CX

January 7, 2019

Nudging customers to do what they should (2-minute read)

Maurice FitzGerald / Behavioral economics, Blog, Psychology, Strategic initiatives / Cass Sunstein, Customer Experience, CX, Nudge, Richard Thaler, strategy /

In their book Nudge, Richard Thaler and Cass Sunstein explain that people are poor at choosing among options, and can quite easily be ‘nudged’ or pushed gently to make a specific choice. They promote the concept of ‘Libertarian Paternalism’, encouraging leaders to nudge all of us in directions that give us the greatest long-term benefit. There is a single important principle that permeates their work: humans need well-chosen default options for their major and minor choices in life and as consumers. They also need to be able to change the default choice.

Libertarian Paternalism

The authors give an example of what they mean using the experience of employees at the University of Chicago. They have a subsidized health plan that comes up for renewal each year. They receive paper and email information about the available plans well before the renewal deadline. The question is what should happen when the employee forgets to renew. Should the default be, for example, to continue the prior year’s plan, or to reset them to having no health plan. Except for the economically desperate, it seems unlikely that anyone would reasonably want to cancel their (say) $1,000 per month family health plan that is matched by equal funding from their employer. Libertarian paternalism suggests that the default choice, preselected in the online form, should be to continue the current plan.

Relevance

All companies and government institutions present their customers with choices. The companies providing the choices have a much deeper understanding of the consequences of the choices than the customers do. This is where companies can and must actively suggest the choices customers should make, rather than leaving them with a list to choose from. Assuming the statement is true, a way of handling the issue would be to say, “most customers like you choose this option.” I suggest being more active.

Retail bank example

Consider the example of hardware maintenance for a retail bank’s infrastructure. Let’s suppose we are only talking about what they need to run the front office while the physical bank is open, from Monday to Friday. I remember an example from when I worked at Digital Equipment Corporation (DEC). A UK bank had contracted to have a one-hour on-site support service, Monday to Friday, in working hours. That seemed quite logical until a disk failed in a RAID array. These are massively redundant, and failed disks do not need immediate replacement. One of our people was at their office within 30 minutes. The customer said they could not deal with this during working hours, and asked them to come back the following day, a Saturday. They did not have a contract for this. With a bit more thought, our default option for retail banks could and should have been 24×7 service. We wrongly thought we should just give them a set of choices, and they chose the one that cost the least. We should have used our experience with other banks to nudge them to a better default, even though it would cost them more.

So, and with a totally out of context Monty Python reference: Nudge nudge, wink wink, I will say no more.

The above is a slightly-edited version of a chapter in our book Customer Experience Strategy – Design and Implementation. All of our books are available in paperback and Kindle formats from Amazon stores worldwide.

December 22, 2018

The plural of ‘anecdote’ is ’emotion’ – You can use this for good or for evil

Maurice FitzGerald / Behavioral economics, Blog, Cognition, Strategic initiatives, Strategy / Behavioral economics, behavioural economics, Cognition, Cognitive bias, Customer Experience, CX, Daniel Kahneman, Sponsorship, strategy /

Some time ago I wrote a short article suggesting that The plural of the word ‘anecdote’ is not ‘science’. My point was that just because a lot of people have their own personal stories about a subject does not make what they are saying true. Take the example of nutrition advice that follows a common formula, “I have been taking ten times the daily recommended amount of Vitamin D and have not had a cold for over five years. My sister and her best friend have found the same thing. Vitamin D is ‘the sunshine vitamin’. Everyone knows that we get far fewer colds in the summer than in the winter. Vitamin D is the reason why. Click here to buy my Vitamin D supplements with added iron and jubjub berries, which are essential anti-oxidants.”

I am sure you have seen lots of anecdote-based advertising like this. If twenty people all say vitamin D supplements prevent colds, does that make it into science? I hope you will agree the answer is no.

This happens in business settings too

The same phenomenon arises frequently when businesses are developing their long-term strategies, and indeed when they are deciding how to deploy resources in the short term. Your CEO goes to see a customer who has a particular problem with your product or service. The CEO only sees a couple of customers a month and comes back believing that because one customer told him/her that this was an issue, it is indeed a critical issue. The CEO may also have committed to the customer that the issue will be fixed as soon as possible. Major projects must be stopped and resources reallocated until the problem goes away. I wish I were fantasizing, but I have seen it first-hand a number of times.

It would be nice to think that your customer experience leader or another executive could approach the CEO and provide a list of the top five customer issues that you have learned about through research. You may even be able to list the three strategic initiatives that you have under way to address the problems. For some reason that won’t matter. The anecdote has become science in the CEO’s mind.

Daniel Kahneman’s work

While I say that your efforts to provide data won’t matter ‘for some reason’, what I mean is that they won’t matter for a specific well-understood reason. That reason has been documented by the Nobel-winning behavioral economist Daniel Kahneman in his book Thinking, Fast and Slow. He describes two ways our brains function in terms of two systems:

System 1 is intuitive, emotional, and quick to act.
System 2 is rational, scientific, and relatively slow to act.
And… if System 1 has jumped to a conclusion, System 2 will not engage at all.

French study on organic food as an example

If you Google “French study shows that eating organic reduces cancer risk by 25%” you should find a lot of links to articles on the topic. Indeed, you will find so many links that you might think that it is true. You would be absolutely certain that this is what the French study said.

What the study (which I have read) actually says is that a group of almost 70,000 people who lived particularly healthy lifestyles and also ate organic food had a cancer incidence that was 25% lower than that of the general population over the four-year period of the study. For example, the study group had 15.7% of ‘current smokers’, compared to an average of 31.8% in France as a whole. They also drank less alcohol and exercised more than average. I don’t find it at all surprising that they had far fewer cases of cancer. How much of this was due to organic food? The authors suggest that it had no effect for most of the observed cancers, and may have had an effect for two types of cancer. They also acknowledge that a much larger and randomized UK study of a million people did not show any positive effect of organic food consumption on the incidence of cancer.

The plural of ‘anecdote’ is ’emotion’

None of the facts make any difference. The 25% anecdote has passed into the folklore of the organic food and nutrition communities. In two of the three Swiss cases where the 25% cancer reduction story has been published, my attempts to provide the actual data have been rebuffed. The answer given is “So many sources are saying the 25% story is true that you must be wrong.”

The point here is that the many anecdotes have grouped together to create an emotion about a particular topic. System 1 has reached its conclusion. System 2 is not welcome.

Use this for good in your business

So, you can now use this information for good or for evil. If you have science-based facts that you want to promote, come up with some human stories that will help. If you work at a security software company and want to ask for funding for a particular project, make sure you have your data and add a human-interest story like this:

Or you can use it for evil

On the other hand, if one of your colleagues, or perhaps a political opponent, has science-based facts that are inconvenient to you, don’t push back on the science. Simply come up with a human-interest anecdote that supports a different direction. This is easy in politics.

Let’s take the example of immigration. In most countries the immigrant population commits far few crimes than the native population. If you are in one of these countries and want to promote anti-immigration legislation you simply come up with a story about your neighbour who was attacked by an immigrant. The story does not even have to be true. You simply imply that all immigrants from your target country are dangerous. “A woman down the road was attacked by a teenager from Outer Slobavia last week. The Outer Slobavians are all dangerous criminals and we need to keep them out of our country.” It does not matter what the data says. Evil, eh? [You can’t hear me practicing my evil laugh here.] And yes, I am sure you can work out how to use this general principle in a business setting.

Conclusion

I have to work on an email to the producers of a Swiss TV program that has been announced for January 8th. As far as I can tell from the trailer, the anti-GMO journalist is going to show a documentary about cotton production in India. I think the information will be based on an entirely false story that the Indian anti-GMO activist Vandana Shiva started to spread about 15 years ago. She says that GMO cotton, specifically a variety that is resistant to bollworm attacks, has been responsible for a large part of the 270,000 suicides there have been among Indian farmers since 1995.

Yes, it is tragic that farmer suicides represent 10% of the total suicides in India since 1995, but there are many holes in the story. For example, the GMO cotton in question was introduced in 2002, requires far less pesticide use, and has a much better ROI than non-GMO cotton in India. My challenge is that her argument can be summarized in three System 1 words, “GMO Suicide Seeds”, and I only have a System 2 rebuttal. Ideas on how to condense it into a System 1 summary are welcome. Contact me by email if you have any ideas.

Remember that our books still make great holiday and New Year’s Day presents! All of our books are available in paperback and Kindle formats from Amazon stores worldwide.

Situation analysis internal realities and insights

December 10, 2018

Strategy: Ask new questions to get new answers – Part6 of 6: Internal realities, and conclusion

Maurice FitzGerald / Blog, Strategic initiatives, Strategy / Chief Customer Officer, competition, Customer Experience, CX, Sponsorship, strategy /

So far, the situation analysis has allowed you to dream about what you can do for customers and partners, how you will crush your competitors and how you will lead your industry. This time we move on to the internal realities in your own organization. It’s a tricky subject and can be the hardest of the six areas we have been studying. Let’s be positive: to get new answers, you have to ask new questions.

This is the fifth in a series of articles about what I consider to be the most important aspect of strategy development: an accurate analysis of the current situation and what should be done to improve it. The first article was about customers and is here. The second was about partners and is here. The third was about competitors and is here. The fourth was about industry dynamics and external factors and is here.

Questions about internal realities

While the first five areas are all about what is happening outside your company, you are unlikely to be able to sell and implement every conceivable idea within your company. These questions may help establish what you can achieve:

What is the state of executive sponsorship for your current efforts?
How likely are you to be to get any additional funding and people you may need to implement?
What can you do to prove the value of your work?
How can you secure enduring sponsorship for your work; sponsorship that will survive leadership changes?
What current work can you stop in your own area to provide resources for new work?
Do you have a formal talent management program in your company that you could use to staff improvement work on a part-time basis?
What measurement and improvement systems and processes have your CEO and other key leaders used in their previous companies?
Look at the intranet pages of your business and function leaders. Which ones mention customers as a priority and which seem to have no interest in the topic? Which ones have announced and staffed formal customer-centric initiatives?
Have you grown by mergers and acquisitions? If so, are many different improvement systems and processes in place? Which ones seem to have the best reputations and produce superior results?

These are just suggestions

Each company is different. You need to come up with your own list of questions. Try to find at least some that you believe nobody has ever asked. My draft list is a reasonable starting place. I have tried to include questions that are about people and organizations as well as about sources of funding. The second question on the list is critical, nevertheless; if you have no hope of getting the people and other resources you need to implement a new strategy, well… you should probably change companies.

The answers lead to insights

The result of the situation analysis in each area should be a short list of insights. Each team should aim to have one to three insights and potential initiatives ready to explain and propose at the end of the analysis cycle. If a team has more than three ‘top priorities’, they have probably not put enough thought into it. As French philosopher Rene Descartes said when writing a letter to a friend (and this is often mis-attributed to Mark Twain), “Please excuse me for writing such a long letter. If I had had more time, I would have written a shorter one.”

Useful insights often take the form of “so therefore…” statements. “We looked at the industry benchmark data from Temkin Group and saw that Acme is outperforming us in this area. We believe we are stronger than Acme here, so therefore here is what we need to do…” The point is that the action proposals need to be based on data and analysis, and not on ideas that have come from thin air, with no factual basis for believing they will improve customer or partner experience. Each team’s insights and proposals will be competing with those from other teams for funding. The better supported the proposals are by fact, the easier they will be to explain and support.

Conclusion

We have now covered all six dimensions of a situation analysis and outlined how to turn the questions and answers into insights. The word ‘insight’ is a deep and meaningful word. It is not superficial. The process I have outlined should give you the depth required to decide what areas you should concentrate on and how.

Good luck!

As is often the case, the above is a substantial rewrite of part 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.

Situation analysis industry and environment

December 2, 2018

Strategy: Ask new questions to get new answers – Parts 4 and 5: CX industry and external trends

Maurice FitzGerald / Blog, Strategic initiatives, Strategy / Chief Customer Officer, competition, Customer Experience, CX, strategy /

This time the situation analysis process moves on to relevant trends in your industry and in the external environment. Accurate observations about these areas can give you a competitive advantage, even if you have little influence over the trends. Remember: to get new answers, you have to ask new questions.

This is the fourth in a series of articles about what I consider to be the most important aspect of strategy development: an accurate analysis of the current situation and what should be done to improve it. The first article was about customers and is here. The second was about partners and is here. The third was about competitors and is here.

Industry and external trends

These areas require a different approach to others in that it may be harder to find objective data. Please don’t ‘trust your gut’. Whether it be for climate change or business strategy, science will give far superior insights to those your stomach and intestines may provide. These are areas where having someone on your team who has a formal business school education may help. I remember learning something I found surprising in one of my INSEAD courses, for example: American companies that decide to expand into Europe by placing their European HQ in London tend to be far less successful than those that are forced to make language adjustments by placing their HQ somewhere in continental Europe. So, if you are competing in a relatively new industry where everyone seems to be expanding from the USA to Europe, let or even encourage your competitors to go to London while you move to Brussels or Geneva, for example.

Questions about industry trends

Here are some questions that should be relevant for most industries. I have concentrated on things that affect customers only. You may like to add questions about industry trends that affect employees, for example trends like outsourcing and offshoring. There may be some overlap between these questions and those about competitors.

What are the most important customer experience trends in your industry? What ways of listening to customers are most popular? What new improvement processes and technologies are emerging?
What is the impact of social media on customer perception of your products and services? Do you know what is being said about you on social media, and does it matter?
Which measurement systems best predict revenue and market share?
How do the latest developments compare with what you are currently using?
What customer experience competitive benchmark data is available and relevant to your industry?

Questions about external trends

These questions are about the environment in which your company, your competitors and your customers live. It includes government regulation and general concerns and hopes of the people in countries where you operate. These questions come from an exercise that was specifically about customer experience strategy. You should edit and adjust for your needs.

How does government regulation affect the way you want to go about measuring and improving customer experience?
What current and emerging rules about data privacy affect your current and potential survey processes?
How are you required to maintain customer survey opt-out lists?
Do you know what surveys are being run in your company and whether they respect relevant laws?
Are you allowed to transmit customer lists to subcontractors such as survey providers?
Do some governments and countries where you operate have an unusually high focus on the environment, gender equality, fighting corruption or other formal initiatives that you may find useful in building your brand image?

Government regulation trends are quite hard to predict in our increasingly polarized world. Trends can take opposite directions when a different political party comes into power. I worked for a company whose factories were confiscated in one country that had a military takeover, which is an extreme example. And I have to say that the Wrangler HQ reaction to François Mitterrand’s socialist / communist coalition government in France was… well… interesting, to say the least.

The answers lead to insights

If you have asked new questions, the result will be new answers. When most companies work on a new strategy they don’t cover these two areas at all. Cover them well and you will win.

Conclusion

We have now covered five of the six dimensions of a situation analysis. Next time we will talk about your internal realities and how to put it all together.

November 27, 2018

Strategy: Ask new questions to get new answers – Part 3: Competitors

Maurice FitzGerald / Blog, Strategic initiatives, Strategy / Chief Customer Officer, competition, Customer Experience, CX, strategy /

There are two main categories of competitors: traditional and emerging. The emerging category includes companies you do not know about yet, but who may be about to take over your market. There are industries such as steel manufacturing where barriers to entry are high, and you are unlikely to be surprised. There are also low-barrier industries such as software and pure import-export businesses. The focus of this article is a set of questions that may help you to gain new insights about your competitors and what you should do to crush them. Above all, remember: to get new answers, you have to ask new questions.

This is the third in a series of articles about what I consider to be the most important aspect of strategy development: an accurate analysis of the current situation and what should be done to improve it. The first article was about customers and is here. The second was about partners and is here.

Emerging competitors

As Willie Pietersen said during the Columbia course I mentioned in the first article in the series, “Somewhere in the world someone has just had a great idea that is going to kill your company.” I won’t bore you with the extensive list of companies that did not notice new threats or did not take them seriously. I suppose those leaders may have been victims of short-termism. By that I mean they felt that they did not need to worry about the new threat during the current quarter as it would not affect short-term financial results. Think of it as similar to the way some political leaders talk about climate change. Nothing they have to worry about or invest in as the worst will happen after they leave office.

Getting started

As mentioned in prior articles, you should use a cross-functional team to agree the list of competition-related questions and then answer them. In a large company, it takes six weeks to do the situation analysis well. You should have a short progress check with your team members each week. What follows below is a suggested set of questions about current and emerging competitors. Please be clear that the list is just there to get you started. This list was developed for the creation of a customer experience strategy and most questions will apply to any type of strategy. Some will of course not be relevant to your business. And you will certainly be able to come up with additional and better questions.

Remember: Ask new questions to get new answers.

The questions

Do you have competitive benchmark survey data that lets you understand where your competitors provide a superior experience and the situations or touchpoints where you lead. If so, how do you compare with traditional competitors and are new competitors emerging with differentiated customer experience?
How have competitors’ customer experience strategy and results changed over time? What investments have they been making in people and systems? (Going to their website to look at their list of job openings may help with this.)
What do your critical competitors say about customer focus and customer experience in their quarterly and annual reports? Is customer experience mentioned on their website as a formal part of their business strategy? How have they set up their customer experience teams and others that support critical touchpoints?
What customer experience software and consulting companies use your competitors as references on their websites?
Do you have competitors that have no short-term profit objective and so can outspend you in critical customer experience areas?
If another company is the customer experience star in your industry, what are the two or three most important reasons for the leadership? Are you able to do those two or three things better than the competitor, or should you be concentrating on doing things differently? (Both work.)
What customer-experience-related investments have your competitors stopped or radically decreased?
Do you see competitors whose customer experience [Insert your own strategic focus area if needed] approach differs by country?

Your people who manage customer experience may have some relevant data. The most difficult thing to get is an accurate comparative view of customer perceptions of your company and your competitors. Double-blind competitive research is best, if you can afford it.

The answers lead to insights

If you have asked new questions, the result will be new answers. Just a small subset of these will lead to true insights and actions about the trends in the experience you and your competitors are providing customers. The concept of new or emerging competitors is an important one and deserves special attention.

Conclusion

We have now covered three of the six dimensions of a situation analysis. Next time we will talk about industry trends and the external environment.

November 20, 2018

Strategy: Ask new questions to get new answers – Part 2: Partners

Maurice FitzGerald / Blog, Strategic initiatives, Strategy / Chief Customer Officer, Customer Experience, CX, strategy /

The majority of companies have partners for at least some of their business. The three main categories of partners available to most businesses are resellers, implementation partners, and subcontractors. The purpose of any and all business strategies is to crush your competitors and win. Your partners can help you do that. But how? And what can they do to help you win that they are not already doing? Frankly, I don’t know, but I do know how to find out. In short, to get new answers, you have to ask new questions.

This is the second in a series of articles about what I consider to be the most important aspect of strategy development: an accurate analysis of the current situation and what should be done to improve it. The first article was about customers and is here.

Some thoughts about partners

While you may have some partners that don’t work with anyone else, it is more likely that you compete for their attention. It is critical to think about partners in an ‘outside-in’ way, meaning from their perspective rather than yours. Assume they have choices. Assume that your decisions have consequences. Assume, for example, that if you pay your partners 60 days after they deliver a product or service and your competitors pay after 30 days, well, your competitors will get better service. Is the improvement in your cash flow (and deterioration in the partners’) worth it? And what happens if your procurement people go around asking all suppliers to cut prices by 15% and your competitors do not do the same thing? Think about it from the partners’ perspective. There is no single right answer. You just need to ask the right questions.

Note that if you manage a business that uses franchisees to reach end customers, you should consider franchisees to be your customers rather than your partners.

Getting started

As mentioned last time, you should use a cross-functional team to agree the list of partner-related questions and then answer them. In a large company, it takes six weeks to do the situation analysis well. You should have a short progress check with your team members each week. What follows below is a suggested set of questions that concern partners. Please be clear that the list is just there to get you started. This list was developed for the creation of a customer experience strategy and most questions will apply to any type of strategy. Some will of course not be relevant to your business. And you will certainly be able to come up with additional and better questions.

Remember: Ask new questions to get new answers.

The questions

What are the critical touchpoints between you and your resellers, implementation partners and subcontractors? How have these been changing over time? Are these three categories useful, or is there a better way to segment your partners from a partner experience perspective?
Should the top few partners, in terms of revenue generation, be treated differently from the rest?
How does your partners’ experience with your company compare to their experience with your traditional and emerging competitors?
Who are your potential new partners, and why?
Which partnerships are not producing anything useful and should be fixed or stopped?
How do your partner marketing incentives compare to those of your competitors?
How do your partner payment terms compare to those offered by your competitors?
How quickly are resellers able to access any special pricing agreements you may have in place for very large customers?
Do you compete directly with your partners?
If you have a formal partner feedback process, what has it taught you?

Your people who manage customer or partner experience may have some relevant data. If not, you may need to set up some simple new research. If you do so, I suggest just asking partners these questions:

How likely are they to continue to work with you? (On a zero to ten scale.)
Why?
What should you improve?
What do they like or dislike compared to other companies with which they work?

Ideally you would ask these questions to your largest partners face-to-face, with video conferencing / Skype a close second choice. Phone calls are better than asking by email.

The answers lead to insights

If you have asked new questions, the result will be new answers. Just a small subset of these will lead to true insights and actions about the trends in the experience you are providing customers. The concept of new or emerging partners is an important one and deserves special attention.

Conclusion

We have now covered two of the six dimensions of a situation analysis. Next time we will talk about competitors.

As is often the case, the above is a substantial rewrite 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.

November 15, 2018

Strategy: Ask new questions to get new answers – Part 1: Customers

Maurice FitzGerald / Blog, Strategic initiatives, Strategy / Chief Customer Officer, Customer Experience, CX, strategy /

Way back in 2005 I had the privilege of attending an executive education program at Columbia called Creating Breakthrough Strategy. The course was far more practical than the other attendees and I expected. The reason was simple: the main content and structure were provided by Willie Pietersen, a South African who has been CEO of a number of multi-billion-dollar companies including Lever foods, Seagram USA, Tropicana, and Sterling Winthrop’s Consumer Health Group. Over a ten-year period at HP, I took what he and Rita Gunther McGrath taught me and applied it to build strategies for individual HP countries (including Russia, Germany, Ireland, and about ten others) and for HP businesses. I also used it to build customer experience strategies for HP in EMEA and in my final job as VP of customer experience for HP’s $4B software business.

What I would like to do in this series of articles is to share what I consider to be the most important aspect of strategy development: an accurate analysis of the current situation and what should be done to improve it. If there is a single message here, it is a simple one: To get new answers, you have to ask new questions. I wish I claim I said this first, but I have to give credit to Willie Pietersen.

I adapted the method over time

I followed the methodology exactly as I had been taught, at least initially. After the first couple of strategy projects, I determined that a major element was missing for HP, and I believe that element matters to all B2B businesses, and to many others. The element I added to the structure you see at the top of this article is ‘Partners’. These are other companies with whom you work to make your business function. More about partners next time.

Getting started

Strategy should be developed by cross-functional teams that cover all areas of your business. What I suggest is that you set up six teams, one for each area of this situation analysis. If yours is a small company, one person may be enough for each. In a large company, it takes six weeks to do the situation analysis well. You should have a short progress check with your team members each week. The first session takes a little longer in that each team needs to agree the questions that should be asked and answered. What follows below is a suggested set of questions that concern customers. Please be clear that the list is just there to get you started. I find that people are better at editing a list than creating it from scratch. This list was developed for the creation of a customer experience strategy and most questions will apply to any type of strategy. Some will of course not be relevant to your business. And you will certainly be able to come up with others.

Remember: ask new questions to get new answers. The purpose of the whole strategy exercise is to develop a set of ideas that will allow you to crush your competitors and win in your market. The overall approach is ‘outside-in’, meaning it is primarily focused on trends outside your company.

The questions

What experiences do your traditional end-customers want at the most important customer journey points? How reliable is your evidence for this?
How and why are the expectations of your traditional customers changing over time?
Are there useful ways you could segment customers and provide differentiated experiences to each segment? Should all customers of all sizes and from all industries be treated exactly the same or should you tailor a specific experience for each?
Should new customers be treated differently from existing customers? If so, how?
If you provide both face-to-face and web-based purchase and post-sales experiences, is the intent that one should complement and build on the other, or are they set up to effectively compete for customer attention? If they compete with each other, is that your intention, or just the result of the way you have set up the work of two independent teams? Are the prices the same, no matter what the purchase channel?
Do you have any information on how your traditional customers consider their experiences with you compared to what they experience with competitors?
What do your formal feedback mechanisms tell you about customer experience expectations?
Do you currently communicate back to customers, telling them what you are doing with input they have provided?
Which are the areas where you just have to be ‘good enough’ and investing more does not provide much return?
Are new types of customers emerging with different expectations?
What experiences are you providing customers that give you no competitive advantage and could be stopped to provide resources for new work?
Do some of your customers have supplier assessment processes in place? If so, how are you doing in their ratings?
If customers have left you, or you unexpectedly lost a deal you expected to win, do you understand why?
If you have an executive sponsor program and / or a Customer Advisory Board in place for your largest customers, do you have any way of getting consensus from the sponsors and the board on the most important improvement opportunities?

At least half the day-to-day work of most customer experience teams is about listening to customers and partners, then summarizing what they want you to improve. This means that much of the necessary situation analysis information is directly expected from and controlled by the customer experience leader. Naturally, in small companies, there is no single central reference point, except perhaps the owner or CEO.

The answers lead to insights

If you have asked new questions, the result will be new answers. Just a small subset of these will lead to true insights about the trends in the experience you are providing customers. The concept of new or emerging customers is an important one and deserves special attention.

Conclusion

We have now covered one of the six dimensions of a situation analysis. The customer dimension is probably the most obvious. My next blog post will cover partners. I hope you will gain some new insights and a new strategy development methodology.

October 11, 2018

When should you ask for customer feedback? And should you survey customers at all? (5-minute read)

Maurice FitzGerald / Blog, NPS, Strategic initiatives, Strategy / Chief Customer Officer, CSAT, Customer Experience, CX, Net Promoter System, NPS, Surveys /

I have a sort of hobby: answering companies’ requests for my feedback and seeing whether they will write back to tell me what they have learned and what they are going to do. I suppose I have responded to about 20 such requests over the last two months, and then heard nothing at all back, except perhaps an auto-reply with a thank-you. So… let me offer my thoughts on whether and when you should ask for customer feedback.

The first step in designing surveys is being selective about what research you are going to do. Make sure you are going to provide customers with more value than you will extract from them.

Sanity check on whether you should gather feedback at all

Here are some considerations that should help you decide where to start:

Are you going to use any new input you get? If you have already established your top five improvement priorities, have staffed them, are implementing, and can’t add a new project in the next six months, don’t do any surveys other than those that provide progress feedback on your improvement work.
Taking a software example, if you are planning a new major release and want user input on what should be in it, ask them in a formal way. After 30 years in and out of the software business, as a leader and as a user, I have never once been asked for formal input about what should be in the next version. Product managers generally feel they know what users want, based on informal and anecdotal conversations, rather than research. This of course applies beyond software.
Not every customer touchpoint is important. Use your overall brand or benchmark surveys to establish which touchpoints customers mention as competitive advantages or disadvantages, and don’t survey anyone about any of the others. To pick a B2B example, surveying people about the friendliness, competence and efficiency of the person who handles a query about the accuracy of an invoice is certain to be a waste of resources that could better be spent elsewhere.

Timing is everything

Survey timing is an important part of research reliability. Seeking feedback about things that are in the distant past is unlikely to be of much value for example. Here are some appropriate times to consider collecting customer input, by type of survey. What follows presupposes that you are going to use the feedback to make improvements for your customers. If not, there is no good timing.

Product surveys part 1 – Unboxing and installing your product

Here we are talking about an individual product, not a generic purchase or other touchpoint experience that applies to all your products. Some products are sophisticated (the marketing word for complex) to install. Others are not. If your product takes time and effort to unbox or download, install and use for the first time, it is worthwhile understanding what your customers think of the experience and how it can be improved. The research needs to be done immediately after the experience. Waiting a week or more will mean losing the positive and negative emotional impact.

If yours is a technology product, I suggest sending the survey request or phoning the customer within 48 hours of delivery. While this will be easy to do in a direct business that sells to consumers, it is more difficult in other circumstances. You want to survey the end user of the product, and they may not be the buyer in a B2B situation, so you might not know who to contact. If you use resellers, they may not want to provide the customer data, and you should offer to run the survey on their behalf, providing them the data for initial screening. If yours is a software product, the installation routine itself should generate the survey request 24 hours after the installation takes place. Requiring or at least suggesting product registration on a website will give you additional sources of end-user contact details.

Product surveys part 2 – Usage

In most situations, you won’t hear anything from a customer who does not have any problems. Unfortunately, the reason for not having problems could be that the customer no longer uses your product. Perhaps they never started using it in the first place. You need to understand the views of customers who have been using your product for some time, and I suggest six months after purchase as a reasonable target for your research. The purpose, as explained to the customer, should be to get feedback for improving the product itself, as well as future products. In my own experience of software product usage surveys, it is common to get suggestions for additional features that the product already has, but the customer has not been able to find. Usage surveys have the same challenge as installation surveys, meaning you may not know whom to contact.

SaaS (Cloud) software is a completely different in that you do know who is using your software and indeed how much they use it. If a customer who has been using your software suddenly stops, contact them immediately. SaaS software usually allows you to see what functions a customer uses. If you can see that they are not using something they really should be using, you can send them a link to a training video, or send over someone who can talk them through it.

Service contracts

The ideal time to get feedback on a service contract is a little before the customer is considering renewing it. This is a bit more subtle than it might seem. If you have a large multi-year contract (for example to provide security services to a company) your competitors will probably know about it, and will start to contact your customer well before the contract renewal data. Since your competitors will be saying how wonderful they are, and how awful you are, you need to have acted well before this point. I suggest an annual survey as a minimum for multi-year contracts, taking place half way through each year. If you have a single-year contract, I suggest doing the research about three months in, so that all improvement suggestions can be implemented before the contract comes up for renewal consideration, probably about nine months in.

Hybrid product / services

An airline flight is a hybrid product & service. This sort of offer should be researched within 24 hours of completion. Most airlines seem to miss the point. Some give you the survey while you are still in the air, not knowing essential things like whether your luggage will show up on the carousel. Others send you the survey after a week or two. Frequent fliers will have completely forgotten about the experience by then, or will confuse it with another flight. This happened to me regularly, as I have been taking over 100 flights per year for nearly as long as I can remember. What did I think of my flight from Atlanta to Paris two weeks ago? Who knows? Since product and service surveys are not mentioned in The Ultimate Question 2.0, this may be a good time to reinforce the definition. An entire flight experience, from awareness, to reservation, to the actual trip itself, involves a sequence of touchpoints. Each touchpoint could be studied by a transactional survey. The airline offers many different products and services, the sum of which might be studied in their brand survey.

Relationship surveys and Brand surveys

Twice a year is a good frequency for your most important customer relationships and may work best for your brand surveys. You may like to run them both on a continuous basis so you can see the effects of things like changes in the economy and your financial and product announcements. This would mean, for example, sampling one sixth of your customers every month. Remember that you need to report results and improvement projects to customers as well as to your own team.

Transactional and episode surveys

While it might seem obvious that they should happen shortly after the transaction takes place, it is surprising how rarely this happens. All too often, I get pop-up windows when I have just started an online transaction. I dismiss the window, and then don’t think about it anymore. For the simplest transactions, surveying just after they are complete seems appropriate. For more complex things, like telephone support for a technology product, it seems appropriate to wait for 24 hours, as it may take a little time for the customer to know whether the issue has been completely resolved.

Your feedback is most welcome.

As is usually the case, this is a slightly-edited version of a chapter in one of our books; in this case Net Promoter – Implement the System. All of our books are available in paperback and Kindle formats from Amazon stores worldwide.

July 25, 2018

#68 – Open plan office layouts, LinkedIn CEM group hits 100k members

Maurice FitzGerald / Behavioral economics, Cost reduction, Newsletter, NPS, Strategy / cost cutting, Customer Experience, CX, LinkedIn /

Open plan office layouts, LinkedIn CEM group. Welcome to the 68th edition of my customer strategy newsletter. The five topics this week are:

Customer-centric cost reduction and open plan office layouts
LinkedIn Customer Experience Management group hits 100,000 members
Latest blog posts
Notable items from other sites – NPS for win/loss
Looking forward

Customer-centric cost reduction and open plan office layouts

Earlier this month two Harvard researchers had an article about the negative effects of open plan office layouts published in the rather obscure journal Philosophical Transactions of the Royal Society B. The article is titled ‘The impact of the ‘open’ workspace on human collaboration‘. They studied employee behaviors before and after major office layout transformations in two large corporations. Their main conclusion is as follows:

“Contrary to common belief, the volume of face-to-face interaction decreased significantly (approx. 70%) in both cases, with an associated increase in electronic interaction. In short, rather than prompting increasingly vibrant face-to-face collaboration, open architecture appeared to trigger a natural human response to socially withdraw from officemates and interact instead over email and IM.”

The article has been picked up by lots of news sources. I have read or at least scanned about ten such articles. Only one (on the Inc. website) correctly mentioned the possibility that the purpose of moving to open plan layouts is not to improve collaboration, but to save money.

And yes, it saves lots of money. I have worked in the mixed open/closed environment that was common at Digital, the primarily closed office structure at Compaq until shortly after its merger with Digital, and the almost 100% open office layouts at HP. The HP layouts meant that about triple the number of people could be squeezed into any given space compared to the closed layouts at Compaq. (In our Dornach/Munich Compaq office, status was measured by the number of windows you had. As a Director I had three. A VP had four, and their assistants had three, for example. Lower ranks shared offices.)

A word about customers. Customers don’t care where your HQ is or what your office layout looks like. Putting your building in a low-cost location and squeezing as many people in as possible may be a great way of freeing up cash to invest in things your customers do care about. That is what ‘Customer-centric cost reduction‘ is all about.

LinkedIn Customer Experience Management group hits 100,000 members

Regular readers will know I took over management of the LinkedIn Customer Experience Management group a couple of months ago. Earlier this week we passed the 100,000 member mark. Of course quantity does not necessarily equal quality, and I am doing my best to drive both.

I have received positive feedback on my efforts to pick a new article to feature at the top of the list every two or three days. Both member interest and personal bias drive my choices. If I can see that an article is generating likes and discussion, it is certain to be ‘featured’. There are also subjects like text analytics and cognitive psychology / behavioral economics that interest me personally. I can only pin one article to the top of the list at a time.

I have excluded a number of members for repeatedly posting the same articles. I also delete everything that I see that has nothing to do with customer experience. Articles that don’t include the word ‘customer’ are certain to be deleted, for example. Lots of articles are posted every day, and I do my best to screen them. Your improvement suggestions are of course welcome.

Our latest blog posts

Here are the latest posts. Older posts are still available on the blog page.

The lower your prices, the happier your customers will be… right? (Not really!)

A combination of behavioral economics experiments and personal experience that should persuade you that your customers do not always want lower prices. Some fun stuff here…

Once you have a set of insights about customers, competitors, your industry, the external environment and your ability to implement, the next step is to decide what you are going…

How demographics affect customer experience research – You should expect surprises

It is tempting to keep feedback requests very short to improve completion rates and avoid wasting customers’ time. However, I have yet to see research where demographics did not make a difference. Most notably, men and women often answer differently…

Notable customer experience items from other sites

Net Promoter System podcast: The Business Lessons of Rejection

Rob Markey interviewed Charlie Chase of FirstService for this episode. I have to say I had never heard of them. Their business started off by employing college students to repaint people’s houses. It seems quite intuitive that their lack of professional expertise must be compensated for in some way, in addition to price. That turns out to be the way they interact with their customers. The thing that I found to be innovative in their approach was the application of NPS to people who chose not to buy their services. I think you could consider it to be a form of win/loss analysis. This makes sense in that their business is entirely dependent on ‘word of mouth’. People who don’t select them for the work are of course unlikely to recommend them to others, making it necessary to understand the reasons. You can find the podcast here.

Daniel Ord: Funny things contact center managers ask their agents to do

I admire the work Daniel Ord does, particularly around contact centers. He is based in Asia, though he went to UC Santa Barbara. I suppose the combination makes him particularly attentive to strange and wonderful behavior he spots from time to time. This light-hearted piece is about some funny things he has seen contact center leaders ask their people to do. I have to say I was not sure whether to laugh or cry when I read a couple of them. You can decide for yourself here.

Looking forward

Relaxing a bit in the northern hemisphere summer. Nothing major happening in the short term. I hope all northern hemisphere readers get a break too.

Here are links to all of our books on Amazon.com. Kindle versions are available in all stores. Print versions are available from the major stores only, with the notable exception of Australia, where print versions are not available from amazon.com.au.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Color edition)

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Black & White edition)

Please share this newsletter with your friends and colleagues and encourage them to sign up for it here. I have put links to past newsletters on the subscription page. Finally, please feel free to change or cancel your subscription using the link below.

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

To change your subscription, click here.

July 12, 2018

#66 – CX Communication – Complaints teams – Text Analytics – CX Career Development

Maurice FitzGerald / Newsletter, NPS, Strategy / Communication, customer complaints, Customer Experience, CX, CX career, Net Promoter System, Surveys, text analytics /

More on CX communication methods, complaints teams, text analytics and developing your CX career. Welcome to the 66th edition of my customer strategy newsletter. The five topics this week are:

Communication – The average person is very bad at math
What does a complaints team do?
Latest blog posts
Notable items from other sites – Thematic Analysis, comprehensive CX career guide
Looking forward – Webcast on July 19th

Communication – The average person is very bad at math

I was re-listening to an old Freakonomics episode about gun safety in the USA a few days ago. Quite a lot of the discussion was about our emotional reactions to various facts, compared to a truly rational reaction. For example, factually, a US child is apparently a hundred times more likely to die from the parents having a swimming pool compared to the parents having a gun. This made me think about what I have written in our book Customer Experience Strategy – Design and Implementation about how to use emotional reactions to your advantage. In short, you should present numbers in one way to have people think they are important, and in another way if you want your audience to pay no attention to them.

Nobel-winner Daniel Kahneman describes this often-repeated experiment in his book Thinking, Fast and Slow:

Participants are given a choice of drawing marbles from one of two urns, in which red marbles win a prize. They are told how many white and red marbles are in each urn:

● Urn A contains 10 marbles, of which is one is red.

● Urn B contains 100 marbles, of which eight are red.

Easy choice, right? Not so easy, apparently. In the various repetitions of the experiment, 30 to 40% of students chose Urn B, despite the lower probability of winning.

As Kahneman says, “…the remarkably foolish choices that people make in this situation have attracted the attention of many researchers.” He uses Paul Slovic’s term ‘denominator neglect’ to describe it. Some of the phenomenon seems to be explained by how vivid the image of something is in our minds. It is easy for us to imagine the eight winning red marbles against a rather indistinct background of white. Our System 1 has acted and found the answer. System 2 continues to take a nap. Perhaps more remarkably, one study showed that people told about a disease that “kills 1,286 people out of every 10,000” believed it to be more dangerous than “a disease that kills 24.14% of the population.” The imagery of the absolute number overwhelms the relatively abstract notion of a percentage.

This matters for how you communicate the results of any study of what customers want. When you want your audience to internalize and act based on your numbers, use absolute numbers, not percentages. You will of course occasionally want people not to pay much attention to some numbers, and the use of percentages will help. Paul Slovic and his colleagues cite an article that states that “approximately 1,000 homicides a year are committed nationwide by seriously mentally ill individuals who are not taking their medication.” That could also accurately be expressed as “the annual likelihood of being killed by such an individual is approximately 0.00036%.” The former grabs your attention on an emotional topic. The latter makes you want to yawn. The version to use depends on what you want to accomplish.

What does a complaints team do?

As many of you know, I manage the Customer Experience Management group over on LinkedIn. We passed the bar of 99,000 members a couple of weeks ago, and will reach 100,000 within about a month, though that is not what I want to write about. A question about how to measure the effectiveness of complaint handling teams came in yesterday, and I would like to say a few words about the subject here.

The way I think about customer complaints is that they are situations where the ‘normal’ company process has failed to deliver the result the customer expected or situations where the customer can’t identify what the normal process is. In 99% of such situations, the best you can do is to prevent the customer leaving you. If they stay, you have succeeded. After all, they should never have had to complain in the first place. I just don’t see how a complaints team can drive revenue growth or bring you new business directly.

This means that the way to measure the effectiveness of a complaints team is by tracking customer loyalty. If you know your historic rate of losing customers each year by business and don’t have a complaints process, try implementing one for a single business, then comparing loyalty numbers after about six months.

Our latest blog posts

Here are the latest posts. Older posts are still available on the blog page.

Once you have a set of insights about customers, competitors, your industry, the external environment and your ability to implement, the next step is to decide what you are going…

How demographics affect customer experience research – You should expect surprises

Improving response rates to survey requests sent by email

Way back in October last year I blogged about using direct marketing techniques to improve response rates to surveys. This post addresses five additional ideas that are specific to survey requests sent by email…

Notable customer experience items from other sites

Alyona Medelyan – Why Thematic Analysis beats Sentiment Analysis

Alyona is one of the world’s leading experts in Natural Language Processing. I consider automatic text analytics to be the single most important technical innovation in customer experience. The reason is that it removes human bias from the interpretation of written customer feedback. It can be applied to unstructured survey data and to online reviews, among others. The whole area is evolving rapidly, as are the ways we can think about and understand it. This short article Alyona has written on LinkedIn explains thematic analysis and compares it to sentiment analysis in a clear and simply way. And she even put a cute photo of a pair of dogs at the top. Enjoy it all here.

Omoto – A comprehensive career guide for aspiring Customer Experience Managers

Moving on from Alyona in New Zealand to Omoto in India, Shruti Sarkar and Vivek Jaiswal interviewed a lot of people in the CX community and wrote this interesting article on CX careers. (Yes, I was one of those interviewed.) The result includes fascinating data about many aspects of our profession, as well as quite a bit of advice. I had no idea the demand for CX leaders was growing so quickly. This is worth the five to ten minutes it will take you to read it here.

Looking forward

I will be the guest in a live webcast hosted by Alyona Medelyan on July 19th. The title is How to combine science and emotion for Customer Experience Success. My preparation is what made me think of the first article in this newsletter. Time zones are tricky to deal with. The webcast is at 11 a.m. Pacific, 2 p.m. Eastern, 8 p.m. Central European Time, for example. A recording will be available to everyone who registers. You can sign up for the webinar here.

Customer Experience Strategy – Design & Implementation

Net Promoter – Implement the System

Customer-centric Cost Reduction

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Color edition)

“So Happy Here”: The Absurdist but Essential Guide to Better Business (Black & White edition)

You can also email me, Maurice FitzGerald, at mfg@customerstrategy.net.

To change your subscription, click here.

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