It’s Time To Engage Your Employees August 27, 2009
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence.Tags: Alaska Airlines, Best Buy, Gallup
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As I was catching up on my reading, I ran across an article in BusinessWeek that discusses research from Gallup showing that less than 30% of the corporate workforce is truly engaged in its work. Why does this matter? The article points to some findings at Best Buy:
For every one-tenth-of-a-point increase in employee engagement, each Best Buy store increased profits by $100,000 a year.
My take: Less than one-third of employees are engaged in their work. Wow, that’s a huge opportunity! Companies that are looking to build more loyal customers need to look at their employees first. As I discuss in my eBook The 6 Laws Of Customer Experience: Unengaged employees don’t create engaged customers. Companies trying to improve the customer experience without figuring out how to engage the other 70% of their workers will likely fail.
That’s why I like what Alaska Airlines did with its North Of Expected campaign. Even with the backdrop of a difficult economic environment, the airline seized the opportunity to energize its workforce. Prior to rolling out its external marketing campaign, the company spent 10 weeks on an internal campaign called “Be North Of Expected” that engaged employees in Alaska Airline’s heritage of good customer service.
The bottom line: Employee engagement is a required path to customer loyalty
Tesco Showcases Strategy + Culture September 11, 2008
Posted by Bruce Temkin in Corporate culture, Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership.Tags: Sir Terry Leahy, Tesco
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I just read a post on the Harvard Business discussion board about a speech that Sir Terry Leahy, Tesco’s CEO, gave about the company’s strategy. He described the challenges of delivering a distinctive and consistent buying experience to consumers in every store when you have more than 400,000 employees in multiple countries. Here’s how Leahy explained his approach:
Tesco doesn’t want one leader. We want thousands of leaders who take initiative to execute the strategy
That’s just a great quote!
In the early 90’s Tesco created a “steering wheel” to help clarify and communicate its mission, values, and strategy. So I went looking for a copy of the steering wheel on the Tesco corporate site. It wasn’t easy to find, but I finally located a version of it on the “Managing Corporate Responsibility” page.
Interestingly, in the center of the steering wheel is a phrase “Every Little Helps” which seems to be a pervasive theme at Tesco. On the retailer’s Our Values page, I found the following graphic that the company uses to depict its “Every Little Helps” strategy:
My take: Did I mention that I really liked Leahy’s quote?!? It does a great job of capturing the importance of engaging your employees. While I feel the need to insert a word in the phrase “Every Little [Bit?] Helps,” the concept seems quite powerful. Why? Because it defines simple cultural norms using easy-to-understand language and graphics. If you want 10s of thousands of people to get on board with something, it needs to be simple and easy to understand!
The bottom line: This is a great example of “Strulture” (I just made up this word to describe a strategy that focuses heavily on organizational culture).
Home Depot Still Has A Spark Of Customer Centricity September 5, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership.Tags: Frank Blake, Home Depot
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I’m in the process of publishing a report called “The Customer Experience Journey” which describes 5 levels of maturity as companies head towards Experience-Based Differentiation. As companies evolve past the first couple of stages, they need to develop “Customer-Centric DNA,” which I’ve defined as:
A strong, shared set of beliefs that guides how customers are treated
So I’m always looking for tangible examples of this type of culture. Well, I found an example in a comment to one of my posts called Can Frank Blake Revive Home Depot? I know that people don’t always read the comments, so I decided to post an excerpt of it here:
I’ve been an Employee for 8years and yes the Nardelli era was hard, not only for the customers but also the employees who’s heart pumps orange blood. I stuck it out with the company because I know the creation of this company wasnt built on the values Bob Nardelli tried to push on all of us…. Now that we have Frank, I can feel the flame spark again… it may never be a strong flame like it once was but I still have faith that it will one day light again. For all of you frustrated customers I would like to tell you that I am personally sorry, even I lost the customer service focus that bernie and arthur built this company around… but I can honestly say I got it back, and I want to rub it off on every employee I come in contact with…. Frank understands that in order to do this we have to teach train and develop each other so that we can better serve you… it will take some time to build that back, but I can see the light at the end of the tunnel.
The bottom line: If most of Home Depot’s employees still feel this way, then I’m betting on the company!
Customer Experience Is The New Quality June 20, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence.Tags: Quality
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As I discussed in “My Manifesto: Customer Experience Is Free,” today’s push for customer experience is very similar to the quality push in the 1980s. The similarities include:
- Nobody “owns” it
- It requires culture change
- It requires process change
- It requires discipline
- Upstream issues cause downstream problems
- Employees are a key asset in the battle
- Executive involvement is essential
Interestingly, several people who I interviewed for my current research on customer-centric DNA mentioned quality techniques (e.g., Six Sigma, Lean Sigma, TQM) in our discussions. I even interviewed someone who had the very cool title of “EVP, Customer Experience and Kaizen.” (For those of you who aren’t familiar with Kaizen, it’s a Japanese word for continuous improvement. This quality concept was popularized in the 1986 book called Kaizen: The Key to Japan’s Competitive Success).
It’s no surprise that this is coming up in my research on culture given what Philip Crosby, the author of “Quality Is Free,” once said:
Quality is the result of a carefully constructed cultural environment. It has to be the fabric of the organization, not part of the fabric.
The bottom line: Make customer experience the fabric of your organization.
The CEO’s (Key) Role In Customer Experience June 18, 2008
Posted by Bruce Temkin in Customer experience, EBD #3: Treat Customer Experience As A Competence, Executive leadership.Tags: Ken Thompson, Wachovia
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I recently discussed Ken Thompson’s impact on the customer experience at Wachovia. That post highlighted this excerpt from his “letter to shareholders” in Wachovia’s 2004 annual report as a blueprint for CEO’s who want to transform their company’s customer experience:
Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.
The power of these words may have been dampened by the length of the excerpt, so I dissected it into components that are critical for CEOs…
“Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality.”
=>Insight for CEOs: The focus on customer experience (or, as it is called here, service quality) must come from the CEO’s clear belief that it impacts business results (in this case, retention). It is a core business imperative, not a “nice to have” initiative.
“We increased staffing levels in our financial centers, call centers, and operations area.”
=>Insight for CEOs: Since customer experience provides real financial benefits, it’s worthy of investment. And the CEO’s willingness to invest in these areas is a clear signal to the organization that customer experience excellence is critical; not just an empty slogan.
“We revised our incentive compensation plans to emphasize not only sales performance, but service as well.”
=>Insight for CEOs: People focus on what’s measured, incented, and celebrated. To embed customer experience within the core operating fabric of a company, therefore, firms need to refine what it measures, incents, and celebrates. So make sure that your HR exec is involved in the customer experience effort.
“We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly.”
=>Insight for CEOs: Any customer experience transformation needs to be driven by the voice of the customer; so CEOs should look for a customer experience dashboard with a handful of customer metrics (like satisfaction or Net Promoter). And hold your entire executive team accountable for improving those metrics; don’t offload the responsibility to a chief customer officer.
“And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.”
=>Insight for CEOs: This effort requires the active involvement and commitment by the CEO. Why? Because transformation efforts can easily get bogged down in politics and silos. So reviewing progress of the firm’s customer experience efforts needs to become a regular part of the executive agenda.
The bottom line: Customer experience success requires CEO nurturing.
Will Thompson’s Departure Hurt Wachovia’s Customer Experience? June 12, 2008
Posted by Bruce Temkin in Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Financial services.Tags: Ken Thompson, Wachovia
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Last week, Ken Thompson (Wachovia’s CEO) was asked to retire by the bank’s board of directors. What will that mean to the bank’s culture that has grown increasingly customer centric under his leadership? Here are a few factoids:
- According to American Customer Satisfaction Index (ACSI), Wachovia has the highest customer satisfaction of any bank it tracks, and has led the way since 2001.
- Forrester’s Customer Experience Index (CxPi) ranked Wachovia 4thout of 14 banks, only falling behind smaller banks: credit unions, BB&T Corp., and Citizens.
- Of the 14 banks in the Forrester’s CxPi, Wachovia placed 2nd in phone satisfaction, 5th in store/branch satisfaction, and 4th in Web satisfaction.
To get a sense of Thompson’s imprint on the bank’s customer-centric culture, I examined his letter to shareholders in Wachovia’s last 7 annual reports. They show a clear and consistent focus on customer experience as a strategic mission. Here are excerpts from each of those annual reports:
- 2001: “The merger of First Union and Wachovia produced an improved market position, exciting growth potential and an operating strategy designed to generate enhanced shareholder value. We are focusing the resources of two fine companies on building a level of service, quality of product and degree of caring for customers that we believe will set Wachovia apart.”
- 2002: “Delivering the Promise In 2003, we intend to demonstrate Wachovia can grow organically as well as anybody in our industry. To do so, our goals are to deliver: Best-in-class sales and service excellence; Best-in-class risk management and financial disclosure; and Top quartile earnings growth.”
- 2003: “In every meeting of the merger integration team, the first comment when considering integration activity was “how will this affect our customers?”… We believe that having fully engaged employees who find real meaning in their work is crucial to our success. It is crucial to attracting and retaining the most talented people; it is crucial to providing consistently superior customer service; and ultimately it is crucial to enhancing shareholder value over the long term.”
- 2004: “Our revenue and earnings performance in 2004 is no accident, but the result of several years of hard work during which all of our employees, from the top levels to the front line, focused their full attention on providing the best possible service experience for our customers.”
- 2005: “With all of these advantages, we have no intention of taking our eyes off the ball. We’ll continue to focus on being the best at providing excellent service to our customers, at being the employer of choice, and in making a real and lasting contribution to the communities we serve.”
- 2006: “Wachovia’s success in leading the industry in customer service for the last six years has attracted attention, and competitors are trying very hard to replicate our success… So in response we remain obsessive about our attention to service… While we earn high marks for the quality and breadth of our product offerings, we are challenging ourselves to be better at seamless coordination between delivery channels, alignment of incentive plans, and ensuring that competing priorities do not hurt our results.”
- 2007: “While most of 2008 will likely continue to be a tough financial environment, we are focused foremost on two things: 1) Vigilantly and conservatively managing risk, and 2) Continuing to take good care of our customers. We believe that the actions we took in 2007 have already taken a lot of risk out of our company, and when the external environment once again improves, we’ll benefit from our steadfast focus on our core businesses and on our customers.”
Other execs can learn a lot from Thompson. He understands a key formula in retail banking: employee engagement leads to good customer experience which leads to higher loyalty which leads to growth. This excerpt from the 2004 annual report represents a blueprint for all CEOs who want to transform their firm’s customer experience:
Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.
The bottom line: Great customer experience takes Thompson-like leadership.
Great Scene: Al Pacino On Cultural Change May 30, 2008
Posted by Bruce Temkin in Corporate culture, Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence.Tags: Al Pacino
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My discussion with Tony Hsieh about the Zappos culture made me think about a scene from “Any Given Sunday” where Al Pacino addresses the football team that he’s coaching. Pacino’s speech is about how winning takes every player to focus on every element of every play; as a team.
My take: Pacino captures the essence of culture’s role in delivering great customer experience. Any CEO trying to fix her/his firm’s customer experience problem should think about Pacino’s words:
Either we heal as a team or we’re going to crumble; inch by inch, play by play, until we’re finished.
The bottom line: Customer experience is made up of millions of inches, delivered one inch at a time.
Discussing Zappos’ Culture With Tony Hsieh May 28, 2008
Posted by Bruce Temkin in Corporate culture, Customer experience, Customer-centric DNA, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Experience-Based Differentiation.Tags: Tony Hsieh, Zappos
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As I mentioned in my post about popular customer experience topics, I’m currently researching best practices for the 3rd principle of Experience-Based Differentiation: Treat customer experience as a competence, not a function. It’s a topic that I sometimes call customer-centric DNA.
As part of that research, I’m interviewing a number of executives. So I reached out to Tony Hsieh, the CEO of Zappos, a company that’s renown for its great customer service.
Given our schedules, Tony and I ended up speaking on Monday (Memorial Day) morning at 10:30 AM EDT (7:30 AM his time). I checked out Tony’s twitter right before we spoke and found this tweet:
About to do a conference call. Way too early to be awake, couldn’t find another time to do it. Getting out of bed was not easy. Red Bull!
So let me start by thanking Tony for getting on the phone so early on a holiday. That shows his commitment to getting the Zappos word out!
How good is Zappos’ customer experience? Well, my wife loves Zappos. And my mother-in-law, after finding out about my discussion with Tony, excitedly told me that she loved Zappos because “it is so easy it use.” She once ordered a pair of shoes at 10:00 PM and was amazed to receive them before noon the next day.
Those are not isolated impressions about Zappos; the retailer has a lot of adoring customers. As a matter of fact, Tony shared an interesting fact with me: the company’s Net Promoter Scores (NPS) are so high that they do not provide any guidance on areas for improvement.
Well, the interview was great. Tony was open, informative, and inspiring. Here are some of the interesting factoids from our discussion:
- The company’s culture is defined in its ten core values that include items like “deliver WOW through service” and “be humble.”
- Tony felt funny when the company codified those core values, because it felt a bit too corporate. But he realized that it needed to happen given the company’s growth.
- Tony doesn’t want to prescribe actions for employees that show how much Zappos cares about customers; he wants employees to do things because they genuinely care about customers.
- Zappos uses its culture as a reason to hire and fire people. All new hire candidates have a separate interview with the HR department that focuses just on cultural fit.
- New employees go though 4-5 weeks of training that includes education about the culture and spending time on the phone with customers.
- To ensure that employees have a strong fit with the culture, new employees are offered $1,000 to quit after their first week of training. That way they weed out the people who aren’t committed to working at Zappos. Hsieh didn’t feel like enough people were taking the company up on its offer, so he discussed raising the bonus to $1,500.
- Every year Zappos publishes its “Culture Book” in which all employees are encouraged to write about what the culture means to them.
- Tony recognizes that cultures often go downhill when companies scale. He wants Zappos’ culture to get stronger as it grows.
- Tony offers this advice to Zappos employees: It’s completely up to you guys. I can’t force the culture to happen; so part of your job description is to display and inspire the culture.
I asked Tony if I could share some of our discussion in my blog. He said yes. Why? It met his basic principle for deciding what he’s willing to share:
Would sharing it make the world a better place?
The bottom line: Most firms would be a better place if they were more like Zappos.
86 Year-Old Chairman Still Talks To Customers May 27, 2008
Posted by Bruce Temkin in Customer experience, EBD #3: Treat Customer Experience As A Competence, Voice of the customer.Tags: Mercury Insurance
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There was an interesting article in the LA Times about Mercury Insurance chairman George Joseph’s view of service. It turns out that the 86 year-old Joseph (who’s net worth is more than $1 billion) receives eight or nine letters from customers each month and, in most cases, he calls the customer. Here’s what Joseph says about his actions:
You used to be able to pick up a phone and talk to people. That doesn’t happen anymore. Now there’s e-mail and automated switchboards. People want to talk to people. They want to talk to people who are knowledgeable and who can answer questions.
My take: There’s almost nothing more powerful than senior executives systematically talking with customers. I call this activity ”continuous listening,” which is one of the key levels in a voice of a customer program. When execs regularly speak with customers, three great things happen: 1) The execs keep grounded in what customers need and want; 2) those customers feel special and appreciated; and 3) other employees get a clear message that customers are important.
The bottom line: There’s nothing better than some good old-fashioned customer experience.
Senior Execs Are Not Fully Customer-Centric May 6, 2008
Posted by Bruce Temkin in Customer experience, EBD #3: Treat Customer Experience As A Competence, Executive leadership, Experience-Based Differentiation.2 comments
As any regular reader of this blog knows, my research focuses on a concept called Experience-Based Differentiation (EBD). A key principle of EBD is to Treat customer experience as a competence, not a function. To achieve this principle, companies need to infuse customer-centric DNA into their culture. But this level of change requires a high degree of commitment from the senior executive team. I think this quote from Mario Andretti explains why:
Desire is the key to motivation, but it’s determination and commitment to an unrelenting pursuit of your goal – a commitment to excellence – that will enable you to attain the success you seek.
In a previous post I discussed how companies with customer experience leaders are progressing faster than other firms. The creation of that type of role can be a sign of commitment, but the president or CEO and all of her/his direct reports must demonstrates an ongoing commitment in order to change the culture.
My sense is that senior executives are intrigued with customer experience, but most are not yet fully committed to it.
8 Signs Of Executive Commitment
If a senior executive team is fully committed to customer-centricity, then it can answer yes to all of the following questions:
- Do senior executive staff meetings have a recurring agenda item on customer experience? (this does not include dealing with customer emergencies)
- Do internal communications from the CEO/President regularly include discussions of customer experience?
- Do external communications from the CEO/President regularly include discussions of customer experience?
- Is customer experience explicitly discussed (in some form) within the company’s strategic plan(s)?
- Does the executive team have a clear set of customer experience objectives?
- Do most of the executive team members have goals based on customer experience objectives?
- Is the compensation of executive team members tied to customer experience objectives?
- Does the organization believe that the CEO/President would trade-off some short-term financial results for longer-term customer experience gains?
The bottom line: Senior execs with less than full commitment need to be committed.
P.S. Download the free eBook: “The 8 Signs Of Executive Commitment.”
