7 deadly sins of customer management webinar

The 7 Deadly Sins of The 7 Deadly Sins of Customer ManagementCustomer Management

40 years of experience in Strategic Stakeholder Relationships

and Strategic Leadership

Many other areas of expertise: 6-sigma/lean, balanced scorecard, cultural

change, performance measurement, “excellence” frameworks, HR

Lived or Worked in over 37 countries around the globe

More than 155 different organisations assisted including Xerox,

Shell. DuPont, Nortel, Johnson & Johnson, Royal Bank of

Scotland Group, Department of Defence (UK), Stora Enso

(Finland), Red Cross, Oracle as well as many SME’s

Owner of Care Associates, Kansas City, Missouri; MQI

Consulting, Boston and The Centre for Innovation Management

Europe Ltd., UK

The Strategic Customer Management System

Customer Focused Culture



In a customer focused organisation there are only two positions: (1)either you serve the customer directly ; or (2) you serve someone who does

Source: Xerox Corporation

Sin #1: Sin #1: “ “Not Walking the Talk”Not Walking the Talk”Of Customer FocusOf Customer Focus

Management at all levels regularly meets with customers to

listen and learn about changing requirements, how their

organisation is performing in meeting those requirements and

to strengthen relationships with customers

Leadership

Management at all levels regularly meets with customers to listen and learn

about changing requirements, how their organisation is performing in

meeting those requirements and to strengthen relationships with customers

Policy and Strategy

All new initiatives are evaluated for their impact on the customer before they

are implemented

Human Resources

The skills and knowledge most critical to building and sustaining customer

relationships have been identified and training has been conducted for all

customer-contact employees.


Vision, Business Plan and Key Business Objectives


Sin #2:Sin #2:Not Answering the Question: Not Answering the Question: What’s in it for the Customer?What’s in it for the Customer?

KBO’sKBO’s CustomersCustomers SuppliersSuppliers CommunityCommunityBusinessBusiness

PartnersPartnersShareholdersShareholders

KBO1KBO1

KBO2KBO2

KBO3KBO3

KBO4KBO4

X

X

X

X

Other strategic issues!

Customer Relationship Strategies




Sin #3:Sin #3:Failure to Define Specific Failure to Define Specific

Relationship StrategiesRelationship Strategies

Identify

Align

UnderstandEnhance Assess

Develop

Improve Process

CRM

Customer Relationship

Strategies



Customers

CustomerExperience

• Sales•Delivery•Service•Others


Sin #4:Sin #4:Failure to Understand and Enhance Failure to Understand and Enhance The Customer Engagement SystemThe Customer Engagement System

Sales Process Delivery

CustomerPurchaseDecision

CustomerPurchase

Consideration

System Design

Installation Repair Service / Maintenance

FirstInvoice

OrderSubmission

CreditReview

Purchase Cycle

CustomerPurchase

Consideration

Training Technical Support

Account Maintenance

“Telecommunications”

What are 5 key management questions that need to be asked?

Sin #6:Sin #6:Failure to Understand Your CustomersFailure to Understand Your Customers

To the Appropriate Depth orTo the Appropriate Depth orBreadth and Add Value Along the WayBreadth and Add Value Along the Way

What are the two costs incurred by customers What are the two costs incurred by customers every time they do business with your every time they do business with your organisation?organisation?

1.1. E_______E_______

2. E_______

So, how do you know if you adding value in a customer relationship?

Basic NeedsBasic Needs

WantsWants

Value Value is determined by is determined by benefitsbenefits

It is any tangible or intangible benefit which the It is any tangible or intangible benefit which the

customer perceives the competition is either unwilling customer perceives the competition is either unwilling

or unable to provide. It is an immediate spource of or unable to provide. It is an immediate spource of

differentiation and competitive advantagedifferentiation and competitive advantage

There are 8 sources, but …..There are 8 sources, but …..

The pre-requisite (Example: Corning)The pre-requisite (Example: Corning)

Image/reputation/brand strengthImage/reputation/brand strength The “feel good factor”The “feel good factor”

Image/reputation/brand strengthImage/reputation/brand strength The “feel good factor”The “feel good factor”

Process Ease of doing businessEase of doing business

Responsiveness/speed/fast cycle timeResponsiveness/speed/fast cycle time

People

Product/service/technology (enabler) Features and benefits (Innovation is a key)Features and benefits (Innovation is a key)

Support

Information


Strategies Customer “Sensing”

Processes



Customers

CustomerExperience



Sin #5:Sin #5:Having Dysfunctional or Having Dysfunctional or

UnderutilisedUnderutilised “ “Sensing” ProcessesSensing” Processes

50

45

40

35

30

25

20

15

10

5

0Delivery

Process Areas

34.6

11.4

ProblemFrequency

(Percentage) 19.7

16.6

6.4

Sales Service Admin Installation

Problem Detection Survey

20

17.5

15

12.5

10

7.5

5

2.5

0Delivery

Process Areas

7.56.5

Percent of customers

said they would stop

doing businessbecause of the

problem

18.0

4.3

11.1

Sales Service Admin Installation


Rapidly Changing Stable

Stable

RapidlyChanging

Ma

rke

t C

on

dit

ion

s (

cus

tom

ers

& c

om

pet

itio

n)

Technology

Where is your organisation today? How fast is your operating and market environment changing? How are you leveraging your contact centre(s)? Whether you like it or not, EVERY organisation is moving closer to the most “uncomfortable” or challenging cell

in this matrix

Increased need for “real” time

data & information•Customer•Market

•Competition


Strategies Customer “Sensing”

Processes



Customers

CustomerExperience



CRM

Feedback

Sin #7:Sin #7:A Failure to Establish an Integrated A Failure to Establish an Integrated

Information Architecture,Information Architecture,Infrastructure and utiliseInfrastructure and utiliseSystematic ApproachesSystematic Approaches

Complaints

CSMCSM

ContactContactCentresCentres

CustomerCustomerVisitsVisits

ComplaintsComplaints

CSMCSM

ContactContactCentresCentres

CustomerCustomerVisitsVisits

CustomerDatabase

Loyalty/Relationship Council

ListeningPost

TeamsIdentify & Prioritise

Opportunities for Improvement

Assign Ownership

Develop & ExecuteAction Plan

AccountManagement

Teams

The Systematic Approach

Do

Measure or Check

Plan

Improve or Act

The Case of Duke Power

Thank You!

Questions

Reference Charts

ConsumerConsideration

Find Item

In-Store Assistance(visible/available, accessible,professional/knowledgeable,

courteous/respectful)

In-Store Experience(avoid unpleasant surprises, e.g., not having advertised

items)

Consumer Decision I

Travel to Location (logistics

convenience)

Attract orConnect with Consumers

AdvertisingMessage and

Image

Communication

Arrival

Consumer Decision IIPurchase

Item

Consider Other Items

Decision IIICheckout Process

ProductUsage

Service Delivery

(installation)

After SalesExperience

The Customer Promise,Keeping Commitments,Meeting Expectations

Convince & Convert to or strengthen loyalty

Resolving problems or complaints

Decision IVShould I

return in the future based

upon this experience?

Management at all levels regularly meets with customers to

listen and learn about changing requirements, how their

organisation is performing in meeting those requirements and

to strengthen relationships with customers

Management places a priority on using customer feedback data

and the analysis and interpretation of this data to facilitate

improvement activity within their organisation.

WillingnessWillingnessto Recommendto Recommend

92%

96%96%

No ProblemNo ProblemExperience (46%)Experience (46%)

68%

42%42%

15%Non-complaints (12%)

Dissatisfied (17%)

Mollified (63%)

Satisfied (20%)Satisfied (20%)

Complaints (88%)Complaints (88%)

ProblemProblemExperience (54%)Experience (54%)

Customers

How effective is your problem/complaint management process?How effective is your problem/complaint management process?


100

90

80

70

60

50

40

30

20

10

0

32.5m

Percentage of Closed Accounts

5.8m 3.0m

18% ofcustomerscomplain

52% ofcustomers

are notsatisfiedwith how

thecomplaint

was handled

38% ofcustomers

not satisfiedwith

complainthandling

close theiraccount

This 38% represents 1.2million customersor 3.6% of the total customer base

Based on £158revenue percustomer p.a. (from2003 Report andAccounts) this is worth an estimated£182.4 m in lostannual revenue

Source: Adapted from Ernst & Young, Treating Customers Fairly

LowExtremelyExtremelySatisfiedSatisfied

Level of Satisfaction with Complaints Handling

High

VeryVerySatisfiedSatisfied

FairlyFairlySatisfiedSatisfied

FairlyFairlyDissatisfiedDissatisfied

VeryVeryDissatisfiedDissatisfied

ExtremelyExtremelyDissatisfiedDissatisfied

% of customers

taking negative

action

6%27%

20%

25%

36%

56%

44%55%

35%

40%35%

35%

65%

Useaccountless

Closeaccount

Do nottake upany newproducts

Source: Adapted from Ernst & Young, Treating Customers Fairly

The proportion of The proportion of negative actions by customersnegative actions by customers

increases significantly increases significantly as satisfaction withas satisfaction withcomplaints handlingcomplaints handling

reducesreduces

And there is even And there is even more bad newsmore bad news(High Net Worth)(High Net Worth)

Reliability: eliability:

Getting it right: first time, on time and every timeGetting it right: first time, on time and every timeKeeping your promisesKeeping your promises

RResponsiveness:esponsiveness:

Acting with an appropriate sense of urgency to ensure we give the Acting with an appropriate sense of urgency to ensure we give the customer what they want, when they want it and do so in a customer what they want, when they want it and do so in a

courteous and professional mannercourteous and professional manner

UUnderstanding the Customer Completely:nderstanding the Customer Completely:

Making certain we take the time to listen and fully understand Making certain we take the time to listen and fully understand the customer’s requirements of us and what is most important to the customer’s requirements of us and what is most important to

them so we can deliver accordingly – no unpleasant surprises -them so we can deliver accordingly – no unpleasant surprises - and that you understand them and/or their businessand that you understand them and/or their business

SStraightforward:traightforward:

Keeping things simple and uncomplicated so we are easy to do Keeping things simple and uncomplicated so we are easy to do business withbusiness with

Four Key Universal Customer Requirements

Indifferent

Satisfied

Loyal

Secure

Increasingly “Benefits” D

riven

Incr

easi

ngly

“Pr

ice”

Dri

ven

Differentiationfrom

CompetitionThrough Value

LOW

HIGH

To be successful, your organisation must identify the customersit wants, attract them and keep them through building

relationships based upon an appropriate value proposition

Key findings:Key findings: Customer loyalty drives profitability and Customer loyalty drives profitability and

growth.growth. A 5% increase in customer loyalty can boost profits by A 5% increase in customer loyalty can boost profits by

25% to 85%25% to 85%

Customer satisfaction drives customer loyaltyCustomer satisfaction drives customer loyalty Xerox found that its very satisfied customers were six Xerox found that its very satisfied customers were six

times more likely to repurchase equipment that those times more likely to repurchase equipment that those who were merely satisfiedwho were merely satisfied

Staff satisfaction drives customer loyaltyStaff satisfaction drives customer loyalty low staff turnover was found to be closely linked to low staff turnover was found to be closely linked to

high customer satisfactionhigh customer satisfaction

EmployeeEmployee

behaviourbehaviour

MerchandiseMerchandise

ValueValue

ServiceService

HelpfulnessHelpfulness

CustomerCustomer

impressionimpression

CustomerCustomer

recommendationsrecommendations

EmployeeEmployee

retentionretentionCustomerCustomer

retentionretention

Return on assetsReturn on assets

Operating marginOperating margin

Revenue growthRevenue growth

A COMPELLING PLACE

TO WORK

A COMPELLINGPLACE

TO INVEST

A COMPELLING

PLACE TO SHOP

5 UNIT INCREASE5 UNIT INCREASEIN EMPLOYEEIN EMPLOYEE

ATTITUDEATTITUDE

1.3 UNIT INCREASE1.3 UNIT INCREASEIN CUSTOMERIN CUSTOMERIMPRESSIONIMPRESSION

0.5% INCREASE0.5% INCREASEIN REVENUEIN REVENUE

GROWTHGROWTH

DRIVESDRIVES DRIVESDRIVES

The Service-Profit Chain at Sears

AttitudeAttitude

aboutabout

the jobthe job

AttitudeAttitude

aboutabout

the companythe company