The Blog

  • March 23, 2015
  • Importance of a System

    tums-chewyI was having dinner the other night with friends, telling them about some of the ideas in my book, Solve for the Customer. My friend, we can call him Brian though it’s a pseudonym, was interested in my emphasis on process and my belief that Customer Science has evolved from a general emphasis on process in business, especially in the back office.

    Brian’s company does a lot to ensure that its customers are happy and loyal because their business involves long term relationships and agreements that renew for many years at a time. These relationships can last decades and nurturing them can be part of the work of a career. I know this because we’re both in our 50’s and Brian has had the same customers for a very long time.

    That’s the kind of relationship that is worthy of the name. Account managers can come and go but Brian, who manages a region with many account managers, still knows many of the customers by name. So I was interested to understand how his company approaches the issues of bonding and retention, satisfaction and loyalty. Not surprisingly, his company’s approach to customers uses direct person-to-person contact and it has built up over time. So it is still a very manual process and while that’s not a bad thing, it can be expensive. Account managers call on their customers frequently and always have a punch list of issues, usually but not exclusively, maintenance issues, to deal with. It’s a high touch business.

    In addition to the frequent communications, which happen mostly between maintenance people on one side and operations people on the other, my friend’s company conducts an annual survey of customer executives to gauge account health and they place extra emphasis on customer retention issues, especially when a five-year contract is up for renewal.

    I was impressed. Despite only having an annual survey, the personnel involved gathered customer data all the time providing a more real time pulse. Here was a company with its head in the right place and a mere two percent annual attrition rate to prove it. That’s right two, 2, TWO percent. Many people reading this right now would go to extremes to have that kind of number. People in the subscription market tell me that a 90 percent retention rate or better is quite good and many are happy to reach that threshold though few see the likes of 2 percent attrition. So in addition to being impressed, I was also skeptical that very many companies could have similar results in today’s business world if they relied on their existing customer facing processes and systems.

    Having full time people managing accounts like this is not cheap and many industries won’t support that overhead nor will their customers accept five or ten year agreements that renew. So if we want similar results in many other businesses, we need to find ways to automate parts of the relationship to both speed up some processes and to reduce costs. At the same time though, we need to be mindful that at some point we might need to insert an expensive employee into the mix to assure a good outcome.

    Applying resources is where I believe we fall down too often when dealing with customers. We’ve put a little too much faith in our legacy technologies that were made for simple lookup and retrieval but not necessarily for solving customer issues. For example, in SftC I have this example from an automated system:

    “We are sold out of: 32 ct. Tums Ultra Chewy, cherry antacids (245-05-0141). Please substitute: 10-ct. Trojan bare skin condoms (245-03-0387).”

    Clearly the automated system is out of its depth but so is the business’ expectation that automation can take care of all customer issues. But ironically, automation can do something even better.

    Part of my enthusiasm for Customer Science is my belief that it can solve many customer issues in sales, marketing, and service, if we apply and use analytics and journey mapping to the customer’s journey. There’s nothing wrong with having a customer facing system suggest an alternative for a customer wanting to buy an out of stock item. It’s a good use of analytics and journey mapping unless it all goes wrong as in the example above.

    Also, and this is key, no automated process should have as one of its assumptions that the automation is infallible. So Customer Science also suggests that analytics and journey mapping ought to be used to promote self-monitoring. Is this the right substitution? What recourse does the customer have if this is not the right substitution? Is the customer happy with this? How do we know?

    If we take approaches to our customer facing processes that include modeling all of the possibilities that we need to provide for, a.k.a. moments of truth, and capturing and analyzing customer feedback, we can approach things like customer bonding which leads to advocacy and loyalty, with the expectation that our automated processes can yield the same kinds of retention rates as a more labor intensive one.

    Last point, we spend a lot of thought cycles on personalizing a relationship, at least the part when the vendor and customer are in a moment of truth but I am skeptical that this is the right approach. Personal is nice, but in a business or commercial relationship what’s needed is authenticity not personalization. The business system that suggested condoms instead of antacids won’t get extra points if it addresses the customer by name. But if it suggested a store band of antacid as a legitimate substitute it likely would have preserved the transaction and at the end of the day the authenticity that can drive a transaction is what matters to both the customer and the business.

     

     

     

     

    Published: 3 years ago


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