Category Archives: Customer-centricity

Why Don’t Companies Base Head Count on Meeting Customer Requirements?

 

I just read two news articles this morning of the type that make me gnash my teeth and shake my head. Both involved Fortune companies planned to cut staff by the thousands based on bad financial results. Say what? To these companies, I ask, “Why were you carrying so much excess staff you could do without?”

Most service companies carry double-digit percentage excess staff. Likewise for product companies in their back and front office settings. How do I know? Process redesign, streamlining in particular, plays a primary role in helping clients meet and exceed customer requirements. And we constantly find excess staffing over-distributing decision-making authority, leading to employee disempowerment and creating excess bureaucracy, both of which drive customers nuts. Today’s customers want to deal with well-trained, empowered employees and as few of them as possible – and on the web an increasing percentage wants to research and order commodity goods without any personal contact.

So how does head count typically change after streamlining? By a negative 15% to 20%, in our experience. But rather than streamlining, most organizations throw people at problems, and the more they add the less efficient and effective work becomes. So instead of streamlining to create a win-win for both company and customers, they create lose-lose by overstaffing.

Why do they do this?

Why Do Marketers Latch Onto Whatever’s New & “Hot”?

The numbers are disturbing. A 2011 Nielsen survey of advertising credibility ranks mobile device advertising 14th in a field of 15 and advertising on social media dead last. Yet these two venues are at the top of many marketing preference lists. What’s in the makeup of marketers or the state of their profession that makes them cling to whatever’s new and “hot?”

BTW, personal and online recommendations from consumers grabbed the top two spots. How does that add to the story?

How Much Does Corporate Design Fight Customer-Centricity?

Historically, virtually all corporate entities have been designed from production/service delivery out (inside-out). And a few unlucky companies have been designed from accounting out (upside-down).  In either case, when companies try to redesign strategy and process from the customer in (outside-in), they run smack up against their organizational structures.

Inside-out and upside-down companies are aligned and managed around functions. Customer-centric (outside-in) companies are aligned and managed around customers. Unfortunately for customer-centricity, companies can’t get from A to B by throwing a switch. The journey is rough and risky, which is a core reason why most customer-centric companies either started that way or transitioned before they were fully formed.

Based on my experience, the alignment change issue stops more companies in their path to customer-centricity than even lack of executive leadership. Do you agree?

If you’d like to do a deeper dive on this topic here’s a new white paper (parts of which will be folded into the book).

http://www.h-ym.com/articles/Alignment.pdf

Is Loyalty for Suckers?

A Time Magazine/Moneyland contributor posted an interesting thought last week (http://tinyurl.com/9942w2v). He titled the post, “Proof That Loyalty Is For Suckers: Best Customers Get Penalized With Higher Bills” and gave several relevant examples. What does promoting low introductory pricing for new customers say to current customers who are paying full freight? Would you do this in your business?

 

“Averaging” Customers – Necessary? Misleading? Or Both?

What’s your knee-jerk reaction to hearing someone say, “our average customer?” Mine is to wince. Describing customers according to statistical averages – age, income, net worth,  shopping trips per week, number of employees, annual revenues, number of vendors used for each purchase category and on and on – tells us something about customers. Seeing a statistical distribution across each of these parameters tells us lots more. But still not very much. We can’t understand customers without understanding their behaviors,  And you can’t average behaviors. What’s the average of leaving a restaurant angry and believing you overpaid?  Might as well average a tomato and a pork chop.

Nonetheless, we let the impracticality of assessing and responding to individual behavior dictate use of statistical averages to describe customers. Then we enhance the data by imputing behaviors to people we don’t know. Is this the best we can do?

How should we go about understanding our customers?

Book Research

Before asking leading questions (and using your answers), I should share that I’ve started a new book exploring the inherent conflict of interest between buyers and sellers and how it should influence customer-centricity and CEM. The working title is “I am Buyer. You Are Seller. That’s the Problem,” and I plan to solicit input using Linkedin, CustomerThink and my blog. If I want to quote someone directly, I’ll ask first.

First leading question: Is designing customer strategies and enabling process to suit “average” customers (customer models) consistent with customer-centricity and CEM – or should sellers be designing “process-on-demand” (term from my Linkedin colleague, Bob Starinsky) that accommodates each customer individually?

Are We Witnessing the “Half-Life” of Customer-Centricity?

The optimist in me says, “Probably not.” The realist in me suspects we are, for several reasons.

-Customers were initially grateful that many companies appeared to be searching for comity. However, buyers now appear to be moving through this phase, which I call “play nice.” Now they’re seeing through the many insincere seller efforts to look and sound more customer-centric and becoming more cynical and mistrustful of sellers than ever. Hence, an increasing percentage is no longer “playing nice.”
-Influenced not only by transacting business over the web but by not seeing the “what’s in it for them” from forming relationships with sellers, many buyers are trying to minimize contact with sellers, preferring efficiency over spending time interacting with sellers.
-The more latitude sellers give buyers to “have it their way,” the more idiosyncratic customer behavior becomes – to the point where finding common approaches to satisfying varied customer preferences is becoming very difficult. “Process-on-demand” (term coined by my colleague Bob Starinsky) is beginning to replace customer best practices.

I’ve gone into much more detail in a new white paper, titled, “After Customer-Centricity Comes…?” http://tinyurl.com/9huk63k

 

Please know in advance that I’ve “trampled over” a number of customer-centricity’s sacred cows, and even more of marketing’s. But please don’t shoot the messenger :-) .

Layoffs – Where’s the Learning Curve?

One touchy subject inevitably arises when we design customer-centric process. And I hate to see it happen.

Redesigning process from the customer inwards produces an ancillary “benefit,” which to many execs becomes their short-term ROI justification. While new process designs are adding new value to customers, they’re also streamlining the organization, which can dramatically reduce front and back office FTE requirements, raising the specter of layoffs.

While we always consul clients to first consider using temporary functionless staff for special projects, then reabsorbing them to create “no hire growth,” some layoffs inevitably occur. One of our clients, post process redesign, eliminated 600 front office positions, and our process reworking contributed to the eventual closing of multiple plants. Worse yet, overall demand in their industry was declining, leading to very slow growth.

Two things really bug me about this situation. First, too many companies practice “boom or bust” staffing. They lurch from overstaff to understaffing, because they don’t have a clue how to avoid either excess. Second, necessary layoffs often cut people but not their functions or positions. Process streamlining should reduce functions and positions and does not target specific workers. And in neither case are they learning anything from experience. They just keep repeating their destructive practices.

Not a pleasant topic at all, but I just read an excellent post an excellent post by Ron Ashkenas (co-author of “The GE Workout”) that spot on addresses both things that bug me. If the subject’s relevant, I strongly suggest reading it (link below).

http://tinyurl.com/c329on8

Selective Customer-Centricity – Is Ikea Shooting Itself in the Foot?

Many in the group have commented about “what’s customer-centric for one segment might not be for another.” Perhaps the most commonly cited example is Ryan Air, which helps the knapsack crowd get around dirt cheap while utterly offending many suitcase carriers. Recently, I’ve run into another example, but the seller advantages aren’t as clear cut.

Recently, my wife and I sold our house of many years and moved into an urban condo. While I wouldn’t stick even our college-aged son with Ikea furniture, they do offer good deals on “safe” items including bookshelves and cabinet/drawer pulls. So I went in there, which I’m generally loathe to do. And once again I discovered that Ikea does not want my business.

First, Ikea is overdue for ADA (Americans with Disabilities Act) penalties. While I’m still erect, hip and back arthritis can make walking long distances difficult. That can make shopping at Ikea very painful, because once you enter the store, they make you walk in bewildering loops past every piece of merchandise on display before you can find an exit – and the only way out is past the registers (unless you turn back early and retrace your steps). The day I went to buy drawer and cabinet hardware I hurt like hell before uncomfortably standing forever in a seemingly interminable checkout line, especially because I had to walk another mile to find a clerk who could find the online catalog items we’d selected. Of course, I could have stayed in my La-Z-Boy if they’d take orders over the web, but that doesn’t bring you face-to-face with every damn item they sell. No accommodations whatsoever for an aging Boomer, never mind someone disabled.

But then came bookcase shopping. First, walk the entire circular route to see items to make sure they’re right. Then, keep walking to the furniture warehouse, where they expect you to load your own cart (but only after walking another mile at the direction of three different clerks to find one). And then one unit is 80 pounds, and Ikea expects you to bring your own help, if you need it, to lift it onto the cart. They will pull the items and deliver them for a hefty charge. But if you want to get them into your car, so your ripped son can unload them, you’re outta luck. After two shoulder surgeries, I ain’t messin’ with 80 pounds. Next to impossible for anyone older, never mind someone actually disabled.

But hey, I’m just an ordinary aging boomer. And there’s the proverbial 78 million pound elephant (the Boomer generation) walking across the time line towards or past the day when they can no longer comfortably handle a shopping experience designed for younger, sounder of body generations. I do believe Ikea is shooting itself in the foot. What about you?

Customer-Centricity: Let’s Not Let the New Block Out the Old

In our rush to see business through customer-centric lenses, we have a tendency let go of some valuable product-centric insight. A past client that asked me to return for a new initiative just reminded me of the value in holding onto some “old” business concepts and techniques – in this case focusing on the product lifecycle rather than the more popular (and trendy) customer lifecycle.

This company’s industry took a severe regulatory hit that all but eliminated the largest of four related industry sectors. And the larger two of the remaining three continue to shrink from Internet competition.  Now the stronger industry players are trying to morph into “something other,” creating a “new” – or more accurately “enhanced” – service sector. The jury is still out on their success. Weaker players are going away. But in the face of all these departures in a shrinking industry, my client decided to plant both feet in the smallest of the four industry sectors, the one with historically weakest service delivery because it’s hardest to provide – but a service sector they’re confident they can grow by raising service quality.

Gutsy move. But certainly not without precedent. Depending on which version of product life cycles we learned, we might label this dozens of different ways, but I’d call it the “last act standing” strategy. Much bigger piece of a smaller pie (and not as many forks). Ample customer need for the foreseeable future fortified by opportunity to grow demand. Plus opportunity to move smartly into the “enhanced” service category, but with a cornerstone service for many customers that competitors have either abandoned or deemphasized. Wise move. But a move you’re unlikely to make if you’re thinking all customer all the time.

For an analogy, think about incandescent light bulbs. Who would invest in incandescent bulb manufacturing today? Try a really smart operator with impeccable timing, While on one hand I’d shudder at the thought of investing in picking up where GE is leaving off, on the other I’d rub my hands with glee at the thought of being the last incandescent bulb maker standing, or even the strongest of the last few. Demand won’t dry up for a long, long time. And margins will grow as competition declines.

If you abandon the past and only focus on more fashionable customer-centricity and customer life cycles, you’ll miss opportunities like these.