Category Archives: Customer-centric planning

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?

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?

Is Customer-Centricity Already Irrelevant?

I’m right now in the process of writing a full article on this topic, which is how I get to the bottom of perplexing questions.  The article is far from done. In fact, I want to read portions of Doc Searl’s excellent new book, “The Intention Economy,” before I wrap it. However, I can already share what I’m seeing through customer lenses.

Customer-centricity is a halfway point between win-lose favoring sellers and win-lose favoring buyers, with the latter being a place business absolutely doesn’t want to go. So in a sense, business (at least enlightened portions) created customer-centricity to stop customers from “crossing over to the dark side.” But a sizeable percentage of customers in developed economies have already pierced the customer-centric line of defense – and have crossed over. And a lot more are coming.

The consequence? Companies have to be prepared to become “customer-reactive” and deal with customers who don’t give a rat’s a** about whether or not sellers survive. Very different business model than customer-centricity.

Are others seeing the same trend lines?

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.

The Death of a Category – Coming Soon to Your Industry?


Have you ever watched an entire business category slide below the horizon? I first did while too young to understand what I was watching – as passenger and mixed passenger/freight railroads didn’t make the bend. But even when I hit graduate school years later the “Penn Central” case study was still very current. Classic example of not changing business model in the face of rapid environmental change.

Since then we’ve all seen more sectors fade from sight. Everything from neighborhood full service groceries; to specialty consumer a/v stores; to big, powerful cars that could pass everything but a gas station; and more recently, we’ve witnessed the demise of mid-sized airlines, mid-priced jewelers plus shoe store and bookstore chains. And we’re now inexorably heading towards the end of client-server computing (outside of extreme speed enterprise stuff) and even PCs themselves.

But what’s next? Are we ready for online niche categories to fade away, just as brick and mortar business categories did? I believe online travel services are toast, as are a plethora of social media services. And Are we ready to turn traditional healthcare on its ear? I suspect we’re reaching the end of medical clinics staffed by FPs and GPs. Likewise physical tax preparation services and perhaps all tax preparation services.  A simplified tax code would send most of the accounting industry packing.

So what’s on your candidate list for extinction?

Can an Organization Shift from Company-Centric to Customer-Centric Without Redesigning Process?

Rephrasing the question, how far will customer-centric attitude and desire to help customers take an organization?

In my mind, not very far. Yes, process is my practice focal point, but I don’t believe I’m being biased. After every customer relationship audit, I come up with change recommendations that can be categorized as: “behavioral;” “process-based;” “process plus technology” based. The latter two categories almost always dominate the list.

What do you think?

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More Companies Are Deigning Customer-Centric Business Strategies, But Then What…?

Although far from a majority, the percentage of companies with customer-centric strategies continues rising. But then what? Well, in so many cases what comes next is a major disconnect. Once the customer-centric intent is established, next should come customer-centric process redesign (including designing enabling technology) that should change intent into action.

Unfortunately, what does happen instead is process design that covers its cost-control roots with a customer fig leaf. Companies wheel out production-based process schemas practiced by production-trained process designers and get production-based process – that adds only tangential benefits to customers.

Personally, I’d rather train process untrained people in the principles of customer-centric process and turn them loose, rather than bring in the Lean/Six Sigma troops. What do you think?

FYI, here’s a link to an excellent CustomerThink post addressing this issue by Joseph Drager (http://preview.tinyurl.com/3coz39a). I’ve added my 2 cents.

Have consumers finally reached a breaking point?


Many (including myself) have prematurely predicted that consumers would express their anger at big banks with their feet – by fleeing to smaller banks and credit unions less inclined to gouge them. Having been wrong before, I won’t make another prediction. But the number of market and industry watchers making the prediction is rapidly swelling.

So I’ll ask for sage opinions from all reading – “Have increased debit card fees, mortgage fraud and other customer abuses finally brought U.S. consumers at least to the tipping point? And what’s the future of big bank – consumer relations?”

Aren’t We Just Kicking the Customer Can Down the Road?

Every time I hear someone say customer-service is where customer-centricity starts, I get a splitting headache. Customer service is the last stop on the customer-centricity train, not the first. But it’s oh so convenient to kick the can down the road to service and dump customer-centricity in their laps. “Hey we don’t want to bother with this customer stuff, let our service reps handle it.”

Sounds ridiculous, even at first blush. Customer-centricity starts with the management belief that adding value to customers is the best path to sustainable growth and profitability – not a handout to customers but a smart business proposition. It continues with formulation of customer-driven business strategies, which need implementation through customer-driven process, which needs enablement by well-aligned technology, all of which require organizational changes supporting the shift from functional performance focus to customer performance focus.

Customer service plays an important role in pleasing and often placating customers. But when organizations see customer relationships as win-lose, develop marketing or product-centric business strategies, design and manage process to minimize cost (which is a very ineffective mode of cost containment), let IT design systems focused on internal operations, leave their silo-centric organizations in place – or make even one of these mistakes – customer service happens after too much water has already passed over the dam. It’s too late by then. Especially because most departing customers never bother to complain.