Is customer focus overrated?

I thought it is always useful to look at alternative points of view regarding customer focus. Below is the first part of a good article by Professor Martin Koschat from IMD in Switzerland. He makes a good case that not every company needs to rely on being customer focused to be successful. Although correct, you need to either be so operationally excellent that you can achieve a price advantage on a sustainable basis or you have an innovation pipeline Steve Jobs would be envious of. For everyone else, being customer centred and using a Service Design approach to understanding, designing and executing a great service experience is a great choice if you wish to keep more customers who spend more with you every year.

There is no shortage of extremely successful companies with business models that critically depend upon a high degree of customer proximity and the ability to generate detailed insights into customers’ needs, wants and behaviors – those buying habits and attitudes pivotal in shaping and directing the whole organization. In other words, companies that are customer centric. Yet, there are also many successful companies that don’t go out of their way for customer proximity. By looking at companies that operate on both ends of the spectrum, it becomes clear that customer centricity is not a virtue.

It is well known that BMW delivers superb engineering. Perhaps less well known is the fact that BMW tightly controls the supply chain downstream by owning most wholesale operations and many of its retail outlets. By doing this, BMW enforces, and ensures, the uniformly high level of service befitting a top luxury brand. At the same time, this proximity to the consumer provides direct and timely insights into consumers’ shifting perceptions and tastes.

Nordstrom, a US department store chain, consistently ranks at the top in terms of customer satisfaction surveys. Shopping is made to be a rewarding experience. Nordstrom’s personnel is carefully selected and trained to help customers along the path of finding what they want or need and, in the process, identify and present new products they never knew they needed. Invariably, customers often leave a Nordstrom store with more than what they had planned on buying. The level of Nordstrom’s customer engagement is in line with the retailer’s sales strategy.

For the balance of the article, please click here.

Raising expectations (and then dashing them) via Seth Godin

I lose count how many sensible things Seth Godin says every month. Here is another, which makes load of customer and business sense. Ponder it next time you are involved in signing off on a new round of advertising that you know is promising a customer experience you have little chance of keeping.

Several years ago in a previous life, I worked with the CEO of a large Australian company that wanted to communicate to their customers that their service solution was “one touch”. The only problem was, it was actually ten touches. Imagine his customers disappointment when they bought the idea of “one touch” only to find out it was actually ten times more diffcult.

In a Service Design world, we believe Branding is the promise you make; Customer Experience is the promise you keep. By understanding what customers really value, you can help organisations keep their customer promises and maximise financial profitability….and at the end of the day, that is what we should all be about when developing world class Service Designed experiences.

Have you noticed how upbeat the ads for airlines and banks are?

Judging from the billboards and the newspaper ads, you might be led to believe that Delta is actually a better airline, one that cares. Or that your bank has flexible people eager to bend the rules to help you succeed.

At one level, this is good advertising, because it tells a story that resonates. We want Delta to be the airline it says it is, and so we give them a try.

The problem is this: ads like this actually decrease user satisfaction. If the ad leads to expect one thing and we don’t get it, we’re more disappointed than if we had gone in with no real expectations at all. Why this matters: if word of mouth is the real advertising, then what you’ve done is use old-school ad techniques to actually undercut any chance you have to generate new-school results.

So much better to invest that same money in delighting and embracing the customers you already have.