Wednesday, June 30, 2010

What If 24% of Your Customers Said, "I'm Off!"?

That alarming statistic in the title comes from a Satmetrix study of UK customers who left buying relationships in the previous 6 months because of a poor experience.

Here is a breakdown of the customers’ reasons for leaving:

How many of these reasons are beyond the companies’ ability to control them? We don’t know what the 7% "Other" is, so let’s assume the companies were not responsible for those; which leaves us with a whopping 93% of the reasons for defections that could have been anticipated and corrected. While this was a UK study, having lived there for almost 20 years, I can tell you that the British become more Americanized every day; that includes customer expectations and buying experiences.

At a time when every profitable customer is a nugget of gold, what were these companies thinking? Is no one asking why such a large percentage of revenues coming from new customers are going to replace income from those who have defected?

How would your company quantify such recurring losses? In addition to lost revenues that must be replaced, there are acquisition costs and lost opportunity costs when you cannot cross-sell to an existing customer (cheaper than acquiring a new one) and when the defecting customer tells ten people face-to-face and thousands online.

The Satmetrix study also reported that while 49% of respondents trusted referrals from friends and family as their primary source of information, only 2% trusted the company’s advertising; what they labeled the Recommendation Generation. It seems that this might be a budget item that could be revisited in the current economic climate.

So, add it all up, assuming 24% of your customers leave annually or whatever percentage you believe is true for your company:

  • Lost revenues
  • Lost market share
  • Acquisition costs
  • Loss of cross/up-selling opportunities
  • Lost Customer Lifetime Value
  • Negative word-of-mouth
  • Ineffective advertising

Now ask your department heads and others:

Why would we spend our budget on advertising instead of improving the customer experience? If you can’t have both, the latter seems to be much more a more effective use of limited resources.

How can we afford to hemorrhage so much money in this economy when most of the reasons for customer defections are within our own ability to change the game? What do you think the cost of a good customer experience is? What is it worth to your company?

Wednesday, June 16, 2010

Let's Hear It For (the New) HR

A lot of us have taken a verbal swipe at the HR profession occasionally; some have written about it. After all, they are the “people people” not the hard-driving, analytical, results-oriented business influencers that the rest of us are. Right?

I had an amazing experience a couple of weeks ago when I volunteered for SHRM-Atlanta at a call in Help Desk for job seekers hosted by a local TV station. Here are some of the things I observed about my HR colleagues:

They Get It. They not only have a good grasp of business strategy but also are good at formulating it. The organizers developed a mission critical style and approach to this event that was awesome to watch. During our two- day call-in, the organizers were tracking call types and other metrics to analyze how best to follow up and improve for the next call in. I know they also will be tracking and analyzing call resolution.

They Are Savvy About Business. This group of HR professionals developed a program, including training, researched resources, screened volunteers and marketed the heck out of this event using every channel available including social media; on time and with a shoestring budget.

They Give Back. SHRM-Atlanta has a vision of Working For a Better Atlanta and from the Board down to individual members; they are trying to live out that vision in all that they do. I don’t think this approach is limited to our local people.

They Believe in Education and Development. HR professionals are credentialed and take their own professional development very seriously. I never sat for the PHR or SPHR designation but I understand that the curriculum is rigorous and maintaining the credentials requires annual continuing education including strategic coursework. How many of us can say that about our own professional development?

They Are Collaborative. These HR professionals worked closely with the Department of Labor and the television station as a seamless team; adding their own particular talents to create something bigger and better than anything they could create alone.

They Can Execute the Heck Out of an Initiative. That says it all.

Is there a theme here? I believe it’s that HR isn’t “Personnel” any longer or the group that processes benefits and payroll or nags us about performance reviews. There has been a sea change and it can only benefit businesses that are challenged to do more with less and yet do it with the best talent available. Your HR department just might be an untapped source of what it takes to lead an engaged company:

  1. Strategy Development and Execution
  2. Identifying and Developing Leaders
  3. Creating a Culture of Collaboration and Teamwork
  4. Providing guidance and influence in human capital development and management
  5. Selecting, developing and training customer-focused employees through a performance management system.

So, before we put our HR colleagues back in their box on the organization chart, take another look at your HR department. Talk to them; invite a dialogue. Better yet, invite them to your next strategy session. You wouldn’t dream of leaving out the Finance person, would you?

Is your HR Department leading the way to organizational engagement? What are some of the ways you utilize its strengths in non-traditional ways?

Thursday, June 10, 2010

Hard Wired For Exceptional Customer Service

This week, I welcome Cathy Missildine-Martin, SPHR as a guest blogger. She also happens to be my business partner and Co-founder of ICC!

I have been traveling on business more than I usually do this year. I have really been exposed to the best and the worst of customer service. I find it fascinating how some companies ALWAYS get it right and some companies ALWAYS get it wrong.

I went to my client's preferred car rental company instead of where I am a "preferred member." I was on the bus from the airport on my way to the offsite car rental facility. The bus drive was happy, greeting everyone, almost whistling while he worked. I thought, "That is refreshing." The next week, I come back, he greets me, "Hi, Ms. Martin, how was your flight from Atlanta?" Wow, he saw me one time. I said, "How did you know that?" He just smiled and said, "It's my job."
I wish more employees felt that knowing the customer, "was just their job."

Contrast the experience below to the one above:

I went to my gate to board my plane; the airport is jammed packed at 6AM. The agents begin boarding and are calling rows and zones. I pass by 2 gate agents, 3 flight attendants, 1 captain and no one even says good morning. I know it is impossible for them to know my name, but is "good morning" too much to ask?

When I returned my car back to the rental car facility, I was greeted by yet, another eager, friendly employee just waiting to check me in. I couldn't help myself to ask this employee about why everyone is so friendly around here. He just said, "I guess we are all just WIRED that way."

How interesting is that? I think there is a lot of truth in his revelation. People can be hard wired for customer service. So, how do the companies that always get customer service right, find people that are hard wired?

I know there is a lot of upfront work that has to happen to make sure we hire for that "hard wiredness" but how to you keep those types engaged and more importantly keep them on board?

What is your experience? Please leave a comment or an example of a company that understands the concept of Hired Wired for Customer Service.

Monday, June 7, 2010

What Business Are You In? Really.

I’ve got a whole key ring full of bar-coded plastic tags that designate my “loyalty” to a particular store; I’ll bet you’ve got fistfuls as well. Are they an indication of my loyalty? Can you measure my loyalty with that piece of plastic?

Companies like Southwest Airlines and Zappos know they are in the customer service business; they just happen to fly airplanes and sell shoes. We all are in the business of serving our customers and that is a tall order when, for years, we organized our businesses around products.

I don’t know about you, but I have a list of criteria that my brain churns through in the midst of a buying decision. If someone wants my business, they have to demonstrate that they know me, respect my needs and provide an experience that suits me.

If you say you’re customer focused, show me. Nothing wears me out faster than marketing messages that bear no relation to the actual experience. Who thinks of this stuff?

Have you ever listened to your own voice mail or help desk systems? Finding the balance between efficiencies and customer experience is a challenge but there is no excuse for making it so hard to talk to a human that we have to Google to find out how to do it. What’s more important than a customer anyway?

Your web site may be great but your (fill in the blank) department lets you down. There are so many ways I can touch your company and if all the touchpoints aren’t designed for my buying experience, I may be leaving and you won’t even know it.

Why can’t the person I’m talking to make it right when there is a problem? As Mick Jagger said, “I try and I try and I try but I can’t get no satisfaction.” Why is there more chain of command in Customer Service than the Pentagon? If your customer strategy spells out how you’re going to deliver a customer experience and the culture supports it, employees should have the tools and skills to make the decisions.

Why are your marketing “campaigns”, coupons and emails so generic? Is it that you don’t really know me, or that you don’t care? You collect so much information from me with that plastic tag and yet you don’t connect the dots.

Please do not expect me to complete a survey foisted on me by an employee who is asking me to give him top marks. This is no way to reward employees or to gather valid customer data.

Loyalty programs are part of customer relationship management but they don’t guarantee that you have hearts and minds. I don’t think loyalty is bought; it’s earned over time by designing the experience customers tell you they want and ensuring the company is aligned around it. What are you doing to earn the loyalty of your customers? Is it more than another piece of plastic for my keyring?

Wednesday, June 2, 2010

What Drives Your Numbers?

Stephen Sadove is a leader I can follow. The CEO of Saks, Inc. was interviewed by the New York Times recently and was asked about his leadership philosophy. His response was that leadership drives culture, which drives business results. Mr. Sadove went on to say that while Wall Street never asks about leadership, culture or people, they actually are what drive numbers and results. Mr. Sadove, you are my hero.

Trying to define organizational culture is a little like nailing Jell-o to a wall: slippery, messy and just plain hard. But, when a leader understands that the harder- to -grasp organizational elements actually make up the engine that propels results, we are at least half way to having a company that truly is engaged. While many C-Suite occupants are comfortable with spreadsheets and analytics (and no one would argue their essential value), the numbers don’t happen by accident or in a vacuum. It takes a lot of deep searching to arrive at a culture design that supports the results you want.

I recently saw a presentation by Reed Hastings, CEO of Netflix who, while not a fan of process, nevertheless, put the steps for embedding Values, Strategy, Leadership and People into a framework he calls Freedom and Responsibility Culture:

How Do We Define Success? For Netflix, business results are “continuous growth in revenue, profits and reputation”.

How Are We Going to Get There? Hastings defined the strategy as “rapid innovation and excellent execution”.

How Does Our Environment Support Our Strategy? Netflix’s culture specifically supports “effective teamwork of high performing people”.

What Would Jeopardize Our Success? For Reed Hastings, it is a culture that tolerates rigidity, politics, mediocrity and complacency.

From this high level, Netflix is able to articulate how its Values are embedded in its culture and specifically defines behaviors that will be rewarded and those that result in being cut from the team. There is no room for ambiguity in Reed Hastings’ vision of success, which means that employees know exactly what is expected of them (part of a team of high performing people) and how their jobs contribute to the company’s success goals (innovating and executing).

We are in an environment today which demands that we stand out in every way. To ignore organizational culture is to sabotage your business success.

Can you answer the four questions above for your company? Can your employees?