Are your customers commodities?


As a customer, you can tell when a business begins to think of you as a commodity. All of a sudden, you are in and out - less talk, less transaction time. What does this mean? What should you do?

A friend of mine told me of a favorite vacation spot that his family had visited many times over the years. He had become friends with the owners. During his last visit, he noticed the customer service just wasn't what it had been in the past. He felt rushed and neglected. When he expressed his concern, the response was, "You've been here before. It's not like this is something new to you."  

When loyal customers begin to have this experience, it means the business has entered a transition point. We know this because what we are doing is getting harder, or our results are not what they were. A transition point can be good or problematic. It can have internal or external reasons. Whatever it is, you must understand it and act. Whether, it marks a decline or new opportunities, you must act.

The choice is not between changing or not changing. The only choice is what kind of changes do I make?

Change is necessary to sustain the loyalty and good will that long term customers have for a business. 

When your customers become commodities, as a number lacking any history or distinctive relationship to the company, just the next transaction, you have determined a new course for your business.

You may think that this is a rational business decision. It is also a decision to change the value structure of your business.

Long term customers don't bring their business to you because you have the lowest prices, unless that is your business. They come because you stand for something that is validated every time they encounter you. It doesn't really matter what those values are. It does matter that you know what they are, and that they matter to you.

Losing loyal customers marks a transition point. It is a change that matters. What are the implications?

In the past, you may have been able to charge a premium for your services because of your relationship to the customer adds value to the produce or service. Now, you are transitioning into the commodity business. You have to lower your fees to find customers. And those customers are not like your loyal ones. They are only interested in price and availability.

  Transition Point - without Title

This is what happens at transition points. We make some seemingly innocent, rational decision, and do not see the unintended consequences.

Dealing with change is rarely rational and orderly. It is disruptive and disorienting. We have to learn how to see the tell-tale signs of transition and act to either reverse the trend or capitalize on it.

For my friend, he may return to this vacation spot one more time, giving his owner friend a second chance to show that he values his friendship and loyalty over the years. He'll go with a critical eye to see how he is treated. And there if has been no improvement, he may just move on to a new vacation spot next year.

No one wants to be treated as a commodity.

Quick Takes: Geek Squad Service

Bill Taylor, of Mavericks at Work fame, writes about the Geek Squad approach to customer service.  Needless to say, it is an obsession with them. Here are the six points of their pledge.

1. Never violate the trust of my clients or disrespect their property.
2. Never say, “I don’t know. Instead, say “I’ll find out.”
3. Always understand that my clients’ time is more valuable than my own.
4. Assume every problem is my fault, unless proven otherwise.
5. Consider my job done only when my client is completely overwhelmed with joy. And instead of assuming they’re happy, I’ll ask them.
6. Keep every promise I make. Including this one.

How many businesses would be better served if this were their customer service principles.

I recently ordered by second laptop from Dell. I did so partly because of the features of the machine, but more so because of their service. I don't mind paying for top of the line service. For Dell this means, next day.  My old Latitude 640 is a great machine, but I continue to wear it out. I found two years after purchasing it that it wasn't designed for the use that I give it.  As a result, every part, except by DVD/CD drive has been replaced at least twice, sometimes four or five times, and usually within a day or two of my calling the repair in. I have no complaints about Dell's service when compared to other consumer products providers.

What interests me about the Geek Squad is their quasi-military/spy team approach. It reminds me of the Boy Scouts. As a scoutmaster of my sons' troop, I established five principles that guided the development of our troop. They are:

1.  We focused on equipping boys to be leaders.
2. We expect the boys to advance in rank.
3. We expect the boys to have fun
4. Leadership is learned primarily through the camping program.
5. We wear our uniforms as a symbol of strength and unity.

We use #2 & #3 as our measures of the boys progress. We want the boys to both advance in rank and have fun. If they are advancing but not having fun, then someone is putting pressure on them to perform. If they are not advancing, but having fun, then mostly likely they are exhibiting laziness and a lack of focus on goals.

Bill Taylor writes:

There’s no denying the Geek Squad has style. The company’s field agents wear a recognizable uniform: white short-sleeve dress shirts, black clip-on ties, black pants, white socks, and black shoes (with the Geek Squad logo in the sole). They drive to client locations in identical cars: black-and-white VW Beetles with the Geek Squad logo on the door.
The uniform is also a symbol of well, uniformity. It reinforces the message that there are consistent ways in which the 15,000 Geeks are expected to behave with customers and among themselves. “Wearing a tie used to be a sign of conformity,” says Stephens. “Now it’s like an act of rebellion—nobody dresses up anymore. The uniforms are visible and distinct. Plus, those ties let me apply a little pressure around the neck!”

The complaint I often hear is that the uniform robs the boy of his individuality. What we've found is that in the context of a team, willingness to conform to a certain level of uniformity is an expression of commitment to the values and ideals on an organization. Too often individualism is self-indulgent, not focused on serving a higher cause.

The Geek Squad and the Boy Scouts both have found a way to create high performing teams by creating an culture that supports the ideals and mission of their individual organizations. The Geek Squad and Dell have both learned that consistent customer service means providing the service the customer needs.  These are good lessons for all of us to learn.

Quick Takes: A Pilot who gets it

Captain Denny Flanagan, United Airlines pilot, gets it. He understands that the experience of flying should be a pleasant, enjoyable one. Read his story in the Wall Street Journal.

Jackie Huba, at Church of the Customer, writes,

The reason why Capt. Flanagan is a rogue is because his work isn't the result of formal training. I'll bet his techniques make some colleagues uneasy or nervous. Even United's "Chief Customer Officer" isn't quite sure what to do with him other than "hope" Flanagan's techniques rub off on other pilots. 

That's a missed opportunity.

I agree.

Real Life Leadership: In some cases, you’ll do well to understand the customer isn’t always right

My latest Real Life Leadership column,  In some cases, you’ll do well to understand the customer isn’t always right, is online.

Every business has had to deal with customers who are unreasonable, ignorantly arrogant and down-right rude. 

Is there a time when you should fire your customer? Yes.

When your staff questions your sanity, moral backbone and ethics because you continue to serve a customer who is (pick one) a. totally unreasonable, b. arrogantly unrealistic in their expectations, c. disrespectful of your staff, and d. all of the above.

So, how to fire a customer? Say something like this.

1. "I'm sorry, sir, that we are unable to meet your expectations. Let me recommend that you try another store. They may be better able to serve you. Thank you."

2.  "Mrs. Smith, we are doing our best to satisfy your requests.  However, what you are asking is not currently possible.  You may be able find another store that has a different supplier."

3.  "I'm sorry you will have to leave. We are more than glad to meet your requests for service. But your comments have become disruptive to our other customers and my staff."

I like the Hostmanship idea (Download my review) because it values the importance of how we, the Hosts, feel when we care for our customers and clients. When we do well, we feel good about the service we provided. Jan Gunarsson and Olle Blohm describe it this way.

One of the big differences between hostmanship and a "service attitude" is the feeling that stays with you after the guest is gone.

In service, the focus is on the recipient, and we say that as long as the guest is happy you've done a good job.  In hostmanship, the focus is on the provider. Good hostmanship is something you take home, that becomes part of you.  It's something that helps you to develop your personality.

If this is the feeling we are to have when we have acted as hosts, then what feeling do you feel your guests have had as well? 

I'm not suggesting at all that we create some touch-feely love fest in our businesses. Rather, I think the key is recognizing what it means to establish an environment of respect that is mutual. We respect our customers and we create an environment where they respect us in return. This is the key.

If your customers are not treating you with respect, it may be because they see your product as a commodity, and are not interested in your care, knowledge and expertise.  If so, then you need to change that relationship. And it may not be the relationship, but the business itself that needs changing.

It for this reason that it is important to be clear about what our values are and how they operate with in our business.  Values are ideas that build unity between people, both internally between staff and externally with customers and vendors.  Realize that the environment you create is a values statement.

As my father, a veteran HR guy, always says, "The best time to fire someone is before you hire them."  I think this applies to customers as well. When we establish an environment of respect, we send a message to our customers that we expect that from them also.

Smart customers understand this. Arrogant ones may, but don't believe that it applies to them.  Smart companies understand this and will succeed where lagging ones don't.  And it isn't brain surgery.  It is just simple common sense.

In Addition:  I'll be posting later a story about a local shop here in Western North Carolina that took the "hosts"  idea seriously and has already made a difference.  I'm waiting to get approval to publish the letter that was sent to me. So stay tuned.

Real Life Leadership: Positive interactions build vital relationships, trust with customers

Happy New Year!  My first column of the New Year is online - Positive interactions build vital relationships, trust with customers.

I have a Rule of Thumb, a guide for understanding relationships with people.  I've concluded that people want two things. They want their experiences to be Personally Meaningful and Socially Fulfilling.  Here's how I break this down.

Personally Meaningful is an affirmation of the values that a person finds important for their life.  If you've read Jim Collins work (Built To Last and Good To Great) you'll understand what I mean by values.  These are guiding principles that form the foundation of a person's life. Sounds deep doesn't it.  Well, it is.  And it cuts both ways.

If you lack any clear values, then you may lack focus. You may not really understand the impact that you are to have through your business.  If business is simply an activity to make money, then your customers will know, and treat your business as a commodity.  And commodities are bought and sold primarily based on price.  If that is what you want, you'll spend most of your time finding new customers rather than building from a sustainable base of customers.  Its cheaper to keep them, than to continually find new ones.

If your customers lack any clear values, then they will treat you as a commodity.  You can only appeal to them based on price.  And any repeat business is based on price, not the customer relationship.

So, if you want to create a sustainable customer base, then you have to address the issue of establishing some common ground of personal values that are meaningful to both you as a businessperson and to your customers.

Socially Fulfilling is different than Personally Meaningful, but builds upon it.  Regardless of this over-played myth of the rugged individualist, most people aren't that individualistic. They are quite social, and enjoy their Personally Meaningful experiences in life to be social ones.  Your customers who lack a clear set of values, who treat you as nothing more than a commodity, at the same time will party with their friends.  They value the social aspects of life.

What this means is that we need to understand how the social dimension functions in the life of people, and then create customer experiences that support it. For example, in a social environment where peer pressure and consumerist values are high, then it is difficult to divide an individual off from their tight, closed social group.  Part of their group identity is sharing the same brands.

Therefore, as a business person, you try to appeal to the whole group.  Give them incentives to bring their friends.  If you pay attention to cell phone pitches to young people, there is a clear recognition of the importance of the peer group.  "Free calls to friends" is a recognition that some consumer choices are not individual ones, but by a social group.  How can your business tap into the social peer pressure so that you get the whole group as a customer instead of just one.

What this leads to is the recognition that businesses want their customers to feel like they are part of a social group as their customers.  This is fundamental to the customer evangelist idea.  "Hey, bring your business here because these people are great." 

Managing the social dimension of your customer relationships takes more effort than simply being good at the point-of-sale transaction.  It requires some thought about the experience that you want people to have when they encounter your business.

Okay, so where do you begin if this is really an alien perspective for you.

Do two things.
1. Ask questions. Ask your customers about their experience. Talk with them. Find out what is important to them.  And then respond to them with your own thoughts. Create a conversation with them that is ongoing.  Make it personal. Remember their names.  Treat them with respect.

2. Observe. Look at what happens in your interactions with other businesses.  What are they doing that makes you feel more attached to them as a business?  What don't you like.  For example, I really like my bank, and am very unhappy with the cable company that provides my internet service.  It isn't the quality of the product.  It is the treatment of me as a person and a customer. 

So the Rule of Thumb is create customer experiences that are Personally Meaningful and Socially Fulfilling.  Use this guide to develop a better customer relations outcome for the coming year.

And have a splendid year with your customers.

Reconnecting with Customers - Mavericks at Work comment #3

This is the third of four commentaries on the new book Mavericks at Work by William C. Taylor and Polly LaBarre.

Reconnecting with Customers

“Three thankless realities define the state of competition in industries from automobiles to airlines, movies to mutual funds: oversupply, overcapacity, and utter sensory overload. Companies are selling too much of everything; they have the wherewithal to make more of what they’re already selling too much of; and they are unleashing too many marketing messages on customers who can’t begin to process all that they’re seeing and hearing.”

What this tells me is that businesses have lost focus. Not just a loss of focus on the customer, but also a loss of focus on what their business is.

Recently, I spoke with a fellow who had just left his corporate sales job to start his own business. One of the reasons he gave was that the business had broaden its marketing scope so wide that it was impossible to continue to service their customers well. It was no longer about servicing their customers, but about selling more and more people more and more products and services. 

Every day I am acquainted with businesses that understand what Taylor and LaBarre describe, and many more that don’t. Why is it that some businesses get it and others don’t? It seems common sense.

I think it goes to a notion that has grown over the past century that business is a scientific enterprise consisting of technical tasks. As a result, my job is to faithfully and efficiently complete those tasks everyday.

The shift that Taylor and LaBarre note, as have many other business writers, is the one to a customer-centric business model. It really is about how relationships form. In this instance, it is between a company and a customer. It is more than an economic exchange, a transaction. Rather it is an experience that envelops the customer in a world that touches their lives.

Taylor and LaBarre offer five principles to consider in reconnecting with customers.

1. There’s always a demand for something distinctive.

How are you distinguishing yourself and your business from your competitors?
How is your business different than it was a decade ago? How do you describe that to people?

2. Not all customers are created equal.

Who is your ideal customer? Who fits your product or service better than anyone else? What can you do to create a stronger bond of experience with them?

3. Brand is culture, culture is brand.

Do you know what your business’s customer experience culture is like? What do your customers experience when they interact with you and your employees?

4. Advertising to customers is not the same as connecting with customers.

How dependent are you on advertising to make each month’s cash flow projections? What does your advertising say about the experience that your customers have with you?

5.When it comes to creating brand value, dollars-and-cents thinking doesn’t always make sense.

How much do you invest in the experience your customers have with you? When they call, do they talk to a real person or an answering machine?

Just as innovation has become an open-source collaborative enterprise, so too, the connection to customers has become a much more open experience of interaction and relationship formation with customers.

Here again it requires leaders to reconsider how they lead. To create a personal experience requires leaders to be a real human being with the customer.

How do you become a real human being?  Sounds silly dosn't it.  Well, it is more than breathing in and breathing out.  It is more than showing up every day.

Here's how?

First of all become absolutely clear that you can't be the answer person for every question.
This means that you firmly grasp in your mind the need for humility.  This doesn't mean you don't have confidence, and you aren't courageous in your performance as a leader.  It means that you don't enter every situation with a preconceived notion that your way has to win, and that you already have the answer that you have to force down everyone's throats.

Second, push as many decisions as far down the organizational chart as possible.
  What's the impact?  Three changes.  One is that many problems will begin to get resolved by the people who understand the problem best, the people responsible.  Two is an environment of team work that elevates people's satisfaction of work.  Three, and this has to be intentional, a higher quality of communication that releases you the leader from the fear and doubt of not knowing what they are doing down there.

Three, change the ideas that you use to understand who you need to be as a leader and a person. This begins with ideas about human nature in the context of business.  Let me suggest three by author and philosopher, Tom Morris - True Success, If Aristotle Ran General Motors, and his latest, If Harry Potter Ran General Electric. Read through these books, and you'll develop a fresh and inspiring persective on what it means to be a leader and a human being.

Lastly, incorporate these changes, using The Circle of Impact, of Ideas and Relationships into the Organizational Structure and operational practices of your business. This is true of all the ideas that you pick up in reading Taylor and LaBarre's book. 

An Idea that does not lead to action is eventually lost. Relationships that lack core values and ideas lose their purpose. Organizational structures without purpose or healthy relationships, decline.  Therefore, whatever idea you recognize as valuable, whether from Mavericks at Work or any of Tom Morris' work, you have to incorporate them into your relationships with other people and into the structure of your organization. 

The principal problem is that virtually no one has every been trained to do this.  So, if you need help just ask.

Read the book.  Put the ideas in action.  Don't wait for a convenient time. Just do it and do it with your people.

Customer Service is a two-way street

Tom Peters posts on a lesson he learned from former Texas Governor Ann Richards and applied in a particularly stressful situation regarding lost luggage.  He quotes Richards,

"Here's what she said (among many other things): "When you are facing a horrid service situation, which has you fit to kill, take a deep breath and remember, as, say, you approach an employee from the offending company, 'This woman [man] is the only person on earth who, at this moment, can help me—or not.'"

I have been aware for a long time that customer service is a relationship, not a business transaction.  And that the customer has as much an obligation to establish as mutually beneficial a relationship as the sales person does.

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Brand Autopsy's take on Whole Foods Market

Read John Moore's 10 point description of Whole Food Markets. He is reacting to an article in Business Week.
Here's the list:
1 | Maximum Freedom. Minimum Governance.
2 | Small Pieces Loosely Joined
3 | Getting Bigger by Acting Smaller
4 | Food as Theater
5 | Shoppers as “Brand” Ambassadors
6 | Education Leads to Appreciation
7 | Everything Matters
8 | Price to Value
9 | Profit is a Good Competitive Game
10 | Team Members Make the Difference

What impresses me about this company is their commitment to decentralized leadership.  In essence, it means that the closer the decision is made to the customer, the better.  My question is whether this is a trend or an anomaly?  If it is a trend then we will continue to see large, complex, top-down bureaucratic structures changed to what WFM has developed.  If it doesn't work, then we'll see a chronic internal confict between the past and future in organizations.

Starbucks Tribal Knowledge

If you know me, you know I like coffee, and you know that I like the way Starbucks runs their stores.  So seeing former Starbucks marketer and current Brand Autopsy blogger John Moore writing about what he calls Starbucks Tribal Knowledge really piqued my interest.  There are seveal postings here, here, here, here and here.

John makes the Starbucks method sound so simple.  Maybe it is.  As he quotes Howard Schultz, "it’s nothing more than greeting customers in a friendly manner and making a drink exactly to their desires."

There is obviously something more intentional about this than what Schultz suggests. 

Where I live we have three Starbucks operated stores and two licensed stores.  The difference between them?  Not the coffee and not the price.  The locations and settings are different for all five.  The only appreciable difference are the people who work in these stores.   The three company owned stores are warm, inviting, friendly places.  There are differences between them, but nothing that is remarkable. 

However the other two stores, one a kiosk in a grocery store, and the other a part of a larger food operation in a Target are different.  They are different because the people are different. The talent level is different.  I went into the grocery store kiosk one day and asked for black iced tea.  They didn't have it.  I went in another time, and the clerk didn't know what to do.  She was filing for someone who had not shown up.  She was at a loss as to what to do.  Can't imagine that happening in a company owned store.

John offers an important insight regarding why Starbucks has been successful in establishing their brand.  He says that it is because they focused on their business, not the creation of a brand.  This makes a lot of sense.  In doing so, it keeps them from trying to be too clever.

Buried within that business focus are some principles that are innovative.  One is being high-touch with each customer.  In essence, the Starbucks partner's job is to create an experience for each customer.  I know this happens for me.  It is simple, not contrived, and rarely insincere.

In essence, attend to business, staying focus on the personal experience of customers, and the rest will take care of itself.  Sounds simple.  At least it is some we can all learn from.

Update: New Starbucks Tribal Knowledge posting by John Moore.  This selection focuses on Starbuck's real estate focus.

Update: Two new postings by John Moore on Starbucks Tribal Knowledge here and here.  Here he speaks of the meetings that are held.  Excellent advice. Hard to do because most people lack the discipline to make meetings work like he describes.