Business Impact

Seth Godin recently wrote a blog titled, "Avoiding false metrics." His point is one that will resonate with Customer Experience and Voice of Customer (VoC) professionals.

The premise of his blog is that a metric should be accurate and aligned with your goals. There are many different examples of customer metrics that are neither. Consider these two examples:

• Not aligned: A business leader adopts a metric solely because the metric is simple, or the metric was touted in a business book. Many companies are guilty of adopting a metric without doing the necessary homework to determine if the metric is aligned with their goals. It is an easy trap to fall into.
• Not accurate: The sales representative who "cherry picks" who receives the survey, ensuring only those on the list will provide positive responses.

The problem is, finding the best metric isn't easy. But, many customer focused leaders are enlightened (like Seth) and will invest in the right process to ensure the business is focused on the right metrics.

When working to identify the right metric, ask yourself:

• Will this metric predict the business outcome that we are trying to achieve? In other words, is there reliable proof that the metric is aligned with the goals?
• Will the metric engage the enterprise? Do colleagues understand the metric? Does it resonate with their role and responsibilites?
• Does the metric enable action? Are colleagues motivated to exhibit behaviors that will have a positive impact on the metric and thus the business?

Identifying the right metric is a work of art and science and companies that invest in the work are rewarded.

The recent death of Steve Jobs and publication of his biography sparked public attention to business innovation. Apple's track record brings to mind a more old-fashioned word -- invention. New-to-the-world, breakthrough products or "disruptive" ones in the sense of their changing whole business categories. Most product innovation activity is actually making upgrades or iterations to existing products or services rather than new ones. But the brand new, disruptive ones attract the most attention because their impact can be enormous ... and awfully good for business.

Launching disruptive products is not exactly new. History notes the major global impact of the printing press, telephone, automobile and airplane. Entire lifestyles have been changed by new products, not to mention launching major business industries world-wide. But in business today, the strategic importance of achieving breakthroughs and innovation of entire businesses has picked up steam. It was recently reported in an Innosight study of the S&P 500 Index  that up to 75% of listed companies probably won't be around in 2027. Where the average company in 1958 had been around 61 years, that average duration dropped to just 25 years old in 1980. The tenure today has dropped again dramatically to just 18 years.

So innovating and re-inventing the business has truly become an issue of survival. It's interesting that many companies and industries spawned by major inventions couldn't always follow that act up over time and eventually faltered. Kodak is one example. Its inventions helped people over the last few generations use affordable cameras and film and earned itself prominent listing on the S&P 500 for many years. But, with the advent of digital technology is struggling mightily today. In contrast the Innosight authors cite IBM, P&G, and J&J as three giants surviving the test of time and innovation turmoil by 1) operating effectively 2) creating products meeting market needs and 3) shedding their legacy businesses toward the end of their life cycles. Good survival strategy tips.

Walker recently set out to answer the question, "What drives partner preference?" Or, asked a different way, "Why do partners recommend one product or brand over others?" 

As we analyzed data from more than 20,000 partner surveys across multiple IT OEMs, one of the findings that emerged is partners have similar needs as customers.  

As we reviewed the drivers of partner preference and compared them to the drivers of customer satisfaction and loyalty, we noticed some similarities:

• Partners and customers prefer OEMs that offer reliable products. This area, more than any other, including the financial incentives that OEMs provide to their channel, has the greatest impact on partner preference and is a common top driver of customer satisfaction and loyalty.
• Partners and customers want to work with companies that are easy to do business with. While this is a nebulous concept, partners and customers generally consider the people and the processes they interact with when evaluating a company as being easy to do business with.

As we sifted through all of the data, I couldn't help but wonder what would happen if OEMs adapted their voice of customer (VoC) best practices to their partner relationships. Best practices such as soliciting partner input, creating partner-specific action plans for vulnerable relationships, and leveraging partner feedback to prioritize improvement initiatives. Would that help them grow market share? Would this help them solidify their customer retention strategies?

Based on the work that we've done, the answer is yes.

I was recently with a business strategist from a Fortune 500 company who stated there were ultimately three reasons corporate strategies fail. Even though he was speaking of overarching corporate strategies, the three reasons align with what I have seen related to customer strategies:

1. You measure the wrong things – Good strategy is the result of careful, intelligent analysis; however, the old maxim “garbage in, garbage out” applies here. In customer strategy consulting, this can be the result of jumping on the bandwagon of the latest killer metric without a full analysis of whether or not the metric actually applies to your industry. One way to avoid this shortcoming would be to conduct a pre-program strategic assessment – this step will allow you to learn not only the key customer touchpoints, but also identify the critical needs of key stakeholders in the process. It will also help you make certain you are profiling the customers the right way and focusing on the most critical.
    
2. You make the wrong decisions – Even if you measure the right data, there is no guarantee you will make the right decisions. Some of this is related to the data itself – in customer strategy consulting, using statistical methods that allow us to determine which areas of focus will have the greatest impact on customer loyalty will provide some insulation against focusing on the wrong areas. There is, however, another source of potential error – and that is the direction of where the market in total is heading. Every decision is framed not only by the data you observe, but also by your outlook on the competitive environment in general. To ensure you get it right, there are three recommendations I would make:

• Include competitive assessments in your loyalty measurement program – Having an idea on your position relative to the competition can help fine-tune your analysis. You can read more about benchmarking options in this series.


• Commit to ongoing measurement – This does not necessarily mean an ongoing data collection effort; rather, it is about knowing when to re-assess the customer landscape to ensure you are accounting for all the relevant issues. Most clients do this every 18 to 24 months at a minimum.


• Build macro and micro-level strategic plans – The overall strategy that emerges from the statistical analysis is best used in the context of focal areas that have the greatest impact on the greatest number of customers; however, building more micro-level, customer-based action plans will ensure you are accounting for the individual differences that exist among customers.

3. You do not take action – This is the one we tend to see the most. I once worked with a person who was prone to saying “strategy is cheap; execution is hard.” When I first heard him say this, I thought he was saying that strategy was simple; I now realize what he meant was that even though strategy can be hard, it is infinitely more difficult to execute on a plan of attack you know is correct. The phenomenon of acting in ways that are not in your best interest is less about intelligence and more about discipline. I tend to use diet and exercise as an example – I know I should exercise more and eat less, but it is far easier to do the opposite. We at Walker have designed a framework to help navigate the key disciplinary elements needed to take action – namely, organization, process, communication, and motivation.

Certainly there are many reasons strategies can fail; however, I suspect that most of the reasons would fit into this framework. Being mindful of the potential pitfalls that may exist can help you be more proactive in building a plan that will maximize your probability of success.

Mark A. Ratekin
Sr. Vice President, Consulting Services

Launching a new voice of the customer initiative is a big undertaking. Unfortunately too many companies do just that – they launch! They charge into an initiative without taking the time to develop a thoughtful plan. Given the potential impact of a company’s customer engagement strategy and the importance of doing it right, it makes sense to conduct an assessment to consider all the elements that will be critical to the launch and implementation of a results-oriented program.

The following 11 key elements are the key factors to consider in a well-executed assessment.

1. Scope – The scale of this undertaking is understood and the necessary resources have been identified.
2. Readiness – The degree of organizational readiness has been assessed and it is understood what will be necessary to create buy-in for the initiative across the organization.
3. Alignment – There is a clear line of sight on how customer insights tie to business results.
4. Listening posts –The organization has determined how they will collect and integrate the most important information for making customer-focused decisions.
5. Stakeholders – The information needs of the organization have been assessed and it is understood how customer insights will be distributed and used across a variety of functional departments and customer-facing associates.
6. Education – Programs to drive awareness, understanding, and action have been identified to bring about the necessary corporate culture for customer-focused success.
7. Communication – Communication needs have been outlined to understand how the organization will drive internal awareness, deliver actionable reports, and communicate externally with customers.
8. Technology tools – Technology tools needed to facilitate the collection, analysis, and distribution of customer insights have been identified and it is understood how these tools will integrate with existing technology systems.
9. External resources – There is an understanding of what additional resources will be necessary for methodology, research, technology, training, and additional consulting.
10.  Metrics – The key metrics for the success for the company’s customer engagement strategy have been established.
11.  Roadmap – A detailed plan or roadmap has been developed that includes a timeline of activities and a breakdown of the necessary individuals to be involved in a practical, phased program.

Patrick Gibbons
Principal/SVP
Walker

A colleague sent me this picture below put together by National Business Research Institute (the full article can be found here).  I thought it was a very clever, and easy to understand illustration of employee engagement, its impact, and its drivers.  I also think it has some great info, specifically over half say they will definitely leave.  Our research confirms that one of the top reasons why someone leaves is there is no room for advancement.  What stands out to you?

I have been blogging for some time that eventually the dam will burst and employees will start moving around.  I think the dam is starting to leak.  We recently conducted a survey of Indiana business leaders and asked if they were going to increase hiring in the next year.  The percent of those indicating they were going to increase hiring went up 7 percentage points compared to 2011 (to read more about this study go to www.indianabusinesscouncil.com) .  I recently saw a study by Young Presidents Organization (YPO).  This is organization of, as you can guess, presidents of organizations that are below a certain age.  This study asked these presidents about various aspects of their business; sales, fixed investments, and employee count.  In this study, more than 30% said they planned to increase hiring by at least 10% over the next year, with more than 10% saying they will increase hiring by 20% or more.   So who do you think they are going to hire?  Sure some of the unemployed will get snatched up but the majority of these hires will be companies pilfering the top talent from other companies, your top talent.    

As business leaders you have a couple of choices here.  You can turn away and ignore the dam and explain it away.  You can try to put your finger in a few of the holes in hopes that it will get you by.  Or you can put up some bricks and mortar to reinforce the dam, the bricks and mortar is called employee loyalty.  By measuring what employees are looking for in their job and from their company, you can take the appropriate action that will have an impact on employee loyalty and the organization as a whole.  We know for a fact that loyal employees are less likely to leave an organization and more likely to resist offers.  We also know these employees are more likely to speak highly of the company, help out co-workers with heavy workloads, support the strategy of the organization, and go above and beyond in their job.  The graph below is from a national employee loyalty study from several years ago but it clearly illustrates that loyal employees are more likely to exhibit positive behaviors. 

The cloud is changing a variety of customer interactions, one of which is the purchase process. We've seen a shift from buying, to renting, and now to subscribing.

Consider movie viewing as an example. Years ago, to watch a movie at home, we bought a VHS or DVD. Shortly thereafter, we went to Blockbuster and rented the movie. Today, many subscribe to Netflix, where they pay a monthly fee and get unlimited rentals. 

This change is happening across many industries, including those providing business-to-business products and services. In the report titled, "Sizing the Cloud," Forrester predicts the "global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020."

This shift is impacting the role of customer strategy consulting. Historically, customer strategy consulting has focused on predicting repeat purchases by identifying which customers are likely (or not likely) to purchase again, when the need arises.

With the cloud, customer strategy consulting is focused on protecting the ongoing and recurring revenue. It is focused on predicting which customers will continue their service versus those who will cancel.

While there are many similarities between the historical role of customer strategy consulting and the role for companies with cloud offerings, consider these differences.

- The switching barriers are minimized for cloud customers, shifting the risk from the customer to the company. To help protect their investment, the company needs to have an intimate understanding of their customer segments, sophisticated analytics to understand and predict renewals within each segment, and systems or business processes that optimize the renewal potential.

- For many cloud-based companies, one sales manager could have many customers. Having a clear line of sight into each customer becomes difficult, if not impossible. Companies need a system that leverages the various sources of customer information to help sales managers prioritize where and how to spend their time.

There is a saying (the only attribution I can find is that it comes from a fortune cookie!) that goes, “Though we cannot change the direction of the wind, we can adjust our sails.” With the uncertainty being thrown at us over the last few years, we have all had to make a lot of adjustments in our sails.

But, what adjustments do we make? What direction is the wind blowing? What direction will it blow?

There is no better compass for businesses than their customers. While simply asking them where you should go clearly sends the wrong message (a message of weakness), asking the right questions will help you find your way.

1.      Ask your customers where their business is headed. Who better to travel with than your customers? Find out what they think is happening in their markets and work together to address those markets.

2.      Ask your customers what challenges they are encountering. As the line from Jerry Maguire goes, “Help me, help you.” You don’t have to be quite that dramatic about it, but you get the idea. Nothing will endear you to your customers more than helping them solve their problems.

3.      Ask your customers what challenges their customers are encountering. Not only is this a good indication of pressures in the market, it will also allow you to add more value for your customer by helping them help their customers to succeed.

4.      Ask your customers where they are spending their innovation dollars. Are there any areas where co-creation might make sense? Working together in a successful initiative can create an unbreakable bond.

The real key is open communication with your customers about topics that will enable you both to adjust your sails and take advantage of the power created by the wind. Working together with your customers for the benefit of their businesses will have a dramatic and positive impact on yours.

• Technical Skill (for support and design)
• Capacity/Scalability The buyer company is not only growing and changing, but may also try out a new vendor with a small piece of business before ramping up the purchase.
• Competitive Pricing - the sum of vendor costs help keep the buyers competitive in their own markets
• Reputation/Brand counts, but often more as table stakes in B2B --  such as assuring financial stability, that the vendor stands by its work, etc.

I love Trefoils. Thin Mints are a close second (and apparently the top seller nationwide). Every year my family looks forward to Girl Scout cookies. We buy a bunch of cookies, yet they have a tendency to disappear very quickly.   

My family has a tradition of girl scouting. My mother was a scout, I was a scout, and my nieces are girl scouts. Given that tradition combined with my love of Trefoils, one could say that I am Truly Loyal. 

Imagine my excitement to learn there is a new Customer Loyalty badge for Girl Scouts. "Girls told us they want more challenge, and we've responded with substantive, focused, fun new badge offerings that will prepare girls for lifelong success," said Kathy Cloninger, Chief Executive Officer, Girl Scouts of the USA. 

The new badge is part of the Senior Scout Cookie Business badge. According to the Girl Scout website, their Cookie Program prepares girls for their future by developing business building skills such as goal setting, decision making, and people skills.

To earn a badge, a scout goes through a five-step test to prove her knowledge on the topic. In this case, she will know how to build her cookie business by increasing customer loyalty. 

Although I wasn’t able to find the specific requirements for earning the customer loyalty badge, I was reminded of a Walker client who developed a training program for their employees.  At the end of the training, each participant needed to prove their knowledge on the topic.  A certification exam was used to “earn the badge” for Customer Loyalty. Incorporating the exam into the training ensures employees understand both the importance of customer feedback and how to act on that information. 

I can’t wait for Girl Scout cookie time to see how the Customer Loyalty effort impacts their Cookie Program! In the meantime, should you consider a Customer Loyalty badge for your associates?

Kitty Radcliff
Vice President

In my last blog post, I talked about the "Before, During, and After" of good communication planning for Voice of the Customer programs. Digging into the Before.... Before you launch a customer program, it is important to consider the internal and external (customer) communications that need to happen.

One great opportunity is to craft, post and distribute a solid one-pager about each major VOC program.  The document should overview the program purpose, scope, timeline, and business impact.  Here is a good example I’ve been involved with:

“We don’t know who first discovered water,
  but we can be pretty sure it wasn’t the fish.”

This (possibly paraphrased) quote, from philosopher Marshall McLuhan, provides a keen reminder that our environment has a weighty but often unnoticed impact on our perceptions. 

This is true in all aspects of our lives, including business and the management of key accounts… how often do we hear from account leads that they just know what their customers need or are thinking? How often are we guilty of this ourselves?  And yet how often does an objective assessment of the perceptions of one of our key customers surprise us?

Almost without fail, any voice of customer feedback will include some new learning – perhaps opening our eyes to an issue or a new opportunity that we hadn’t been able to see clearly because we were simply too close to it.

Working with key account managers, I see this all the time.  My recommendation?  Be a fish out of water.  Open your minds to the power of customer feedback, and prepare yourself to discover something new… then take action on that something to build stronger relationships with your customers.

Once again, Willow Creek Association put on a tremendous Global Leadership Summit last week. As soon as Len Schlesinger started his presentation, I knew I was in for a whirlwind of new ideas and different ways of thinking. As President of Babson College (ranked #1 business school for entrepreneurship by U.S. News & World Report); former Harvard Professor; and noted author, he is an entrepreneurial genius. 

In the 1990’s, he and his co-authors helped us better understand how to build profitability in a service business via The Service Profit Chain (1997). Per Harvard Business Review, the service-profit chain established relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity.

More recently, Len Schlesinger has been focused on using entrepreneurship in all kinds of settings to create economic and social value. His book Action Trumps Everything (2010) makes the case that conventional approaches to problem-solving don’t work as well in an uncertain world.

Instead, a very simple framework used by successful entrepreneurs can be more effective: Act. Learn. Repeat.

1)      Act: Take a small step forward.

2)      Learn: Pause to see what you have learned by doing so.

3)      Repeat: Incorporate that learning into what you do next.

At Walker, we know that taking action can be one of the biggest challenges faced by customer strategists. I suspect that is due in part to our tendency to set aggressive, stretch goals that may at times seem unachievable. This can lead to inaction. But, what if we didn’t try to solve world hunger from the onset? 

What if we make a decision to just do something that might have a small impact? 

1)      Act: Take a small step. 

2)      Learn: After taking that first step, see what customers think and say about it in your customer feedback program. 

3)      Repeat: Then, incorporate that learning into your action plan and take another step forward.

Do we make the idea of taking action more difficult than it needs to be? 

Kitty Radcliff
Vice President, Consulting Services 

These are definitely uncertain times. Your customers are uncertain about their business and that translates into cautionary behavior—lower spending. At best that means price pressure for your business; at worst, it means lower demand. And it doesn’t look like this is ending any time soon.

We can just throw up our arms and resign ourselves to letting lower demand and price pressure negatively impact our revenue, or we can find ways to bring some stability into this unpredictable environment. Here are three things that will add stability to your business:

1.      Focus on solidifying relationships with your existing customers. The best way to keep a bucket full of water, is to plug all the holes. You can try to put more water into the bucket, but without plugging the holes, you won’t get anywhere. Same goes for customers. Rarely can you sell your way out of a customer retention problem. Build stronger relationships with the customers you have and lock them in.

2.      Understand how your customers view you and make changes so they view you the way you view you. From the “Truth Hurts” files: We are rarely objective about ourselves or our businesses. Our own view is frequently much more attractive than the view our customers have. Really understand how they feel, how they view you and make the corrections necessary so they see the partner they cannot do without.

3.      Articulate the value of your offerings around the challenges your customers are encountering. Helping your customers solve their problems is much more important than making sure they are buying what you are selling. Way too often, we focus on what we think is important about our offerings, not what our customers need from our offerings. Solve their problems, solve your own.

There are probably many other ways to add some stability during economically challenging times. Getting closer to your customers must be at the top of the list.

The unthinkable has happened. The credit of the United States has been downgraded from the highest rating of AAA to AA+. This, of course, is not good, and it will put more pressure on all businesses as interest rates and general uncertainty rise. This also will likely create more government intervention, which generally tends to do more harm than good…our system operates based on natural balances that occur in a free market system. Government intervention, while always well intentioned and sometime theoretically sound, throws that balance off. And if this entry feels like déjà vu, you’re right…check out my blog entry a couple years ago titled, “Is the World Really Ending?”

So how does this crisis affect our customer relationships? Our relationships will be impacted in at least one way, two ways if we are customer focused.

First, our relationships with customers will be impacted by ways in which they act differently. Times like these make people more cautious, less likely to spend as freely, more likely to demand higher value and returns for the money they do spend. Procurement becomes more powerful which drives value out of proposed offerings. These dynamics put real pressure on customer relationships.

There is not much we can do to change their behavior. It is a natural reaction to uncertain times like these. However, there is much we can do about our own behavior and how we react to this new or exaggerated dynamic.

1.      Recognize that your customer is struggling and use your offerings to help them solve their problems. Not only is that the right thing to do, but it is also a clear demonstration of value. And when you can help them solve their problems, they will be much more likely to spend with you.

2.      Continue your efforts to really understand your customers so that you are in a position to add the value they are looking for. If you have a good customer experience effort underway, expand it. If you don’t, start one. It may seem counter to spend more, or there may be pressures to cut costs, but if there is one area that calls for more efforts during times like these, customer listening would be the area.

3.      Ramp up your efforts to build a real relationship…not a vendor/customer relationship, but a real partnership. Even if your customer is not currently in a position to purchase more from you, this effort will be time well spent. They will understand that you are in it for the long haul and not ignoring them while times are tough.

4.      Understand their situation and, if possible without harming your business, be responsive to it. Can you adjust your offering to address only their most pressing needs and reduce the price accordingly? Can you do that in a way that still allows you to be profitable and maintain a good relationship with them?

5.      Call on your good relationships to help you work with their procurement processes. With good relationships you have invested in over time, you may have built enough equity to get their assistance—chances are they are only slightly less annoyed with their procurement department than you are.

Yes, some of these may require resources during a time that companies want to cut costs and that might be tough. But your customers are worth fighting for. Customers are the only way out of this morass. Until customers are willing to spend more, growth will be somewhat elusive. We must invest in our customers and provide them the return they need to be successful. That, and only that, will drive your success too.

In my last blog, I shared an interview Michael Reynolds, President and CEO of SpinWeb, an Indianapolis based web solutions firm.  Michael implemented ROWE (Results-Only-Work-Environment) in his company three years ago.  My last blog shared with you some of the principles of how he has implemented ROWE.  This blog will focus on the impact ROWE has had on his business. 

Michael said moving to ROWE was the greatest thing they have ever implemented at their company.  They have become more profitable and efficient.  It forced them to rethink how they price projects.  They used to estimate the number of hours each project would take and track hours.  Now they have a project price based on certain key specifications of the project.  Since hours aren’t being tracked, it encourages employees to be efficient in their job.  The less time it takes to finish their piece of the project, the more time they have to themselves. 

He said one other benefit that he did not expect was he is able to retain his top talent.  His employees love this work environment.  Over the years, top talent has also been attracted to his environment so he is able to pick the cream of the crop.  Retaining and attracting top talent, in turn, allows him to be more efficient and more profitable and serve his clients even better.   

One complaint I often hear is this approach will negatively impact customers because everyone will be off playing when a customer is calling with a need or an emergency.  Michael says customer service has actually improved because at almost any given hour, someone is working and anytime, someone can respond to the client quickly.  Customers love receiving responses after 5:00 or early in the morning.  His work environment does not have regular office hours or certain times where employees must be logged in.  Therefore, he may have employees working early in the morning or late at night.  This means when a customer sends an e-mail or leaves a message, odds are someone either is working, or will be logging in shortly to work.  Everyone in the office carries cell phones so it is not uncommon for an employee to talk on their cell anywhere or anytime. 

One big lesson he learned in implementing ROWE is it is not about a rulebook and giving employees a list of rules and can and can’t dos.  It is about rewiring your brain to think about work differently.  Far too long we assume work can only happen in an office during certain hours.  We have traded efficiency and profitability for control and lack of trust.  I know many Senior Leaders will be reading this thinking something like this will never work in their company.  That is the problem.  Maybe you have tried it and a few employees took advantage or some customer calls fell through the cracks, that does not mean ROWE is at fault.  More than likely, it was a bad hire or a lack of clear outcomes that lead to the problems.  Just because there are bumps in the road, does not mean the road is bad, it could just mean it has not been traveled often.  In today’s war on talent, Senior Leaders need to view work differently in order to attract and retain top talent, better meet customer needs, and become more profitable.  Just because it is the way you have always done it, does not make it the best way.  Maybe if you don’t think it will work, it is really telling you something about yourself rather than your work environment. 

I also know many of you are thinking this only works in an IT environment.  Wrong, Michael is working with a Day Care (yeah, you read that right) to implement it as well.  This can work in any almost any environment.  I loved what Michael said at the end of our meeting.  He said all of the productivity gains and increases in profits are great but at the end of the day, ROWE is simply the right way to work. 

if you would like to find out how to convert your organization to a ROWE, contact CultureRx at www.gorowe.com.