B2B

November 27, 2019

CX Strategy (4) – The dangers of ‘What you see is all there is’

Maurice FitzGerald / Behavioral economics, Blog, Customer experience, Customer Satisfaction, Strategy / B2B, Customer Experience, CX, strategy /

Welcome to the fourth article in my series on how to develop and implement a customer experience strategy. You can find the previous articles in the series here.

Before going into each step of the strategy development process, here is a special word about the data you use as a basis for your decisions. You must not assume that everything you have is everything you need to have

The danger of WYSIATI

Nobel-winner Daniel Kahneman introduced the concept of What you see is all there is (WYSIATI) in his book Thinking, Fast and Slow. The concept is that we tend to make our decisions based on woefully incomplete evidence, believing that what we currently know is all there is to know. To use a Food Babe-type example (www.foodbabe.com), “The number of cancer diagnoses has multiplied by 20 in the last hundred years. Our diet has changed totally in that time. To cure cancer, we just need to change our diet back to what it used to be.” Just so you don’t think I am picking on Food Babe (I am really), the following is equally illogical, “Life expectancy has increased by more than 20 years over the last hundred years. Our diet has changed totally in that time. Our diet is entirely responsible for the increase in longevity.”

In the world of customer experience, the symptoms are easy to recognize, once you understand the concept. A senior executive who has never met a customer finally speaks to one. He / she returns to the office and behaves as though that one customer is representative of all customers. “The customer kept going on about the color of the timer buttons on our new microwave oven. It is really a serious problem. Send two people over to the customer right away to understand the issue better. This is our top priority. Cancel whatever your people are working on until this is resolved.”

Another common WYSIATI statement you will come across is “Everyone knows that employee happiness is the most important factor in customer happiness.” In a later article, you will see that employee happiness does not have much impact on customer satisfaction in most businesses.

I receive a lot of emails that include advice on various customer experience topics. I remember one from Boomerang that provided 7 tips for getting more responses to your emails (with data) . While the tips are good, it would be a mistake to believe that these are the only seven things that matter. The study was limited in scope and did not cover things like personalization of the emails and the subject lines, for example.

Updating the elephant metaphor

You may have seen another way of representing WYSIATI. It uses the metaphor of a group of blindfolded people who try to identify what they are looking at by touching just one part of an elephant. The metaphor is helpful, but does not go as far as WYSIATI in terms of explaining the consequences of such limited beliefs. The drawing at the top of this article uses more modern Virtual Reality technology and may help you to visualize how dramatic the effect can be. If you believe that what you see is all there is, you are not living in the real world, even when the zombie apocalypse is actually happening.

Next time

The next article will be a lengthy one on a critical strategy development topic: Understanding your current situation.

As is often the case, the above is an edited version of a chapter in one of our books; in this case Customer Experience Strategy – Design and Implementation.All of our books are available in paperback and Kindle formats from Amazon stores worldwide, and from your better book retailers.

November 11, 2019

CX Strategy (3) – You need a strategy

Maurice FitzGerald / Blog, Customer experience, Customer Satisfaction, Strategy / B2B, Customer Experience, CX, strategy /

Welcome to the third article in my series on how to develop and implement a customer experience strategy. You can find the previous articles in the series here.

Why bother with strategy?

The reason you need a strategy is simple: you do not have unlimited resources and never will. The word comes from the Greek strategos and means ‘generalship’. Its origin is in how to deploy your scarce troops, equipment and diplomatic resources to win battles and wars. It is all about defeating the enemy. No general ever won a battle by saying, “I don’t care where the enemy is, or what they are doing. I am going to line up my army three deep all across this open battlefield. I don’t care what weapons my army has nor how they compare to those of the enemy. I don’t care about the weather today or tomorrow. I don’t care what my allies are doing. I have given my troops their top 20 priorities. We will just walk slowly forwards and I am sure we will win.” Sounds ridiculous? It should. Unfortunately, this is what most companies’ customer experience strategies look like.

Your enemies are outside your company

In business, your enemies are your competitors. The purpose of any customer experience strategy should be to do things differently or better than your competitors so you can win. The strategy should be articulated in terms of three to five priorities or initiatives that are easy to remember and make the biggest difference. The number of priorities is important. George A. Miller of Harvard published The Magic Number is 7, plus or minus 2 way back in 1955, suggesting that most people find it reasonably easy to remember about seven things. I find that teams in modern businesses cannot spontaneously remember more than five priorities. Think about this in terms of being able to list your priorities on the fingers of one hand.

Quick start

If you are just starting and don’t have a strategy, here is how to go about generating one quickly. What follows is adapted from Willie Pietersen’s book Reinventing Strategy and his lectures that I attended at Columbia Business School. I have used and improved the methodology for many years.

There are five steps and the following chapters cover them in detail:

Situation analysis: understand what is going on and what will change.
Make your strategic choices.
Secure the necessary sponsorship and investments.
Implement and experiment.
Start again.

What follows below are some things I have learned about the nature of strategy.

Resource limitations

As Pietersen explains, chess would not be an interesting game if you had unlimited resources. “Ah, you took my queen? Never mind, I have plenty more queens.” The whole process is about using your resources as efficiently as you possibly can. Translating this to customer experience, statements like “We need to exceed customer expectations in every interaction they have with us” are both wasteful and unachievable. You don’t have unlimited resources. You should not bother trying to exceed expectations on things that don’t matter. Most customer touchpoints don’t matter. It takes work to find out which ones do, and which ones can give you a competitive advantage. What matters for you will differ from what matters for your competitors. There are no universal answers.

The concept of hygiene factors

There are plenty of areas of customer interaction that are what I call ‘hygiene factors’. The old explanation is to think about them like taking a shower. Nobody will thank you for taking a shower but everyone will notice if you don’t do so for a long time. What this means is that there are things that just have to be ‘good enough’, but making them better will be a bad investment. Remedial phone support is an example. You need to be good enough at answering the phone and solving customer problems. Creating the capability to talk to them about past problems, or their birthdays and favorite sports teams does not add any relevant value. Similarly, delivering a product when a customer expects it is a hygiene factor. Delivering it early may be counterproductive and not worth the effort.

Just as standards of human cleanliness have changed over time, hygiene factors are evolving too. Yesterday’s ‘wow!’ factor, like being on Twitter, may be today’s basic requirement.

Never combine strategy and planning

A note of caution: never combine strategy and planning in a single exercise. ‘Strategy and planning manager’ is a common corporate job title. It has been my title in the past. When you combine strategy and planning into a single job, only planning gets done. When you start to do your strategy work just before the budget submission is due, your working team members will quickly start to say, “Forget this… just give me the spreadsheet to fill in.” Strategy is a creative divergent process. By its nature, it is about doing things you are not currently doing. Planning is a convergent process. It takes what you want to do and creates order about doing it. Divergent and convergent thinking are diametrically opposed and should never be combined. Make sure you work on strategy at a time of year when planning deadlines are not creating pressures that will prevent you doing anything other than making minor adjustments to your current strategy.

Tactics can change, strategy should not

Once you have established a customer experience strategy, you must give it time to work. Just as marketing produces its results in the mid-term, the same is true of customer experience. This can be a challenging dynamic in businesses that are driven to produce results each quarter. Maintaining sponsorship for your work is both difficult and critical. Sponsorship is the subject of a section of this book. If you are creating a strategy where none exists, you will be under pressure to demonstrate results. The pressure is as much self-imposed as it is from other parts of your organization. The section on sponsorship includes advice on how to ensure your work continues in times of cost pressure, as well as times of growth.

You know you have a strategy when the screaming starts

Deciding what you will not do is just as important as deciding what you will do. Ensuring you have the necessary resources will probably involve stopping existing work and transferring people and budgets to new work. It is inevitable that the people currently doing that work will be upset about the choices. Plan on this, and only be satisfied that your strategy is clear when the pushback actually starts to happen.

Next time

The next article will be the first covering a relevant behavioral economics topic: What you see is all there is.

November 6, 2019

CX Strategy (2) – What makes B2B different?

Maurice FitzGerald / Blog, Customer experience, Customer Satisfaction, Strategy / B2B, Customer Experience, CX, strategy /

Welcome to the second article in my series on how to develop and implement a customer experience strategy.

This series is about customer experience in business-to-business (B2B) situations. Most of what you read elsewhere about customer experience is in the context of business-to-consumer and is not directly relevant. The reasons are the following:

In B2B, a single person is never responsible for all the client organization’s interactions with your company.
The difference in the relative financial importance of your largest and smallest customers is much greater than for B2C.
The people who use your products or services are usually not the ones who make the purchase decisions.
Your relationship with your customer requires more constant attention because multiple sales and support engagements are likely to be happening at the same time.
Relationships with individual people in the customer organization matter as much as relationships with positions on organization charts.
It takes time to know whether you are improving things.
Your customers want and need you to be successful.
Angry customers stay with you.

There are businesses that look like B2C but are actually B2B. Kentucky Fried Chicken (KFC) is an example, and so is General Motors. Most of their income comes from franchisees, not directly from consumers. Keeping franchise operators happy is more important to KFC than the views of the end customers. It is largely up to the franchise operators to keep the end customers happy.

No single person responsible for everything

When I shop at my local supermarket, I start by scanning my loyalty card and picking up my barcode scanner. I then scan each article as I put it into the caddy. I check out on my own and speak to nobody. The same happens when I buy something from Amazon. More commonly, my retail interactions involve a single person. If I buy a pair of shoes, it is possible that I won’t go back to that store for a year or two, no matter how happy I am with the shoes and the shopping experience. OK, if you want to be picky, a second person might have welcomed me to the store.

When a business buys from another business, things can be far more complex. Yes, a business can still buy Amazon Web Services and never interact with a human being. At the other extreme, a decision to no longer handle invoicing internally in a large company but to outsource it to another company can take two years. It can involve many different people, from the CFO to Procurement to labor unions at the customer end, from a sales person to an implementation project manager at the supplier end. And that is just to get to a decision. Implementation can be complex and involve a lot of different people. Management and organization changes can call the whole project into question and delay things significantly.

Differences in customer size matter

In most B2B situations, you have customers who matter more to you than others. There are two main reasons some may be special. The obvious one is revenue. A typical Pareto curve means that 20% of your customers may bring 80% of your revenue. The 20% need to be treated differently from the 80%. While you might like to think this is in the case in B2C, it has a different scale in B2B. There are very few B2C situations where a consumer is spending millions with one company. The second reason a customer may be special is that they are the pilot customer for a new product or service. You need them to be particularly happy with you, so they are willing to recommend the new product or service to others. (Of course, you should not expect a B2B customer to recommend your product to one of their competitors.) The Pareto chart below illustrates a typical B2B customer profile.

Users are not purchasers

Perhaps most importantly, the user of a product or service is rarely the one who signs the purchase order. If you are a catering company, you may bid to supply canteen / restaurant services to a large client. The people who eat the food are unlikely to be consulted in any way in the purchase decision. Unless your food is awful, they are also unlikely to be consulted at all about renewing the contract. Of course there are exceptions and end users can be decision-makers. A noteworthy example is software. Before the emergence of cloud computing, most decisions to purchase software required you to buy hardware. This meant that the central IT department could control everything. That has changed. An individual user can download a free trial version of some application and use it. It can spread to a department, if the department has a credit card, and then throughout a company, no matter what the CIO wants. That creates a specific customer experience dynamic which we will cover.

Constant attention required

The nature of large transactions and large projects means that some B2B customers require constant attention from your teams. The attention may be from different teams at different points in the implementation of a large project. Multiple sales, project and support engagements may be happening simultaneously.

Relationships with both positions and individuals matter

Large customer organizations are dynamic. Their structures can change, and people move from one position to another as they develop their careers. People you know at one customer can suddenly pop up at another. This has profound implications for research and improvement methods. For relationship surveys, it usually means that an overall score for a customer has no value. What matters is the state of each individual relationship, particularly with decision makers, decision influencers, and to an extent with the end users of your product or service. The same applies in the other direction. Customers need to be carefully prepared for a change in ‘their’ account manager, for example. This will be covered in detail in the section on relationship surveys. If your customer project takes a long time to implement, you can be reasonably certain they will change their organization and that this will have an impact on what you have to deliver. Plan on it.

It takes time to know whether you are improving things

If you run a supermarket and want to improve sales of something, you move the product to the head of an aisle. You learn about your success or failure right away. When selling to businesses, it takes much more time to know whether customer experience improvements are helping or hurting. For most types of B2B businesses, it will take 12 to 18 months before you know whether a change is giving you a competitive advantage. The reason is the typical purchase cycle. Customers will use a product or service for some time before needing to buy more. If you are working in a company that considers thinking two fiscal quarters ahead to be long-term planning, you may have difficulty retaining the funding for your efforts. A later article will cover methods for ensuring ongoing sponsorship for your work.

Your success matters to your customers

Most of your customers want you to be successful. Think about the procurement people, for example. In their ideal world, they want as many companies as possible – including yours – to compete to offer products and services at the lowest possible price. Others want to see as many different innovations as possible, believing that your innovation will be to their competitive advantage. If you have already sold them something, your continued financial survival is important to their belief you will be able to support and improve your product or service. While the same may be the case in consumer businesses, consumers are more likely to have short-term relationships with companies, not caring much if one goes out of business. The consumer’s livelihood is unlikely to depend on the survival of a company that does not employ them.

Angry customers may stay with you

Customer satisfaction is easy to understand in consumer businesses, less so when selling to companies. If the waiter in a restaurant treats you badly, most people (in the USA at least) still leave a tip and never go to the restaurant again. That is life in consumer land, apart from banks and cable TV companies that make it difficult for you to leave. Let’s suppose your company supplies restaurant services to corporations. Six months into a contract, a customer’s employee finds a worm in one of your salads. The customer gets angry. You devote large amounts of resources to fixing the issue so it never happens again.

One final thought – Sales differences are quite similar

Will Cannon has written an interesting article about the differences between B2B and B2C for sales teams in April 2020. He makes some points that are quite similar to those made here, and some new ones. As regular readers know, I consider the relationship with sales to be the most critical internal one a CX leader can have. Please have a look at Will’s article here.

Next time

The next article will be about why you need a strategy. Seems like a reasonable question.

November 20, 2017

What B2B customers and resellers want – A perspective that goes beyond research

Maurice FitzGerald / Blog / B2B, Behavioral economics, Chief Customer Officer, Customer Experience, Relationships, strategy /

While I have been pushing a scientific approach to building and implementing a customer experience strategy for a long time, let’s put that aside for a moment. After working in this area since 1981, there are a few things I believe are high priorities for most B2B customers. You probably won’t discover some of these points directly in any formal feedback system, though they may be at the heart of many different improvement suggestions.

Remember me

Customers all want to be remembered. This means remembering everyone with whom you have had contact, and what that contact was about. Think about your favorite local restaurant. You appreciate it if the owner greets you at the door and says, “Welcome back Mrs. Smith. It is good to see you here again.” It gets better if the waiter asks, “Would you like the same drink as last time?” You feel that you matter to them.

At its most trivial this means not asking customers for the same information repeatedly if they phone you for support. If your phone routing system asks them for a contract number to route them correctly, you should not ask them for the contract number again. If you have gone through a diagnosis process with a generalist and found that you need to pass it to a more specialized person, the diagnosis information should go with the call. If the person has already phoned with the same problem, or indeed any problem, you should know about it and potentially check that all is still OK. If you have the person’s phone number in your database and the person calls from that number, you should not need to ask their name.

You must participate in the customer’s investment process

Your company probably has a standard format for proposing solutions to customers. If your customer is a large company, they are certain to have their own investment approval process. The person you are selling to has to decide, then propose any substantial investment for further approval at their end. Your proposal needs to fit their process. You should find out what their process is, and make it as easy as possible for them to use it to get your proposal approved.

Continuity of project management

If yours is a service business that relies on project execution, ensure the same project manager is in charge from the start to the end of the engagement. Let’s suppose you have three project stages: proof of concept, pilot, and full roll-out. Different people are needed for each stage of the project. If you have a completely different team for each stage, each new team leader has to get to know the customer organization, and the customer has to get to know them. Customers find full team changes deeply frustrating. The best solution for this is to keep the same project manager in charge the whole way through.

Reduction of your organizational complexity

If you are a large company, you are a complex company. Large customers are complex too, so they will have some empathy for you. A fundamental role of your account team is to reduce the perception and consequences of that complexity for customers. The account manager should be the broker between your different businesses and functions. If you have multiple businesses, each with a separate sales team, you will fail in this complexity reduction and never become a true strategic partner. You will be condemned to have their procurement department as your main contact point. This is not good for your margins.

Your company is always “We”

No matter what your customers complain about, apologize on behalf of your company. The worst type of thing you can say is “Ah yes, another complaint about shipping. Those people have a lot of problems at the moment.” Replace the thinking by “I am sorry you had this experience. We have had a few shipping problems recently and are doing our best to improve.”

What resellers want

If you use resellers to sell complex products, the resellers’ top priority will probably be that you supply accurate, price-competitive quotations quickly. Let’s suppose the reseller is selling to Nestlé, and that you have a global discount agreement directly with Nestlé that gives them a price reduction everywhere in the world. The quotation you give the reseller needs to reflect that. Let’s further suppose that this deal is in Indonesia and that you have had to give a further 15% price reduction to Nestlé in Indonesia the last three times you did business there. You should give the reseller the quotation with the additional reduction without being asked, though with the necessary explanation. Otherwise you, the reseller and Nestlé all waste time.

The second thing resellers want is for you not to compete with them. Unless you have a formal business model that says you work 100% through resellers, their expectation is not realistic. Your most important customers will want to do business directly with you. The best you can do for resellers is to provide them with clarity on your business model, letting them know when they can expect you to show up, and when it is less likely. If you do business in many countries, it is also probable that you have countries where you have no direct presence and will use resellers. Sometimes you will have an exclusive agreement for a country with a single reseller. Be clear about that too.

Remember that cost reduction is not strategic

While your selling proposition to customers may be cost reduction, cost reduction is not strategic for customers. While that might not seem to make sense, try to think about it this way: the strategic decision is what to do with the money that has been saved. How will it be invested? Once you are helping customers with their investments, you access people that are higher up in the organization and develop a true strategic partnership.

Customers get used to positive experience, then expect more

With relatives in Chicago and California, the difference in weather between the two is common subject of discussion. In addition, the Californian relatives have moved there recently. I have observed this phenomenon with others who have moved to much better climates. Personally, I moved from wet and grey Galway, in the west of Ireland a long time ago, and learned to appreciate the existence of summer. However, for me, and for others who have gone through the weather-improvement experience, its impact is strongest at the start, and fades over the years. Nicer weather becomes “the new normal”. So it is with customer experience. No matter how great the improvements you implement, customers will get used to them. Your competitors may also copy them. You need to repeat the whole strategy development exercise and come up with your “next big thing”.

Conclusion

I hope you enjoy these points that are based more on experience than on what comes out of customer research. Feel free to agree or disagree below. As is usually the case for my blog posts, this is a slightly-edited version of a chapter in one of our books, in this case Customer Experience Strategy – Design and Implementation. And the drawing at the top is included in a new book of business cartoons by Peter FitzGerald that should appear within the next week on Amazon.