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Design Thinking-Deeply immerse yourself in your customers' world

Tuesday, March 22, 2016

 

"Our customers are leaving in droves. Those that stay are killing us in price negotiations. We need your help to fix it." A major pharmaceutical company asked me to understand how, despite spending millions in marketing, advertising, and sales, low-cost generic competitors were eating their lunch in a particular segment. They had slick brochures that promised great benefits including higher inventory turnover, lower COGS, enhanced cash flow, highest returns on investments, high-tech inventory management programs, and more. Yet revenue was sliding. Customers seemed to only care about low price. Salespeople were negotiating away margin, and over-servicing customers to make up for what seemed like inflated prices. The dots weren't connecting.
 
I sat down with an elderly Mr. Wong in the cramped backroom only barely separated from the noise and hustle in the front of his small NYC pharmacy. When I asked about his experience in working with my client, he told me that he hadn't seen his sales rep in four years. He had never seen the brochures detailing the bevy of programs that my client offered. He admitted, in fact, that he didn't didn't know what COGS was (cost of goods sold). I came up empty as I tested all of my client's assumptions.
 
Flummoxed, I asked Mr. Wong, "What is really important to you in running your business?" His answers were surprising:
  1. I want to spend more time with my customers
  2. I have to grow volume. 
  3. But I can't do either because the insurance companies are squeezing everything.
  4. I'm looking ahead at retirement and I need help in getting my son ready to take over the business. 
I repeated these interviews in many, many different pharmacies across the US. The answer was shockingly consistent: customers were clamoring for help. They were willing to pay more for greater value. But they didn't understand what my client was telling them. My client was providing glossy brochures designed for the CVS and Walgreens of the world. But the small pharmacists didn't understand COGS, inventory turn, ROI. They were pharmacists. Who were forced into running a business.
 
In the absence of real value, they turned to price-the only thing they had left. I suggested four key hot-button issues that marketing and sales could use that actually met customer needs. And sales increased by $20M. Each year. 
 
One of the foundational tenets of design thinking is deep immersion in your customer's world. Like my client, without this deep immersion, you are stuck with supposition and belief-which may be completely wrong and may have damaging financial ramifications.
 
What if you were to deeply immerse yourself in your customer's world? What if you were to simply ask your customers, "What are you trying to accomplish? What is important? Why?" There are any number of methods to formalize this process from simple phone interviews to "follow-me-home" visits to full ethnographic research.
 
But what if you started with a direct conversation with a couple of your best customers and asked, What? And Why? Whom can you call tomorrow?
 
Take the first step in applying design thinking by deeply immersing yourself and your team in your customers' world. 

We're focusing exclusively on design thinking in our upcoming CCO Council meeting on April 12. Brilliant conversations with brilliant CCOs. If you think you should be there, call me @ 978-226-8675. 

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Categories: CCO Council | Customer Insight | Customer Retention | Design Thinking

Design Thinking vs. Customer Experience

Sunday, March 13, 2016

Last week I called my bank, entered my account number into their automated system, then my pin, then my zip-code, then the last four numbers of my social security number.  Having properly identified myself as the real Curtis Bingham (or at least a sufficient facsimile), I proceeded to check my balance and then transfer a balance to another account. I realized that my car payment was being deducted twice. So I pressed “0” to speak with an agent.  The agent then asked me to provide all the same information, again. 

This is my biggest pet peeve in dealing with banks and their IVR systems:  despite having proven my identity enough to make payments on a loan or even completely zero out my account, every agent makes me provide the exact same information. Some want additional verification, some say they didn’t receive it from the IVR. Making customers provide the same information all over again creates friction. And how many times have you gone to a doctor’s office and been asked to fill out three forms, only to find that you have to enter in all the same information on all three. Or been stuck listening to an agent read, verbatim, a three-minute long legal disclaimer before confirming a change you’ve made to your life insurance plan?

Someone created these processes to meet a business need—to verify identity, get information, or fulfill regulatory requirements. But like many processes, they neglect the customer. You’re predisposing someone to be irritated with you before you even begin the human interaction. Too much friction creates dissatisfiers which, if left unchecked, can lead to churn.

Despite significant efforts to improve the customer experience, many NPS programs have plateaued and customers complain even louder on social media. Chief Customer Officers (CCOs) are stuck in groundhog day: dealing every day with an endless stream of apologies, billing statement credits, and service recovery efforts. The focus is on remedial efforts to reduce detractors. And they are often “lipsticking” bad processes—making inherently business-centric technology and processes more palatable to customers. But this only takes you so far.

The goal of many customer experience (CX) initiatives is to make many of these business processes more palatable to customers. The goal of design thinking is to determine how to do away with some of these processes altogether and recreate the rest on balance between customer tasks and business needs. The value and application of design thinking in the enterprise was described in the September 2015 issue of the Harvard Business Review. This issue included a very good summary of how Pepsi applied design thinking not only to product design but also to culture and customer experience. Design thinking brings disparate stakeholders, disciplines, and expertise together to first listen and intimately understand the customer’s tasks to be completed. Instead of immediately converging on a solution from a narrow set of options, design thinking allows us to create new choices, explore new alternatives, create new options that didn’t exist before.

There are a couple of core principles of design thinking: 

  1. Begin with people, culture, and context: understand human needs deeply enough to know where to begin design—the biggest challenge is ensuring that you’re asking the right questions
  2. Rapid prototyping: learn rapidly by building, testing, failing, and honing 
  3. Engage: enable participation of disparate stakeholders including customers, process owners, and even those outside the domain to build upon ideas and remove artificial domain constraints
  4. Execute: change is hard—especially the type of transformative change realized with such a wholescale reimagining of the customer/company interface

What would your product/service/process look like if it were wholesale reimagined, not from an operational-efficiency perspective but from the perspective of the customer task to be performed? How much customer-company friction could be reduced? How might this decrease call volume? Or service recovery? How much more “easy to do business with” might you become? What would be the impact on churn? On revenue?

Design Thinking helps us go beyond the incremental to the transformative. Using design thinking we can examine products, processes, and experiences holistically from the outside in, starting from the customer’s work to be done/tasks to be performed and work backwards with few constraints to create fresh and transformative processes that actually solve real customer problems. In the near term, we want to minimize the friction in the customer interface. In the longer term we want to align the brand promise, business objectives, job functions, processes, around facilitating the customer tasks to be performed—balanced with critical business needs. 

Come join us at our April 12th Chief Customer Officer Council meeting, where we’re going to be discussing how the discipline of design thinking can help us go beyond the remedial, incremental improvements that many CX initiatives may provide and help us align the business to solve real customer problems. Jill Herriott, former CCO of CIGNA and current CMO/CXO of the American Marketing Association (AMA) will be sharing her remarkable journey applying design thinking to create powerful end-to-end customer experiences that customers loved—and that promise huge ROI. And you won’t want to miss her discussion of customer archetypes that create emotional attachment and far greater customer engagement.

Steve Mescon, CCO of Riot Games (90 million customers!) is sharing how he used design thinking to create a powerfully customer-focused culture that enables them to bring in 83% of new business from word of mouth.

I typically reserve a couple of seats for guests. If you’ve missed your invitation, please contact info@ccocouncil.org to request an invite. 

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Categories: CCO Council | Chief Customer Officer | Customer Retention | Design Thinking

2014 CCO Tenure Study Preview

Wednesday, April 16, 2014

I'm putting the finishing touches on the CCO Council 2014 Tenure Study and am excited to share a sneak preview. For the last four years, I have examined the role of the Chief Customer Officer to understand the context within which CCOs are functioning and the future of the role, specifically as these relate to the development and execution of potential CCO career strategies.

The CCO Council defines a chief customer officer as the customer-facing executive who is ultimately accountable for customers and who is driving customer strategy at the highest levels of the organization. This eliminates middle-level to senior-level executives who may be customer centric and even responsible for customer experience within their organizations, but who don't appear to possess sufficient authority to act and influence across organizational boundaries.

The average chief customer officer tenure increased again to 34.5 months, up from ~23 months four years ago. The lengthening tenure reflects in part the fact that mobility was severely restricted during the years following the recession. As well, enterprise CCOs weathered the recession far better than those in small companies.  Most importantly, this increasing tenure speaks to the growing recognition of the value of the CCO role and its increasing stability. Nevertheless, as the newest member of the C-suite, it remains the most fragile role, trailing the CMO by ten and a half months. As a side note, there is an interesting flaw in the way that Spencer Stuart computes the CMO tenure. If the CCO tenure were computed in the same fashion the average CCO tenure would be 3.2 months. Look for more detail in the upcoming tenure study results.

One of the more exciting findings is the lengthened tenure of members of the CCO Council. Where average enterprise tenure is 34.5 months, tenure of Council members is a whopping 54.2 months. CCO Council members are demonstrating significantly greater ROI as they elicit greater executive commitment and involvement, demonstrate a clear impact on executive objectives, and incorporate customer strategy into the overall corporate strategy. As well, they enjoy significantly greater influence over the rest of the organization as they balance business and customer needs.

Another significant finding of the study is that for the first time, CCOs are enjoying an unprecedented mobility. When I first began the study, the CCO role was terminal-they retired in the role and there wasn't a career path available. Now, however, the CCO is being promoted to COO, CEO, or president of a business unit. This is indicative of the increased importance companies are placing on their customer strategies in requiring that executives have substantial customer roles. Executives and boards are beginning to recognize the value of the chief customer officer as a stepping-stone into roles of greater responsibility and authority. This will be covered in greater depth in the forthcoming study.

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Voice of the CCO: What is the Value of the CCO Council?

Monday, November 19, 2012

CCO Council members Jeb Dasteel, Jasmine Green, Tammy McLeod, Alan Chow, and Lacey Grey and Advisory Board members Vicky Stennes and Scott Bennett share their many perspectives on the real value of membership in the Chief Customer Officer Council.

CCO Council members Jeb Dasteel, Jasmine Green, Tammy McLeod, Alan Chow, and Lacey Grey and Advisory Board members Vicky Stennes and Scott Bennett articulate their many perspectives on the real value of membership in the Chief Customer Officer Council.

Video Transcript

Voice of Jeb Dasteel: We’re communicating, of course, all day every day with customers but we don’t really spend much time talking to other people who have figured out how to be more customer centric. And in my view, the Council allows us to do exactly that.

Jasmine Green: You get a lot of rich information from your peers across many industries and you learn that you don’t need to go it by yourself. We can learn from others and take information from others and still do a wonderful job in our roles.

Tammy McLeod: We can go out and with a specific problem call in the members of the Council and see who has experience in a similar setting. We can ask them for feedback. We can find out what did and didn’t work. And hopefully we aren’t then going out and experimenting at our customers’ expense.

Alan Chow: It’s been a fantastic experience joining the CCOC, the Council. The type of knowledge that I get is just fantastic for building customer centricity culture. 

Vicky Stennes: From the moment I walked in the door I was struck by the openness, the transparency of the members, the quality of the discussions, the candor, and a sense of genuinely trying to help each other.

Lacey Grey: We can learn from other companies and what they've done and how it's been successful. We can think about other approaches that other companies have taken to accomplish the same tactics as those that we have to undertake.

Scott Bennett: I've got peers and others that I can talk to and work with and overcome challenges; like, a new CEO or an operationally-focused organization or a financially-driven organization. 

For exclusive resources and reports, visit http://ccocouncil.org/site/exclusive-resources.aspx | http://www.ccocouncil.org/video

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CCO Council's 2013 CCO of the Year: Pete Winemiller

Friday, November 16, 2012

Danny Barth, Executive Vice President and Chief Administrative Officer of the NBA's Oklahoma City Thunder, applauds Pete Winemiller, Senior Vice President, Guest Relations, and his team for being instrumental in helping to foster relationships with fans throughout Oklahoma and make their organization one of the most fan-centric teams in professional sports.

Video Transcript

I'm proud to have the opportunity today to talk to you about the Oklahoma City Thunder and our Senior Vice President of Guest Relations, Pete Winemiller. When the Thunder family came to Oklahoma City, we knew that the success of our team depended on our ability to integrate ourselves into the community. We place a high value on community outreach and fan interaction.

Under the leadership of Pete Winemiller, the Thunder set out with the goal of becoming the most fan-centric organization in professional sports. Pete and his staff were instrumental in helping the Thunder achieve the number one ranking this past year in ESPN Magazine's Ultimate Fan Rankings.

But one thing that makes Pete so valuable to our team is that he understand guest relations is not an area where you can call the job finished. Every day, every game, all the details have to be right to make sure the fans continue to have the best experience possible. Pete and his incredible eye for those details and open heart, truly appreciates and goes out of his way to initiate fan feedback.

Now, with a well trained and highly responsive guest relations team, we have made our mark as an organization that truly values our fans. In fact, they know that they're not just Thunder fans, they're part of the Thunder family. Pete, we are so proud to have you as part of our organization. I'm so very pleased to introduce you as the 2013 CCO of the Year.

Congratulations from all the Thunder family!

For exclusive resources and reports, visit http://ccocouncil.org/site/exclusive-resources.aspxhttp://www.ccocouncil.org/video

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Voice of the CCO: Alan Chow on CCO Council Membership

Thursday, November 15, 2012

Alan Chow, Chief Customer Officer of Teradata Corporation, discusses the benefit he receives from being a CCO Council member and what made attending the 4th Annual CCO Summit so valuable to him.

Video Transcript

It's been a fantastic experience joining the CCOC, the Council. The type of knowledge that I get is just fantastic for building customer centricity culture in a company like Teradata where we thought we were very customer centric. And yet, there's just so much to learn out there from our peers, in other industries; it's just a wealth of knowledge, first of all.

And then the Summit itself is just wonderful because it's action-packed. It's a day and a half. It is never a dull moment. It's hard for us to find just 30 seconds to go and do this video because there's so much knowledge from people that you see face to face. The network that you build to be able, now, go into more in-depth exploration of any area that is particularly important to you. Without being here to see and meet those people face to face, you never make those connections; you never know that, on this topic, I could come here and talk to this person and that person, because I've met that person here -- the trust and the interaction and the openness to share among your peers and help: it's just tremendous. It's so wonderful. I'm just so glad I'm here. Thank you!

For exclusive resources and reports, visit http://ccocouncil.org/site/exclusive-resources.aspx | http://www.ccocouncil.org/video

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Categories: CCO Council | Chief Customer Officer