“LOYALTY” - the Ultimate Economic Model

I wanted to let our readers know of a site that is not only stacked full of information and articles but is one that actually has some quality content.  The site is CEO Refresher and it looks like a Newsletter, website and Blog all rolled into one.

OK, so i might be just a little biased, they chose to print my last two articles as part of their monthly newsletter to CEO’s.  My latest article, “Be Disruptive, Build Loyalty and Consistently Beat the Competition - 5 Steps to Succeeding in Difficult Times” was chosen as their feature article in the Customer Service category.  We thank them for that and hope it allows many more readers to access the article.  I have had great success and feedback so far on the article - most downloads ever from our site. 

Back to the CEO Refresher site.  One of the things I really like about the site is how well organized it is and easy to find information of interest.  They also add lots of new fresh content every month and spend time to quality control what goes into their newsletter and site.  Not very many these days seem to take the time to check what goes up so it is nice to see.  I would also recommend the subscription, even though it might cost you a few bucks - well worth it from what I can tell.

So check them out, it will be worth your while and worth the bookmark.

Blaine Millet

Customer Experiences Inc.

I just read a very interesting article in the Deloitte Review (Deloitte Review is a semi-annual publication of selected articles they believe are important to their clients and potential clients) that gives a great deal of support to what we have been saying for years - building TRUST and LOYALTY with your customers is key to your success as a business.  They recently published an article, “The View from The Glass House,” that was an excellent view on how Web2.0 (social networking) is going to work for you or against you with your customers in the future.

They start off by saying, “Thanks to the onset of Web 2.0, customers are increasingly able to shape the market. This is transformational. New technologies not only inform customers’ decisions about purchases, they enable a participatory role in everything from design and development to the point of sale.”  Then they move on to list 6 key areas they believe organizations (specifically retailers and CPG companies) will need to have to compete in the future.  These six key areas are:

1. Creating customer trust and preserving reputations
2. Involving customers to co-create trust and value
3. Competing on responsiveness
4. Competing on design
5. Competing on brand
6. Strategically and proactively using information to define demand

Is it any wonder that the TOP 2 areas of focus are around the customer and building Trust and ultimately Loyalty?  I don’t think so.  They stated (and used a quote) in describing the how to create customer trust that said, “When the goods and services that a company offers are easily duplicated by competitors, real differentiation and competitive advantage will only occur when a company improves its relationship and builds trust with its customer base.⁵ Trusted reputations and positive relationships are built through repeated high-integrity interactions with customers and the careful cultivation of a corporate image.”  WOW, maybe people are finally getting it.  We stated in our book several years ago that unless you can build a “consistent” and “repeatable” customer experience, you don’t have the chance to really build Trust and Loyalty.  I guess it means more coming from one of the Big 4 today (I feel I can take some liberties with them since I worked for one of the Big 5 for many years).

They go on to say, “As customers publish on MySpace and other venues, they become referents for other customers. If companies permit them, customers are also empowered to “virtually touch” nearly all parts of the company value chain, from insights for product design to co-creating ad copy in the marketing and sales cycles.  Companies are harnessing the collaborative power of their customer bases to create word-of-mouth marketing and collect consumer input on their product offerings.”  We are only beginning to see the impact of social marketing and the power of the customer in many new areas that organizations have not yet experienced.

Our advice, if you can’t “get in the game” today with Web2.0 and some of the social media, at least be aware that it is out there and understand the potential power it has to work “for you” or “against you” in the marketplace.  For those that are a bit more venturesome, take the bull by the horns and start doing something - even if it is baby steps so you can start to understand it better.  If you don’t have a blog, get one.  If you don’t have some presence on social networking sites, set one up.  These are relatively easy to do but will take some care and feeding.  Like with any good customer focused activity, plan it out well so you don’t have to retract or do major repairs on it later.

We completely support the comments made in the Deloitte Review and believe they are spot on target with their assessments and insights.  Building Trust and Loyalty takes time and takes a concerted effort on everyone’s part.  But when your customer finally receives a “consistent” and “repeatable” experience and you are able to keep your PROMISES to them, you will be the winner in the end.  Thanks for reading…

Blaine Millet

Customer Experiences Inc.

For the past number of years we have been talking about how everything needs to start with the Customer in mind and that if they aren’t considered in everything you do, you are missing the point.  After all, our favorite phrase is, “How can you ignore the primary group that ‘writes you checks’ when trying to figure out how to run your organization?”  And “Writes you checks” is a very broad term, including both “for profit” and “not-for-profit” organizations, including the government.

 Another key we have talked about is how to make strategy “Executable.”  So often we come across organizations that say they have the strategy component figured out when, upon further investigation, they only have half of it figured out.  They created the strategy but didn’t really spend the time to figure out how they are going to execute it - consistently and in detail every day over the next several years.  To us, building the strategy is only the start.  If the strategy is not “Executable” and the plans aren’t put in place to accomplish this, why waste the time building it?  We have built strategies for a number of companies over the years and I have to admit, not all of them took it to the Executable state.  This is unfortunate.

However, in an effort to help you get there and to emphasize some key points that tie directly to our thinking about “Executable” strategy and the Customer, I found an excellent article I would encourage everyone to read.  The article is titled, “Linking Execution With Strategy in Support Functions,” by Robert Angel.  In a nutshell, he focuses on different support functions inside the organization and how they are not generally linked to the strategy and as such don’t focus on strategic initiatives that add value.  We see this all the time and when we developed our Customer Experience Mapping methodology, that was exactly the intent, linking strategy and the customer experience to all departments and their key business processes.  Robert stated early on, “More recently, strategy has regained some of its lustre in addressing these same questions by providing a point of reference in the midst of the twists and turns of rapid market change. Companies must foster innovation because cost cutting is no longer a competitive advantage - but differentiating customer experience is.”  Couldn’t have said it better myself.

He goes on to say, “Creating really good strategy is not a trivial task. Moreover, it can be all for nothing if the execution is flawed. ” He then offered a key quote by Peter Drucker, “creating and serving customers profitably is the central purpose of most organizations.”  WOW, this guy really has it figured out.  A couple of other key comments he made were, “When internal objectives outweigh customers’ objectives, innovation and competitive advantage are early casualties. Are the support functions being left behind on such measures? Customers should be at the heart of execution value for all parts of the organization.  For support groups, “customer” also refers to the organization’s customer-facing departments who are in effect their primary customers.”

I have only given you a snippet of what the article is about.  I would encourage you read the entire article and you will leave thinking differently about your strategy and why building and “Executable” one is so vital for your organization. I think Robert did a great job of pointing out the value of not “window dressing” the strategy of your organization but taking it through execution in ALL areas of the organization - support functions included. 

Blaine Millet

Customer Experiences Inc.

I just read an article and felt compelled to share some thoughts about it since it was using some new “language” to describe some well known problems with management.  The article was titled, “Culture Shift: The Causes and Cures of Collective Amnesia” and was written by Paul Levesque.  It was posted on the Manage Smarter website for those of you wondering where it came from. 

Paul used some interesting language to describe some all too common issues in management, namely losing focus on what is important in both the short and long term.  Let me give you an excerpt from the article that will help you understand what he is saying.  “When a new business is launched, it’s on a mission to fill some need in the market. All businesses begin with this kind of external focus. Everyone on staff knows what’s important. But, sooner or later, problems begin to arise. New competition emerges, key suppliers start dropping the ball or customer preferences take an unexpected turn—and suddenly the numbers aren’t looking so good. In response to the potential threat, everyone’s attention turns inward. Gradually the well-being of the organization begins commanding more attention than the well-being of customers in the marketplace. A downward spiral has begun. Customers feel neglected and gradually begin to defect, which worsens the numbers, increases the severity of the threat and subsequently intensifies the distraction from the organization’s original mission.”

He is describing a situation that occurs in many organizations we see and talk with as well - losing sight of the original mission and being distracted, usually to the detriment of the customer.  People get distracted easily and if management isn’t there to keep the ship on course and continue steering it in the original and right direction, the employees will get caught up in the distractions and lose focus on what is important.  Granted, the competitive landscape is tougher than ever these days and companies have to be flexible and observant to notice these changes as they occur.  This doesn’t mean you forget about the environment and stay the course no matter what, but does mean that you have to continually evaluate outside information to make course corrections where necessary.  Too often companies continually abort their original, well thought out plans because they see others going in a different direction - not sound business management.

What we believe is the stronger way to assess new information is to go direct to the source - YOUR CUSTOMERS!  Develop a program that allows you to get the “right” information at the “right” time to make the “right” decisions about making any changes.  Your original course and mission was (or should have been) well thought out with lots of input from trusted advisors, your management team, employees and customers.  To change off this course, the new input has to be very good and and valid or you should stick with your original design.  If you are linked to your customers in a way that gives you “real time” information on a “regular” basis, you don’t have to worry, you have input from the one group that “writes you checks” all the time - and to us, that’s pretty good information.

One final excerpt from Paul’s article that will drive home my point about distractions and staying focused.  “Threats and distractions are fundamental leadership issues. And leaders who get everyone involved in the mechanics of deflecting or resolving threats are making a critical mistake. This simply intensifies the internal focus and the anxiety, giving everyone official permission to forget about customers “until this crisis blows over.”  The reality of organizational life is that threats and crises never blow over. Once employees begin thinking of their main responsibility as “putting out fires,” they may never go back to seeing their overarching mission as “filling customer needs.”  Not, that is, unless the leadership keeps reminding them about it. That’s the real cure for collective amnesia: constantly place everything that happens within its larger context, so that the ultimate mission is never forgotten.“

I really appreciated the “new language” from Paul around “Amnesia” and think this is an appropriate way to categorize much of what we see today as well.  Thanks Paul for helping all of us think about an old issue in a different way that brings back its importance and value to the organization and the customer. 

Blaine Millet

Customer Experiences Inc.

In my travels and meetings with company executives one thing has been standing out in the majority of these discussions.  I’m being asked, “Why is it that everyone in my industry is starting to look and act the same and the customer is seeing us as one big non-differentiated group of companies?”  What does this mean?  Remember the old story of “boiling the frog?”  You know, the one where the frog was put in a pot of water and if the temperature was turned up slowly the frog didn’t notice it and react and as such, boiled to death.  But when the temperature was turned up all at once, the frog noticed it and jumped out of the pan to safety.  Companies and their customers are like the frogs.

 Take the cell phone wireless communication industry as an example.  For the past several years, it has been a dog-eat-dog world out there.  One day Verizon will come along with a new phone and then Sprint will match it and soon after that AT&T will announce their new Apple iPhone and capture the market by storm.  All this means is that by constantly matching or slightly exceeding their competition the customer will be “trained” by all these companies to feel like the service is ubiquitous and there isn’t really much difference, if any, between the major carriers.  While this may be true to some degree, there are distinct differences that exist among them all - but no one is noticing.  Why? 

 Simple.  The customer has been lulled into believing they are basically all the same with the same service, basically the same phones, pretty similar plans and on and on and on.  There is so much “noise” being created out there by the big 3 that no one is really listening.  No one is really evaluating these three for what they offer and the customer thus doesn’t see a lot of differences between them.  So when there is little observable difference between your competition, you are basically a “commodity” whether you like it or not.  Only two ways to play the commodity game - be the lowest priced commodity or “change the game.”

Continuing with our telecom example, most people today make their buying decision (other than sophisticated high usage business customers) based on the phone.  How cool it looks, how many people have it, its style, color, etc. - not based on the key factors the company offers nor the experience they are going to get by being a customer. Then, after they have made their decision and signed a two year contract, they find out all the other factors, including how much the customer experience really matters. 

So what does all this have to do with “Shock Therapy?”  Simple.  “Shock Therapy” is basically a term used in business that says if you want to separate yourself from the pack and the rest of your competition, you need to do something that makes you stand out from the crowd.  And no, introducing a new phone isn’t what we are talking about.  What we would be talking about would be things like “no more termination charges,” or “no more two year contracts,” or “a guaranteed accurate bill,” for example.  And above all this they offer a truly great customer experience from the time you made your purchase decision, through technical support and post sales support.  Now that would be so unique that the customers of all their competitors would stand up and take notice, right? 

You are probably asking yourself, “Why don’t they do that and stand apart from the others?”  Again, simple answer - fear of losing their customers.  In the telcom example, they would be afraid they would lose a number of customers that were waiting to leave but couldn’t because of contractual obligations.  But what they don’t realize is what you lose on the front end, you will more than make up on the back end because you will also be stealing customers from your competitors.  If you were able to create the proper messaging around this and deliver on these “shock value” items, you could distance yourself from any competitor and build longer, more trusted and loyal relationships with your customers - thus annihilating your competition.  You would be a leader, not a “me too” or a follower.  You would be the creator of a new model in an existing space, viewed as innovative, creative and willing to make changes based on what your customer wants. 

This is what every company should realize and strive for as they analyze whether they need to elicit some “shock therapy” of their own given their competitive position in their industry.  This is the time to create “disruptive” and “radical” change in your industry and take a leadership role and out distance yourself from your competitors.  Don’t think you can’t do it - there are plenty of examples of household name companies that changed the game in a disruptive way and took a leadership role in their industries.  Companies like Google, Starbucks, Amazon, Southwest Airlines, Nordstrom, Expedia and a host of others.  They are the leaders and they did it by jumping out of the pan and creating some “shock therapy” for their customers to see and experience.  And, of course, backed it up with a great customer experience and great messaging about what they have done to differentiate themselves from their competitors. 

So you get to make the choice for your own future.  What will it be - stay in the pan and fry like the rest of the pack or jump up and say, “I am going to be the leader in my field and change the game for my customers.”  Your choice, but when the “R” word starts to pop up everywhere, where do you want to be - in the pan or out of the pan.  That is the question and those that jump out will never look back.  So take a chance, create some “shock therapy” of your own and start being a leader and not a follower - or worse, another dead frog in the pan.

 Blaine Millet

Customer Experiences Inc.

Carly Fiorina, a household name in the business world, was a guest speaker at Seattle Pacific University’s annual breakfast meeting in Seattle last week.  There is no question she is one of the more controversial people in business today and was the center of attention for several years during her demise at HP.  But, whether you liked her or not, whether you thought she was doing the right things or not, one thing I have come to realize is that she “got it right” in a number of areas and had some great insights into business and the world economy. 

What do I mean when I say she “got it right?”  Simple, she focused on the CUSTOMER.  I have attended hundreds of speeches by leaders from all over the world, in business, sports, politics, not-for profit - you name it and I have probably attended a speech on it.  My goal is to always take away at least one thing that I personally believe to be accurate and to use that to better myself, my relationships or my business endeavors.

Carly was more than generous last Thursday morning, she shared many things that I could take away and share with others.  But there were several things she talked about that I felt compelled to share with our readers that I thought were “spot on” with what I believe.  You can disagree if you like and if you do, please comment on the blog.

First, she talked about the fact that the “individual is now becoming ‘in charge’ during this century.”  Couldn’t agree more - we see this every day in our interactions with companies and their customers.  Second, she said “Individuals demand a level of transparency and if you don’t embrace this you will lose.”  Again, right on target Carly.  Customers in particular (and employees as well) are tired of surprises and as such want transparency in the people and organizations they deal with.  The Internet has changed the game and where information is available at your fingertips, why try to hide something - it just makes people skeptical and not trust you or your organization.  So “get transparent” and you will open the doors to many happy relationships and create Loyalty among those.

Third, she said, “The Customer is ALWAYS in charge.”  We have been focused on the customer in great detail for the past 15 years and believe me, that couldn’t be truer.  If you aren’t focusing on the one constituent that writes you checks then who are you focusing on.  Fourth, she talked a great deal about change and how hard it is for people and organizations to change - believe me, we see it every day as well. But she did make a great comment about change and the level of the individual in the organization.  She said, “Only leaders can drive positive change.  Managers accept the world as is and manage in that world whereas leaders change the world around them and show people how to adopt a different direction. A leaders job is to unlock people’s potential.”  Great insights and again, spot on Carly. 

Whether you like Carly or disagree with everything about her, she has great insights and wisdom from being in the board room at at the helm of one of the biggest organizations in the world.  She certainly inspired me and showed me some simpler ways of thinking about issues and people - which I look for every day.  I just wanted to thank her for “staying in the game” and sharing her insights and for Seattle Pacific University for taking the chance on a certainly controversial speaker - both should be commended. 

Blaine Millet

Customer Experiences Inc.

I just recently released an article, “Marry Your Customer - Creating Trusted, Loyal Relationships,” on our website, www.customerexperiencesinc.com, to share some thinking I have had for quite a while.  It also supports what I have been seeing in various client situations and since it is so “simple yet powerful,” I wanted to share my thinking and some additional insights in this area.

What I absolutely find amazing and appalling in organizations is how leadership tells their people to act one way toward their customer that goes against all the principles of building trusted relationships - all for the almighty dollar.  This is just plain wrong!  The organizations we see that have the greatest success, create linkage between what the leadership stands for and the employees and this is then demonstrated to their customers through their actions.

Let me give you an example.  When employees go to work, they bring with them their own set of “ethics” or what I call “Employee Character.”  Included in this Employee Character is an underlying component of wanting to build trusted relationships with co-workers, leadership, customers, suppliers, partners, etc.  And they know how to do it.  They understand how important it is to a successful personal relationship to make and keep your Promises - they do it every day when building their own relationships outside of work.  So now, they enter the workplace and one of the first things that happens is they are asked (directly or indirectly) to make Promises that they know they can’t keep - at least not consistently. 

For most employees, this doesn’t work.  They are at odds with this and whether they recognize it outwardly or not, they are violating their own character to act this way.  This conflict between the employer and the organization is one of the greatest frustrations in employees and one of the key reasons for employee defection - or leaving the organization.  But when there is great alignment between “Leadership Character” and “Employee Character” and the Promises they are asked to keep are actually supported by leadership - great things happen.  The organization has become both “customer-focused” and “employee-focused” instead of “operationally focused.”  This is a huge distinction and one that separates the best organizations from all the others.

So I won’t steal the thunder of the article and allow you to read how all this comes together but let me leave you with one parting thought.  Promises Made = Promises Kept is one of the most basic concepts an organization can embrace and one that has some of the most profound impacts on short and long-term profitability, Loyalty and ongoing sustainability.  It is just interesting so few understand it or have implemented it today.

Take a minute and let me know what you think?  Are you seeing the same thing in your organization?  Does this make sense to you or not?  Do you think this is off base and isn’t the way it works and you have other ideas?  Do you agree and would like to see your organization operate like this?  Any and all comments are welcome - as we continue to explore this area and write about it, we would love to incorporate others experiences and thoughts.  Thanks.

Blaine Millet

Customer Experiences Inc.

The Bellevue Chamber of Commerce presented the Eastside Economic Forecast Breakfast November 15th at the Meydenbauer Center. The breakfast was well-attended with several hundred present.

Chris Falco, the Chairman of the Bellevue Chamber led off, followed by presentations by:

• Joseph Quinlan -Chief Market Strategist of Bank of America Capital Management
• Kristina Erickson Hudson- Business Development Manager for the Interactive Media and Technology cluster at enterpriseSeattle
• Glen Hiemstra - Noted futurist and author, website link here. (Read by >>>)

  

Just a note to let everyone know about the upcoming MIT Enterprise Forum on December 5, 2007 at the Bellevue Hyatt Hotel.  An excerpt of the announcement follows:

Playing Games—Serious Business:
Building and Fostering Player Communities, the Ultimate Customer Base

(Read by >>>)

Here’s a Best Practice for you: try networking on Linkedin.com.  For some unknown reason, probably divinely inspired, I received two emails today from people that wanted me to join their network.  I started a profile months ago, but as a result of todays email I put a little more effort into it.  I even uploaded my photo…. and then surfed the site.  I was impressed enough I paid the $10 for a month of paid service.  See how a “Best Practice” earns my business?  No doubt the owners are having a few beers because I’m so free with my money…. 

So there I was, surfing LinkedIn.com, and I stumbled upon the “Answers” section where a user was asking about “Best Practices.”  Well, like so many things in life, it brought me back to another time and place, back when “Best Practices” were all the rage.

See, I worked at Arthur Andersen when Thomas B. Kelly, Charles Ketteman, Robert Hiebeler published the book. (Read by >>>)