Customer World

Inside Steve's Brain- customer-centric design thinking

Here's an overview of the new book that's just got released - Inside Steve's brain ( Nishad sent this to me a few hours ago). Personally, it tells me a lot about the way the man is thinking, pushing( the people around him), acting-on( his instincts) and executing( without being worried about what the world thinks about him). Customer-centric enterprises need to have customer-centric design thinking - the way their products need to be conceived, designed and delivered. Steve just does it with impeccable perfection and style.    Here's the preview before you rush-out to buy:

| View | Upload your own

CMO council releases study on 'Leveraging Customer Data and Analytics'

Only 50 percent of global marketers report having a strategy for further penetrating or monetizing key account relationships, reports the Chief Marketing Officer (CMO) Council in a new research study, Business Gain From How You Retain . In addition, a surprising 45 percent rate the effectiveness of customer relationship management (CRM) systems as deficient or needing more work, with only 15 percent of companies rating themselves extremely good or effective at integrating disparate customer data sources and repositories.

 

Conducted in late 2007 and early 2008, the CMO Council's Business Gain from How You Retain study undertook a wide-ranging evaluation of where and how marketers are "operationalizing" customer intelligence and insight to reduce customer churn, increase lifetime value, improve the customer experience, and increase the effectiveness and targeting of marketing spend.

More importantly, marketers are struggling to gain a true and timely view of the customer due to inadequate or incompatible IT systems and databases, siloed data in functional areas, and a limited strategic focus or management mandate on Customer Data Integration (CDI). Compounding the issue is a lack of formalized data-sharing policies and practices in the organization, combined with internal political or cultural barriers and IT obstacles and objections to data integration.

 

"We are seeing a fundamental need for marketers to be more effective at tapping the valuable vein of customer data that runs deep inside all organizations," notes Donovan Neale-May, Executive Director of the CMO Council. "Investing in integrated systems that harvest customer insight is critical to driving both marketing and business performance," he adds.

•       Only 15 percent of marketers say their companies are doing an extremely good or effective job of integrating disparate customer data sources and repositories; 55 percent note there is room for improvement or a deficiency in this area.
•      More than 31 percent of companies surveyed had customer churn rates of more than 10 percent and 32 percent reported turnover of five to 10 percent. In comparison, more than 62 percent said they desired or expected a churn level of less than five percent.
•      Respondents believe customer churn significantly impacts business performance through revenue loss (59.9 percent), reduced profitability (39.6 percent) and greater marketing and re-acquisition costs (36.3 percent). 
  
•      While churn is a big issue, nearly 67 percent of those surveyed say they have no system for re-activating dormant or lost customers, while just over half of respondents have a strategy for further penetrating or monetizing key account relationships.

•       While more than 35 percent of respondents report that the CMO or marketing department (38.9 percent) has primary responsibility for the customer analytics function, they are not leveraging its value. Over 31 percent of those surveyed do no data mining at all and 63 percent are only doing moderate levels of data mining for intelligence and insight.

•             The top six strategic applications of customer information by marketers include:

                        - Up-selling and cross-selling
                        - Segmenting and targeting
                        - Driving retention, loyalty and promotional programs
                        - Identifying new opportunities and unmet needs
                        - Improving customer service
                        - Shaping personalized and customized communications

•      Key initiatives to increase customer retention include improving customer communications (65.2 percent); addressing complaints, problems and pain points (51.8 percent); and enhancing the customer experience (54.8 percent). Unfortunately, fewer marketers noted their companies' willingness to modify business practices and policies to accommodate customer needs.

What are the icons of your customer service?

If you are obsessed with customer-centricity in your organization, it make sense to have some icons that serves as a benchmark for the organization to emulate and live-up to. CRM Buyer has an interesting article on how Lands' End did it:

Motivation can take many forms. At Lands' End these days, it has taken the shape of a London taxicab parked in front of the company's headquarters, its black paint buffed to a mirror-like shine, its grille festooned with a Christmas wreath.

Historic Return Policy

Lands' End, now a division of Sears, has built a reputation for 44 years on customer service. The London taxi, returned by a customer in 2005, has become Lands' End's version of a well-known Nordstrom legend, in which a customer was allowed to return tires even though Nordstrom never sold tires.

However, in this case, Lands' End really did sell the car, back in 1984. The London taxi was featured on the cover of Lands' End's holiday catalog that year as a special luxury item. The cab, complete with a right-side steering wheel, and filled with classic English cashmere clothing and gifts, was sold for US$19,000 to a Kansas native. The woman bought it as a gift for her husband, who was a car collector.

In 2005, the man called Lands' End and invoked the company's unconditional guarantee policy that allows customers to return any item that they are not satisfied with for an exchange or refund of the full purchase price. He got the $19,000 back, and Lands' End got the car.

The taxi would be worth between $10,000 and $12,000 now, according to Richard Lentinello, editor of Hemmings Motor News, a monthly publication for car enthusiasts based in Vermont.

It's more than a cab. McCreight says the taxi is a valuable symbol.

"For thousands of employees, or new employees, to say, if you're designing a product, and you're going to need to stand behind that product 21 years later, how dearly and how much attention do you take to design it," McCreight(President of Lands' End) said.

I personally think this is a lovely quote from McCreight and one that is extremely relevant. Many companies develop products or policies, sell or run it for sometime, only to later revoke it! Companies need to realize that such revoked products or policies leave customers confused, frustrated and miffed. It pays to plan just in case your customer returns after 21 years!

Open Source organisation design

Reading the article in Wired about Kidrobots written by Alissa Walker, I felt there are some very important implications about how corporations need to redesign their business models for a successful future. Specifically on how organizations have to structure themselves towards customers, product design and internal working methods came to my mind. Here are my thoughts:

CEO  as Chief Engagement Officer: The job of person on the top of such organizations is about having a loose control of various functions and people in the organization.His/her ability to bring together multiple talents either from within or outside will become increasingly important. His/her job is to drive active engagement across functions and people. There is a nice quote in the article by the owner Paul Budnitz where he says "You need someone with a very clear vision holding everything together, and frankly that's what I'm exceptionally good at..."

Employees as artists: The ability to embrace ideas and suggestions across the board will become important for the success of the corporation. As mentioned in the article, "When there's no sense of possessiveness or ownership in the artistic process, great things happen,.." Employees must understand and practice this approach across markets, departments and offices.

R&D as open source: Product development wil get more collaborative and hence  they need to understand talent always may not reside inside the company. Like mentioned in this article, "ideas for new Kidrobot products are coming at Budnitz fast--from friends, musicians, fashion designers, graffiti artists, animators, even suggestions from Kidrobot's message boards..", R&D will be a lot more open than closed.

Products to extended experiences: Companies have to learn to work with alliances beyond their categories. It's no more just about the product but about the experiences in places where customers never expect them to be present. Like how the article mentions "Budnitz has overseen the design of a wildly successful tie-in with a shoe by Nike (NYSE:NKE) and exclusive apparel for Barneys. Then Volkswagen came knocking, with a plan to bring to life another bunny-inspired character, the Dunny, in a signature version of its new Rabbit. Budnitz was able to completely customize the vehicle, from interior textiles to the paint job..."

From retail to playtail : If an organization's customers have to interact with them at the retail level, it is no more about product placement and availability. It's the ability to provide an environment for customers to come-in and play with their imagination around products. The article goes on explain - "He transformed the spaces from toy galleries to lifestyle stores that feature a new limited-edition line of apparel." 

Corporation as a network: The corporation of tomorrow must not structure itself as head offices, corporate offices and regional offices but as a network of excellence across the globe. As mentioned in the article "Budnitz lets that sort of fluidity permeate the entire company. With so many projects in motion, it's impossible for him to provide all the direction himself, so he divides his staff of about 45 into small groups, letting important decisions fall to anyone from an intern to a visiting artist."

Customer focussed companies - Businessweek's list

Businessweek has come out with first ever ranking of the best customer service companies in the US. There are a few things to learn from them. Here's what I found interesting about these companies:

• They emphasize employee loyalty as much as customer loyalty, keeping their people happy with generous benefits and perks. Since 1984, No.5 Wegmans has given away $59 million in scholarships to 19,000 employees.
• Senior management logs hours on the front lines, listening in on phones in the call center or working by staffers' sides. At No.15 Cabela's Inc. (CAB ), for instance, Vice-Chairman James W. Cabela spends hours each morning reading through the retailer's customer comments, and hand-delivering them to each department, circling the issues he'd like to have addressed.
• Apple's customer service shows its bruises--device problems frequently erupt just after warranties expire--the in-person support offered at the "Genius Bars" in the electronics maker's more than 170 stores sets it apart from its peers.
• Low-cost brokerage firm Vanguard, whose top executives are each trained to man the phones during heavy call periods.
• Four Seasons Hotels & Resorts (No. 2) has been trying to enhance the check-in process for customers, a service that's in little need of improvement. "We call it having a healthy paranoia," says Craig Reid, senior vice-president of operations for the Americas. So over the last 18 months the hotel has been quietly extending curbside check-in. It aims in advance to identify customers who've stayed at the hotel as infrequently as five times and literally hand them their room keys as they step out of the car.

To me what what was interesting was the passion these brands demonstrate in 'bringing alive' the philosophy. The common thread of taking the credo seriously across the company and seeing it through all the way is something all these service brands seem to have done.

Building a customer-centric culture

Someone asked me the other the day, if I have been talking and spreading the philosophy of the ideal work culture that our office should practice, the need for extreme customer-centricity amongst employees, a passion for the work one does etc. for so many years now, why is that there are only a few people around me who seem to get it, do it, practice it and spread it.

Here are my answers:

• Building an organization is an evolutionary process. Keep doing it.
• Change management is a continous job. Keep attempting it.
• There's no perfect answer. Keep trying.
• Don't worry about results. Remember, culture & habits can't change overnight. Keep up the pressure
• Identify evangelists. Keep working on them to spread it across the organization.

It's interesting that on the same topic I just got a reference of a 1972 McDonald's Training Video.The content and the message of the video is still relevant after 35 years! Take a look:

So, don't lose hope. Remember, the 35 year McDonald's Chant!

Soon, your phone will become your wallet

The world's largest credit card network is ready to replace plastic with silicon.

Visa hopes to turn hundreds of millions of cellphones into electronic wallets that are simply swiped in front of a merchant's scanner to complete a transaction. This form of "contactless" payment won't require a signature or a personal identification number, but will be limited to purchases of $25 or less, Mr. Gauthier said.

Visa expects about $140-billion (U.S.) worth of the transactions it processes will be done with cellphones by 2010. As large as that amount is, it would represent just a fraction of Visa's $4-trillion worth of transactions each year.

A second form of mobile phone payment that Visa hopes to test is transactions between individuals. How such deals would be authenticated remains to be worked out by the card issuers, but they could be much bigger transactions than the contactless ones, he said.

thro' globeandmail

Just-in-time shifts based on customer flows

Walmart has come-up with an innovative worker shift system. Shifts will be based on customer flows and employees will know it  3 weeks before!

I think this is an interesting evolution where shoppers, customer service and optimization of costs are at the central focus of this decision. As we move from a "mass manufacturing" era to "mass customization" era, new management principles and methods have to be invented for the companies of the future. We are yet to see some innovations in this area. If Alfred Sloan changed the auto manufacturing thinking for GM or if Henry Ford brought-in the mass manufacturing methods during early 1920s, the new service economy will have to dump the old economy rules and transition to new ones. Because, 24x7 businesses need to find innovative ways of developing superior customer service while balancing it with fair HR policies.

MSNBC reports:

Wal-Mart said the new system ensures that stores are fully staffed at peak shopping times and it takes into account the hours employees prefer to work.

“It is much friendlier and more predictable than the previous system in that it actually asks for our associates preferences of when they prefer to work,” Clark said.

She said under the old system, store managers drew up schedules based on the level of sales in a store. Now, increased staffing will coincide with times when customer traffic surges, she said.

Customer-Centric Companies and customer management blues!

I often wonder how to get my organization aligned to customers and get all employees to have shared goals. I realize that it is far easier said than done. Getting an alignment across the entire organization is what I have to come believe is the key difference between the best customer-centric companies and the worst ones. We read a lot about Starbucks, Whole Foods etc. but  what make them the companies that they are?

Transparency amongst employees  is what I feel is the most critical.  The other one is having a fair compensation across various levels in the organization. The US companies seem to have lost the plot on this. John Mackey, CEO of Whole Foods has an excellent post on compensation. He writes:

The second part of today's announcement has to do with my own compensation. While it has become necessary to raise the salary cap at Whole Foods to help ensure the retention of our key leadership, this is not true in my case. The tremendous success of Whole Foods Market has provided me with far more money than I ever dreamed I'd have and far more than is necessary for either my financial security or personal happiness. I continue to work for Whole Foods not because of the money I can make but because of the pleasure I get from leading such a great company, and the ongoing passion I have to help make the world a better place, which Whole Foods is continuing to do. I am now 53 years old and I have reached a place in my life where I no longer want to work for money, but simply for the joy of the work itself and to better answer the call to service that I feel so clearly in my own heart.

As you can see from the following chart, the average CEO received 431 times as much as their average employee received in 2004, while the Whole Foods Market CEO (me) received only 14 times the average employee pay in cash compensation.

Most large companies also pay their executives large amounts of stock options in addition to large salaries and cash bonuses. However, this is not the case at Whole Foods Market. As the chart below indicates, the average large corporation in the United States distributes 75% of their total stock options to only 5 top executives with the remaining 25% going to everyone else in the company (actually most of the remaining 25% goes to the next level of executives below the top 5). At Whole Foods, the exact opposite is true: the top 16 executives have received 7% of all the options granted while the other 93% of the options have been distributed throughout the entire company with all Team Members eligible for a grant after 6,000 hours of service to the company

When you have such values and belief in the business that you lead and are willing to share this transparently with your employees, it  definitely shows in the way they treat their customers!

What colors will attract customers in spring 2007!

Colors radiate moods and unleash a kind of  'sensory experience' amongst customers. Brands use a splash of colors to attract customers thro' packaging, signages, product brochures, mailers, press advertising, visual merchandizing and on the web to create a 'sensory brand experience' with their customers. What's in for Spring 2007? Take a look.

According  Designer Today, The Spring 2007 runways will radiate with surprising neutrals and innovative splashes of corals, yellows and purples, reports Pantone, Inc., the global authority on color and provider of professional color standards for the design industries.

Each season, Pantone surveys the designers showing at New York Fashion Week to collect feedback on prominent collection colors, color inspiration, color philosophy and each designer's signature shade. This information is used to create the PANTONE® Fashion Color Report and serves as a reference tool throughout the year for fashion enthusiasts, reporters and retailers.

Here's the report.

"Rich people love low prices, the poor need them."

In an interesting story - Why hypermarts are a hit in India- Indian customers are checking out everything in sight, visibly overwhelmed by the choiceand prices in hypermarkets.

Today, the country has barely 25 hypermarkets, but the belief is that India's 67-odd retail destinations can easily accommodate over 1,000 hypermarkets by 2010. No wonder the early birds are working overtime to keep the footfalls coming.

As Andrew Levermore, CEO, HyperCity Retail, says, "Rich people love low prices, the poor need them."

Says Levermore, "Today, there are too many middlemen. To be able to capture value, we need to be able to source directly from the farm-gate, bypassing intermediaries, so that both the farmer and we benefit."

After all, at an estimated $230 billion, the size of the entire Indian retail sector today is less than Wal-Mart's turnover: $285 billion. Of this, the organised sector accounts for just 3 per cent, or $7 billion. That's expected to grow by over 400 per cent to $30 billion by 2010, according to Ernst & Young.

I must admit, it is interesting days ahead for the Indian consumers and Indian retail!

Living without a bank!

Can we ever do it? Banks have become an inevitable part of our lives. But, Sunday Mail has some interesting perspectives on how the landscape is changing for banks. The take-out really is that banks have to find new ways of serving demanding customers and their competition seems to be not other banks!

With banking essential to everyone's financial lives banks have taken advantage of their central position, steadily increasing fees on many basic services. But a growing number of financial service companies have begun to offer basic financial services to compete with the banks.

• A small but growing number of conventional credit cards also come with features, such as EFTPOS, that allow them to serve as a cash substitute at some retail outlets. The credit union Rewarder card is one example of this.
• And for online or internet buyers, a PayPal account can now be linked to a bank account, rather than a credit card.
• Company-branded debit cards can make employers' finances more efficient and give employees more flexibility of use. Read more

The game for banks, I guess,  is all about being more innovative and they need to find new ways of helping customers manage their finances. It's no more about branches, ATMs, credit cards, line of credit, bank accounts etc. but serving customers in newer ways.

Beware of dissatisfied customers

According to new Wharton research, bad word-of-mouth communication should be a big cause of concern to retailers.

Results of The Retail Customer Dissatisfaction Study 2006 -- conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, in the weeks before and after Christmas 2005 -- show that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people. "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people," says Hoch.

• Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience.

• Parking was a major source of aggravation for shoppers, according to the survey. It topped the list of problems, with 40% of those surveyed reporting dissatisfaction in the parking lot.

Loyalty programs thro' mobiles - Chicago Grocer shows the way

The Chicago-based upscale grocery chain Potash Bros. Markets has become the first MobileLime merchant in Chicago to offer its customers savings and rewards through their mobile phones.

The deployment of the MobileLime system at Potash Bros. apparently marks the beginning of MobileLime's national expansion as it moves beyond its existing merchant base in Boston, MA.

How it works

Rather than issuing a typical membership card or number, MobileLime turns a shopper's mobile phone number into their unique identifier for the loyalty rewards programme. The cashier simply enters the member's mobile phone number at the check out, and the shopper receives any appropriate item-level savings toward their purchases in real-time.

In the Potash Bros. Mobile Rewards programme, members can opt-in to receive weekly e-mails, interest-oriented text messages, event alerts, special offers and savings on a selection of items every week.

Know more

Your personal shopper - Know when merchandize become available in your favourite store in real time

Looking for new ways to reach consumers, retailers like eBags, ICE.com, TowerRecords.com and others are using R.S.S., or "really simple syndication," to feed product alerts to Internet users who have set up personalized Web pages on Yahoo, Google and other sites.

I don't know how many e-mails you get a day, but I can't keep up," said Jon Nordmark, the chief executive of eBags. "Rather than delivering a slightly relevant message to a person's mailbox, this allows us to get customers very detailed information directly."

The system, in the case of eBags at least, appears simple enough. Starting later this month, consumers who visit either the company's main site or its shoe site, 6pm.com, will see R.S.S. icons near the sites' products, with messages offering users regular updates on those products. Once a user has indicated a preference for, say, black, size 11 Cole Haan shoes, he clicks on the icon telling the company to send the alerts to his personalized page, then confirms the request by signing into that page.

Read more

thro' NY Times

Customer Conversations - Reading into trends

I think customer conversations  or chatter or buzz will increasingly have a great impact on brand preference, brand awareness and marketshare. I did a trend analysis of some Indian brands in different categories - Retail, Telecom, Technology, Banks etc. You can do it here for the following brands.

Interestingly, the customer chatter for some of these brands  - Shoppers' Stop, Pantaloon, ICICI Bank, HDFC Bank, Tata Indicom, Reliance Infocomm, Wipro, Infosys  and they show a direct correlation to how these brands have innovated or performed in the marketplace. Increasingly brands need to pay attention to customer conversations and ensure they are "top-of-chat" in addition to being "top-of-mind".  This will in the future reflect customer involvement, customer engagement and customer ownership trends for many of these brands.

I did the same for Google & Microsoft, Apple & Dell and the results do reflect the success of Google and Apple in the recent past!

Retailing set to change the shopping experience in India

It is increasingly becoming apparent that Indian consumers are wanting international shopping experience and service.  And the retail market in India is growing at a hectic pace. International retailers are waiting in a queue to take a share of this pie.  AT Kearney has released a Global Retail Development Index(GRDI) report and India tops that list. Here are some highlights of the report :

India tops a list of 30 new markets attracting global retailers, according to a study by the consulting firm A.T. Kearney.India has steadily risen on the GRDI, with its underserved $330 billion retail market growing by 10 percent on average per year over the past five years. "This market is among the most fragmented in the world; the combined market share of the top five retailers totals less than two percent," the report notes.India's retailing landscape has more than 12 million mom-and-pop stores that are not likely to idly watch their businesses erode as foreign companies encroach on their territory. But gaining early-mover advantage could make tackling all of these issues worthwhile.

thro ET

Google empowers mobile customers with maps!

It looks like Google is suddenly getting serious about MOBILE and this effort, called "Local for Mobile" is serious indeed.  For anyone that's ever lamented the fact that all but the most powerful handheld devices can't handle the memory intensive Google Maps API, the new application is the answer to a prayer (well at least for those with a supported device and on a supported network;

The application looks very exciting, with mapping, directions, integrated search, and even hybrid satellite imagery.  I plan on trying it today as I drive around San Francisco to see just how well it works.

thro' mobile blog

Will customers benefit if FDI in retail opens-up in India?

The big debate in India right now seems to be - Should the government open-up foreign direct investment(FDI) in retail. There are divided opinions on this issue here. Some seem to say the customers will benefit, others say the supply chain will get better in India and a lot of them say the "kirana" stores ( mom & pop equivalent) will die. Wal-mart is waiting to open its first store and has been lobbying hard.

Business World has a good article that gives good insights on the debate:

• India's supply chain inefficiencies are legendary. The Rs 50,000-crore fruits and vegetables sector is estimated to suffer between 20 and 40 per cent wastage due to poor transportation, storage and handling. "The cost of the intermediary in India is the highest in the world. For every one rupee a consumer spends, the farmer gets 20-22 paisa. Whereas in developed countries, it's more like 70-80 paisa," ....
• Again, back home, in Chennai, where large and organised supermarket chains like FoodWorld and Nilgiri's have grabbed a 20 per cent market share, the kiranas haven't been slaughtered. They are smarter, more efficient, and more customer-friendly than they were five years ago. They are matching the chains' prices and continue to do brisk business. Even stores in the close vicinity of these large supermarkets have survived.
• India's retail industry - the fourth largest in the world - accounts for 11 per cent of the country's GDP and employs over 40 million people (about 7 per cent of total employment in the country). Now, a huge majority of the retail workforce is in kiranas. This sector, in fact, acts as an informal social security net - almost anyone without a job can set up a kirana.

I believe the coming-in of big retailers will strengthen the much needed supply chain system in India. It will lead to overall improvement in infrastructure, customer service and of course a lot of jobs will be created. Also, the local "kirana" stores will co-exist with the large ones. Over the past few years, I have seen the local "kirana" stores upgrade their shops and give me better customer service.  It can only get better.

Ultimately, the customers will benefit in my opinion.