-s-signature-experience

Integrating Customer and Employee Experiences

A key to delivering clearly differentiated and effective customer experiences is the holistic and deliberate design of the employee experiences that “generate” those customer experiences.

My colleagues and I have spent the last 25 years helping leading organizations design and deliver more innovative and differentiated customer experiences.  Over this time, we’ve developed a deep respect for how difficult it is to actually shift the behavior of the organization in a way that actually produces a different and noticeably better experience.  In fact, our greatest learning over the past decade is probably that the key to getting the customer experience working is to make very deliberate and targeted improvements in the employee experience.

This has little or nothing to do with making employees more satisfied or “engaged.”  We’ve seen many situations where more highly engaged employees just deliver a poor experience more enthusiastically.  I’ve already had a lot to say about that in A Break in the Service Profit Chain:  Why Increases in Employee Engagement Don’t Improve the Customer Experience.

If I were to summarize the key lessons we’ve learned about the integration of customer and employee experience it would include the following:

• The experience customers’ have with any organization is the product of behavior that emerges from a complex organizational system.
• Every organization is strongly predisposed to deliver the current customer experience based on deeply entrenched legacy effects, beliefs, values, and unwritten rules.  These legacy effects are reinforced by employee experiences at every level of the organization.
• Most customer experience efforts significantly underestimate the difficulty of actually shifting these legacy effects.  In some cases, organizations create a vision for the desired customer experience that is fundamentally at odds with the character and the culture of the organization.  As a result, most initiatives fail to produce a noticeable shift in the customers’ actual experience.  (See:  Why Customer Experience Initiatives Fail?)
• Any effort to fundamentally improve the customer experience must first decode how and why the organizational system produces the current experience.  This understanding allows executives to identify what changes are feasible and what specific interventions are necessary.  Without this understanding, efforts to change the behavior of that system are likely to be naïve.
• Delivering a substantially different customer experience requires a holistic, end-to-end perspective on the employee experience.  Within that holistic perspective, highly targeted employee experience interventions must be designed to address any “unwritten rules” that produce behavior inconsistent with the intended customer experience.
• By creating a strong linkage between the customer experience required to drive profitable growth and the employee experiences required to generate this customer experience, it becomes possible to create an economic model of the employee experience.  This economic model can then be used to justify and prioritize investments in the employee experience.

BSG Concours is in the midst of a multi-client research project titled “Employee Expeiences and Business Results“ that will extend our thinking about how leveraging the link between employee and customer experiences.  I’ll have a chance to expand on this in future posts.

Human Sigma: Strong on Description; Weak on Prescription

I just finished reading the new book Human Sigma; Managing the Employee-Customer Encounter by John Fleming and Jim Asplund.  I’m excited that an integrated perspective on employees and customers is getting the attention it deserves.  The book is well written and makes a strong case for the importance of both employee engagement and customer engagement.  The authors are executives at Gallup and, as might be expected from an organization that’s sweet-spot is measurement, the book does a solid job of discussing the measurement of customer and employee engagement.

Unfortunately, I was disappointed with the book for three very important reasons:

• First, I’m concerned that the focus on employee-customer encounters will perpetuate a flawed belief amongst many executives that the solution to improving the customer experience is about fixing the behaviors of front line employees and managers.  Of course, what customers’ experience is often highly dependent on the interactions they have with front-line employees.  The authors do make a strong point about empowering front-line employees.  However, we’ve found that customer experience shortfalls are almost always a result of organizational issues that are closer to the core of the business.  In most cases, the behavior of the front line employees is just an outward expression of organizational conditions and culture that have deep roots in the beliefs, values, leadership, and legacy of the organization.  Visualize a tree; addressing front-line employee behavior is like hacking at the leaves rather than striking at the root of the problem.

• Second, the prescriptions described in the book include conducting ongoing Human Sigma measurement and appointing a Chief Human Sigma officer.  In addition, the last two chapters provide short descriptions of actions like: brand alignment, customer advisory counsels, selecting for talent, employee communications, recognition, rewards, motivational retreats, etc…  While these actions may contribute to some amount of improvement, they are superficial bordering on naïve.  They substantially underestimate the complexity of shifting deeply entrenched organizational behavior.  We’ve found that the fundamental character of customers’ and employees’ experiences with an organization are largely determined by the “unwritten rules” that drive the real behavior of individuals throughout the organization… from executive management all the way to the front lines.  Those “unwritten rules” are the sensible ways for those individuals to behave given a deeply embedded set of motivators (what’s important?), enablers (who’s important?), and trigger (how do people get what they want?) that exist in the organizational system.   Any effort to improve the customer and employee experiences that doesn’t deliberately surface and address these barriers is unlikely to shift the real behavior of the organization. (See: Why Customer Experience Initiatives Fail? and A Break in the Service Profit Chain: Why Increases in Employee Engagement Don’t Improve the Customer Experience?)

• Finally, the book proposes Human Sigma as a measurement that falls between 1 and 6 and summarizes the overall effectiveness of employee-customer encounters. The authors provide no explicit description for how the score is calculated.  The units of measure are not defined.  This “measure of employee-customer encounter effectiveness” doesn’t appear to be based on any information actually derived at the point of these encounters.  It seems like a simple bending of the customers’ stated levels of engagement and employees’ stated levels of engagement.  One can’t help but assume that the point of this book is to make the case for hiring Gallup to do this measurement, since they clearly didn’t intend to enable readers to do it themselves.

On a positive note, the authors make several strong points:

• Many companies appear to operate based on a risk adverse philosophy that can be described as “Just Don’t Suck.” Many companies think if they deliver an adequate, industry par experience they’re entitled to their “fair share” of the market.
• Scripting employee behavior doesn’t improve the customer experience. You need to define the outcomes you intend to produce for customers and then allow employees some flexibility in how they get to those outcomes.
• There is a critical distinction between customers that are rationally satisfied and customers that are emotionally satisfied. Customers that are highly emotionally satisfied deliver the greatest value to the company while customers that are highly rationally satisfied often do not behave any different than dissatisfied customers.
• For customer or employee experiences, “feelings are facts.” How the people perceive and feel about their experience are the most critical facts, not the objective measures of service levels.
• There are four levels of emotional attachment that people have towards a company:
  • Confidence.  “A name I can trust; always delivers on their promises”
  • Integrity.  ”They resolve problems and treat me fairly.”
  • Pride.  “They treat me with respect and I’m proud to be associated with them.”
  • Passion.  “I can’t imagine a world without them; the perfect company for people like me.”

Overall, I’m glad that this critical topic is beginning to get the attention it deserves.  I’d love to hear other reactions to the book or the points I raised above.

A Break in the Service Profit Chain: Why Increases in Employee Engagement Don’t Improve the Customer Experience

Over the past 25 years of working with companies to design and implement outstanding customer experiences, it has become resoundingly apparent that the key to a great customer experience is a deliberately designed set of employee experiences.

About 10 years ago, James L. Heskett, W. Earl Sasser, and Leonard A. Schlesinger created positive awareness about “The Service Profit Chain“, which is generally summarized as:  happy employees create happy customers create happy shareholders.  The Service Profit Chain is a great way of illustrating the correlation between employee satisfaction, customer satisfaction, and profits.  It’s true; customers tend to have a better experience with organizations that have higher levels of employee satisfaction and engagement.

However, just because employee satisfaction and engagement are correlated with customer satisfaction doesn’t mean that making employees happier will lead to a better customer experience.  This is one of the classic traps your college professors warned you about; confusing correlation with causation.   I’ve observed that this flaw in logic has led many organizations to invest in trying to make their employees happier in the hope that those happier employees will turn around and deliver a better experience for customers.   IT DOESN’T WORK THAT WAY!!!

I understand this point of view runs against the grain of the traditional thinking.  We’ve just seen too many companies where, at best, more highly engaged employees simply deliver a sub-par experience more enthusiastically.  Now, I do believe that employee engagement is important.  In most situations, it’s necessary but far from sufficient.  Across the work we’ve done with companies in this area, we’ve learned that four major barriers must be addressed in order to have increases in employee engagement actually lead to a better customer experience.

1. A clear, current, and well-tested understanding of customers’ priorities. Unless the key decision makers throughout the organization really understand what’s important to customers, the best efforts of the organization will be misdirected. We’ve observed that, in most business situations, customers’ expectations and alternatives change faster than the “mental model” or beliefs of internal decision-makers about what’s important to those customers. If this is true in your situation, there are two important implications. It implies that there is always a disconnect between internal beliefs and the external realities about the customer. In addition, it also implies that this disconnect is not only present but growing. In order to have improvements in employee engagement translate into improvements in the customers’ experience, most organizations have to work very hard to make sure they stay in sync with continually changing customer priorities.
2. Alignment around a concise specification of the intended customer experience. What exactly is the experience you expect customers to have? Although every company designs their products and services, very few have ever clearly specified or deliberately designed what they do around the experience they intend their customers to have. As a result, the individual efforts of executives, managers, and front-line employees tend to be at odds with each other in subtle or even not so subtle ways. In turn, the experience customers have tends to be inconsistent, fragmented, or just plain frustrating. If this is true, increases in employee engagement will not translate into any substantial improvement in the quality of the customers’ experience.
3. Processes, technology, and management practices that get in the way of employees doing the right thing for customers. Is it easier for employees to do the right thing for customers or are there policies, procedures, systems, measurements, reward systems, etc… that get in the way? Although it isn’t intentional, most organizations have significant hurdles employees must overcome in order to deliver a great customer experience. Although, very high levels of employee engagement can contribute to employees’ ability to overcome these hurdles, individual heroics also tend to contribute significantly to inconsistency in the customer experience.
4. “Unwritten rules” that drive behaviours inconsistent with the desired customer experience.These unwritten rules drive the real behaviour of the organization.  In virtually every organization we’ve talked to and worked with, there are significant unwritten rules that are just inconsistent with delivering a great customer experience. These unwritten rules are unique to each organization,driven by extensive legacy effects, and reinforced by the existing employee experience. Many of these unwritten rules typically center around things like: what it takes to be successful in the organization; the importance of financial vs. non-financial metrics; the importance of internal vs. external stakeholders (e.g., my boss vs. the customer); the importance of acquiring new customers vs. caring for existing customers; the ability to admit mistakes; the ease of cross-functional collaboration, etc… Unless these unwritten rules are surfaced and addressed, they get in the way of having improvements in employee engagement drive a better customer experience.

Unfortunately, I have a hard time thinking of many organizations where these barriers are not in place.  The pervasiveness of these issues is one of the reasons why many organizations run the risk of investing heavily in improving employee engagement and have it not generate the benefits implied by the Service Profit Chain.

Over the past several years, we’ve been working on a way around this problem.  (See:   Why Customer Experience Initiatives Fail? ).    We’ve learned that, if you want to enable an intentionally better customer experience, you need:

1. Customer intelligence specifically designed to close the gap between customers experiences and internal beliefs (see:  Observation and Elicitation:  We Like to Watch )
2. Alignment on a concise specification of the intended customer experience (see:  I Got a Song that Ain’t Got No Melody)
3. To use this specification to prioritize and blueprint specific changes in the operating model required to consistently deliver the specified experience.  This includes customer communications, product and service strategy, customer-facing processes, organizational roles, skills, and structure, management systems, technology, etc…
4. To holistically design specific employee experiences that “generate” behaviors aligned with the specific experience you intend for customers… not just improve engagement!

So what do we mean by “Employee Experience?”  Our working definition is: “An employee’s rational and emotional reactions to how their organizational and external environment impact their ability to accomplish goals that are important them.”  This is inherently “employee-centric” in that it focuses on the employee’s priorities and how the organizational and external environments impact the employee’s ability to address those priorities.”  This has several important implications:

• The employee experience is not just about what you do for employees nor the managerial or physical environment in which they work.  The employee experience is about how an employee reacts to their environment and how that environment helps or hinders them in addressing their priorities.
• Different employees will have very different experiences of relatively similar work situations based on their individual priorities, motivations, what they are looking for from their job, etc…  Effective employee experiences must be designed to address the unique needs of employee segments rather than be “one size fits all.”
• Employees’ experiences must be designed to reinforce specific motivators (what’s important?), enablers (who’s important?), and triggers (how do people get what they want?) required to produce group behaviors that are consistent with and “generate” the intended customer experience.
• Employee experience interventions must be designed to address any “unwritten rules” that produce behavior inconsistent with the intended customer experience.

In addition, by creating a strong linkage between the customer experience required to drive profitable growth and the employee experiences required to deliver this customer experience, it becomes possible to create an economic model and ROI for well-defined investments in improving the employees’ experience.

I’m looking forward to talking more about holistic employee experience design in future posts.

No Matter What Business You’re In… You’re in the Hospitality Business

I recently did a keynote speech at a Customer Experience conference in New York.  As part of that event, the participants and speakers had the chance to share dinner with Danny Meyer at his restaurant Eleven Madison Park.  For those not familiar with the New York restaurant scene, it’s an understatement to say it’s highly competitive.   Danny Meyer is the CEO of the Union Square Hospitality Group which includes several of New York’s other favorite restaurants, including Union Square Cafe, Gramercy Tavern, Tabla, Blue Smoke, and The Modern.  Last year, Danny published an exceptional book called “Setting the Table: The Transforming Power of Hospitality in Business.”

Over the course of the evening, Danny Meyer had the chance to share some of his thoughts on the distinction between service (the things we design our processes and train our employees to provide) and hospitality (the sum of all the thoughtful, caring, and gracious things we do to demonstrate we are on the customer’s side).  Service is a monologue; it’s about technical delivery, standards, and execution.  We decide what to do and how to do it.  Well designed and executed service usually does a good job of meeting customers’ rational needs and expectations.  On the other hand, hospitality is a dialogue; it’s about watching a customer’s experience with every sense and following up with a thoughtful and appropriate response.  Hospitality is the component of the experience that addresses the customers’ more important emotional needs and creates real loyalty.

It’s natural to think about hospitality if you’re in the hospitality business.  However, it’s not hard to see that creating a hospitality experience can apply to just about any business… at least any business that wants to have truly loyal customers.    Hospitality is the concept that reframes customer loyalty as the business’ loyalty TO the customer.

Unfortunately and fortunately… true hospitality is rare in the business world.  Very few businesses actually deliver it and, as a result, are unworthy of any real loyalty FROM their customers.  This creates an opportunity for any highly committed competitor.  There certainly are organizations that differentiate their experience based on hospitality.  For example, I consistently have a hospitality experience with Nordstroms and am increasingly willing to pay a premium to shop there.

In his talk, Danny Meyer emphasized that an organization’s ability to deliver hospitality has to do with who you hire and how you manage them… core components of the employee experience.  The individual characteristics he felt critical to a hospitality experience include people that demonstrate: 

• Optimistic Warmth.  Genuine kindness, thoughtfulness, and a sense that the glass is always at least half full
• Intelligence.  Open-mindedness and an insatiable curiosity to learn
• Work Ethic.  A natural tendency to do something as well as it possibly can be done
• Empathy.  An awareness of, care for, and connection to how others feel and how the individual’s actions affect others
• Self Awareness and Integrity.  Understanding what makes you tick and a natural inclination to be accountable for doing the right thing

In parallel with hiring individuals that exhibit these characteristics, there are several specific elements of the management environment, managers behavior, and management practices, that Danny emphasized:

• Infectious Attitude.  Managers have a positive attitude and the ability to stay positive in the face of adversity.
• Charitable Assumption, Patience, and Tough Love.  Managers assume the best in other people; understand and capitalize on unique strengths; and build accountability
• Long Term View of Success.  Management maintains a focus on the long term value of the employee and the customer experience
• Sense of Abundance.  Enlightened generosity with employees and customers rather than operating from a sense of scarcity
• Trust.  You can’t motivate, empower, or collaborate with people if you can’t trust them

In the time since this event, we’ve had the chance to work with many clients on the role of hospitality in their business.  In most cases, this deceptively simple concept has led to a fundamentally different way of thinking about delivering a differentiated customer experience… one that is intimately linked to and reflective of the employee experience.  

Some of the obvious barriers is that delivering true hospitality can’t be scripted.   You need to create elbow room for employees to do the right thing for the customer.  This requires a deliberately designed pattern of interventions in the employee experience including recruiting, incorporating, training, communicating, measurements, and rewards.  It also involves surfacing the unwritten rules that may be driving employee behavior inconsistent with the desired customer experience (see Why Customer Experience Initiatives Fail?).