Customer Trust

The Important Lesson You’re Missing from the Facebook Data Debacle

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Facebook didn’t fail to protect user data in accordance with its terms of service. Facebook didn’t fail to make itself transparent enough so that users understood how their data would be used.

Facebook failed to keep its promises to its users.

This is the lesson you and your company can take away from this debacle. It’s vitally important to you because, while it’s really hard for most people to leave Facebook, I’m pretty sure it is not nearly as hard for most of your customers to leave you, should you break your promises to them.

How did Facebook break its promises?

To answer that, let’s start by defining a promise. We think of promises as commitments we make to other people about things we intend to do. But for a business, a promise is more than that.

A promise is made when a business commits to using its capabilities to meet a need or aspiration of its customer.

In the B2B world, this might look like something as simple as a marketing automation vendor promising its product will always get your campaigns scheduled and launched correctly, and tracked as you instructed. Or it might look like an intelligent system promising to understand your customer interactions to help you identify your happiest and least happy customers.

In the second example, if the system got it wrong enough of the time so it became unreliable to use as a basis for customer-related decisions, then it would be breaking its promise. I am not suggesting it needs to be perfect. But it does need to be consistent and reliable.

You make promises to your customers every day. Some have to do with your product or service. Some with how your people interact with and support them. Others might be about what you are going to do for them in the future. All these promises are important and are the reasons your customer bought from you in the first place. The quickest way to lose a customer is to break a promise you’ve made. The easiest way is to fail to understand what promises your customer thinks you’ve made.

Back to Facebook

Facebook’s core promise is to connect people to their friends and to things of interest to them (news, events, companies, etc.). Part of that promise is that, in exchange for doing this at no cost, Facebook will show you paid advertising, based on the data you provide.

That last bit is important. Most people know they are providing data such as their name, location and age. Most people don’t know they are providing information about their preferences, political views, browsing habits and so much more.

The promise of a free service in exchange for advertising is not a hard concept. Ad retargeting is. A spokesperson for Mozilla said it well: “Tech companies can’t expect most of their users to understand how their service works.”

That’s where Facebook went wrong.

Facebook works on the premise that, by publishing a terms-of-service document and making settings available to control use of personal data, every user will know exactly what it all means. That’s not even close to true.

In fact, most Facebook users think Facebook keeps their information relatively private, and that by having a password, only they can get to the data they enter. That’s also not even close to true. It’s even reasonable for any Facebook user to believe the persona information they enter is a kind of a public secret among them and their friends. Even many sophisticated Facebook users — ones who understand how an advertising-supported model works —  with whom I’ve spoken are surprised at how much data Facebook has shared, and how freely Facebook’s advertisers are permitted to use and distribute that data.

And there’s the problem.

The gulf between what Facebook thinks it promised and what its users think it promised is enormous. Facebook didn’t fail to live up to its terms of service. It didn’t fail to provide settings and promote them. It failed to understand what its users expected and how to act on those expectations.

We in the tech industry take a laissez-faire attitude toward our promises to our customers. Most EULAs say products are delivered “as-is” and make it clear they may not work. Most terms-of-service documents disclaim any responsibility for failure of the product.

That may protect your company legally. But it won’t keep customers. Remember my first rule of customer service?

“If you’re quoting your terms of service, you’re wrong.”

What you should do:

Talk to your customers. Make absolutely sure you know what they think you promised to them. Make sure they know you are, in fact, promising. Make sure there is no gap whatsoever between those understandings.

Then keep those promises. Consistently.

Because, if a Facebook-like debacle happens to you, you will probably not end up testifying before Congress. But you will almost certainly lose a significant number of customers.

To learn more about doing it the right way, check out my five-part series showing how customer trust is the key to growth.

Customer Success

Five Levels of Rethinking Recurring Revenue and Retention

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Many B2B businesses either have shifted or are shifting to some form of recurring revenue business model. When they do, one of the first things they learn is that renewals by current customers are just as important as — and often more important than — initial sales. If the customer doesn’t stick around for, typically, three to five years, then you’ve lost money on them.

But renewal rates seem to be stuck. Companies I work with are ones that have been trying to increase their renewal rates through a variety of tactics, but none seem to make much of a difference. They need to significantly increase renewal rates to achieve the growth their investors demand and their team wants.

These companies usually rely on two approaches to maximizing renewals. The first is an activity-driven approach, usually focused on adoption. The intent is to determine which activities your customer performs with your product that tend to lead to renewal and then to build a program to encourage your customers to do more of those activities. The second is a conversion-driven approach, where you ask customers for renewals, maybe making special offers for early renewals or upgrades, and expect a percentage to accept your offer. This is very much like your demand-generation process, where you expect a given conversion rate from a marketing offer.

Both of these are good approaches, and they work. But if you’ve spent time trying to improve your renewal rates, then you probably have that gnawing feeling in the back of your brain that wonders why this is so hard and why it takes what seems to be either a patchwork or a Herculean effort to make any significant uptick in renewal rates.

If this sounds familiar to you, you’re missing something: You’re not paying attention to what your customers really needed in the first place. You’re probably working with each customer on a plan for what you think they define as success, which is typically a list of activities you’ve developed that you think, statistically, lead to renewal.

But renewal is not the same as a successful customer. We have all become so programmed to define success as a collection of metrics that we miss out on what we really mean by being successful.

What customers really want

I’ve heard any number of marketers and salespeople say to me that customers buy only two things: cost reductions and revenue increases. You might even hear the (highly coached) customer attest to this in case studies. But this is not what the customer really wants.

To build a strong relationship with your customer and ensure they renew year after year, you need to understand both their concerns at every level and the kind of relationship your customer needs to have with you.

Note that concerns in this context are not worries. Concerns mean the things with which your customer or its people, are concerned with, think about and hope for.

The model I use with my clients surfaces customer needs, concerns and aspirations in five different ways. It looks at the questions you are asking and about your customer’s business and how you are addressing the concerns and aspirations you identify. This model is based on a model of understanding concerns written by my good friend Jennifer Kenny.

Key QuestionIssues AddressedCustomer PerceptionRelationship Level
What makes their day?Are you helping them make a difference in their company?
Are you delivering personal wins and turning your customers into heroes?
You are fulfilling both their personal goals and their company missionTrusted adviser
What are their outcomes?Are you helping them achieve outcomes?
Are you making their plans come to fruition faster or better?
You are making their outcomes better and helping them fulfill their promisesPartner
What are their responsibilities?Are you helping them do something better, faster or more cheaply?
Do you help them improve their day-to-day processes and activities?
You are improving their work and making them more effectiveCredible source
What are their tasks?Are you helping them achieve outcomes?
Are you making their plans come to fruition faster or better?
You are simplifying their lives and making their work easierTransactional
What’s broken?Are you solving a critical problem?
Are they not making enough revenue?
Is a key process broken?
Once the problem is solved, your customer really needs little interaction with you.Commodity

When you use this model, it’s important not only to understand what your customers need, what they are concerned about and what their aspirations are, but also what you can actually deliver. You will not be a trusted adviser to all your customers. Some companies will be transactional with all of their customers. Most will have customers at every level of relationship.

When you understand your customers at this deep level, and you know how you work best with them, you then have an approach to creating, building and maintaining relationships that will lead to renewal year after year after year.

Customer Trust

The One Mistake that Derails Your Company’s Growth

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You have a pretty ambitious growth target. You’ve put together a strong team, as well as a great sales and marketing plan based on industry best practices. Your offerings are ready to go. And you launch your campaigns. Everything looks good, and the outlook is rosy.

A few months later, you’re scrambling. Everything worked as planned, but prospects are not hitting your funnel nearly as fast as you thought they should. Your pipeline looks pretty anemic. And you’re missing your growth targets up and down your pipeline.

What happened

If your company is like most these days, the entire company is looking at you — the marketing leader — to explain why things have gone awry and how to fix them. After all, marketing’s job is to drive the pipeline, right?

If you’re like most marketing leaders, you take a look at your campaign. Was the message right? Did we miss something in the design or execution? Then you look at your process. Is there something keeping an interested prospect from taking whatever action you were hoping they would take? Did you fail to follow up? Did sales drop the hand-off of the lead from marketing?

The mistake

Your problem isn’t your sales people. It’s not your marketing people. It’s your customer.

That’s right, the problem is your customer. In my previous post, I wrote about building a better persona to get a better understanding of your customer (you all did that, right?). If you did that, then the next three steps are:

  1. Decide, based on what you know you can deliver, what specific concerns and aspirations your company can fulfill for your target customer.
  2. Decide what promises you will make to your prospects that they understand will fulfill those concerns and aspirations.
  3. Then, build your position and your message around those specific promises.

When you do that, every prospect that receives your message will understand instantly how you will help them and whether they need that specific kind of help. If they don’t, they are not your target customer, and you can comfortably let them go. If they do, they will be interested and will enter into your funnel quickly and easily — and of their own accord.

If you don’t get your target customer definitions, position and message right, you are marketing to no one. You are putting a bunch of messages out into the market in the hope that they will resonate with someone who will then call you. Your metrics for this type of effort (often called “spray-and-pray”) will be below your industry average, and you will be left wondering what went wrong.

We, as marketers, put a lot of effort into the process of marketing, including campaign design and the underlying technology. But marketing is still, fundamentally, about knowing what your target customer wants and needs and delivering that in a way that makes them feel like you’re doing magic for them.

If your marketing isn’t yielding the results you expect or want, the problem is not how you’re doing marketing or sales. The problem is that you don’t know — at least not well enough — who your customer is and what you can do for them.

Go back to the drawing board. Get your target customer, position and message right. Your pipeline and your company will thank you.

Customer Trust

Drop the Persona. Market to a Person.

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Nearly all the marketers I meet seem, in some way, obsessed with personas. Personas are convenient little tools that describe some set of attribute of a hypothetical — and supposedly typical — customer that are intended to allow everyone in the company to understand this customer and what they want.

If you’ve spent time talking with me about personas, you know exactly how I feel about them: I hate them.

No, I don’t hate the idea that there should be an understanding of the customer, and everyone should be able to see what it is. That’s necessary for getting teams aligned and driving market growth (see my discussion on this in my previous post).

I hate the idea because most of the marketers I meet use them as crutches — and not very useful crutches at that. I hate that most marketers try so hard to be specific and complete in their description of “Finance Francine” that their list of things “Francine” cares about are either redundant or useless in creating messaging that will convince the hypothetical “Francine” to spend non-hypothetical money.

Have you ever seen a list like this:

“CEO Chuck” cares about:

  • Increasing revenue
  • Increasing profit margin
  • Meeting set revenue and profit goals
  • Not losing revenue
  • Not losing profit margins
  • Increasing net income

OK, I’m going a little overboard, but you’ve seen that list. The problem you see with it is that it’s redundant. I see that and something far more dangerous to your marketing:

The list is meaningless.

If the person working on personas in your organization makes lists like this one, you probably don’t ever look at them for anything you do. If you do look at them, I’d ask you whether they help you target content, create advertising or email campaigns or even inform sales scripts.

A good test for whether you have a useful persona is whether your average sales rep can use the language in the persona document to describe how you help your customer and the prospects on the other side of that table (or other end of that call) respond with “Yes!! That’s exactly what I need!” How often does that happen to you?

So what do we do about this? How do we get a useful understanding of the people to whom we are selling? (And yes, if you’re selling to businesses, you’re still selling to people)

Focus on the person.

It sounds easy, doesn’t it? Well, it is, but then again, it isn’t. They say understanding other people and building relationships is hard. When you are selling any kind of offering, you are building a relationship with another person (or people), and it’s exactly as easy and hard as with anyone.

What’s the key to getting this right?

In an earlier post, I wrote about the importance of knowing how you and your offering make a difference in the lives of your customers. There are three steps to making this an integral part of your marketing:

  1. Understanding your customer’ needs and aspirations — most importantly, the ones they don’t articulate
  2. Understanding what needs and aspirations you can enable
  3. Understanding how you help your customer meet those needs and achieve those aspirations

Revisiting “CEO Chuck,” here’s how this might work:

Chuck runs a small software company. Chuck is trying to solve the disconnects within his organization. He knows that if product, sales and marketing could stop arguing and get on the same page, it would be easier and smoother to generate leads and grow the sales pipeline. His demand generation leader says the biggest obstacle to getting prospects into the pipeline is knowing how to effectively find the right kind of person to whom to deliver messages. His investors are breathing down his neck about meeting sales targets and showing some eye-popping PR stories. His engineers are bugging him about prioritizing new features and bug fixes, and claim they can’t understand what they should be doing first — it all seems important.

Now let’s say you are selling some kind of marketing product to Chuck. You could tell Chuck your offering increases revenue, and you’d think that would be important enough for him to buy it. But let’s say your offering could help get the pipeline process unified between sales and marketing, and make sure they both have at least common numbers, account information and the like. You could then offer Chuck a solution to at least part of the sales and marketing friction problem, making his pipeline move more smoothly to help grow revenue.

Some marketers will see that as a more specific and, therefore, smaller offer. It’s not. It helps solve the problem your prototypical customer thinks they have. It makes sure you can deliver something they think is valuable to them and that makes a difference in their lives. And if you do it successfully, I am pretty sure they will tell their friends and colleagues you made a whole set of challenges go away.

This illustration is an over-simplification for the purposes of keeping this post readable. But the point of doing this exercise — and doing it well — is you get to understand your customer as a person, not as a hypothetical profile.

And when you stop making claims to personas and start making promises to people, you can start delivering real value and changing their lives.

Customer Trust

Pricing: Three steps to succeeding with what most marketers fear

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Marketers hate figuring out pricing. It often seems challenging or obscure, and the risk of getting it wrong seems so high. After all, what you charge for your offerings ends up determining your revenue. Price too low, and you harm your revenue stream; price too high, and you drive potential customers away.

There are two major schools of thought about pricing: one that says you should price your offerings to match the willingness to pay of your potential customers and one that says you should price your offerings based on what it costs to produce and deliver them, so that you achieve a chosen margin.

Many companies, notably those that manufacture products, use a cost-plus method. The motivation to earn a given margin is certainly a strong one, but this approach ignores market realities. The economics of any market show that potential customers are willing to pay based on a range of factors, from supply and demand, to delivered value, to competitive pricing.

That leaves value-based pricing as the more viable approach. But unless you have a team of econometricians at your disposal, it can be hard to determine the right price to extract enough, but not too much, value from the market and your customers.

Here are three things to do to get your pricing right:

  1. Know the competitive landscape. You need to know who your competitors are and what they charge. But that’s not enough. Don’t forget that “competitor” means anyone — even if it’s the contractor paving the parking lot — competing for the same budget dollars you hope to get. Know what they charge. If you can’t find out from public information, ask your sales reps; their prospects are telling them. On top of that, figure out your competitive position. Are you a leader? A follower? A price-setter? A price-follower? A premium offering? A value alternative? Once you know that, you can set price compared to your competition.
  2. Know the history. What have customers paid in the past for your offering? Other similar offerings? You don’t have to prove exactly the same as always, but unless you’re selling to the few truly innovative potential customers or are a completely new offering, you can only change price-levels so much — but you can change them.
  3. Get your packaging right. What do your customers value most about your offering? Can you break out parts of your offering and price them separately? Can you add new pieces that will deliver additional value? Do you offer any services your customers especially value? Make sure your minimal offering delivers value, but also make sure you add value where you can.

Once you know the answers to these three questions, you can choose your price level. When I do this, I always sit down and write a price list. That tells me what I have and what I’m missing. Once you feel you’ve documented everything you need, you can validate your thinking with a little market research (I usually just call 5–10 potential customers and ask if it makes sense).

The last step is one where most marketers should feel comfortable: Test, test and test again. Pay attention to how potential customers react. Are they balking? Or are they eagerly accepting your new pricing? Did you get your base product right, but your add-ons too high? Make adjustments. Then keep making adjustments until you don’t see many more needed.

Marketers may hate of fear the idea of doing any pricing analysis, but these three steps can help take the challenge and put it into a context that is much more familiar and easier to approach. And, I hope, make it less scary.

Customer Trust

Storytelling Is Really the Only Marketing

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Maybe the inverse of my title is more true:  if you’re not telling a story, you’re not really marketing.  As marketers, we’ve all spent plenty of time analyzing features and benefits of our offerings, figuring out just the right messaging and discovering the right ways to talk to our prospects and customers.

In more recent years, notably with the rise of online marketing of every sort, we’ve started talking about conversations, storytelling, and how to engage our prospective customers and build relationships.  This is also an important part of marketing work.

But no matter what you sell and no matter what audience you want to engage, if you’re not telling them a good story and engaging them with that story, you’re not going to garner much interest.

Why Storytelling Matters

Kathy Klotz-Guest, CEO of Keeping It Human, (also a friend and sometime MENG speaker) recently released a book, Stop Boring Me! How to Create Kick-Ass Marketing Content, Products and Ideas Through the Power of Improv, based on her years as an improvisational actor, then as a storytelling marketing adviser to Silicon Valley businesses.  Her premise is that all business is human (also the premise of my work, which is one reason I admire her!).

Kathy cites marketing professor and author Jennifer Aaker of Stanford University, who notes that people remember stories as much as twenty-two times more than they do facts alone

Worried?

You should be.  If you’re “talking” to your prospects by showing them features and benefits, and your competitors are telling engaging stories, it might explain why you’re having trouble with your conversion rates.

One of the most important pieces of advice Kathy offers is that marketing is about change, as are stories.  If you help your prospect see and understand the possibilities and how to change to realize them, you have a far better opportunity to engage and, eventually, sell to that prospect.

How do I do that?

Three Steps to Better Storytelling

Like me, you’ve probably heard that advice from way too many marketers and so-called experts. But doing it seems to escape you.  Here’s one person doing it well every single day.  Megan DeGruttola heads storytelling and content marketing for Stitch Labs and uses these three guideposts to create a story:

1.  Know your audience

Who is the person you want to hear your story?   What interests them?  Why is your story going to matter to them?  This is nothing more than knowing your target audience but in a much more human way.

2.  Understand their problems and aspirations 

This is not about the problems you think they should have (sorry, we’re marketers, you know you think that way even though you shouldn’t).  Make certain you are addressing the problems that person faces in their daily life.  Maybe it’s something that frustrates them endlessly or maybe it’s something they never thought they could solve.

Then make sure you know their aspirations.  What do they want to change?  What do they hope to become?  How, very specifically, do they think they can get there―and how can you help them?

3.  Take them on a journey 

Show them where they are and make clear the problems.  Show them the way forward to achieving their aspirations.  In other words, tell a powerful story.

Remember, journeys are never a single step, and they are fraught with setbacks. Don’t forget that your story shouldn’t be a carefree romp to the finish line. It should be an honest and credible account of the challenges and motivations that keep the story going.

Are you worried you don’t tell good stories (it’s the worry I hear most often from marketers about storytelling)?  Don’t worry.  You do.  Ask your family or friends.  At least some of them love your storytelling.  Go find out why and use those strengths to get better.

And as with everything else in marketing, keep trying and experimenting.  You’ll get to what gives you and your company that twenty-two times engagement multiplier.

Then tell us the story of how you did it in the comments!

 

Customer Success

Want to Avoid Customer Rejection? Here’s How NOT To

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Here’s a lesson on how to create customer rejection in 30 minutes or less.

I heard a story from a friend today.  She bought what she hoped would be a useful and productive accessory for one of her tech devices.  Nothing fancy, just one of those things that makes your device go from “pretty useful” to “part of my everyday work.”

I can safely say she will avoid doing business in the future with the company that made the device.  And I’ll bet she’ll happily tell all her friends (as she told me) about how well they knew the art of customer rejection.  I can’t tell you how many potential customers this company lost today, but I know of two, and based on her influence circle, I’ll bet that’s a few orders of magnitude off.

It turned out this effort by the company to lose customers was pretty simple.  They spent a total of half an hour of work on it.  The customer rejection professional involved (maybe in charge of this particular effort?) was efficient, effective, and, I’d bet, well-rewarded for his or her efforts.

In fact, if your company is looking to lose some customers fast, I’d try to hire this customer rejection expert ASAP.

The whole thing was pretty simple.  When my friend received the product, it was broken and did not work.  She wanted it replaced; I’m pretty sure I would have, as well.  She emailed them. They asked for pictures.  She sent them.  They asked her to call.  She spent half an hour on the phone with the very competent customer-rejection professional who told her the replacement was out of stock and could not be sent.  Going above and beyond their duty, the same customer rejection professional added that no advance order could be placed for the item to ensure it would be sent when it was back in stock.  The apology acting, I’m told, was extraordinary (maybe the customer rejection professional also is an aspiring actor?).

My friend tried to respond to the company’s email, but the email message bounced. In the bounce message, she was directed to a web page to file a complaint, but the web page produced errors that could not be deciphered (Note to web professionals: If you want to contact the company to help resolve this, remember that is at cross-purposes with the responsibilities of the customer-rejection team).

My friend now has a broken product.  The company that sold it to her thinks this is as it should be.

I’d call this an example to follow of how to lose customers in half an hour or less. Customer-rejection professionals: are you listening?

Chasms of Failure

Five Critical Steps to Knowing Your Customers

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It’s a trap into which marketers of all kinds fall:  assuming your customers are just like you in their preferences, desires, and buying characteristics.  It can happen because we lack information to figure out what customers are really like or because our own inherent biases cause us to ignore information that would contradict our assumptions.

In a series of studies (published in the AMA Journals), Hattula, Herzog, Dahl and Reinecke found that marketers putting themselves in their “customers’ shoes” were more likely to assume their customer is just like them rather than the generally expected outcome that they would understand their customer’s needs and desires even better.

In an interview with the Harvard Business Review, Hattula noted, “That tendency [toward egocentrism] is so strong that we’re willing to ignore objective data when we make predictions about others.”

You Are Not Your Customers

Yes, he is saying that in our data-driven world, the more empathetic (and maybe more expert) we become, the more likely we are to just ignore the data and use our own intuition to make assumptions about our customers.  If you’ve been in a marketing organization for any length of time, this should not surprise you (though it may be hard to admit).

Simply put:  The more you assume your customer is just like you, the farther you get from building a relationship with and serving that customer.

In our daily lives, we develop relationships fully realizing that the people with whom we become friends or partners or any other form of relationship are not exactly like us.  Success in each relationship requires that we develop an understanding of what drives the other person and how we fit into their lives—and how they fit into ours.

Consider this:  You walk into a room, and a man approaches you.  He tells you why he is in that room (at that event or party) and then proceeds to tell you he knows you must be there for the same reason.  Maybe he harangues you to engage in ways that suit him well or to help him meet the people he wants to meet.  You can tell pretty quickly this person had no interest in you or your needs.

When you make the assumption that your customer is just like you, you start off your relationship with that customer on the footing I described in the previous paragraph:  you alienate your customer and make them feel like you have no real interest in meeting their needs.

This can be exacerbated by the common marketing practice of developing customer personas.  Personas are just descriptions of prototypical customer types.  If the egocentricity bias that Hattula describes enters your persona development process, the personas can start to look an awful lot like the people who are developing them (One way to check this is to ask someone who knows you but was not involved in the process to look at the persona and describe how much like you it is—as long as you can trust that person to give an honest answer.).

The Importance of Data

Marketing has become, for the most part, a data-driven endeavor.  Marketers work hard to gather and analyze data on the actions of those who engage with the company, on how those actions lead to (or don’t lead to) sales, on the costs and ROI of specific marketing activities, on how customer usage leads to repeat sales, and on so many more things in your everyday activities.  One of the things on which marketers have relied for a very long time is market research.  Assuming it uses well-designed research, the data gathered can inform many marketing decisions and challenge many assumptions.

But challenging assumptions, especially within an organization, is very hard.  When the data clearly contradicts any assumption we make about our customers—from buying habits to feature preferences—Hattula’s study shows we tend to just ignore the data—even when we know the best course of action is to adjust our own assumptions to match the data.

Where Does This Lead?

Hattula’s study suggests that employees who are disengaged from customers are in the best position to understand objectively what the data they receive is telling them.

My own experience says that getting a direct, personal understanding of your customer, including developing empathy (maybe by putting yourself in your customer’s proverbial shoes), gives you insights that data just can’t.

The irony is that in order to truly understand your customer well, you need to do a good job of both getting closer to them and distancing yourself from them.  You need to:

  1. Gain direct exposure, understanding and empathy with your typical customer’s needs, preferences and desires.
  2. Ensure you are gathering good, unbiased data on customers’ needs, preferences, and desires
  3. Pay close attention to even the smallest hint of contradiction between your empathetic understanding and what the data is telling you.
  4. Get objective viewpoints that can tell you when your assumptions about your customers are really just a projection of your own needs, preferences, and desires.
  5. Have the courage to challenge organizational assumptions about your customers.

Did I promise this would be easy?  It’s not.

But if you want to stay close to your customers and continue to succeed in delivering what they want and need, in the way they want and need it, you will have to make sure you are meeting their needs.

Not yours.

Customer Trust

Are You Really Customer-Centric? Or Is It Just Talk?

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It seems every company wants to show just how customer-centric it is these days.  It’s increasingly common to hear PR machines toss around phrases such as, “We value our customers,” or “We put our customers at the center of our business.”

But it’s easier said than done.  When it comes time to make a decision that pits customer interests against a chosen corporate strategy, do you really make decisions that put your customers first?

A.P. Giannini, founder of Bank of America, said, “The purpose of a business is to create a customer.”  If, in the process of evolving your business, you choose to forsake some (or all) of your customers, you not only have no longer put customers at the center of your business but also have given up the business those customers represent.

A recent stark example of the conflict between a chosen corporate strategy and a customer-centric one is the recent decision by Starbucks to close a number of its brands, including San Francisco icon La Boulange.

La Boulange is a chain of bakery cafes in San Francisco that has a reputation for quality food at reasonable prices and has earned the trust and devotion of San Francisco Bay Area locals. This is important to this story, as earning the trust of San Franciscans, as a whole, is not easy, and locals tend to fiercely defend local brands, often at the expense of national brands.

When Starbucks acquired La Boulange in April 2013, there was a local uproar.  Would they keep the beloved cafes open?  Would we be deprived of La Boulange baked goods?  What would happen to the people working at them?

Starbucks is one of those companies that claims to employ a customer-centric business strategy.  Putting customers first means making a promise to those customers, then keeping that promise.  And, of course, not breaking it.  Starbucks made a promise. They kept that promise—until they broke that promise by making a decision that clearly put their chosen corporate strategy ahead of their customers’ wishes.

Make a promise:  At the time of the acquisition, Starbucks stated it would keep the cafes open and even offer La Boulange baked goods in its Starbucks coffee shops.

Keep a promise:  It held to this promise.  It even opened more locations of La Boulange during the two years since the acquisition.

I cannot overemphasize this point:  Starbucks made and kept a promise to the segment of consumers who value and frequent La Boulange.  San Franciscans breathed a collective sigh of baked-good-induced relief.

Break a promise:  Last week, Starbucks announced it would close all La Boulange locations by the end of September 2015.

The justification for the decision was, in Starbucks’ words, “Starbucks has determined La Boulange stores are not sustainable for the company’s long-term growth” and that the decision was made because “Starbucks continually evaluates all components of its business to confirm they are aligned with key priorities and strategies for growth, which includes the continued analysis of the store portfolio.”  Notably, the decision was not made based on profitability, as the company claims the La Boulange brand achieved 16% year-over-year growth, and industry reports show that the newly opened stores far exceeded expectations.

In a company that claims to put its customers first, what is missing from this decision is any consideration of the promise to the customers.

Which brings me to the difficult question Starbucks faced:  Do we follow our chosen corporate strategy or do we make our strategic decisions by putting our customers first?  I wonder how you or I would make the same decision.

Traditional corporate strategy says a company should choose its competencies, market, and customer segment, pursue them to the exclusion of other options, re-evaluate those choices periodically (or continually), and make adjustments.

Customer-centric strategy demands a different approach.  If the customer is truly at the center of your business, then your business must choose its competencies, approach, and services to focus on the needs (known, unknown, or even unanticipated) of the customer. This is true whether your customer is an individual consumer or another business.

Making the choice between a chosen strategy and customer-centricity is not always as stark or obvious as it is in this case.  Companies face decisions every day that pit delivering value to customers against the chosen strategy of the business.  If your company chooses the chosen strategy and moves away from the customer it created, it must either create a new customer or face the fact that it no longer has a business (at least in that segment).

Starbucks’ mission statement is “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.”  The core Starbucks brand will continue to do that. But the La Boulange brand did that exact same thing for a different customer in a different way (appropriate to that different customer).  Despite Starbucks’ statement that this decision was one that keeps their mission intact, it seems that the other decision (to keep La Boulange open) would have done that as well.

So, while the decision does not directly conflict with the mission statement, it does conflict with any claim of customer-centricity.

All of which presents us with a stark example of how even the best companies make difficult strategic decisions when customer interests collide with a chosen strategy.

Have you faced such a decision?  How have you handled it?

Customer Success

Customer Service Success Is So Simple that It’s Hard

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We all love to complain about customer service.  Most of us have some sort of nightmare story at the ready anytime the conversation turns to the topic of customer service.  And collectively, we have classes of companies we just love to hate:  airlines and cable providers.

I know you can tell any number of stories about how some company (Comcast, anyone?) got it wrong (check out Mr. A**hole Brown has a really good one post).  I’m willing to bet you even have a few choice suggestions on how to get it right.

But your suggestions will likely only fix the issue in your case (or your type of case).  The company that is failing at customer service has a much deeper problem.

The issue is simple:  lack of empathy.  But the solution, which is also so simple—create empathy in your customer service staff for customer service success—is, in fact, very hard to make happen.

Why Is It Hard To Achieve Customer Service Success?

Allow me to start with an idea that will sound familiar from my earlier posts:  When someone buys a product or service from you, they are doing so because they expect that product or service to do a specific job for them.  Sticking with my favorite scapegoat, when someone buys cable television service from Comcast, they are expecting Comcast to deliver entertainment on which they can rely at all hours.

Here’s where it gets complicated (frankly, it’s not really all that complicated for Comcast, but it is for most companies).  The definition of “entertainment” varies widely among the millions of people who are Comcast customers.  Personally, I want my cable company to bring me intelligent, unbiased, detailed news coverage any time of day (largely the responsibility of the news outlets and not even within the control of a cable provider).  Or you might want access to a huge library of foreign films.  Someone else might want endless reruns of TV shows from the 1970s.

Sounds pretty simple for a cable provider, right?  So where do they go so wrong?

Customer service doesn’t happen until something goes wrong.  Service is out.  Channels with my entertainment disappear, or worse, move to a higher tier of premium cost.  Or the CableCARD stops working with the latest update of my DVR.

Then I have to call (chat, e-mail, whatever).  Someone explains the process of why it’s broken.  Then they explain the process the company has set up to fix it.  It’s going to take time.  It’s going to cost me money.  It’s going to require that I sit at home and wait for someone to show up.

There’s a lot of process.  There’s a way to handle the situation.  But there’s no empathy. There’s no one who is capable of understanding why I am actually disappointed and figuring out the best (maybe even the right) way to make sure I get what I need.

Empathy is not a process.  It’s not a set of rules.  It’s not a policy.  It is a human ability. And it requires the one thing the giant customer service organization fears most:  individual freedom to act.

Halfway There

I have a lot of respect for Frank Eliason.  If you don’t know who he is, he is the guy who started @ComcastCares, Comcast’s Twitter based customer service.  It’s generally believed that he singlehandedly taught the corporate world what social customer service means.

Frank recently wrote an article exhorting Comcast to improve its customer service.  He included five suggestions on what they could do to improve.  The last of these was, “Live up to being the Philadelphian that you already are.  We will support you, but you need to support us too.  Treat us in the same manner you would want to be treated.”

I don’t disagree with his first four suggestions.  But they are all process improvement ideas. They don’t do anything at all to get your customer service staff to understand your customers’ problems and help bring solutions that address the actual issues right there and then.

The fifth suggestion (quoted above) gets closer to the mark.  It doesn’t say it the way I would, but it suggests that each and every customer service representative needs to be a decent upstanding human to create successful customer service.  That sounds a bit like empathy to me.

Getting it Right? 

It is nearly impossible to train empathy into an organization.  It’s a uniquely individual skill. People can have empathy, while organizations can’t.  But that doesn’t mean you can’t let your customer service people use the empathy they already have.

Companies such as Nordstrom and Zappos became customer service success standouts for one reason:  every single employee can do (nearly) anything to solve a customer’s problem.  On the margin, this led to stories (unconfirmed) of things such as a customer returning a set of tires to Nordstrom (which has never sold tires), but these stories are a very small group of exceptions to the rule.

The policy of “do whatever it takes to make it right” doesn’t just let the front line employee use their skill and empathy; it challenges them to do so.  Even better, it challenges them to create a story in that customer’s mind about how amazing the customer service provided by that employee was. And it creates a culture that makes employees want to be better at serving customers with empathy because their peers are also doing it.

These companies don’t train an organization to deliver empathy.  They created a culture of customer service success that valued it, paid attention to it in hiring, and challenged their people to do it—and do it better.  This requires trust (often anathema to many large hierarchical corporations) as well as a different approach to dealing with your own people and your customers.

Can You Change?

The obvious question is can a company such as Comcast really change?  Could it ever figure out how to change from a policy- and practice-driven organization to one that lets their people make their own judgments about what is the best practice in every individual situation?

It would be hard.  And it would take time.  Maybe for Comcast, their newly hired chief customer officer will be a start.

What about your organization?  Are you telling your people how to solve your customers’ problems?  Or are you hiring amazing people and letting them figure it out?  If you are the former, can you change?  Do you think your organization can help your people develop empathy?

Customer service success is so simple that it’s hard.

Tell us in the comments how you think your organization might do it.