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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

The Six Components to Customer Engagement Strategy

Tuesday, June 03, 2014

Customer engagement needs to be a disciplined strategy with ownership, accountability, broad reach, goals, accountability, measures, and a marketing plan of its own to communicate with employees, customers, and other stakeholders. Here are six essential components to a successful customer engagement strategy:

Purpose
In order to devise an effective strategy, you must first identify what you want engaged customers to do for you. Do you want them to help resolve problems, inspire innovation, co-develop new products or services, generate market insights, improve operational efficiency, enable greater sales velocity, or something else? You need a purpose to give your strategy focus.

Engagement Opportunities
What are the most important collaboration activities that support the engagement strategy? What are the most important advocacy activities that support the engagement strategy? How do you determine each activity’s importance and priority? Once identified, what resources do you have to support these activities?

Customer selection and enticement
How do you identify the ideal customers to participate in an activity that achieves your business goals? What opportunities are best suited to the customers and the pursuit of your goals? How do you entice customers to participate? For some, it’s simply a matter of asking. But others may need incentives or a clearly articulated mutual benefit that makes participation worth their discretionary time.

Measurement and impact on business metrics
You need to find a correlation between the measure of engagement by activity and its impact on the business. How do you measure engagement and how do you demonstrate that correlation? Without it, investment in your strategy is not defensible or sustainable.

Organizational alignment to customer direction
While it’s great if you have customers collaborating and advocating, if the organization is not aligned around delivering improvements or outcomes from these activities, engagement will be short lived. Customers will realize, “Oh, they’re asking me for help but they’re not really doing anything about it, therefore, it’s not worth the investment of my time and energy.” 

Employee engagement
Similar to the process of selecting customers, how do you identify the ideal employees to participate in an activity that achieves your business goals? What opportunities are best suited to the employees and the pursuit of your goals? How do you entice employees to participate? Rewards and incentives, both intrinsic and extrinsic, may be appropriate and necessary to successfully engage employees in the business of engaging customers.

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Categories: Chief Customer Officer | Customer Engagement | Customer Insight | Customer Loyalty | Customer Retention

Three Steps to Manage Customer Crises

Wednesday, May 28, 2014

Customer crises strike without warning, and the chief customer officer must act swiftly and decisively to address root causes and begin rebuilding damaged customer relationships. Over my years of experience working with scores of chief customer officers, I've found three steps that are crucial in successfully managing any crisis:

Build Strong Customer Insight Before Crisis Strikes
As owner of the customer you know the value of thorough customer research, but having detailed data is particularly vital when crisis strikes: your unique customer insight must form the basis of a successful response strategy. Relying on that insight you will be able to specifically target touch points that will resonate with your customers, identify areas of the organization's plan that may exacerbate negative opinion, and determine the best strategies for mitigating that negativity. Have a comprehensive customer research program in place before you're faced with crisis to ensure that the information is there when you need it most.

Focus the Organization on Customer Impact
It's all too common for the wider organization to focus on damage control-acting in self-defense, laying blame, or stonewalling. But this will only worsen already injured customer relationships. Instead, it's imperative for you to lead the organization to focus on customer impact at every step along the road to recovery. This is not to say that every action must have a positive impression; we know there are times the organization must act despite negative impact. Your job is to ensure that at every step someone is asking the question: how will this affect customers? If it's positive, highlight it in a way that strengthens customer relationships, and if it's negative, use your customer insight to mitigate the damage.

Rebuild Damaged Trust
Incorporating high customer touch into routine operations allows you to rebuild trust while creating sustainable customer centric change. Seek opportunities for reassuring customers not only within the recovery, but throughout the organization. Look for functions that can be updated or repackaged to highlight positive customer impacts. Share information with customers by updating call center scripts, or devise high touch outreach programs to provide understanding about particular actions or operations of the organization. Customer trust will return only when customers feel they are receiving honest and forthcoming communication about the problems affecting them and the steps you are taking toward resolution. 

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Categories: Chief Customer Officer | Customer Insight | Customer Loyalty | Customer Retention

Who Cares Whether the CCO Tweets?

Tuesday, May 20, 2014

Now that “tweet” has become a verb, it seems that everyone has a Twitter, Facebook, Google+, and any other alphabet soup social media account. And rabid social media “experts” are calling for every C-level executive to embrace social media as part of their “new commitment to transparency.” 

Who cares whether or not the CCO tweets? Is the CMO going to magically create brand evangelists in 140 characters? If the CFO posts a family vacation snapshot on the company blog is Wall Street going to raise earnings expectations?

I think not. While there are benefits, whether you choose to blog or personally participate in social media is irrelevant. However, there are four things CCOs need to be thinking about now with regards to this powerful phenomenon.

Customer monitoring
More and more of our customers are on social media and, with the proliferation of social media monitoring tools, we have at our fingertips a very rich and real-time view of customer (or end-user, as it may be for your business) needs, desires, and issues. Do we need yet another source of information about our customers? We might think not, but in truth, this source is far more immediate than sales reports, quarterly rolling surveys, or even post-interaction surveys. And because they are unsolicited, they are probably more accurate although sometimes far more inflammatory due to the inherent anonymity of the medium. Leverage the opportunity presenting itself and use it to mine information about customers, users, and even competitors and detractors. What might words said in pseudo-public tell you about private business strategy and direction that salespeople can leverage?

Triage and escalation avoidance
As we've seen over and over again, mistakes and mishaps can go viral in a heartbeat. FedEx did a wonderful job of responding within 48 hours to a security camera video of one of its drivers caught throwing a monitor over a customer's gate. In two days the video received more than 4 million views and 17,000 comments. The SVP of U.S. Operations issued a video and print response that was fantastic: apologizing, reiterating the true values of the company, detailing actions being taken, and reaching out to the offended customer. Every news article includes reference to his response, nearly nullifying the impact of the original misdeed. We have all spent significant time and energy creating in our companies elaborate, closed-loop triage and issue resolution processes for our customers in the call centers, sales channels, and at the executive level. We need to extend those processes to social media to discover problems and nip escalations before they become full-blown PR nightmares that damage our brand, loyalty, and profits.

Opportunity discovery
During the Super Bowl a couple of years ago, a number of customers were highly offended by Go Daddy's continuing borderline risqué advertisements and expressed their frustration with the obvious disconnect from their personal values along with their interest in changing domain hosts. An individual in Comcast's then-nascent social media monitoring group happened to be watching and offered them a special incentive to switch. There was a fair amount of business generated by this lucky catch. What opportunities can we find and shuttle to our sales teams?

Employee engagement
In addition to all the benefits, social media can be a legal nightmare, a PR disaster, or simply a venue in which customer trust can be damaged or destroyed. Make sure you provide customer-facing employees authorized to use social media channels on the company’s behalf with clear guidelines for appropriate, business-relevant social media behavior. Take advantage of the many new businesses that are emerging to help companies monitor and control how employees interact with customers using social media. Your objective should be to empower and leverage the enthusiasm of your employees to build trust, promote products and services, champion the brand, and foster productive customer relationships, while providing guidance and oversight to the creation of a consistent customer experience across all channels.

What are your thoughts? Who cares whether or not the CCO tweets?

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Categories: Chief Customer Officer | Customer Centricity | Customer Engagement | Customer Insight

How to Shape Customer Behavior?

Tuesday, April 29, 2014

Google and Microsoft took what initially appeared to be an innovative path to decrease residential energy consumption. Believing that customer's decisions to conserve electricity were impeded solely by the lack of easily-understood, real-time consumption information unobtainable via paper utility bills, both created web-based analytics platforms, displaying consumption costs in real-time to help make conservation decisions. And both companies canceled the projects. Their tools had absolutely no effect on behavior. 

According to a recent article in the Wall Street Journal, oPower programs yielded $234 million in energy savings last year, removing 1900 gWh from the electrical energy grid, enough energy to power 190,000 homes for a year. How did oPower succeed when goliaths failed?

The overall goal is to decrease energy usage. Google & Microsoft solved a data problem with their belief that people naturally want to conserve energy but are prevented from doing so by a lack of insight.  Their failure disproves their hypothesis.  oPower solved both a context and motivation problem using both descriptive and injunctive norms. oPower partnered with public utility companies to present via monthly bills a comparison of recent historical energy consumption with nearest two or three neighbors. Because individuals measure their own behavior against their perception of peer norms, consumption data in context with neighbors or peers can change behaviors. This is an example of a descriptive social norm.  Those consuming greater energy than their neighbors began to conserve energy.  But as is common with descriptive norms, it had a boomerang effect on those consuming less energy that subsequently relaxed conservation efforts and quickly climbed to the average.  oPower added an injunctive norm wherein they added a smiley (☺) or frowney (☹) face to the descriptive comparisons, representing approval or disapproval of their positioning relative to their neighbors.  The addition of this judgment is a form of operant conditioning, which is a powerful driver of behavior.

Google, Microsoft, and oPower all provided insight into energy consumption. Their assumptions were vastly different. Google and Microsoft incorrectly believed that people inherently desired to conserve energy and insight would enable behavior change. oPower correctly assumed that social pressure was a far more effective means of shaping customer behavior.   Research has shown repeatedly that people desire to conform to social norms. Other research has shown they overestimate the prevalence of undesirable behavior and use these perceptions as standards for comparison. Energy customers overestimate their neighbor’s energy consumption and conserve when faced with descriptive norms showing otherwise coupled with assessments of desirability of behavior.

How can you use descriptive norms to change behaviors?  One chief customer officer (CCO) showed a B2B customer how often they were calling customer support in comparison with other customers and as a result were decidedly unprofitable. The number of support requests tapered dramatically thereafter. Another company uses peer mediation in their customer communities to assess behavior in comparison with other players and assess penalties in an effort to root out toxic behavior. 

What other applications of these principles have you found?

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Categories: Consumer Spending | Customer Insight

The Tweet Heard 'Round the World

Tuesday, April 08, 2014
Reflect back with me to April 19, 1775... 
 
With the might of the British Empire behind them, the British infantry believed it was utterly invincible. Imagine its surprise when it became surrounded by the Minute Men and later, many more of the American colonists. In the tension that followed, one nervous British infantryman fired upon the colonists, which started an exchange of fire from both sides. With this one shot that later became known as the shot heard 'round the world, the revolutionary war had begun.
 
Slightly more recently, in September of 2013, Chicago-based business owner and Twitter user Hasan Syed made history after British Airways lost his parents luggage on a flight from Chicago to Paris. Syed did something nobody has ever done before: he bought a series of promoted tweets on Twitter to express his frustration and displeasure.
 
Don't fly @BritishAirways. Their customer service is horrendous 
 
Checkout @British_Airways state-of-the-art baggage handling system [with photo of horse and buggy]
 
@British_Airways is the worst airline ever. Lost my luggage and can't even track it down Absolutely pathetic
 
A full 7 hours later, @British_Airways responded:
 
Sorry for the delay in responding, our twitter feed is open 09:00-17:00 GMT. Please DM [direct message] your baggage ref and we'll look into this.
 
By any account, Syed is no social media powerhouse. As of February 2014, he still had only 1,129 followers and 436 tweets. The sponsored tweet, however, for which he spent $1,000.00, yielded 76,000 impressions and 14,000 engagements (replies, retweets, etc.), all of which sided with him against the brand or broadcast their own, similar stories. Syed's tweet also quickly entered the news cycle, where his story appeared on BBC News, Time, Fox News, the Guardian, NBC News, Mashable, Huffington Post, and others.
 
With Hasan Syed's "tweet heard 'round the world" on September 2, 2013, the revolutionary war for customer control of your brand had begun. That same day, Andy Witt (@designingWell) tweeted:
 
What if patients were more forward and public with their frustration with hospitals like Hasan Syed was with @British_Airways?
 
Just like the British regulars, big companies have long thought they were utterly invincible-they controlled the messages, the media, and the conversations with their customers, when they bothered to have them. But to Andy Witt's point, what if one (or more) of your key customers - by size, revenue, influence, or other criterion - broadcast their frustration with your company to the public and to your other customers? What would the impact on your brand look like? Would it be inconsequential? Or could it cost millions of dollars in advertising to rectify?
 
Let's be honest. The age of cool products and feel-good service has come and gone. Social media, with all it empowers, is here to stay and still growing. It is not enough to listen to and pacify customers. Now, more than ever, reputations and relationships with customers can be tarnished, if not destroyed, with a few simple keystrokes. Customers are taking charge. They clearly want a voice.
 
We've entered the age of engagement. Today we have to engage the Hasan Syed's of the world: collaborate with them to help fix our problems and enlist them as our sales force to dramatically grow our businesses. In the days ahead, the most successful companies will grow only as they engage customers in customer acquisition, retention, operations, innovation, and even strategy.

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Categories: Customer Engagement | Customer Insight | Customer Loyalty | Customer Retention