smith+co on
customer experience
Shaun Smith
  • By Shaun Smith
  • May 23 2008

The ONE thing I learnt last week

Last week I chaired day two of the European Conference on Customer Management in London. There are always hundreds of memorable learning points flying around at an event that features the likes of Stephen Covey, Richard Branson, Ken Blanchard, Dan Pink and Fred Reichheld. But, one Uber learning point stood out for me. I was chatting with Lou Carbone of Experience Engineering and we agreed that there was a common thread that ran through many of the key-note presentations.

It is this: belief shapes our reality. The models or frameworks we use to conceptualise our organization, employees, and customers, are like a lens or filter through which we see the world. That filter determines our behaviours towards colleagues and customers, shaping our actions and therefore the results we achieve and how we keep score.

Let me explain: There was some argument at ECMW 2008 over the now popular Net Promoter Score (Satmetrix and Fred Reichheld’s loyalty measurement system. NPS measures customers who are ‘Promoters’ minus those who are ‘Detractors’). The godfather of loyalty, Fred Reichheld, argued its case on day one of the event and previously argued that ‘It is the one number you need to grow.’ In other words, the NPS can replace most other customer measures in business.

The next day, Timothy Keiningham of IPSOS MORI (a competitor in the marketplace, it must be said) berated the audience for believing NPS works, claiming aggressively that all those who believed in it were deluded by flawed research. Of course, a cynic might argue that a research company like IPSOS MORI agreeing that there is only one number that you really need to measure is a bit like turkeys voting for Christmas.

Shared belief creates common purpose

But, Keiningham was missing the point, it seemed to me. A shared belief, when harnessed as a common purpose, creates powerful alignment, focus and a common direction of travel, which delivers momentum. So if we BELIEVE that NPS is in fact the one number we need to grow, then all our efforts will be devoted to customer advocacy and this is what we will get. That is exactly what Enterprise Rent-a-car focused on and that is exactly what they got.

If we believe, as Stephen Covey (Seven Habits of Highly Effective People) does, that leadership happens at all levels, then the way we lead will create a culture that fosters that. If we believe that innovation and a healthy disregard of traditional business practices is not just legitimate or allowable, but actually a competitive advantage and the best way to run a company, as Branson does, then that will become the nature of the brand, manifesting itself in the way its people behave and in the other Virgin brand attributes, from innovative customer experiences to cheeky advertising.

Transactional leaders

Similarly, most executives are ‘transactional leaders’. They believe employees are hired labour and see their relationship as a transactional arrangement at best with little loyalty on either side. Transactional leadership tends to deliver compliance but not commitment. If you want people to stay you have to bribe them through increased pay and perks. By contrast, Robert Stephens, founder of The Geek Squad, who was speaking at the conference, believes that a company today is like a social network that has ‘temporary custody of talent’, and that you have to build in social links to help unite that talent around a common purpose. In other words you have to create an environment of learning and fun if you want people to stay with you.

In Robert’s view, it is absolutely fine if your people leave to advance themselves, but not for any other reason. He also believes that ‘recruitment is the most authentic form of advertising’ and so goes out of his way not to ‘sell’ the Geek Squad to candidates but to tell it like it is as part of the recruitment process - the need for dedication, devotion to duty, hard work and obsessive attention to speed and quality.

If we look at how market places evolve and companies compete over time, the centrality of belief in shaping reality becomes clear. A good example is MP3 players. If you believe that they are purely functional, then that is how you will compete and your culture will mirror that, focusing on costs and features primarily. You will tend to manage by the numbers.

How markets evolve

If you believe that you can add value through service, as Apple did with iTunes, then marketing assumes greater importance and brand loyalty and market share will be your focus. If you believe that customer experience is the greatest differentiator, as I do, and Robert Stephens does, then the culture you need is likely to be more engaging and emotional (EQ rather than IQ) and experiential itself. In this case measuring the customer and the employee experience become the dominant focus. This is where Apple is heading with its retail stores.

Our structures create us

So, the key thing for me is this: if a company wants to compete on the basis of customer experience then it first has to create a culture that values engagement & emotional intelligence; one that invests primarily in people and their development.

Form follows function, as the designers and engineers like to say. Or as Winston Churchill said ‘First we create our structures and then they create us.’ So it is a waste of time trying to embrace customer experience if the culture or the belief systems of the leaders don’t support it as a competitive strategy. This requires us to make our beliefs explicit and ensure they are aligned with what we want to achieve. Otherwise we are likely to fail

So, if you want your investment in the customer experience to bear fruit, the ‘one question’ you have to start out with becomes: ‘What do I believe in?’