We’re Moving to the New Customer Innovations Website

We are very happy to announce that Customer Innovations is moving to a new and updated home on the web.

You can find us at:  www.customerinnovations.com

The ideas and insights we’ve been sharing on this blog site have already been relocated to this new location.

Onwards and upwards,

Frank Capek,  CEO, Customer Innovations, Inc.

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.

Overcoming Customer Experience Program Stress Points

Along with my colleagues at Customer Innovations, I’ve had the opportunity to help structure and manage major customer experience initiatives for a wide range of companies.    In the course of doing so, we’ve run into every imaginable roadblock and gone down our fair share of unproductive “rat holes.”   About a year ago, the Customer Innovations leadership team took a step back and summarized the stress points that organizations face as they try to build and maintain momentum with their customer experience programs.   Here’s what we came up with:

Customer Experience Program Stress Points

Customer Experience Program Stress Points

These stress points create confusion, slow or stall progress, and often partially, if not totally, derail the effort.   We’ve found that these stress points occur predictably with certain roles (e.g., the project team, executive stakeholders, support functions, etc…) and at certain points in the lifecycle of the effort.   Although they occur predictably, they tend to catch most organizations by surprise.   The key to building and maintaining progress is to know how to anticipate these stress points and manage them in advance.

Here are just a couple of the predictable stress points and what we’ve found is important to proactively address them:

  • Moving Beyond Platitudes (Executive Sponsors). Many executives have strong rhetoric around customer-focus and the need to deliver a compelling customer experience.  Very rarely do they understand how to move the organization beyond this rhetoric into action.  The experience that customers have with the business is typically the product of very deeply entrenched structural, cultural, and behavioral “legacy effects.”   Shifting the customer experience in any noticeable and profitable way involves knowing how to shift this deeply entrenched organizational behavior.  Addressing this stress point requires having a comprehensive, well-tested roadmap that allows Executive Sponsors to know how to create the conditions for success with a program that follows through on the rhetoric.  This roadmap must take into account surfacing and addressing the legacy effects that get in the way.  (see:  Centers of Gravity: Levers for Shifting the Customer ExperienceHow Employee Experiences Drive Organizational Behavior, and Integrating Customer and Employee Experiences)
  • Knowing Where to Start (Project Leadership and Support Functions). Improving the experience customers have with the organization seems all encompassing.  There are usually a very wide range of processes, functions, technology, and people that touch the customer.  Most organizations have multiple lines of business, each with multiple types of customers, and often many different channels or intermediaries that play a role.  Where do you start?  Do you try to work top-down on the things that are common across all of these dimensions or do you try to work bottom-up by focusing on individual elements of what the organization does to influence the experience?   The answer is neither… and both.  We’ve found that an iterative top-down / bottom-up process works best.  Starting with top-down principles and a unifying customer experience specification (see:  Customer Experience Specification) and then refining the principles and specification in bottom-up detailed design and pilots with individual lines of business or experience components.
  • The Experience Mapping Swamp (Project Team and Support Functions). Touch-point mapping… the analysis of how customers experience what the company does at each of the points of interaction… is the central approach used in most customer experience initiatives.    It’s very rational that the organization would want to know how it’s doing at those points of interaction.  The problem is that it’s close to useless for figuring what to do to significantly improve the experience.  In most cases, addressing the issues that get surfaced in touch point mapping exercises creates no more than “better sameness.”  (see:  Whose Experience is it Anyway? and The Customers’ Experience Does Not Happen At Your Touchpoints!)   The fact is, the customers experience doesn’t just happen at an organization’s touchpoints and, as a result, it’s really impossible to know how to meaningfully improve that experience unless you understand what’s happening at the non-touch-points.   The most effective tool for proactively addressing this stress point is making sure that the effort starts with an “experiencer-centric” definition of the experience.   (See Experience Miner: Creating Profitable, Evocative Experiences)

There are many other stress points:   Facing the ugly truth in “Coming to Terms with the Truth About Today“, overcoming the tendency to define an “Ideal Experience We Can’t Implement,”  having the guts to do drive towards “Differentiation vs. Better Sameness,” while avoiding “Painting the Surface vs. Changing the Core,”  and overcoming the “Surfacing Unwritten Rule Barriers” that make it impossible for the organization and it’s intermediaries to behave in a way that creates the desired experience, etc…  You get the picture.  We’ve developed effective strategies for addressing each of these stress points.   I’m happy to provide additional information…. just shoot me a message.

Cheers, Frank

Note:  Our stress point framework was inspired by the “Reengineering Stress Point” framework originally created by brilliant consultant,  Glenn Mangurian, while he was at CSC Index in the mid-90s’

Another note:  If you found this post interesting, you might also find the following posts helpful:

Centers of Gravity: Levers for Shifting the Customer Experience

I’ve heard many executives and consultants talk about the importance of training and motivating front-line employees in order to improve the customer experience.  While I agree that having highly engaged, well-trained, and motivated front-line employees is important, it is very far from sufficient. 

In this post, I will make the case that focusing on front-line employees is generally NOT the most important place to start if your goal is to significantly improve the customers’ experience.

In order to make this case, I’m going to refer on one of the most important lessons from military strategy.  In the early 19th century, Prussian military strategist, Carl von Clausewitz introduced the concept of the Center of Gravity (CoG) of any strategic system (e.g., political, military, or organizational system).  The Center of Gravity describes a system’s most critical sources of strength; the elements that are most influential for stable and successful operation of the system.  The optimal military strategy is typically the one that achieves well-defined objectives by attacking the enemy’s “system” at it’s points of maximum influence or vulnerability.

Col. John Warden, ex-Commandant of the Air Command and Staff College and chief architect of the Desert Storm air campaign, has argued that the Center of Gravity of any strategic system consists of five concentric components — leadership, system essentials, infrastructure, population, and fielded forces.  (See:  Reining in” the center of gravity concept – Features – US Armed Forces, Air & Space Power Journal,  Summer, 2003  by Antulio J. Echevarria, II).   This can be shown as follows:

Center of Gravity 1

From this perspective, attacking the enemy’s field forces has relatively minor influence versus attacking leadership, essential resources, or communications infrastructure.  Instead, Col. Warden’s has argued for using airpower to simultaneously strike at each system component thus overwhelming the opponent and irreversibly shifting the state of their system.  This was a key to the success of the Desert Storm air campaign.

The central lesson is that systems change when their centers of gravity changeThe experience that customers’ have with any organization is driven by the emergent behavior of a complex organizational system.  If you consider the center of gravity of a complex organizational system it looks something like this:

CoG2

If you want to shift the behavior of an organizational system, front-line employees are actually the furthest component from the organizations’ true Center of Gravity.  However, the most critical components of the organizational system are:

  • Leadership including the aspirations, capabilities, and beliefs of the executives, as well as, the something called the operating state of the organization.  Operating state establishes the context for how the organization works together and includes four dimensions: Power, Identity, Contention, and Learning.   Note:  Operating state is described in more detail in the post:  How Employee Experiences Drive Organizational Behavior?
    • Power. Do people have the sense of possibility and the power to accomplish what is important to the organization… and to them?
    • 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?
    • Contention. Can people deal constructively with disagreement?  Can they face up to breakdowns, build alignment, and move forward?
    • Learning. Are people open to learning about the changing needs of customers, real strengths and weaknesses versus competitors, and ways the organization must change in order to continually improve the experience
  • Unwritten rules that drive the real behavior of the organization independent of the espoused ideals and formalized processes and systems.
  • Management systems that define how the organization measures, manages, and rewards performance, as well as, how priorities are determined and resources allocated.

These most central elements create an environment within which processes and technology, along with front line employees and supervisors come together to deliver service to customers.

Most systems are surprisingly resistant to change.  Unless these three components that are close to the Center of Gravity are addressed in a coordinated and holistic way, I would expect that efforts to train, motivate, and engage front-line employees will lead to marginal results.   As Col. Warden has emphasized, shifting the state of an organizational system requires a coordinated, simultaneous intervention on each of the concentric components.

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.

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?).