Given all the business challenges you’re facing today, the last thing you want to do is drive away customers, particularly your most valuable customers. However, I can say with total confidence that:
Some of your best customers will leave you based on negative experiences they’re currently having!
How do I know this? Because, after having worked on customer experience initiatives with many dozens of different companies, I’ve learned that every complex organization is, to some extent, disconnected from their customers’ changing priorities… and the harsh realities of the experience customers have as they pursue those priorities. (Note: It turns out that this statement is more than just an observation. It’s a provable certainty that I’ll cover in another post). As a result, it is highly likely your organization is unintentionally frustrating, annoying, confusing, missing opportunities with, and on the verge of losing some of its best customers. And your organization is doing this in ways that are impossible to fully see from where you are sitting inside the organization.
I’m not trying to be antagonistic. I’m just stating something that should be intuitively obvious to anyone that’s ever experienced the joys of being a customer. Bain’s “Closing the Delivery Gap” clearly illustrated this disconnect as follows, “When we recently surveyed 362 firms, we found that 80% believed they delivered a “superior experience” to their customers. But when we then asked customers about their own perceptions, we heard a very different story. They said that only 8% of companies were really delivering.”
But wait! It gets worse! Not only does the gap exist, the gap is almost always growing. This is true in any situation where the EXTERNAL REALITIES (customers’ circumstances, needs, expectations, and perceived alternatives) ARE CHANGING FASTER THAN THE INTERNAL BELIEFS held by management about what’s most important to customers. If this is true in your situation, the rate this gap is growing is proportional to the rate of change in your external environment.
As we’ve entered this recessionary economic period, the external environment is changing quite dramatically and quite unpredictably. As a result, any organization that turns its attention inwards rather than getting even closer to customers is only going to accelerate customer attrition and, ultimately, the irrelevance of their business.
In previous posts, I’ve started to address the most important strategies for dealing with these challenges. (See: When the Going Gets Tough… The Tough Get Closer to Their Customers and Delivering Winning Experiences for the Recessionary Customer Mindset ). In this post, I’d like to extend these perspectives to one of the most valuable things you can start doing today.
Rapid Revenue Retention – A “Swarming” Approach
Over the past decade, we’ve done a particular type of focused Rapid Revenue Retention effort for clients. We’ve affectionately call the approach we follow “swarming” or “swarm sensing” because it involves sending a distributed team of people into the field to observe (i.e., to swarm around) the experience customers are having. The approach we follow is based on Swarm Intelligence; a highly parallelized approach to reconnaissance used by the military.
The objective is, over an 8-10 week period to:
Identify and prioritize the six most important things the company can immediately start doing or stop doing that will lead to a substantial improvement in customer retention or additional sales
In order to accomplish this objective, we send a team of “swarmers” into the field to live with and talk with customers and prospects; to experience things first hand, from the customers’ perspective; and to identify the specific frustration and confusion points that are leading to attrition or lost sales opportunities. Generally these efforts have been able to quickly identify improvements that lead to a 3 to 5 point increase in retention and, often, a significant increase in the win rate on new business. Depending on the size of the business, the benefits of this focused effort have traditionally run into the tens of millions of incremental retained revenue.
Here’s an example:
- Situation: The company is a leading provider of financial products that get sold through intermediaries (dealers) around the country. The differentiated positioning for this organization was their ability to partner with those dealers in a way that created a measurable improvement in their performance. The President of the organization approached us and said, “I believe we provide a highly superior product but I can’t understand why dealers are leaving us at an increasing rate.”
- Approach: In order to respond to his request, we had a team of swarmers hit the field and spend about 6 weeks with current dealers, lost dealers, as well as, the customers of those dealers. Like other situations we’ve been in, it’s surprising how immediately apparent the issues are when you’re able to step into the customers’ perspective.
- Results: In the course of those six weeks, we were able to identify seven immediate interventions that improved both dealer retention and the profitability of the existing dealers. These interventions included improvements to the screening criteria for pursuing new dealers, modifications to the initial dealer training they provided along with the creation of a refresher training schedule, and an attrition early warning process that picked up on changes in dealer behavior and directed sales people to intervene proactively as soon as the dealer started to exhibit the behaviors associated with leaving. Over the course of the 6 months following this effort, the organization was able to increase their retention from 88% to 91% creating a revenue uplift of approximately 20 million dollars.
Organizing the Swarm
We’ve generally done this with a small number of trained swarmers (consultants or researchers) supported by a team of more inexperienced swarmers (employees). While it’s generally easier for outsiders to approach the situation from a fresh perspective, there are several conditions that can be managed to make it possible to accomplish work economically with inside people. The keys to organizing the swarm include:
- Ensure swarmers are capable of seeing things from an unbiased perspective. This can be an unnatural act for anyone that’s been involved in any way in delivering or managing the services being observed. People who’ve had any involvement in delivering the services being observed are “burdened by knowledge.” This includes being steeped in the processes, constraints, assumptions, excuses, biases, and blind-spots associated with delivering the service.
- Arm swarmers with the right tools and training. Over the past 10 years, we have developed and continuously improved a “Customer Experience Observation Field Book” and accompanying training that has been effective at helping swarmers better see the experience from the customers’ perspective.
- Ensure swarmers are able to put themselves in the customers’ shoes. Swarmers must be able to step into and “live” the customers’ priorities. It’s important that swarmers be able to viscerally “get” what the customer is trying to accomplish, feels their needs, and understands how the customer looks at the experience. This can be easier to do with inexperienced swarmers when those people strongly resemble the customers in question and have themselves been in similar customer situations. For example, we’ve found that inexperienced swarmers have done an outstanding job observing the experience at Disneyland, when they themselves fit the profile of the customers whose experience we’re interested in. However, we’ve had much less success in situations where swarmers come from significantly different cultural, economic, or business backgrounds than the customers in question.
- Ensure that swarmers have no relationship with the customers being observed or interviewed. The presence of any personal, professional, or organizational relationship with the customers being interviewed will bias: 1) what customers may feel comfortable sharing, 2) what the swarmer is comfortable asking about, and 3) the purity of observations that can be captured. It is particularly important that neither party has a stake in the findings. This is one of the reasons why…
One of the most biased and ineffective ways to listen to customers is through your sales and account management executives.
The immediate reaction we typically get is, “We’ll just have our people on the frontlines… the one’s that spend all day with our customers… do this.” While we understand the advantages, we’ve learned this is generally a bad idea. There are three multiplicative barriers that get in the way of having salespeople and account executives be a good source of insight. First, when salespeople talk to customers, they have an agenda and customers know it. There are often negotiation-oriented and face-saving dimensions to the relationship between the salesperson and the customer. As a result, customers do not tell salespeople everything. Second, since sales people show up with their agenda and existing relationship, they generally filter everything they hear through that agenda and relationship. So, salespeople don’t hear many of the most important things customers have to say. Third, salespeople don’t accurately report everything they’ve heard back to management. This is particularly true if, by any stretch of the imagination, what the salesperson heard might reflect negatively on them.
- Build a capable, well balanced team. There is a profile for the good swarmers. In our experience, the best swarmers tend to be extroverted, empathetic, open-minded, detail-oriented people who are capable of withholding judgment rather than quickly jumping to conclusions quickly. Although we generally have a diverse team, you need to have enough of these types of people in the mix.
There are several things that make the Swarm Sensing process different from “mystery shopping.” Most importantly, the intention is different. The objective is to aggressively identify the highest impact improvements that can be made immediately. This requires executive sponsorship and visibility for the effort, as well as, for implementing subsequent improvements. In addition, the level of depth is different. Most mystery shopping exercises are more about measuring compliance with expected service standards rather than getting deeply under the covers of what’s working and not working about the experience customers are having. In a way this makes the swarming effort more like a highly directed ethnographic study. The most challenging elements of this are equipping, training, and coordinating a distributed team of swarmers to do the work over a short period of time with a very well-defined and highly valuable business objective.
I’d be happy to share more perspective on this approach than I have room to address here. Shoot me a message or add a comment if you’d like more information.
Filed under: Customer Experience | Tagged: bain, closing the delivery gap, Customer Experience, customer experience delivery gap, customer retention, ethnography, keeping customers, recessionary mindset, recessionary strategy, revenue retention, swarm intelligence, swarm sensing, swarmers, urgent customer retention |