You can always tell how important a goal is by how much time and money a company invests in it.
Many companies invest a lot of time and money in customer programs and get almost nothing out of them. The dirty little secret is that the vast majority of these programs don't work.
The two of us have seen evidence of this over and over in our work with hundreds of businesses that are trying to improve customer retention. At some of those companies, we've been regarded as geniuses who led amazing changes that dramatically improved our clients' business. At others, we were seen as inept because we couldn't change the slightest thing. We were the same people with the same capabilities in every company. So why did some of our clients think we were brilliant, while others thought we were total failures?
To answer this question, we analyzed the companies we worked with and the initiatives we helped them launch. What we discovered is that there are six factors -- belief, credibility, actionability, accountability, systems, and human capital -- that differentiate companies that run successful programs from those that don't.
If those six factors aren't present, nothing the company does will drive positive change. If only a few are present, the company may improve a bit. But companies that have all six are the ones that succeed -- and make us look like geniuses.
Belief
At The Ritz-Carlton, the message is crystal clear: The customer is the most important person in the world. The Ritz-Carlton keeps that belief front and center with three techniques: overt communication, constant reinforcement, and clear relationship to mission. No Ritz-Carlton associate ever forgets the customer.
At the opposite extreme is a drugstore near our office. Its message to employees seems to be "Stock the shelves first, then wait on customers." We've stood in the checkout line behind eight other people, watching the only clerk in the store busily adding hair scrunchies to a display.
Both companies are sending a message about how employees should behave toward customers. That message comes from company leaders, and it stems from what those leaders believe is important. For a customer program to be successful, employees must believe that their leaders genuinely care about the program -- and about their customers. Until that's obvious, nothing changes.
Psychologist Daniel Kahneman, Nobel Prize winner in economics and former Gallup senior scientist, says people make thousands of decisions every day. At The Ritz-Carlton, customers come first in those decisions. At the drugstore down the street, customers are the last thing on employees' minds. That's because customer engagement is at the core of The Ritz-Carlton's beliefs, while it's an afterthought at the drugstore.
Credibility
Nothing is more frustrating for employees than when leaders implement a customer program that holds them accountable for things they have little or no control over. We once worked with a major bank that surveyed customers to find out whether they would recommend the bank. If not, tellers had to call customers to ask why. Most customers gave reasons like "The bank doesn't have ATMs near my home or office" or "Fees are too high." There's nothing a teller can do to change either of those things. It's natural for employees to disengage from a process that seems arbitrary and makes them feel powerless. And workers won't make much of an effort if nothing they can do will change how customers feel.
That's just as frustrating as a process that doesn't do any good at all. We worked with a software company that has collected 10 years of customer data. The data don't link to any financial outcome, and they know it. But they keep collecting data because they have 10 years of trends. For a program to be credible, employees must know that changing their behavior will have a positive effect on customers and that it will improve sales and profit.
Actionability
At most of our clients, workers aren't starving for information. Instead, they're drowning in it. They don't lack data; what they really need is focus, clear priorities, and direction for improvement.
Any competent, engaged employee who receives a report asks himself or herself these questions:
- Of these 40 -- or 140 -- items we're measuring, which are most important?
- What can I do to improve them?
- Am I meeting my performance expectations?
- How am I doing relative to my peers?
Companies that significantly improve ask workers to focus on a vital few items that have been scientifically tested to show a strong, positive impact on customers -- and employees can take action to improve them. To make a customer initiative actionable, workers must be able to answer those first two questions -- Which metrics are most important? and What can I do to improve them? And leaders must be able to help them take action.
Accountability
The last two questions above -- Am I meeting my performance expectations? and How am I doing relative to my peers? -- relate to accountability. Many companies tolerate chronically poor customer service as long as workers hit their sales numbers. Those companies don't really care about customers.
It's one thing for a company to announce that "Customer service is our No. 1 goal." Being accountable for meeting that goal is another thing entirely. You can always tell how important a goal is by how much time and money a company invests in it. If there's little time or little money invested in a program, no one is really accountable. However, if a company makes meeting performance expectations and employee awareness about how they are doing relative to their peers points of constant discussion -- and if it ties pay, promotion, and continued employment to the results -- people will hold themselves accountable.
Real change requires, well, real change. To change an outcome, change the behaviors or events that create that outcome. To ensure accountability for changes, leaders must:
- balance rewards and consequences to promote desired behaviors
- drill down performance data and measurements to the most granular level possible -- in a retail company, this might be the store level; in a call center, it might be the individual employee
- create shared accountability across the organization
Systems
Companies with effective customer programs use both a top-down and bottom-up approach. So far, we've focused on workgroup accountability and measurement. But bad organization-wide systems -- an antiquated IT system or misaligned pay program, for example -- can inhibit growth and send a message that customers are everyone's responsibility except leadership's.
Balancing local accountability and control with executive oversight is always tricky. The key lies in understanding when actions and behaviors should be locally driven or mandated from the top down. In our experience, finding the right balance can make a tremendous difference. To address systemic problems, leaders must:
- have a formal plan to improve performance from the top down and the bottom up
- acknowledge that some customers and locations may be outliers requiring unique solutions
- create an ongoing process to identify and remove system barriers
Human capital
The hardest part about changing the customer experience is changing the behaviors of employees who interact with customers. It's easy to draft new rules, protocols, and policies. But if you want to provide a different customer experience, employees must act differently.
Companies that get the most out of their employees use data-driven interventions, training, and coaching to focus on specific associate behaviors. Those companies know their workers and their customers and apply that knowledge in ways that make customers want to come back.
That granular level of knowledge helps managers and leaders understand behaviors that can be trained and coached versus talents that are innate. It's far more effective for employees to work from their strengths, using their natural talents to achieve objectives they're well-suited to achieve, than it is to attempt to fix people in hopes they'll improve.
In our experience, companies that focus on natural talents and strengths do better. Teams with managers who received strengths feedback have 8.9% greater profitability and 12.5% greater productivity compared with teams with managers who received no strengths feedback. And turnover rates were 14.9% lower among employees who received feedback on their strengths.
The difference between failure and genius
Last year, Bloomberg Businessweek reported that there's no positive relationship between the money spent on customer satisfaction and the results. In fact, they wrote: "The most-hated companies perform better than their beloved peers. . . . there's no statistical relationship between customer-service scores and stock-market returns."
Well, we could have told them that. And when clients bring us in, we do tell them -- and then we tell them the six factors that can make a customer program work like it's meant to: belief, credibility, actionability, accountability, systems, and human capital. The companies that meet those six conditions are a lot happier, and so are their customers. And so are we, the two geniuses from Gallup.