NickB

Giraffes, razors and jet engines: the re-emergence of the subscriber

There are attractions in the subscription model, but only if it’s genuinely customer-centric

Somewhere along the road from a government department to an FTSE100-floated plc, BT stopped referring to its subscribers and started referring to them as customers. Strangely, the outmoded term is making a comeback as more and more companies try to move their customers onto a subscription model for their products and services.

The problem is, it’s not going to work for everyone.

I got confused by an advert in London’s Evening Standard this week: it features a toy giraffe in a toothbrush and on closer inspection is promoting a new subscription service – Brushbox – for toothbrushes and toothpaste.

That’s right, those commonplace items you can find in any supermarket, corner shop or chemist. I’m struggling to see why anyone would need to sign up for a service that sends you a new toothbrush when you should be changing it. Presumably you’re one of the feckless “70% of us who don’t change our toothbrush when we should”. The advert, which promises “a fun and environmentally friendly way to look after your family’s oral care” reminds us that 1 in 3 children are starting school with signs of tooth decay so it’s basically tooth-shaming you into coughing up for a subscription.

Razor boy

I’m not immune to the charms of a subscription service though: I’ve been having razor blades delivered to my home on a regular basis and that works for me as the product – Harry’s in my case (other subscription services are available) – is superior to others that I’ve used and isn’t available in shops. I don’t think I’m paying a premium for this either – possibly because replacement blades are eye-wateringly expensive whether you buy them in a shop or online.

The model has been well-established in the business sector for many years. When I started out in the computer industry a few decades ago, we would seek maintenance contracts as a way of extending our software project income and also giving the client the ability to have regular upgrades. The other night I was talking to someone about how Rolls-Royce’s jet engine sales include an ongoing maintenance contract – sensor technology enables Rolls Royce to keep tabs on engine condition and notify the aircraft operator of any problems in real time. Preventing a flight taking off with a faulty engine seems like a premium worth paying and in the long term will more than likely have cost benefits for the subscriber in reduced overall down time.

But I’m wondering if in the consumer world we may well have reached “peak subscriber”…

Too many schemes, not enough customers

The subscription model clearly has benefits for customers but, on inspection, has even more attraction for businesses and their investors. Viewing customers as a source of ongoing income is easier to account for than a number of one-off transactions. And advances in technology mean that businesses can use the data gleaned from the customer base to predict demand and tailor offerings accordingly.

However, as an article in The Economist (another of my subscriptions) points out, the downside of the model lies in the high cost to subsidise customer acquisition and likely increasing volatility of the market. As competitors offer better subscription schemes, customers will vote with their feet and, with more businesses finding ways to run subscription schemes the choice will only increase.

Lock-in

The answer to this, at first sight, is to make it difficult for customers to end their subscriptions early. Some gym chains, for example, have been doing this for years, locking customers into annual schemes at a reduced rate. This approach is anything but customer-centric: it’s a defensive manoeuvre that gets the business off the hook of continuing to make their offer more attractive.

And this is the nub of the challenge: those businesses that will succeed with a subscription model are those that commit to continuously improving the value they deliver to customers. Netflix, for example, continues to offer high-quality unique content to its subscriber base and has a low customer churn rate as a result. Spotify, the music streaming service, has a more volatile base as much of its content is available from other sources – YouTube and recorded media – and faces a challenge of proving to enough paying customers that it provides something unique.

Businesses adopting a subscription model need to get their priorities straight: provide a compelling reason to subscribe (hint: customer outcomes are a good way to start) and then work out how that subscriber base gets “monetised”.

I’m still confused by the giraffe though.

NickB

There’s no place like Home(base)

Pretty soon, there may be no Homebase at all

My track record as a DIY-er is not all that great, but I’m thinking I could have done a lot less of a botched job than Australian company Wesfarmers did when they acquired UK DIY retail chain Homebase back in 2016.

The analysts’ views could not have been more damning with GlobalData’s retail analyst, Patrick O’Brien referring to it as “undoubtedly the most disastrous retail acquisition in the UK ever.  I can’t think of a worse one that has made these kinds of losses so quickly.

According to reports in the Guardian, up to 40 UK stores could close with a possibility that the parent company could exit the UK altogether as Wesfarmers recovers from a £454m write-down due to the acquisition.

My use of the term “botched job” is not a management consultant’s know all “post-disaster” arrogance but the term used by Rob Scott, Wesfarmers’ managing director, who stated the problems with Homebase were largely of their own making – a slightly diplomatic way of saying “we just shot ourselves in the foot with a gun we already knew was loaded. The number one – and probably most critical – mistake was to remove the entire management team plus 160 middle managers as soon as the takeover was concluded.

If you want big change, do it fast but beware of the risks

There’s a school of thought that suggests that if you are going to implement big change then do it quickly and do it early. The catch of course is that these have to be sensible changes and if you haven’t assessed the strategic landscape effectively then hitting fast and quick can make the acquirers look like drunken rhinos in an overpacked china shop.

Moving fast was not the mistake. Streamlining is an obvious first move but arguably they went too far. Including the people who effectively ensure at least short term smooth running – the middle managers – in the first tranche shake-up was too great a risk. All the knowledge about what worked in the stores and what did not – gathered over years of trial and error also walked out of the door at the same time.

Don’t change what’s already working

Homebase had already achieved some success attracting more female shoppers with an emphasis on top-end soft furnishings from Laura Ashley and Habitat which created  a differentiator over other brands. Based on the experience of their Bunnings chain in Australia, however, Wesfarmers decided that a different approach was needed and opted for a purer DIY warehouse, providing customers with a no-frills (or chintz) experience.

Judging from customer feedback and our own research the previous approach seemed to be working. And, subjectively, our experience of the post-acquisition Homebase has not been that great – product facing is poor, and it seems harder to find what you want with too many options and price-points in some categories.

The lesson here is don’t change what’s already working and expect feedback from customer segments in one country to be replicated in another without sufficient research. History has shown time and time again that this approach does not work.

Ignore middle managers at your peril

Middle managers get a bad rap: the term suggests a lack of ambition and a degree of mediocrity, so they’re a target for easy downsizing. But middle managers hold a lot of knowledge about what works and what doesn’t and, whilst you can argue that companies would be more effective if they codified and shared that knowledge better, it seems a rather crude piece of change management to cut it out just like that.

Home or away?

Homebase’s problems are challenging – a £1bn rent obligation prevents Wesfarmers from walking away completely. The UK retail market is depressed, and the outlook remains uncertain for the short to medium term. The new Homebase have clearly not listened enough to their customers (or their voices in the company). They might want to think more about what their customers – male and female – want from their outlets before wielding the axe further.

Mistakes may have been made and recovery will be tough, with a degree of downsizing appearing all but inevitable. But in a crowded market, customers will shop around and loyalties can change. Homebase has every chance of recovery if a customer first philosophy is adopted and aligned to every aspect of the organisation. Time will tell whether the new owners have learned from their mistakes.

NickB

Gender pay gap: a blunt instrument is better than no instrument

Obsessing about what’s right obscures the real issue

Measuring the “right” things is talked about in almost every company. Unless we agree with what and how something has been measured we howl “this is too subjective” and then refute some of the core findings. The rush to meet the 4th April deadline for UK companies to report on their gender pay gap is a case in point.

Criticism has come in from many quarters that the measures created an unnecessary burden on employers and failed to measure enough of the right things other than what we already knew – gender pay inequality exists.

If you look a little deeper then there are findings which are valuable and actionable:

  • The headline is that men are paid on average 9.9 per cent more than women but with significant disparity between companies and industries. Some companies like Google were quick to claim that none existed and others like HSBC, which has claimed equal opportunity as a core value, emerged as one of the worst offenders.
  • The trend in closing the gap is currently slow with pay parity only by 2048 unless something changes.
  • Interestingly, some reports demonstrated a poor understanding of statistics with 38 companies reporting no difference between median and average pay, something that is statistically highly unlikely.

It has to be said the figures are pretty depressing, but what these figures will do is put pressure on companies to action in change in a way that has not been done before. There is a very good chance that a significant improvement in pay parity will be achieved a long time before 2048 – so even if on reflection the initiative could have been delivered better it has gone further to establish change than many.

So wrong it’s right

The debate illustrates one of the key problems with measurement in business. Almost all measures other than those on the balance sheet, can be subject to debate and accusations of subjectivity.

This is particularly acute in customer experience. I’ve used all sorts of measures in my time – various types of customer satisfaction scale and, of course, Net Promoter Score – and the only conclusion I can come to is that none of them predict with absolute certainty how customers will behave.

But even if accurate prediction is impossible, correlation can give you some clues about likely customer behaviour. This is both the flaw and the virtue of Net Promoter Score: Frederick Reichheld’s research correlated high NPS with high financial performance but that doesn’t mean that in all circumstances you can generate the same increase in performance simply by raising NPS. However, the correlation indicates a general tendency for high NPS companies to do well, so if your NPS is lower than your peer group’s score it indicates there’s something you need to pay attention to and you need to drill down into the root causes of customer reluctance to promote your company.

Accountability

This is like gender pay gap reporting. Any company with a gender pay gap will appear to be under-rewarding female employees but a drill-down in to the reasons why will expose the factors that cause this. Some – such as the likelihood of women to take more career breaks for childcare – may be seen to be outside the company’s control, but the link between this factor and the disparity in pay should force the debate about what the company could do to, for example, to make it easier for anyone returning from a career break to make the same, or improved contribution that they made before the break, and to ensure that it was rewarded fairly.

Whether you are talking about gender pay gaps or the gap in your customers’ experience, the essential thing is to have people accountable for the changes in what the organisation does and the improvement in the associated measures.

In the customer experience world, I have seen too many organisations where the customer experience leads have the responsibility for the measures, but insufficient accountability – whether shared or individual – exists for their improvement.

It’s wrong that women should be paid less than men for the same job. It’s wrong that people should not be seeing year on year improvements in customer experience. Both are fixed by adopting measures and clear accountability.

 

NickB

Travelling hopefully: the problems of accessibility

When customer journeys are actual journeys it’s hard to get a joined-up solution

I love a challenge and this one seemed quite straightforward: two elderly people – my in-laws – are travelling by train this weekend to Paddington station in London. I need to get them from there to my home with a minimum of walking.

Little do I realise that planning this simple piece of travel will send me on an information hunt lasting well over an hour and requiring almost Sherlock Holmes-like detection skills.

I start with mobility assistance at Paddington. I call the accessibility helpline shown for Paddington on the National Rail website. I’m put through to Ruth, who suggests a buggy to pick them up from the train, although they’ll need to phone the booking line to arrange this “owing to data protection”.

“That’s great” I say, “now where can the buggy take them?”

“I’ll just check” says Ruth – a few seconds pass then “there’s a drop-off at the taxi rank above platform 12.”

“OK, is that a pick-up point as well?”

“I’ll just check”.

At this point it dawns on me that she is looking at the same information that I am which, as it wasn’t much help, is why I called the helpline in the first place. We draw a blank.

“I’ll try putting you through to customer relations at Paddington.”

I’m then put through to Carl at GWR. Carl is also willing to be helpful but after describing the situation we seem to be treading much the same ground as before.

“I don’t have a physical view of the station” he says. “I’ll tell you what, why don’t you phone the helpline.”

He then gives me the same National Rail helpline that I dialled to start with.

Loopy

After a fruitless Google search to see if there is a way of breaking out of this loop I dial the accessibility line again.

This time Jamie at National Rail confirms that if my in-laws ask to be taken to the taxi drop-off area I can pick them up. We then conduct a joint mission to decode the information available on the website and Google satellite view and deduce that the drop-off point is signposted from the access road in Praed Street. I decide that I’m not going to get any further and thank him for his efforts.

Image (c) Google Maps

A quick check on Google StreetView suggests that the Praed Street access road might not be that accessible, but I am now in the frame of mind that this whole exercise will be an adventure or quest that I will have to get some fun out of. The prize is clearly going to be some valuable and scarce information.

But this is too high-risk. Knowing the routes around the station, I know that a wrong turning could leave my in-laws standing around while I navigate the various one-way and no-right-turn roads in the area.

I have a brainwave – call the station and ask the simple question “how do you reach the drop-off point?” I type “paddington station number” into Google and dial the 0345 number that comes up. My heart sinks somewhat to discover that it’s another Network Rail number with an options menu. I repeat the question to the helpful woman but as I suspect, she’s in a Network Rail call centre so doesn’t have the information – but she does have the actual number of Paddington Station.

I speak to someone at Paddington Station reception, who confirms that the drop-off point can be accessed from Bishop’s Bridge Road – this is at the other end of the station from Praed Street – but crucially advises me not to go into the taxi queue on the left but to go into the right-hand lane, then turn in. This is the crucial piece of information that I have been after, so I can now plan the pick-up with almost-military precision.

Problem solved for now, but why does it have to be so difficult?

Silo thinking

The various actors in this journey are all operating in silos and, to make matters worse, they are remote silos: all the people I spoke to were operating in a remote call centre providing only the same information that I had already got on Google. They were all professional, courteous and helpful but their help couldn’t reach as far as joining up the bits of my customer journey: in other words, they weren’t outcome focused, since my outcome is “get my in-laws to my house with the minimum amount of walking”. I only managed to piece together the information because I’ve had many years’ experience of picking up and dropping off at Paddington as its been through several improvements and modifications. Anyone without that level of knowledge – or access to Google Maps – would have most likely been given the wrong information.

It could have been worse

This lack of joining up and thinking end to end was highlighted in a more high-profile case at the weekend when BBC defence correspondent Frank Gardner who uses a wheelchair since being shot in 2004 was stranded on a BA flight for 100 minutes on arrival at Heathrow. It’s common practice to stow wheelchairs in the hold and clearly mark them with a label to take them to plane door on landing. Clearly this didn’t happen and according to Gardner it’s not the first time either.

Coincidentally, a couple of days earlier I had met with Samantha Berry, a passionate advocate of customer experience and accessibility for Omniserv, who provide mobility assistance at Heathrow. There will be more on that meeting in a future article, but my take-away from the Paddington experience – and the Frank Gardner incident – is that you need the following conditions in place to provide a joined-up solution:

  • An understanding of customer outcomes
  • Access to detailed local knowledge
  • The ability to act on that knowledge to deliver those outcomes.

It’s easy to state, but apparently quite hard to do.

Postscript – on the day

Here’s what actually happened…

Armed with the essential knowledge about the entrance to the drop off area, I set off in time to arrive about 3 minutes after the train was due in to the platform. Perfect timing but no sign off the in-laws. I wait 5 minutes. No in-laws. I try calling. No response. I repeat this process over the next 10-15 minutes. Eventually I notice a poster with a number to call.

I speak to a helpful person at Paddington station reception. He informs me that the mobility buggy didn’t pick up my in-laws because they weren’t there on Platform 1. Had they actually travelled on that train? Yes, because my mother-in-law had called me. I make one final attempt to locate the errant in-laws and get through to my mother-in-law who was wondering where the buggy was when the train had arrived at Platform 10. I call the reception number again with their precise whereabouts and the same helpful person jumped into a buggy and picked them up.

One small error of coordination cost me 20 minutes wait time (not a big problem) and two rather confused in-laws (slightly bigger problem). Clearly getting these elements to join up continues to be a challenge…

The return journey was all fine however: the buggy arrived at the drop-off point and off they went, happily seated on a GWR train although as there had been a number of cancellations they were in a minority. GWR’s lamentable performance however is another story.

NickB

Five Go Mad at GWR

Even a fictional character can have a bad customer experience

George was feeling a bit strange. Together with her cousins Dick, Julian and Anne – not forgetting her dog Timmy – The Famous Five, as they’d become known, had been revived for an advertising campaign by GWR so here they were, sitting on a brand-new electric train, heading down to Dorset for some jolly adventures, no doubt involving spies and some crude characterisations.

But being brought back in 2018 was making George feel uncomfortable. It wasn’t just that, as the most “woke” member of the Five, she was beginning to find her fellow adventurers’ attitudes more than distinctly outdated. It wasn’t that everyone was sitting on the train staring at their smartphones instead of chatting and sharing out bottles of ginger beer like in the good old days – George had got her own iPhone and was looking forward to discussing the manipulation of social media by foreign powers with her father the world-famous scientist later. No, it was that she was really actually, physically uncomfortable in her brand-new seat.

To take her mind off it, she flicked to the GWR page on Twitter. There was that rather annoying picture of the Five turning cartwheels on an imaginary picnic in an imaginary countryside with a brand new high-speed train running in the background. From some of the comments on Twitter it seemed like the train might be imaginary too, as quite a few seemed to be cancelled on a regular basis. That might explain why there were so many people crammed into her compartment.

Oh well, #GWRAdventures seemed like a jolly hashtag and, of course, was all part of a jolly campaign that The Famous Five were part of. Some customers didn’t seem to be keen on joining in the fun though, and a suggestion that they should tweet some lovely views seemed to produce pictures of broken seats, worn carpets and more overcrowding. Honestly, people could be really grumpy at times!

As she reflected further she realised her brand-new seat, whilst not broken, was really quite uncomfortable, even for an imaginary character in a children’s adventure story. Having become bored with the incessant trolling on Twitter she took look at Facebook. Goodness, people were even more grumpy on the GWR Facebook page than they were on Twitter! There was a lot of moaning about cancelled trains and, she was encouraged to read, some people found the new seats were jolly uncomfortable too.

Strangely though, there wasn’t much response from GWR to these complaints on either the Facebook page or the Twitter account. They seemed awfully keen to respond if someone said something nice but didn’t really engage with any negative comments at all other than to say that “people’s concerns would be recorded”. Really, thought George, that seemed rather impolite to say the least.

Although George liked being out of doors, solving crimes and rescuing her father from the clutches of evil villains, she thought if she ever grew up and had to settle down she’d like to be a head of customer complaints. You could really get things done if you listened to what the customers found most annoying, were honest with them about your shortcomings and then did something about it. That sounded like the kind of grown-up adventure she’d really enjoy.

But maybe for another company, not for GWR.

NickB

A question of ownership

It’s not the structure that’s important – it’s ownership

Picture the scene: 1994, a late summer evening in a scruffy office block on the outskirts of Vienna. It is the big one: my client team’s presentation to Herr F, the CEO. He has sponsored a re-engineering of their product management and introduction processes and we are describing the new process-driven organisation structure, the final slide of a small but perfectly formed PowerPoint deck.

“One question,” said Herr F, “where’s the process owner in this structure?”

I should point out that Herr F had read the often-quoted book by Michael Hammer and Jim Champy, “Re-engineering the Corporation”, and was referring to the part – page 103 in my copy – where it says that each of the shiny new business processes should have an owner, responsible for orchestrating performance across the now-irrelevant organisational silos. In his mind, the process owner was an essential part of those that were re-engineered.

Before I could point out that these responsibilities would be carried out by the leaders of the process teams that we’d designed, one of my colleagues leaped to his feet and proceeded to illustrate where the process owner would sit in the structure. This didn’t satisfy the CEO, so another eager team member attempted to re-draw the structure to point to the process owner. This still didn’t work either, so another one jumped up and had a go. Then another colleague got the bit between their teeth, and so it continued until we all agreed with the rather disappointed sponsor that a little more work was needed before he could sign it off. It took a further two weeks before we’d managed to include a role for the process owner in the new organisation, and then rolled it into the implementation phase.

I learned a few lessons from this experience about organisation design and stakeholder buy-in.

The real lesson I learned though has taken a few years working in the management structure of a large company to sink in. Which is this: we are obsessed with organisational structure and therefore changing this is the one thing that you have to get right.

But it’s not a question of designing a new hierarchy or turning the hierarchy on its side and creating a process structure (OK, I know there’s more to it than that), it’s making sure the people involved know where they fit.

This provides the one thing that people crave during times of change: security.

But, hang on, isn’t this the one thing we can’t guarantee anymore? Jobs for life are so last century, surely, with savvy millennials only staying in jobs for 2-3 years before moving on to bigger and better things?

Well, maybe, but not for everyone. Most people want a job and, if not a job for life, a job that gives them security.

And leaders of organisations have a duty to honour that desire, by focusing on ownership.

In the case of my Austrian client, the team had a strong sense of ownership that was a result of having lead roles in reshaping their unit, and I’ve been part of many projects since then that have had the same quality: the members of the team feeling that they are part of something and have a stake in its future.

But leaders, particularly when they are business owners can go even further and change the whole structure so that employees cease to become employees and instead allow the business.

One firm that did this was the branding company Novograf, based in East Kilbride, Scotland. When the two owners, John Clark and Alistair Miller, were looking to sell their business and retire they were approached by an American company looking to buythem out. As recounted in a recent article in The Guardian they were close to a deal when they enquired what would happen to the East Kilbride factory. When they were told that it would be closed down they had a rethink: retiring on a large pile of cash would mean nothing if you had to face the employees and their families existing on benefits the next day.

With the support of Scottish Enterprise, they set about selling the business to their employees and since their employees didn’t have access to a wad of cash to buy the business, they effectively set up a bank themselves, transferring shares to the employees and allowing them to pay back the money – with interest – over a number of years.

Partnership modelslike this are relatively few and far between – much-loved retailer (in spite of the TrustPilot scores) John Lewis Partnership is the largest employee-owned firm in the UK – and their high customer experience rating and employee satisfaction are a data point that suggests that spreading ownership has benefits on both sides of the counter. In spite of research in the US that indicates that younger workers who are worker-owners enjoy higher wages and household wealth only 300 British firms have made this change.

I’m not suggesting that all companies should be partnerships, but I’d certainly advocate considering alternatives to the traditional hierarchy but keeping not just process ownership but enterprise ownership front of mind.

NickB

No time for poetry? You’re missing a trick

Breaks – for poems – can raise your productivity

World Poetry Day? The very thought fills you with foreboding, probably as a result of being forced to learn or critique some piece by a Dead White Male while you were at school. And now you’re a whizz-bang business leader there’s no time for any fripperies – right?

Wrong!

I’m not going to make a case for force-feeding your contact centres with inspirational poems of the day or worse, have your staff sing the company song before starting a shift (probably because you don’t have one – if so, good on you).

But it’s worth remembering that taking time out to read a poem gives you a few minutes of reflection and according to many writers, taking a break is a key productivity tool.

Confession time: I’m quite bad a taking regular breaks and can often let tasks drag on for too long before recognising that I’m no longer productive – I suspect many other people are too.

In business, taking a break is still see as somehow shirking: can you remember the last time anyone in a meeting suggested a stretch break before the meeting heads into it’s second, less productive hour. A poem break would be an even better idea.

I’m keeping this short so that if you’ve taken a break to read it, you can soon get back to whatever you were doing. Or maybe read a poem? If you want one now, here’s one of my favourite bits of Shakespeare which often feels relevant to my working day. It’s Brutus, in Julius Caesar, before going into battle…

“O, that a man might know
The end of this day’s business ere it come!
But it sufficeth that the day will end,
And then the end is known.”

NickB

Don’t waste your time going on a “CX Safari”

Spend time with your own experts – on the front line

Of all the greatest myths in management, the idea that you can improve by going on an inspirational tour of great companies is one of the biggest. This is particularly true in the area of customer experience – why?

The answer is simple: you know what you need to do, and happy-clappy trips to the likes of Zappos or Amazon won’t alter that fact.

Is all study a waste of time?

I’m not saying that there’s no point in trying to understand what innovative practice looks like or that you’ll never pick up some insight from hearing about another company’s change programme. Indeed, The Next Ten Years was set up precisely with this in mind so it would be highly disingenuous of me to suggest otherwise. And it would have been a waste of my time judging at the Complaint Handling Awards last month (it wasn’t).

But study tours? Getting on an aeroplane and travelling half way around the world to find out how great Disney are at customer service? With some other executives? For a week? Do the math! This isn’t an effective way of using senior management time.

What’s interesting is that senior managers can, unconsciously, invest quite a lot of time and effort in not improving customer experience – and the study tour, CX safari or whatever is symptomatic of avoiding the issue. Big time.

The answers to your CX challenges are in front of your nose: in the feedback from your front-line staff and from your customers when they complain or praise you for a really good experience.

Put simply, instead of a study tour, why not invest the time and budget in:

  • Analysing the heck out of the journey or process that attracts the most complaints.
  • Finding out what the units/teams that attract the most praise do right and using them to train up the lower-performing ones.
  • Spending time on the front line.

I used to work for a company that had a regular “back to the floor” days where senior managers would spend the day in a contact centres or on customer calls. These were great, but it baffled me that such a fuss was made about it, since I figured that it should be a part of any non-customer facing executive’s job to find out more about the people who dealt with the people who paid their salaries.

So, by all means read up on what role model companies do, but apply the lessons judiciously, and recognise what great work you’re already doing.

Just do more of it.

NickB

True agility trumps customer experience – here’s why

When a great customer experience isn’t the only answer

A few weeks ago, I wrote a glowing account of my post-Christmas experience with bed supplier Warren Evans and, more recently, The Next Ten Years gave an upbeat – albeit quite conditional – assessment of the future of High Street retail.

SINCE THEN

Warren Evans, despite its customer-centric approach and reputation for quality has not been able to overcome its recent financial woes and is now in receivership. A whole swathe of other retailers continue to experience difficult times.

Does this imply that being customer-centric is not a strong enough guarantee for business success?

99 problems…

The problems facing retail are many and multi-faceted. Tightening consumer spending fuelled by Brexit uncertainty, rising material and labour costs, high levels of personal debt and the threat of rising interest rates. The answer for many companies has been the traditional focus on cost-cutting, with the loss of managerial roles in Sainsbury’s and Debenhams being recent example.

So, is cost-cutting the real answer in these troubled times? Should CX take a back seat?

The solutions adopted by surviving retailers would appear to suggest this is the case, given yet another apparently customer-centric retailer having failed.

…1990s solutions

Back in the 1990s I worked for the consultancy that originated business reengineering. Like any company that majored on process-driven innovation, we invested heavily in looking for the “next big thing”. Business or organisational agility became, at a conceptual level at least, the candidate with the biggest potential. How could companies who had reengineered themselves into streamlined super-beasts move themselves to the next business performance level?

By becoming more agile, of course!

Great idea – what did it mean in practice?

We looked out for examples of companies who could demonstrate success through re-inventing themselves and we discovered Silver Platter – the originators of the CD-ROM as an information-storing medium.

I remember attending a workshop with their CEO, Bela Hatvany. Bela radiated gravitas and wisdom as he described the Silver Platter philosophy – being big on empowerment and innovation was an emphasis as I recall. Then one delegate asked him a great question: “who was the most important – customers, employees or shareholders?”

Bela’s response became abstract and practical: “If you have an injury in your leg, you get your leg bandaged; if you have a head-cold, you take aspirin; if your arm hurts, that’s where your attention is.”

I may be paraphrasing somewhat but the essence of his response was that you treat what’s painful, but you keep the whole body together.

Focus

I suspect Warren Evans’ problem was that they focused on a great customer experience without balancing the more traditional factors that impacted their business.You could make the same argument that strong values and outcomes came at too high a price – ethical sourcing, pioneering the option to return a mattress after 120 days – as being potential weaknesses.

The sad truth is that looking for a factor to “blame” is an exercise in 20:20 hindsight – what is the lesson for those businesses trying to avoid a similar fate?

It’s a combination of great customer centric strategic thinking – the trajectory concept described in last week’s article really helps here – and being agile enough to switch attention when required.

If you’re a customer-centric company you should not stop being customer-centric all of a sudden, you maintain the focus on the customer – an investment you wouldn’t ever want to throw away – whilst managing downsizing, de-layering, product rationalisation or whatever gets you through the tough times.

It’s the ability to seamlessly add the necessary extra dimension to core focus – that’s true business agility – which will give you the best chances of success.

NickB

Closing the loop – listen to Yoda

For a really effective way to manage complaints profitably, you have to be prepared to learn

I don’t often look to fictional characters for management advice, but if you’ve had any exposure to the Star Wars universe, you’ll know that diminutive Jedi master Yoda is capable of some cornball wisdom that occasionally hits the spot.

When it comes to complaints management his line from The Last Jedi “the greatest teacher failure is” pinpoints the difference between organisations that thrive on complaints management and those that would rather sweep their customers’ gripes under the carpet.

As I’ve mentioned before, complaints are a goldmine of opportunity for turning grumpy customers into raving fans and gaining enhanced revenue as a result. But to do this you have to have a fully joined-up approach that covers detection, handling and learning.

Back in 1990, Peter Senge, then Director of the Systems Thinking and Organisational Learning Programme at Sloan School, MIT, published a seminal book, The Fifth Discipline, that introduced the idea of the “Learning Organisation”. Re-reading it, I’m struck by how much advice it offered appears to fall into the category of the “bleeding obvious” – but on reflection has still not been adopted by most businesses.

Maybe the concept of a learning organisation sounds too academic, non-action orientated, even un-business-like to have gained real traction, but in the world of customer complaints a learning organisation focused on customer outcomes is exactly what you should strive to become.

Discipline

Let’s reflect on Senge’s five disciplines of a learning organisation and see what they tell us:

  1. Systems thinking – the need to view the organisation as a joined-up whole, where actions in one part may have a positive or negative implication in another. Forgetting to think systemically is a trap that complaints managers can fall into. Actions with a positive effect in one area may result in negative effects elsewhere. Looking at end-to-end process rather than silo boundaries can help prevent this.
  2. Personal mastery – the requirement for individuals to commit to a process of wider learning, as the basis of organisational learning and therefore impact. This is straying into Yoda territory, but you need people who are committed to their continuous development so whilst fairly obvious, is key to managing complaints effectively, particularly as wider perspectives can be considered.
  3. Mental models – the need to test the assumptions held by individuals and the organisation about the way things work. Challenging these is essential for customer-centric innovation, particularly in response to complaints.
  4. Shared vision – seen by Senge as essential in motivating staff to learn. Although vision is seen by some as an outmoded concept, anything that motivates staff – I’d prefer a strong statement of purpose (e.g. our purpose is to use our customers’ feedback as the basis for improvement) – is valid here.
  5. Team learning – this“Fifth Discipline” is where the organisation builds on its individual responses to learn collectively about how it can improve. The benefit of this approach is that the problem-solving ability of an organisation is significantly enhanced, so arriving at a solution to a complaint-generated issue should be easier with this discipline in place.

In the loop

My back-of-an-envelope analysis of Senge’s model says that at least 80% of it is critical to closing the loop on complaints, but what is this loop that needs closing?

Put simply, there is a virtuous circle that organisations can put themselves in where what you learn from a failure to delight your customers feeds into improvement activity and a renewed commitment to detect when customers are unhappy.

In fact, this process is a version – admittedly rather high-level – of Senge’s first and most important discipline, systems thinking. So, how do you inject this approach into learning from customer complaints?

Beat the system

Anyone reading this piece who’s involved in complaints will be familiar with the various quality and other techniques used in Root Cause Analysis (RCA). I won’t reiterate them here – like any tool different techniques are applicable in different circumstances – but there’s a danger with the RCA approach. You may be able to get solutions that address the complaint but miss the big picture – or the organisation may feel that the big problem that’s preventing a breakthrough in customer satisfaction is too difficult to address.

The organisation can then find itself in the opposite of a virtuous circle where the solutions implemented from RCA fix point problems in the customer journey but don’t have much overall impact. As a result, RCA will be starved of the resource it needs to do a thorough job on the complaints in its workstack, results will be sub-optimal, and the cycle will continue.

To avoid this, complaints organisations need to make sure that they focus on customer outcomes – i.e. the underlying reason why the customer was using the product/service in the first place before things went wrong. This big picture thinking increases the likelihood of everyone addressing the underlying issues and, if your organisation is practising the other disciplines, it will pull together to fix them.

Chicken

Here in Britain we’re recovering from a crisis (I may be exaggerating) in the fast-food world. Fried chicken purveyor KFC found itself unable to meet demand for its fowl-in-fat products following a switch of logistics supplier. The situation was so bad that it had to close most of its stores while it sorted out the issues. This is a clearly a big cock-up (I’m not the first to make that joke) and the advantage, if there is one, is that the error is glaringly obvious and therefore getting to the root cause should be straightforward – and resources will be thrown at the problem to solve it quickly.

KFC have done a good job of responding, at least in terms of publicity, with a public apology and long-term probably won’t suffer too much.

However, what’s obvious, to me, is that KFC failed to pass on the learning from one supplier to another: the logistics involved in getting chicken hygienically from slaughter to fryer are highly sophisticated, apparently. I assume that their previously logistics supplier had refined their approach in response to customer and front-line feedback, but this learning clearly hadn’t made it to the new provider. In an outsourced environment, keeping the virtuous circle of a learning organisation in motion is even more of a challenge.

As Yoda might have said, “learning organisation the biggest challenge is”.

 

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