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 Trust

Customer Retention Is Also about Keeping Your Promises

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If you’re reading this, you likely already know your brand is your promise to your customers.  But there is an important extension to this:  keeping customers means keeping your promises.

Let me tell you the story of what just happened to me (I admit this is a bit of a rant, but if you’ve been following my customer retention stories, you know how I love to pick on the companies with the worst customer service—they are fantastic examples of what not to do).

This story is about my mobile phone upgrade.  You’re probably not surprised to learn I have not been thrilled with my mobile phone carrier.  When my contract was up and the new devices became available, it was time to upgrade.  I did my homework, calling and asking lots of detailed questions about devices and plans.  I got great answers from very helpful people.

In other words, they made me a promise.  They made promises about the features and plans, and more importantly, they made promises (implicitly) about the kind of service I would receive (friendly and helpful, making the upgrade process easy and smooth).

When it came time to place the order, things started to go wrong, and small issues turned into big issues, leaving me wanting to switch to another carrier.  First, when I called to place the order, I was told I could only do that online.  Just a small inconvenience, so I tried online.  Even though I was out of contract, they wanted to charge me a fee for upgrading (this is a common, if customer hostile, practice).  I called to complain and was put on hold, then transferred to three (!) different departments.  Then I was told this fee was required, and that I could not upgrade my phone without it.  And no, not even if I paid full price for an unlocked phone could I avoid this fee.

More than an hour later (trying my patience), I hung up and called another carrier.  They agreed to sell me new phones (the same model) with a similar plan without any fees to get started.  The only reason I did not sign up right there and then was a small technical feature I need—which they do not have.

So I called back my old carrier and told them I would leave if they didn’t waive the fees and process my order without further hassles.  I was transferred to the “customer retention department.”

As you probably know, these are the people whose job it is to handle the angriest customers and the worst customer service mistakes the company has made to improve customer retention.  The mere fact a customer retention department exists means customer service is failing (If you have such a customer retention department in your company, I advise you to do a better job of customer service).  They succeeded (they were nice, apologetic and made the process easy for me), and I renewed and upgraded.

But they’d made me a promise:  an easy process with no hassles.  They broke their promise and failed in every possible way to deliver.  Then they were forced to spend time, effort, and money to “retain” me.

If you’ve dealt with customer service or even customer retention departments, you probably have at least a few stories that sound just like this or maybe worse.  But this, as I noted above, is the bad example.

What you can do to avoid having a customer retention department and doing this to your customers is simple:  keep your promises.

When a customer comes to make a purchase—any kind of purchase —make them a promise.  Your promise is not just that the product or service you sell will perform an expected task, but it is a promise about the kind of service you will offer, what the buying experience will be like (now and every time they come back), what their experience will be using the product, how they will feel about your product, and how your product will affect their reputation.

The single biggest mistake companies make when they are seeking repeat or return business is breaking promises.

As a consumer, you know what it feels like to have a company break a promise.  You are left with a sour taste and a desire to seek out competitors.  Sometimes you switch, but even if you stay put, you are not a happy customer.

In your business, you are probably breaking promises to your customers far more often than you think (and certainly far more often than they are telling you).  Without your customers’ willingness to tell you every single time you break a promise, how do you know?

Here are two questions you must ask for effective customer retention:

  1.  What promises are you making to your customers? Make sure you know every single promise your customers  think you are making and not just the ones you want to make.
  2.  Which promises do your customers value? Companies break promises all the time, but most of the promises  broken are unimportant to their customers.  Find out what’s important to your customers.

Once you know the answer with a great deal of certainty, you are left with the very hard customer retention work (don’t underestimate this) of finding out how you are breaking those important promises.  It might be in very small ways (oops, we forgot to tell you we charge $40 to upgrade your phone.  Didn’t you read the small print?  And if your agent starts quoting small print or company “policy” to your customer, you have blown it).  You will have to look hard.

You’ll probably have to do the hardest thing of all:  get outside your view as a representative of your company and step into the view of your customer.  Live the experience your customer has with you as if you are your customer.  You might be surprised at what you find.

In my experience working with companies whose business depends on having customers come back again and again, the work of fixing the issues you find is the easiest part.  Often there are some simple tweaks to your processes that will help.  Almost always, giving your employees on the front lines the authority to solve customers’ problems will solve most of your customer retention problems.

No matter what kind of business you are in, you depend on customers coming back. Breaking your promises in important ways (even if the importance is small) can ensure they never do come back. If you are in a recurring revenue and custom retention business, broken promises will certainly spell the end of your company.

Please share how you found out about your own broken promises and how you fixed them in the comments.