Customer Focused Leadership

While Channel Partners are customers too, unlike the traditional customer, partners are able to provide a unique perspective. When it comes to Voice of Partner versus Voice of Customer survey research, consider these four differences:

1 - Many Channel Partners sell competing products and services giving them a unique perspective on what drives customer purchase decisions. Their input can help companies understand what causes a customer to purchase one product over another competing product.

2 - In a similar manner, OEMs can use partner input to understand what drives a partner to recommend one product over another.

3 - Many partners are combining an OEM's products with other products to deliver a complete solution. Having a better understanding of solution offerings, can be valuable input for the product group.

4 - Customers who purchase from a channel partner often go to the partner for support. Partners can provide a unique perspective on what is needed to support the indirect customer. This input can also be leveraged for serving the direct customer.

Corporate business strategy can benefit from insights provided by the channel. The partner perspective can be used to grow market share, enhance the product roadmap, and deliver an experience that both direct and indirect customers value.

If you are working to create a customer focused leadership position, consider including the perspective from all customer types.

Photo credit: stevendepolo

One common challenge customer-focused leadership faces is knowing the right question to answer or problem to solve. This isn't just a challenge reserved for customer strategists. It is a challenge faced by all leaders.

In the movie Moneyball, this challenge surfaces during a meeting where the Oakland A scouts discuss how they are going to replace their most valuable player. The discussion went something like this: 

Scout 1: "We're trying to solve a problem here Billy."

Billy Beane: "Not like this you're not. You're not even looking at the problem."

Scout 1: "Look Billy. We all understand what the problem is."

Billy Beane: "Good. What's the problem?"

Scout 1: "The problem is, we have to replace three key players."

Billy Beane: "No. What's the problem?"

Scout 2: "Same as it's ever been. We have to replace these guys with what we have existing."

Billy Beane: "No. What's the problem Barry?"

Scout 3: "We need 38 home runs 120 RBIs."

Billy Bean: Makes a buzzer sound indicating another wrong answer and goes on to explain the real problem.

Knowing the real problem that you are trying to address is the first step to developing a customer strategy that will ensure success. Before you get too far down any path, take a step back and challenge the problem you are trying to solve.

Once you've identified the real problem, you can design a customer satisfaction and loyalty program that is aligned with the true business need. 

• 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.

Are we or aren’t we headed for a double-dip recession? Hard to say, especially since most of us feel like we never left the first recession. So how about this premise: It doesn’t matter. For most businesses right now, demand is soft, business could be better. Forget what the economists think about the macro-situation; let’s all worry about our own businesses and get them headed in the right direction.

What can we do to deal with the current environment that is, at best, apathetic and at worst, slowing from lethargic to near dead?

1.      Be confident. I’m not crazy and asking you to be confident in leadership or government. I am suggesting we all be confident in ourselves and in the value we each offer to our customers. That confidence is contagious and we could use a heavy dose of viral growth in the feel-good arena.

2.      Focus on success. Focusing on avoiding failure is much like trying not to lose—it almost certainly assures that you will. Look for ways to take advantage of the current market. Focus on positives and find the growth opportunities where you can.

3.      Celebrate wins. Don’t worry about the size of the wins, if you see some wins, call them out. Celebrate them. Get in the habit of winning. Constantly losing or underperforming tends to breed a culture or build a habit, even an expectation. Build an expectation of performance.

4.      Help your customers. First realize if your demand is not great, chances are your customers are hurting a little too. Can you help them solve some of their problems? That is what customer-focused companies do well.

5.      Co-create. Find ways to work together with your customers to identify the best way out of this bramble. There is no better time to innovate than now and no better partners than those you will be helping with your innovations.

6.      Partner with your best customers. Your best customers, those where the mutual value is the highest, are terrific sources of opportunity. If you are looking to grow your market share (after all, if the market is not growing you will have to take market share to grow), look first to grow your share of wallet within your best customers (those that view you as a partner.)

Double dip or not, there are ways for us to succeed in this soft economy. And guess what happens as one-by-one companies start to succeed? We dig ourselves out of this mess. Double dip? Maybe, maybe not. Long-term recession? It’s up to us.

This might start to sound like another sports story and candidly, it involves a sports team, the Chicago Cubs. But it is not a story about baseball, it is a story about loyalty. And let me tell you, being a Cubs fan since I was nine years old through thick and thin (OK, OK, through thin and thin) requires a LOT of loyalty.

There are a few theories as to why so many are loyal to a team that has been so unsuccessful (the Cubs have not won the World Series in over 100 years). The most common theories are the Cubs are loveable losers or have benefitted from the early nationwide broadcasts of Cubs games by WGN TV. I just heard a new theory about the real driver of loyalty to the Cubs -- what really brings people to fill the stands whether they are in last place, next to last place or teasing us with conference leadership. The new theory supposes that people are not loyal to the team, they are loyal to the Friendly Confines, Wrigley Field.

I just returned from a three generation (my dad, my son, and me) trip to Wrigley, and as much as it hurts me to say so, I think this theory has legs. I have been to at least 30 top-level professional sports venues and never do I feel the way I feel when I walk out of the inner concourse and get my first glimpse of the green grass of the infield and celebrated ivy covering the outfield walls. My first trip to Wrigley Field was 40 years ago and there have been many since, yet I still get giddy just thinking about entering Major League Baseball’s second oldest stadium.

How is this related to loyalty? Well, the important question in this case is what drives loyalty? The Cubs team was recently purchased by the Ricketts family who will need to make many decisions about the future of the team. Wrigley Field is lacking in modern amenities for the players. Should they build a new stadium? Would that be meaningful in helping the Cubs win? What would it do to attendance? Would it change the experience that fans have enjoyed for so many years? What happens if fans really are loyal to the Wrigley Field experience and not to the team?

This is a pretty simple illustration of the shortcoming of minimal discussions with your customers. If you are going to reach out to your customers and ask them to take any time to answer questions, you had better make them count. They should help you make decisions, not post a number or keep a score. Simplicity is good but not if it leads to inaction or the wrong actions. There are no “silver bullets” in terms of understanding your customers. In order to make the right decisions in a customer-focused manner, your customer information must be predictive and prescriptive rather than short and simple.

One last caveat: I’m good with a new stadium if the Cubs would start winning World Series. But I really prefer them to win in good old Wrigley Field.

When we are faced with uncertain times, the most important decisions we must make are centered around resource allocation. It usually boils down to answering this 2-part question: Where should we continue to spend (maybe even increase spending) and where should we cut back?

Different companies take different approaches, some going as far as cutting programs and resources that they admit are necessary to grow and succeed once we emerge from the economic funk we are in.

Let me propose a customer-focused approach to making these decisions. A quick clarification first: customer-focused does not mean do whatever the customer wants for whatever they want to pay. We still have to balance the needs of our business and our shareholders with that of our customers. But an approach that considers the customer and recognizes that the best way to succeed is to help customers succeed is a customer-focused approach. Your customer listening programs should give you incredible help in these decisions.

The areas in which we should continue to invest and perhaps even increase resource levels during tough times are those areas that are valuable both internally and to customers. Innovation is one of these areas…our customers are looking for new solutions and we need new solutions to grow. Innovation benefits us both and should probably continue to get resources. Initiatives that help us to deliver more value to our customers and therefore continue to realize reliable revenue streams are mutually valuable and need continued investment.

By contrast, some areas are important or valuable to neither our customers nor our businesses. You cannot cut fast enough in these areas. (Blogger note to self: any example you give here is going to hack off someone because you will be calling their efforts low value. Be smart for once and don’t go there. Better yet, create some crazy example that no one would believe. Nah, don’t be lazy, think up a real life example that is a good one…). John Chambers, CEO of Cisco Systems didn’t just cut in a low value area, he turned a low-value resource eater into a mutually valuable one. Chambers dumped private plane travel (no value for the customer, very little if any value for the company, high convenience value for the traveler) in favor of more frequent communication via Cisco Telepresence, putting Cisco’s product line in plain view of strategic customers. Kudos to Chambers for true Customer Focused Leadership.

Spending that is high value to the customer but low value to the company should be maintained unless it is actually detrimental to the company. In other words, low value might be acceptable if it is important enough to customers, but no or negative value is not. Same goes for spending that is of high internal value but not that valuable for our customers; maintain these areas unless they are of negative value to your customers (there are many items of no value to our customers—quality control, forecasting, accounting, bureaucracy—but necessary for our business. These are ok to maintain as long as they don’t hamper customer success. ). (Blogger note to self: Yep, you just had to go there.) These areas are important. But from our customers’ point of view, they are not value-added. Take quality control. We must deliver quality products or services and need quality checking to make sure that happens. But, customers expect it done or produced right, there is no value to them in terms of how you get there.

This model only addresses resource allocation and not individual performance. We still must deal with performance issues and look to increase the competence of our teams. After all, those teams deliver the value to our customers.

Before you cut, consider how many degrees away from customer success you are cutting. Lowering the value you deliver will start a cycle that has only a bad ending. Focus on your customer, think about your business. Find the areas that neither of you need and redeploy those resources into areas that neither of you can do without.

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 

• The kind that are focused on other things - financial management, operational efficiency, or any number of other business concerns. They know it is important to have customers, but they may not be very committed to hearing what they have to say. That is, until there's a problem.
• The kind that are supportive, but not very involved - they know it's important to use customer insights in running the business, but aren't personally very involved. Instead, they leave it to others.  
• The kind that are very customer focused - they know customer strategies drive performance and believe it is everyone's responsibility take action on customer insights. What's more, they are involved and set the example for the organization.

Companies can enhance their customer retention strategies by combining the solicited feedback from their customer survey programs, complaint management systems, and sponsored communities with the unsolicited feedback that is available through social media.

Doing this can create the following outcomes:

1. Appropriate resource allocation. By relying solely on one type of information the complete picture might not be visible. However, if both solicited and social media discussions are viewed together it will accentuate areas of the business that impact both forms of feedback.

If you are in a boat in choppy waters and you start to feel seasick, what do you do? While I'm no expert in marine medication, I have heard a common cure. Look to the landscape, find an object, and focus on it. As you stare at it, the commotion around you is not as evident to your body, your equilibrium adjusts, and your stomach begins to settle.

Over the last few years, a lot of businesses have been through some rough waters. Those that stayed focused on their customers have been able to endure the choppy economic environment and are now benefiting from better relationships, higher customer retention, increased customer loyalty, new insights on customer-focused solutions and much more.

It pays to show a little customer focused leadership when you're in rough waters.


Patrick Gibbons
Principal, SVP

• Client interactions - Walker clients shared their journey and best practices for leveraging customer, partner, and employee insights to create world-class outcomes. We heard numerous stories about individuals who have used the customer or partner perspective to drive change within their organization and generate a return on the investment.
• Roundtable discussions - Walker clients and Walker associates facilitated roundtable discussions on the topics of 1) strengthening channel/partner relationships , 2) engaging account teams, 3) leveraging the customer perspective for a competitive advantage, and 4) increasing the value of customer comments through text analytics.
• Six working sessions  - Walker consultants facilitated discussions and activities related to each of the six essential elements for world-class listening (see diagram for the six elements). Each session included a description of world-class and steps for getting there.
• Social time - There were several opportunities to network and interact with all of the attendees and to enjoy the Palm Springs destination.

Try expressing uncertainty. It might work.

Research from Zakary Tormala of Stanford Business School shows that experts who express some uncertainty can be more compelling and more likely to capture the attention of their audience.

This Harvard Business Review article and recorded interview highlights the findings from Zakary's research, including when a CEO might want to exude certainty and when she might want to be less certain.

One common obstacle for customer experience strategy is capturing attention from internal and external audiences.

Could this research help overcome this barrier? It has raised several questions:

• Are customers paying attention to your requests for their feedback? If uncertainty is expressed, could it prompt more customer participation?
• Similar to customer participation, could showing some level of doubt prompt action from account managers?
• Who should send the message? Should it be someone who is already accomplished or someone with the potential to be great?
• When are customers motivated by "objective truth" (like expert eye witness testimony) versus the "subjective domain?" 

• Choose a small number of "unclaimed" benefits to provide through their experience.
• Identify and overinvest in the one or two touchpoints where they can best showcase those unique benefits.
• Use other touchpoints to reinforce their unique benefits. 

Next week, we’re holding another of our Walker Forum events (www.walkerinfo.com/walkerforum). Recently at these events, we’ve been focusing on key aspects of customer-focused companies and how they compete, operate, adapt, etc. One of these areas of focus has been leadership. At our last Forum, we held a panel discussion among four executive sponsors of customer listening efforts in their organizations (summarized in a prior blog post at: http://blog.walkerinfo.com/blog/walker-information-blog/page/4).

Next week, we’re taking it a step further. We’ll be conducting a virtual interview with the CEO of an extremely customer-focused high-growth company. In the interview, he'll share his advice to other CEOs trying to rally their organizations around customers (and reap the benefits of that):

1.       Be seen and heard talking with and listening to customers – make sure the entire company knows this is your top priority.

2.       Put an objective rewards system in place to drive your desired behaviors – in this case, it’s a stock award when customer metric goals are achieved.

3.       Race to success – set high long-term goals and work back from those to drive annual plans to get to those goals as quickly as possible.

He suggests this approach will make a company’s shareholders as happy as his are – and, trust me, they are!

Sonya McAllister

Principal/SVP

Customer-focused companies hammer the competition. Measured as many different ways as we can come up with, every time, companies that are customer focused beat those that aren’t. And not by a little either. They hammer them.

For the last 15 years, we have maintained the Walker Index. The Walker Index is a stock index comprised of our clients—companies that are customer focused and use that focus as a lever to generate better performance. Over the last 15 years, these companies have outperformed the marker by a multiple of 5 to 1!

Sort of begs the question, “What are these companies doing differently that allow them to consistently be high performance companies?” Here’s their secret. There are three areas that make them different, but all three are characteristics that are simply part of their culture, they are subconscious and second nature.

The first characteristic is their customer-focused leadership. All the leaders in the company put the customer first, starting with the CEO. And it isn’t lip service. They really mean it, they demonstrate it with their actions. The importance of customer relationships is part of all internal business reviews. It is discussed on earnings calls. It is viewed as a competitive advantage within the company, not an area to score once in a while.

The second characteristic is the infrastructure built to accommodate customer-focused initiatives. This infrastructure makes customer insights part of the management information system, no different than financial or operating data. It also ensures that the customer perspective is part of every strategic plan or critical decision made by the company. Customer focus is part of the culture of the company, its built into the processes that all employees use every day.

The third characteristic is also part of the culture. These companies are never satisfied that they have done enough to help their customers succeed. They have an insatiable thirst for action to improve the value delivered to their customers. Some call this a bias for action. Call it what you want, but it is a game changer. The companies that use customer focus as a differentiator are constantly listening to customers and acting on their learnings in a quest to help their customers achieve their goals.

We all strive to be high performance companies. And who doesn’t want to hammer the competition? Our companies can use the perspectives of our customers to leverage an effective competitive advantage, grow our market share and improve our margin structure. But only if we have these critical characteristics in place.

Science has advanced mainly through failed hypotheses. New theories, ideas, or inventions are based on the invalidation of a previous hypothesis. This type of advancement is also true in other arenas, including business. However, most people focus on confirming hypotheses and spend little, if any, time looking for contrary evidence. I think there are a number of reasons for this:

• We have an emotional investment in the hypothesis and want to be right. This is especially true when we created the hypothesis or when our job is seemingly dependent on the hypothesis being true (which is hardly ever true, even when it seems to be).
• Our boss or executive leader is a big proponent of the hypothesis, and we don't want to contradict them.
• We created a bad hypothesis that really can't be invalidated.
• We don't even consider that our assumption or belief should be tested and skip creating a true hypothesis. We treat our assumption as a statement of fact and then go about putting together all the evidence that supports it without even considering contradictory evidence.

1. Create a culture of testing and inquiry. It is essential to moving your company forward.
2. Develop good hypotheses based on your assumptions. 
3. Know what it would require to disprove the hypothesis.
4. Try to find good, solid evidence against your hypothesis. The supporting evidence is much easier to find. 
5. Be willing to challenge the common wisdom of your company or leadership when the hypothesis is shown to be wrong. This can be uncomfortable, but if you do it respectfully and with the support of strong evidence, the message should be accepted. It also helps to have a few other colleagues in your corner!