Building a Customer-centric Organisation: The Role of · PDF fileBuilding a customer-centric organisation: ... Condition Value for Money Value for Time ... Building a customer-centric

Henley Centre for Customer Management

Building a Customer-centric Organisation: The Role of the Board

and the Executive Team

Professor Moira Clark

© The Henley Centre for Customer Management 2017

Building a customer-centric organisation:The role of the board and the executive team

• Does customer centricity drive great business

performance?

• How can we drive customer centricity from the

top?

•How can we get best people performance?

•How do we get the right measurements in place?


Customer centricity drives businessperformance

• Customer retention/loyalty

• Customer willingness to spend more

• Competitive differentiation

• Improved company and brand reputation

• Employee motivation

• Improved culture and climate


Business success and customer centricity

4


Customer satisfaction and businesssuccess

The Service-Profit Chain

Operating Strategy and Service Delivery System

InternalService Quality

Employee Satisfaction

Customer Satisfaction

Customer Loyalty

ExternalService Value

Employee Retention

Employee Productivity

Revenue Growth

Profitability

Source: Harvard Business review, March-April, 1994

• Workplace design• Job design• Employee selection and development• Employee rewards and recognition• Tools for service customers

• Service concept: Results for customers

• Retention• Repeat business• Referral

• Service designed and delivered to meet targeted customers’ needs


Enhanced financial performance

6


Customer retentionProfit impact for a 5% points increase in CR

Source: F.F. Reichheld and W.E. Sasser, Jnr., “Zero defections: quality comes to services”, Harvard Business Review, September - October 1990, pp. 105-111

Profitincrease (%) in customer

value*

AutoServiceChain

Creditcard

InsuranceBrokerage

IndustrialDistribution

IndustrialLaundry

OfficeBuilding

Management

Software0

depositsBranch

depositsBranch

30%25%

50%45% 45%

40%35%

20

40

60

85%

75%80

100

*calculated by comparing the net present values of the profit streams for the average customer life at current defection

rates with the net present values of the profit streams for the average customer life at 5% lower defection rates.


Amazon

8

The exception to the multi-channel rule is Amazon, which isramping e-commerce to become a channel in its own right.

Amazon: UK Banner Sales 2006e-2016f (GBP bn)


Understanding life-time value of acustomer

It helps to know how valuable a retainedcustomer can be

$10,000

Retained for 10 Years$10,000

$10

Single Purchase

Source: Bain & Company

“No matter how valuable I was tellingthem a customer was, our peopleneeded to have that magnitude intheir mental balance sheet.”

- Chief Executive Officer


Cross-selling boosts retention

Criticalillness

5%

Lifeassurance

55%

Incomereplacement

15%

8%

3%

7%

7%

© The Henley Centre for Customer Management 2017 11©Moir

Net Promoter Score: LSE report Advocacy drives growth

Email surveys: 83%Phone surveys: 90%

© The Henley Centre for Customer Management 2017 12

The Customer Effort Score

Source: HBR article - “Stop Trying to Delight Your Customers”by Matthew Dixon, Karen Freeman, and Nicholas Toman

LOW HIGH

HIGHPREDICTIVE POWER FOR REPURCHASING

PREDICTIVE POWER FOR INCREASED SPENDING

CSAT

NPS

CES

The Customer Effort ScoreOutperforms the Net Promoter Score and customer satisfaction measures in predicting behaviour.



Measuring easy

Are we easy to do business with?

Yes NoNeither

If not why not?Clark , HCCM 2015


Apple’s success


Building a customer-centric organisation:

You need to:

•Drive customer centricity from the top – involve

the Board and the Executive Team

•Involve them in customer insight and customer

experience

•Ensure best people performance


• Only one third of Top Teams are ALIGNED!

We also need:

• Belief in values – linking the values of the company

to the values of the brand

Strategic alignment


Belief in valuesSome Unilever brands

http://www.unilever.com/brands/personalcarebrands/ponds/index.aspx

http://www.unilever.com/brands/personalcarebrands/ponds/index.aspx

http://www.unilever.com/brands/personalcarebrands/simple/index.aspx

http://www.unilever.com/brands/personalcarebrands/simple/index.aspx

http://www.unilever.com/brands/personalcarebrands/vaseline/index.aspx

http://www.unilever.com/brands/personalcarebrands/vaseline/index.aspx

http://www.unilever.com/brands/homecarebrands/omo/index.aspx

http://www.unilever.com/brands/homecarebrands/omo/index.aspx


We help people feel good, look good and get more out of life with brands and services that are good for them and good for others.

Our identity expresses Unilever's core values, with each icon representing an aspect of the business.

We aim to be a trusted corporate citizen wherever we operate in the world, respected for the values and standards by which

we behave.

Linking the values of the companyto the values of its brands



First Direct

• Twice winner of the overall Unisys Management Today Service Excellence Award

• Core Values– Respect

for individuals– right first time

efficiency and accuracy– Responsive

to customer needs and each other

– Contributionby individuals and teams to first direct

– Opennesswith each other and customers

– Kaizencontinuous improvement


Building a customer-centric organisation

You need to:

•Drive customer experience from the top – involve



experience



You need to develop good customer insight

Customer insight


SemioticsEthnography

Customer insightUse the full toolbox…………

etc

Get into the mind of the customer!

“A fresh and not yet obvious understanding that can become the basis for competitor advantage”.

Source: defyingthelimits.com, Mohanbir Sawhney, Kellogg School of Management


The Great Recession 2008-2009

2009: Hyundai Assurance: If you lose your job or income withina year of buying the car, you can return it with no penaltyto your credit rating. Industry sales declined 37% but Hyundai sales nearly doubled and sold more than Chrysler who had 4Xmore dealerships


Achieving customer centricity

The importance of creating memorable experiences


The Customer Experience Model

Emotional

Access

Application of

Knowledge

Atmosphere

Caring

– Attitude –

Caring

– Procedures, Processes –

Communication

Sector

Differences

Individual

Outcomes

Peer-to-Peer

Relationship

Reliability

Safety

Social Impact

Supplier

Condition

Value for

Money

Value for

Time

Variety /

Choice

ProductService

Experience*

**

*

* Emphasis on attitude


Knowledge – From Brain to Heart

Two types

Articulate knowledgeWe can write it down

•BA (hons), MBAs•Accountant, Engineer

The Brain•Physical need

•Practical•Comfort•Sensible

•Common Sense•Rational

Tacit knowledge•Silent

•Implicit•Can’t write it down

Heart•Experience•Emotions

•Esteem•Aesthetics

•Impulse

Tacit knowledge - the next generation of competitive advantageProfessor Moira Clark




Strong BrandWeak Brand

Deppe, M.; Schwindt, W.; Kugel, H.; Plassmann, H.; Kenning, P. (2005): Non-linear responses within the medial prefrontal cortex reveal when specific implicit

information influences economic decision-making, in: Journal of Neuroimaging, Vol. 15, No. 2, 2005, pp. 171-183


1. Extent of Personal Contact

2. Flexibility

3. Implicit Understanding of

Customer Needs

4. Pro-activity in Eliciting

Customer’s Objectives

5. Pro-activity in Checking

that Everything is OK

6. Promise Fulfilment

7. Knowledge

1. Helpfulness

2. Value for Time

3. Customer Recognition

4. Promise Fulfilment

5. Problem Solving

6. Personalisation

7. Competence

8. Accessibility

B2B B2C

Important CE Factors in B2B and B2C


Important CE Factors in B2B

1. Extent of Personal ContactThe extent to which the company deals with the customer through personal contact methods

2. Flexibility How willing and able are the company to modify their offering in response to the customer’s specific needs or changing requirements?

3. Implicit Understanding of Customer NeedsDoes the company understand the context of the customer’s order? Do they use their prior knowledge of the customer and their business to serve them better?


Important CE Factors in B2C

1. Helpfulness

Are they really prepared to help me – where nothing is

too much trouble for their staff?

2. Value for Time

Do they respect and make efficient use of my time – by

shortening queues and delivering what they provide

efficiently?

3. Customer Recognition

When I contact them do they recognise and

acknowledge me as an individual?


‘Client ease’ is a client’s perception of how easy a company is to do business with. It is the amount of time and energy that he/she has to spend in an encounter with a brand or an organisation.

• It is different from the objective amount of time and energy.

• It is the nonmonetary cost of consumption.• It can be a global judgment or a judgment about a

single encounter.

What is ‘ease of doing business’?

Clark and Bryan, HCCM 2013


Why measure effort – cont?

• Drives advocacy

• High actionable feedback – tells you what drives your

clients mad!

• Applicable to all channels and all businesses

• Engages and resonates with staff

• Low effort = low cost for everyone!


1. Queuing and waiting time

2. Transaction/consumption time

3. Cognitive energy

4. Emotional energy

5. Physical energy

Dimensions of client ease



Cognitive energy

• Too much choice/information/jargon

• Lengthy terms and conditions

• Welcome packs that overwhelm (0.6 Kilo! And

150 pages)

• Complicated contracts

• Remembering passwords

• Complaints procedures not transparent

• Web site – difficult to navigateClark and Bryan, HCCM 2013


‘Thinking is to humans as

swimming is to cats. We can

do it if we have to, but we’ll

do anything to avoid it.’

We are cognitive misers!

Kahneman, 2012



Thinking fast and slow!

Source: Kahneman 2012

Perception Intuition Reflection

Autopilot System 1 Pilot System 2

Characteristics Effortless, triggers emotion, fast, unconscious, looks for patterns, looks for causation, creates stories to explain events

Effortful, slow, logical, conscious,Deliberate, can handle abstract concepts

Advantages Speed of response, easy completion or routine or repetitive tasks

Allows reflection and consideration, consequences, options, logic, maths and statistics

Disadvantages Jumps to conclusions, unhelpful emotional responses, can make errors that are not detected or corrected

Slow so requires time, requires effort and energy which can lead to decision fatigue

Input Decision


The autopilot processes everything weexperience through our senses

Autopilot11,000,000 bits per second

Pilot 40 bits/s


Emotional energy

• Attitude of staff/ people relationship

• Inability to access the right people/changes in account

manager/adviser

• Inability to access the right processes or procedures

• Complaints not being properly dealt with

• Being kept waiting

• Safety and security

• Only want to talk when you want to sell somethingClark and Bryan, HCCM 2013


Achieving client centricity

You need to develop a client orientated culture and put

the client at the heart of the business

Increased satisfaction 41% Increased satisfaction 27%


Time energy

• Waiting / queuing – in any channel

• Simplified procedures to shorten time effort

• Explaining things again and again

• Being given the run around

• Distance travelled

• Telepresencing



Make it easy to be a client

Companies create loyal clients by making it easy for them to be a client: helping them to solve their problems quickly and easily

‘Making It Easy to be a client’


Measuring easy


Yes No

If not why not?

Clark , HCCM 2015


How do customers judge value?

Goal theory, which suggests that individuals evaluate the quality of products and services not directly but with reference to their goals.

Quality and value are related concepts at different levels of the customer’s goal hierarchy, value corresponds to goal fulfilment and quality to the excellence/ superiority of the product which enables that value.

Perceived customer value


How do customers judge value?

We define it as:

“Perceived customer value is the extent to which customer’s perceive achievement of their goals through customer

experience.”

We make no prior assumptions as to whether these goals are collective, individual or both.



Preventative and promotional goals

Preventative goals

Preventative goals minimize problems for the customer arising out of the

relationship

For example:

– value for money

– easy to do business with

– minimize stress


Preventative and promotional goals

Promotional goals

Promotional goals address customer aspirations and desired

enhancements

For example:

– idea generation

– feeling important

– knowledge acquisition



Do your customers perceive that: Yes/NoO

rgan

isat

ion

al

Preventative goals

01. you offer value for money?

02. your organisation is easy to do business with?

03. you help them to be cost effective?

Promotional goals

04. you help them with idea generation?

05. you help them to acquire knowledge?

06. you help them improve their value proposition/s?

07. you help them improve their business processes?

08. you are flexible to do business with?

09. you help them to enhance their margin

Ind

ivid

ual

Preventative goals

10. you help them have confidence in the relationship?

11. you help them to be comfortable?

12. you help them with their time efficiency?

13. you are fair in how you manage the relationship?

14. you reduce personal risk?

15. you minimise stress for them?

Promotional goals

16. you are friendly?

17. you help them build their esteem/reputation?

18. you make them feel important?



Preventative Goals Promotional Goals

Organisational

1. Value for money2. Ease/customer effort

(org)3. Cost effectiveness

(by reducing customer’s costs)

4. Idea generation5. Knowledge acquisition6. Value proposition

improvement7. Business process

improvement 8. Flexibility9. Margin enhancement

Individual

10. Confidence11. Comfort12. Individual time efficiency13. Fairness14. Personal risk reduction15. Stress minimisation

16. Friendship17. Esteem/reputation18. Feeling important


How do we measure customer experience?

• CSAT surveys

• NPS

• Ease of doing business

• Text analytics


Yes No

If not why not?

www.hccmsite.co.ukMaximising Value through Relationships

Rant & Rave – Active - 66099


Building a customer-centric organisation

You need to:

•Drive customer experience from the top – involve



experience



People performance is the critical challenge


The quality and history of your relationships is

perhaps the only source of competitive advantage that

ultimately cannot be copied.

People


• Better business outputs

• Better financial performance

• More loyal customers

• Improved innovation

• Better safety

• Can weather the storm better in difficult

times

Best people performance: Does it really matter?


Research model

Employee Engagement

Reputation

Affective Commitment

Advocacy

J0B

SATISFACTI

ON

Trust Senior Management &

My ManagerClimate Servant LeadershipCohesionOrganisational SupportEmpowermentEmployee Initiative(Low) PressureCustomer Care Intention

To Stay Customer Orientation

PERFORMANCE

Employee resilience

Employee effort


Research Method

Used structural equation modelling

Branches with less than 3 responses were dropped

The sample consists of 2056 colleagues from 335 branches


Climate is the atmosphere that employees perceive is created in their organisation by the:

Policies

Practices

Procedures

Rewards of the firm

“We judge companies - and managers - by their actions, not their pious statements of intent.”

Sir Adrian Cadbury

Climate - “The feeling in the air”


Service

Climate

Employee

perceptions of

practices,

procedures and

rewards

Customer and employees

perceive service quality

Customer

satisfaction

Customer

retention

Service

quality

Employees set

own priorities

Draw conclusions

about organisation’s

priorities

Modelling customer retention ratesand perceptions of service quality


5

1

Warmth &Support

Cohesion

Rewards &Recognition

CustomerCare

Structure

4

3

2

12

34

5

1

3

5

2

4

1

2

3

4

5

1

2

3

4

5

Organisational climate themes


Cohesion

“Coming together is a beginning. Keeping together is progress.Working together is success”

Henry Ford


Managers

Staff

Customers

2.

Head Office/

Senior Managers

Managers

Staff

Customers

1.

Head Office/

Senior Managers

Key ‘Common

enemy’

High Retaining Companies

Boundary-spanning relationships andthe ‘common’ enemy


Boundary-spanning relationships and the ‘common’ enemy

Managers

Staff

Customers

2.

Head Office/

Senior Managers

Managers

Staff

Customers

1.

Head Office/

Senior Managers

Key ‘Common

enemy’

High Retaining companies

Competition

is the

common

Enemy


Boundary-spanning relationships and the ‘common’ enemy

Low Retaining Companies

5.

Head Office/

Senior Managers

Managers

Staff

4.

Head Office/

Senior Managers

Customers

Managers

Customers

Staff

6.

Head Office/

Senior Managers

Managers

Customers

Staff

Key ‘Common

enemy’

Still care a bit

about customers


Warmth and support

“Train people well enough so they can leave,Treat them well enough so they don’t want to”

Richard Branson


Reward and recognition


Empowerment

“Learn the rules like a pro so that you can breakthem like an artist”

Pablo Picasso


Participation – have a voice!

“Freedom is participation in power”Marcus Tullius Cicero


Profile of organisational climate themes

10

2

Warmth &Support

Cohesion

Rewards &Recognition

CustomerCare

Structure

8

6

4

24

68

10

2

6

10

4

8

2

4

6

8

10

2

4

6

8

10

High street bank

On-line financial company

Air-line


People Power: Driving business performance


Building a customer-centric organisation: the role of the board and the executive team

• Customer experience does drive great

business performance?

• You need strategic alignment from the top to the

bottom

• Managers should track perceived value measures

as well as customer experience measures in

customer surveys

•Senior executives need to create an organisational

climate that is focused on the customer

Main Sponsor

www.hccmsite.co.ukMaximising Value through Relationships

Henley Centre for Customer Management

Thank [email protected]

Documents

Building a Customer-centric Organisation: The Role of · PDF fileBuilding a customer-centric organisation: ... Condition Value for Money Value for Time ... Building a customer-centric