Does Size Really Matter?

Posted on April 13, 2011 by Bob Champagne

A Little “Customer Voyeurism”…

Last week, my family and I took a vacation to visit some of my in-laws in California. For those of you who know me, you’ll appreciate the fact that any trip for me is an opportunity for a little “customer voyeurism.” That is, I very much enjoy watching exchanges between customers and service providers, whether I am engaged in the transaction or not, largely because they provide me with a wealth of perspectives that serve to validate and augment the many years of performance data, benchmarks and trends I’ve collected in my research and client engagements. So, while spending part of my vacation documenting the customer experiences of myself and others may seem a little weird to some of you, I was not about to miss the insights that would undoubtedly be generated by this seven-day excursion into the depths of airline, restaurant, amusement park, golf course, and taxicab servicing processes.

Like most, this trip did not disappoint (as far as the volume of insights and “take-aways” go). While there was no shortage of examples on both the good and bad aspects of the customer experience (too many to share in one post), I decided to zero-in on what I am finding to be an interesting phenomenon, i.e., the apparent implication of company size on customer satisfaction, engagement, and perception.

Here’s what the data from my little informal research gig told me:

The vast majority of transactions (experiences) appeared to be “issue neutral”- apparently meeting expectations of the customer (deduced through a lack of a visible change in emotion on either side)…Note that I use the word expectations deliberately since I believe many customer’s expectations are considerably lower than in past years. Hence, delivering against a “bar” that is set very low is not likely to produce a lot of emotion other than resignation or apathy.
While they were few and far between, there were failures and successes on “the fringes” of the distribution. I’ve shown a simple example of what I mean, although I believe actual research on a broader set of experiences would probably show that the distribution is anything but “normal” /gaussian (i.e. these days it is likely skewed to the left assuming customers still have some semblance of expectation (hope) of good service, which of course, is debatable (I’ll leave that for another post).

That notwithstanding, If we were plotting this data, we’d be talking about a data distribution with some range of values that characterize the majority of observations, and a small number of significant negative (small in number, but “intense” as far as generating negative emotion…and what our lean or six sigma brethren would call “failures”), and significant positive experiences (pure, but perhaps unexpected, delight- or what my friend Stan Phelp’s at “9 Inch Marketing” (no relationship to the title of this post!!!) likes to call “Lagniappe” in his “purple goldfish” project), at the “tails” of the distribution.

In my experience on this trip, the above distribution was more in line with my observations in that there were probably an equal number of positive and negative experiences on each side of the norm, along with a similar proportion of significant negative and positive experiences on the fringes. The following however, was particularly noteworthy.Most

- (90%+) of the really poor exchanges (generating a fairly clear display of emotion from neutral, to visibly “pissed”) occurred with what I would call larger more established companies
- Most (60%+) of the really positive exchanges (generating what we might refer to as “delight”, or as Stan Phelps likes to refer to it, “customer lagniappe”) occurred with small companies (“Mom and Pops” and/ or specialty stores in cottage industries)

I’ll say again, that throughout this trip, I was only able to observe several dozen transactions between a variety of customers and service providers, including those encountered by yours truly. And while this hardly qualifies as a statistically relevant sample, and falls well shy of what I would consider a rigorous research approach, it served its purpose of identifying a subject worthy of some debate and dialogue.

Why Size Matters…

Why does the above phenomenon occur? Hard to say exactly, but my hunch would be that it has a lot to do with the history and evolution of these organizations. Clearly the smaller “niche players” have a vital need to differentiate and compete, since many lack the market size and scale to do so “naturally.” And while service is one way to accomplish that differentiation, you’d expect some real “over-achievement” in this segment. In fact, the brand identity of many of these companies is directly tied to some “exceptional” aspect of their product or service offering (e.g. the special touch in the packaging, the handwritten thank-you note, or similar gestures). It’s a necessity for these companies, and when they realize they’ve stumbled onto a differentiator (deliberately or by accident), it’s relatively easy to clone and replicate.

No so much with the larger players. Sadly, many of the companies causing the above “grief” were once viewed as nimble and leaders in CS space (think wireless providers, regional airlines, etc.). Not anymore. Sure, they all have their positive exceptions, but with these companies, many of the interactions have been routinized into their operational processes and automated systems, most of which were built on the foundation of operational and technology excellence, rather than on the basis of what differentiated their service to begin with. That leaves the only opportunity for real customer “delight” in the hands of standout employees operating “on the margin”, often operating outside of the process to either strengthen the exchange or recover from a process-inflicted problem. While scale and size should be an advantage, many of these companies have allowed it to become a disadvantage.

That is not to say that the larger companies did not generate some level of delight, and that the smaller companies didn’t generate some significant failures. For example, I did get a “call back” from a CSR after a “disconnect” from a rather large company call center, which was nice to see for a change. I also experienced what I’d call a “super save” from an airport employee to avert what could have been a significant failure. And the small companies, on occasion did generate some negative experiences. Interestingly though, my tendency was to “forget” these failures quicker, giving them the benefit of the doubt for not having all of the CRM tools and technologies that larger companies have at their disposal. But in the end, my observations were my observations, and the trends were notable.

Breaking the Trend…

Given the above reality that size does apparently influence customer experience, and recognizing that “shrinking the company” is not the desired path to breaking that trend, companies that are increasing in size and growth need to be especially vigilant in five key areas:

How we measure success – We need to once and for all get beyond the measurement of general perception, because it tells us little about performance against real customer desires, and tells us virtually nothing about what is really happening on the margin.
How we view risk and failure – When we think of risk and failure, we normally think of manufacturing or operational processes, not customer processes. We need to get beyond the notion that 95% satisfaction is acceptable, and into the zone of limiting the number and magnitude of breakdowns on the margin (what are now viewed as exceptions or acceptable tolerance. Think: How would a Six Sigma or Lean driven manufacturing process view this challenge?
How we build our processes – We can start by changing from a functional to a market-driven approach to building our processes and systems. Most systems today are built to optimize cost and effectiveness at the transaction level, rather than the customer level.
How we staff and develop our employees – It is becoming harder and harder to find retainable employees that come “hardwired” with a strong CEM mindset. Finding and retaining them in large numbers is virtually impossible these days given employee demographics and market conditions. We need to look to other industries and functions to learn how to build and clone the human capital skills to support and enable the above processes.
How we manage and reinforce performance – In support of all of the above, we need to change what we teach, how we lead, what we observe, how we motivate, and what we elect to reward in terms of its orientation toward CEM excellence.

The old adage…think globally, act locally…seems to have some relevance here. I am firmly of the belief that the notion of large size, scale and growth can effectively co-exist with high levels of service, at the norm and the margin. It just takes work on the front end to design the right foundation to make it all work.

-b

Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

Customer Engagement and Efficiency- Are these conflicting priorities?

Posted on March 28, 2011 by Bob Champagne

The Challenges of Funding a CEM Strategy…

A few weeks back, I was talking to a client about their latest strategies to enhance what is now known commonly as “the customer experience.” And like most companies that are working tirelessly on driving their customers toward higher levels of satisfaction, delight, and our latest aspiration, “engagement,” this company was going through all the common challenges of funding their new Customer Experience Management (CEM) strategy.

But also, like many others, funding their CEM strategy is meeting some pretty big resistance from their CFO and others who are trying to make corporate “ends meet,” especially in this economic climate. More and more, these two perspectives are clashing, not because the organization fails to value investment in Customer Service (CS), but more so because the impacts associated with that those investments are often less direct and less tangible, at least compared with the realm of immediate cost and productivity savings that produce faster (albeit not always sustainable) payback to the bottom line.

The Cost/ Service Trade-off: Myth or Reality?

For over two decades of working in the Customer Operations arena, I’ve heard clients invariably revert to the “perceived” trade-off between customer service levels and cost savings or efficiency efforts. That is, the notion that there is an inverse relationship between our ability to improve service levels and our ability to capture CS related productivity and cost savings. And for a long time, the data supported this notion. But as technologies improved, and companies began to increase investments in CS-related technology, tools and process changes, select companies started to prove that notion false by demonstrating the existence of both high service levels and low cost at the same time–companies clearly worthy of the term “myth busters”.

Yet despite all those great examples from the 90’s, we are now seeing many return to the proverbial “trade-off” as a reason for deferring further investments in their CS infrastructure. Make no mistake, there are clearly companies that are pushing the envelope of customer delight, and perhaps even engagement, but more often than not, investments in CEM, and even critical investments in basic infrastructure, are once again hitting the funding wall.

Some of this is clearly driven by the current economic climate. As a CEO from one of my energy clients said recently, “We haven’t given up on CS. But these investments are discretionary, and right now we are struggling to ‘keep the lights on'”. And, while on the surface, this may provoke emotions of heresy from those in highly competitive markets, it’s hard to argue with financial realities. At one time or another, most CS executives, regardless of industry, have encountered this same argument from their C-Suite executives.

Unfortunately, for some, the lack of investment in that infrastructure has created a bit of a back-slide in performance, creating the question of whether we are back to the days of the proverbial trade-off.

Reversing The Course…

As with most things in life, the cup can be either half empty or half full based simply on the lens through which we are looking.

Sure, we all want to delight our customers and make them happy. But from a financial perspective, there is always an ROI at play, and it’s not always easy to establish a causal linkage between that “added delight factor” and the bottom line. Hence the conflict.

But this assumes we are trying to impress, delight, or otherwise “engage” the customer for the sole purpose of selling more of our product or service. And that is clearly part of it. But again, at the risk of offending our hardcore sales and product advocates (of which I am one), I would assert that there are many other reasons for having an engaged customer that go far beyond the next product sale or any direct influence on buying behavior at all.

Beyond the Obvious…

From my perspective, “Engagement” is about changing the overall predisposition of a customer from one of negative predisposition or neutrality, to one of positive engagement that is leveragable in some context. That context could be higher sales, repeat business, or Word of Mouth (WOM) referrals, but it could also serve a variety of other purposes.

One of those purposes is cost savings. What?

That’s right, cost savings.

Over the past several years, we’ve completed a variety of assignments that were geared to identifying efficiencies where the mandate was “zero degradation to Customer Satisfaction”. Not an insignificant challenge. Especially when you consider that most companies have explored every way under the sun to drive more productivity out of their workforce, and have automated just about everything they can automate. And in some cases, these efforts have in fact degraded service level.

But many of those changes were inflicted on customers in a “push fashion”. Sure we’ve made tons of good changes in everything from local office closures, to call center automation improvements, to web interaction, but many of those changes were “pushed on the market” regardless of the level of satisfaction or disposition it happened to be in at the time. Yet we still wonder why the acceptance rates on what may appear to be wonderful customer options are at levels well below their potential. Experts claim that something as basic as “paperless billing” should be hitting 50-70% saturation in the next 3 years, but most of us are only at a fraction of those levels. But to me that is not surprising, given that we have not yet engaged the customer who we are asking to accept these changes. At least not in the spirit of how it is defined above.

Engagement for the Sake of Cost Reduction ?

Just for a second, put on your CFO hat and consider the following argument.

Cost is a product of both efficiency and transaction volume. We can decrease cost per transaction by 5,10, or even 20% in the form of cost-per-call, cost-per-bill, cost-per-payment, and the litany of other transaction types we offer. But the large majority of cost still remains.

Now think about the other side of the equation. Transaction volume. Different story entirely. When we eliminate a transaction, be it a printed bill, a mailed payment, or a call to the call center, we eliminate 100% of the cost. Looking at it this way, there is no question where our focus should be. And looking at the potential that our recent advances in technology could have on enabling these reductions in transaction volume, it’s rather amazing that such a large part of our focus is still on operating and productivity gains.

On this basis, and given the potential that exists in the workload dimension alone, it is conceivable that savings of 30, 50%, or more are possible, and go well beyond what we would ever consider from mere productivity gains.

It all starts with Impacting Predisposition and Behavior…

Given the impact of workload on bottom line, why wouldn’t that become our primary focus?

Perhaps it should be. Or at least one of our primary goals. But haphazardly looking for where we can drive customers to self-service channels without a clear strategy will get us right back to square one. The “win win win” (CCO, CFO, and Customer) if you will, is only achievable if the levels of potential I describe above are fully realized, and accomplished in a manner that leaves the customer satisfied and engaged.

Engagement is about changing customers’ predisposition from negative or neutral to positive and engaged. Once that is accomplished, there exist numerous ways to leverage that engagement, including getting the customer to willingly shift the nature and frequency of their interactions with us, thus decreasing transaction volume. But that is only the tip of the iceberg, as the companies mastering this dynamic are finding out.

But it all starts with the lens we look through.

So next time you are faced with hitting that infamous “funding wall”, or get challenged on the basis of your new CEM strategy, think beyond the obvious.

-b

For more on driving Customer Excellence through combined efficiency and service level focus, see the folloowing posts on EPMEdge.com . Related articles include:

What a good preacher can teach us about accountability…

Posted on March 16, 2011 by Bob Champagne

iPads, Insomnia, and Podcasts…

Sometimes, when I have trouble sleeping, I will find a good podcast or ‘sirius talk’ channel that looks interesting, and let the drone of the narrator “read me to sleep”.

I don’t know what it is about “talk radio” or short podcast subjects that do the trick for me (instead of music, for example), because some of the topics are really interesting and engaging and would keep most normal people “awake” rather then send them off to sleep. But not for me. 30 Minutes into one of these podcasts or talk shows, and I’m out like a light.

Who Knows. This phenomena probably has to do more with our childhoods, when we were “put to sleep” by our parents reading us a good story book, than it does the level of topical ‘engagement’ of the content itself. But that’s a subject for another day, or perhaps my therapist.

Now, sometimes when you download a podcast, there is not too much background available on the host, but that usually doesn’t bother me because the vast majority of them on itunes are pretty much free. So, if it’s a bad one, so be it- it’s still usually enough to put me to sleep through the sheer value of their mindless droning. Last night could have been one of those nights.

Last night, however was about the content. I found a podcast dealing with the topic of “personal change”, something near and dear to me because so much of the consulting work I do involves cultural alignment, behavioral change and leadership skills. Invariably, all of those are in some way dependent on PERSONAL change, often of significant magnitude.

Rapture, repentance, and judgment day…

As the podcast opened,however, it was clear that I was in for a surprise. While the topic was “personal change” (which we all know can span a broad array of angles), this one had what one might call a “spiritual bent” to it, which clearly was not evident by the podcast icon and description.

Although it was not what I was expecting, I did listen on. After all, who can’t resist a little advice from a good “preacher man”!

As I am fading off to sleep amidst his messages of raptures, repentance and judgments, the word “ACCOUNTABILITY” popped out of my ear buds like a shot in the dark. And while it probably was his intention to pique my interest will all of his other words of prophetic wisdom, it was the word “accountability ” that hooked me.

Now, if God is reading this, I don’t mean to say that I didn’t internalize ALL of the other parts of the sermon. I LISTENED TO ALL OF IT!!!” It’s just that the subject of accountability is one that I have been working with many of my clients on currently, and so the mere mention of the topic grabbed my attention just A LITTLE more than the “end of days” stuff. But that was for one instant, until I returned to the rest of the sermon, at which point I paid perfect attention. (Ok- bases covered with God- check.)

What “The Preacher” says about accountability…

Good preachers have a few things in common. One, they are charismatic speakers. Two, they are usually great storytellers. And three, they have an uncanny ability to translate complex principles into very simple messages. So what was his simple message on the subject of accountability? Just tell someone!!

That’s right, tell someone. Such a simple act. Yet such powerful implications. Here was his four step process to accountability:

Make a decision to make a commitment
Set a goal
Write it down
And tell someone

Now before you conclude that it’s not that simple (and I am not suggesting it is), just think about this in various facets of your personal, spiritual and work life. Heck, think about something as simple as exercise and weight loss (yet another topic close to my heart- literally!). I know for me, the only time I take that seriously is when I do in fact ‘tell someone’. I don’t know exactly why that works, but it does. Probably, it has something to do with someone else “watching”. Or perhaps it is because you feel a commitment beyond just yourself. Whatever the reason, I find that it works.

It also works in other areas of my life. When I commit something verbally to my kids, it means more than just a superficial personal “intent”. Same with my spouse. And truth be told, as a “good Catholic” (subject to debate, I suppose), when I make a confession to a priest, I take the commitment of “doing better next time” more to heart, than if I just made that same commitment to myself in passing.

I think”writing it down” certainly helps too, since it is now part of “recorded history”, and something you can go back to and look at. It becomes tangible.

Livin’ “The Gospel” in business!!!

Even if it’s just inside your own sandbox…

As I think about this in a business context, specifically with respect to performance improvement, it all makes sense, doesn’t it? I can’t tell you how many times those “personal change “rock-stars” (from Carnegie to Covey) have preached these same principles in their books on ‘achieving success’, ‘positive thinking’, and the broad array of topics they wax so eloquently on. And no doubt, every consultant (including your’s truly) has developed some methodology for driving accountability and change that include these basic four steps in some way, shape, or form.

I know many of you are working on driving accountability into your business cultures, and have one point or another, been involved in that type of multi step, multi phase, “journey of change” that was no doubt complex. And for many of you, some level of reward was received from those efforts. Change management programs do work, and with good leadership commitment, can really mobilize and cement long term improvements to a results oriented and highly accountable culture across the business.

But there are other times, when a manager just wants to simply motivate an employee, change the attitude of a team member, or the shift culture within a small workgroup. But instead of moving ahead in their little “patch of turf”, they often get caught up in the narrative of “it’s all about leadership” and the inability to change things from within unless “the top dogs” are behind it. That’s unfortunate, because change can happen in small pieces if the managers of those parts of the business understand the simple behaviors required to catalyze that change.

So before you conclude that reaching an new or ambitious goal is not achievable with your current team and cultural environment, give the preacher man a chance, and try out his 4 steps. Make the commitment. Set a goal. Write it down. And tell someone.

Then come back in a few weeks and see if anything has changed. You might surprise yourself!

-b

“Lagniappe”- And its impact on customer satisfaction…

Posted on March 8, 2011 by Bob Champagne

The Principle of “Lagniappe”…

Being a native of New Orleans, I have always been accustomed to the term “lagniappe”. For those of you who don’t reside in the deep south, lagniappe is a cajun term used to describe the “little bit extra” someone gives you as their way of saying “thanks” and/or expressing their gratitude and generosity.

And today being Mardi Gras in New Orleans, I can tell you, there will be a lot of “lagniappe” to go around, from extra servings of gumbo and king cake, to the myriad of beads, cups, dabloons and other “freebies” that are thrown to the crowds from the parade floats.

Yes, the concept of lagniappe is still quite unique and special to those who live day to day in the New Orleans culture. It is special mainly because it is so rare to see it applied these days, largely because of the many who view this concept as “over servicing the customer” and an unnecessary gesture that could hurt profitability.

Lagniappe- As seen through the eyes of Purple Goldfish…

A few days ago, I stumbled on a twitter post by Stan Phelps that referenced the concept of lagniappe as it related to marketing and customer service. My interest was piqued for two reasons. First, it was nice to hear the term since I rarely, if ever, hear the term used outside of Louisiana. But more importantly, it reminded me of the “balancing act” that is essential when applying the “lagniappe” mentality inside a business.

On Stan’s blog, there is a recent post relating to his “purple goldfish project”, an effort to collect the many examples of “lagniappe” experienced by their readers. And there are some great examples starting to emerge if you take the time to read through the comments and entries. What a great idea to expose those companies who do in fact understand the value of great service and going that “extra mile”! There are so many posts lately on the “bad experiences” (see my recent rant on CS storefronts), that it’s refreshing to see the other side of the coin every now and then. So I really applaud Stan for getting that project going. Great stuff.

Lagniappe versus the Almighty Dollar..

Although I am a native of New Orleans, and lived there for nearly 35 years, living in the Northeast for the last 13 has tempered my views on the topic a bit. While I still value and cherish “lagniappe” when I experience it as a customer, I am now more keenly aware what it can sometimes do to the cost side of the equation. Any time I consult to a Customer Service or Marketing Executive, I am always working to find the optimal balance where good service and profitability meet.

If we think about this balance, it’s helpful to acknowledge the two very polar ends of the spectrum that are often at play- The Customer Service and Marketing folks, who view their primary goal as Customer Satisfaction, and who will do “what it takes” to earn it. And the Finance side of the business who view every investment in CS as a highly discretionary investment that, while perhaps necessary in the long haul, will have negative impact on short term profitability.

Of course, few of us operate on either end of that spectrum. Marketing and CS Executives are rarely that pollyanna when it comes to “satisfaction at all costs” , and Finance Executives are rarely that blind to customer dynamics.But the underlying biases are certainly there at some level. And anytime I hear discussion of going beyond a customer expectation, my “antennas” go up almost instinctively until I can see that a balance is present.

It’s all about Exceeding Expectations…Isn’t it?

Well that depends.

For starters, let’s look at what we mean by “exceeding expectations”. There are many ways to exceed expectations. We can exceed the customers expectation through the product itself. We can exceed their expectations on how the product is sold and delivered. We can exceed expectations on what happens after a complaint. The list goes on….In fact, the “Purple Goldfish” project has good examples emerging of all fronts.

However, while “exceeding expectations” on any one of those dimensions will generally score you points in short term satisfaction, it’s doing it in ALL of the zones that will generate “sustainable” levels satisfaction and loyalty over the long haul.

For me, all of the dimensions I reference above can be summarized into two broad categories, either of which we are capable of delivering on effectively (by meeting or exceeding expectations) or poorly (by failing to deliver). These are:

The PRODUCT ITSELF (or service) that is purchased- With respect to physical products, this generally deals with quality (does it work consistently without failure?). But with softer products or services, it could be the quantity provided ( for many, lagniappe is that extra helping or side dish you get with your meal at a restaurant), or a “feature” that you’ve grown to expect in the core product (In flight entertainment, availability and features of your bank’s ATM, Lobby services provided.)
The SERVICE EXPERIENCE (in terms of delivery/ and follow up support)- Here I’m referring largely HOW the service is delivered. It’s HOW you are handled by the sales, service staff, or even the automated channels when you interact with them. This could be during the sale itself, during the account set up phase, as part of a general inquiry or bill payment, or as a follow up to a complaint. For these purposes, I view service as “how the product is delivered“- before, during, and after the sale.

Winning with “lagniappe”…

As the chart below shows, a strategy to exceed expectation on any one of those dimensions, while failing to do the same on the other is a pretty quick recipe for trouble. The below chart shows the range of customer experiences (from below to above expectations) on each of these two dimensions (Product on the horizontal, and the delivery/ “Service” experience on the vertical).

Starting in the bottom left quadrant, few of us would argue that failing on both dimensions is a clear path to customer satisfaction HELL. While its a painful way to go, it’s often quick, unless you’re in a protected monopoly or some other type of “controlled market” that will prolong the agony. Assuming the product concept is good, and it has a decent enough business model, someone may actually step in to acquire and/or turnaround the business. But short of that, the days are numbered for companies that live in this space. Utilities and Municipal Services providers can often fall into this category because of their largely protected monopoly environment, although there are exceptions.

On the other end of the spectrum (top right) are clearly the “winners” in this game, the ones who are generating and sustaining high levels of customer satisfaction and delight. Great product. Great service. Interestingly, in more cases than not, they also have lower cost structures for servicing since good products and good first time service resolution actually results in fewer required interactions. The investment up front in product design and development of a strong service process has paid off. Apple is a great example of a company in this arena. The core product is well designed and it works without fail. It’s easy to set up, use and it rarely breaks. The service, wherever it is provided- store, call center, self help, etc…always surpasses my expectations.

(click to view full size)

And while, it’s not the “holy grail” on the chart above, operating in the cross hairs (“core players”) can actually be a pretty safe place to play. It won’t earn you much in the way of lagniappe or high levels of customer “delight”, but there is something to be said for consistently meeting both expectations ALL THE TIME. Customers value that more than we often think. Look no further than Southwest Airlines and McDonald’s for examples in this domain.

Being one dimensional often means trouble…

As with most things, failing to have a balance usually spells trouble downstream. The same is true here.

Companies in the lower right, are those who have a great product, but fail miserably on the service side. Interestingly, many of the quasi competitive utilities like Cable and Cell Providers operate in this space. Their service rarely goes out, and most of the time is truly fantastic (above expectation). But the sign up processes, inquiry resolution, and in store interactions are often pure hell. Auto companies (operating through a dealer network that varies in its performance levels) can also fall into this category.

The trouble here is threefold. First, bad service usually creates a spiral of its own spending (how many times have you had to call a second or third time to get resolution?) Second, whatever gain you got by having a great product, is at best neutralized because of the poor service. And third, given a way to get the same product somewhere else (think bad car deal experience), you’ll take it. Barriers to switch (for example, it’s not easy to mentally “uproot your TV and cable system” after you’ve gotten used to it) can certainly delay the defection. But when those barriers go away (e.g. time for a new car lease?), it’s a whole different story.

That all notwithstanding, I think the most interesting quadrant is upper left. Here lie the companies that are trying so hard, often spending out the wazoo to essentially buy their way to a desired satisfaction level. You know the types- the incessant stream of discounts, give aways, apologies, follow ups, etc… that occur on the heals of buying a poor product or service and failing to have even your most basic expectations met. Nothing ticks me off more than someone “begging” for a survey score (sometimes overtly), knowing full well that you aren’t satisfied. Its easy in this area for costs to spiral out of control because you’re fighting a losing battle from the start. Until the core service is delivered, the customer doesn’t (and shouldn’t) care about anything else. This is the one quadrant where lagniappe can in fact hurt more than it helps. Hotels that give me free cookies won’t earn my satisfaction if my bed is uncomfortable or my room is subpar. A happy stewardess does nothing for me if the inflight entertainment is down on a 10 hour flight. And an apology or free drink coupon does not help much if my flight is delayed because of a mechanical problem on a plane that has been sitting there overnight!

Get to the crosshairs, THEN move from there…

If I had to give advice to a company, it would be to first get to basic levels of expectations on both dimensions. Then worry about the lagniappe.

Define what your core product is. Go beyond just the basic product to all the things that customers expect about the service or product they’re buying. What’s your equivalent to the in flight entertainment system? or the TD bank coin counting machine? or the Chase check deposit feature (by capturing image on your phone)? even you’re pricing and rate structure/ plan options? These are the things that have brought customers to you. And they must work flawlessly just to meet expectations. Introducing new features and tools will do nothing if they either dont work, or are layered onto a poorly functioning base product

Do the same for your service offering and channels. Don’t embed a new self service channel, or new IVR if your underlying process still has major flaws. There’s nothing worse than getting stuck in a 7 layer IVR system, until you recognize that the analog process wasn’t much better. These kind of things speak volumes about the nature of your underlying process and service infrastructure. Same goes for those new kiosks, mobile bill pay, social media interaction, online knowledge base’s. Nothing is more frustrating to a customer than watching a company invest oodles in technology when it consistently demonstrates little in the way of savvy when dealing with the most basic of interactions.

Once you have your baseline set in each of these areas, and get your performance to the minimum expectation for both, you can look for more and more ways to offer those “extras” that will really make a difference, while also raising the bar for your competitors.

Who wants a second helping of crap?

Look folks, lagniappe is a often a good thing, particularly when it is added to a solid buying experience.

But when it’s not , any effort you spend to provide it will at best be neutralized, and may even cause the opposite effect. After all, who wants a second helping of a crappy meal?

Fortunately, for those who are spending Mardi Gras in New Orleans, there’s little likelihood of a crappy meal. And if you do happen to experience one, you’ll probably be to drunk to notice!

-b

Data, Metrics, and Information- Are we better off than we were 4 years ago?

Posted on March 4, 2011 by Bob Champagne

Data, data…all around us…

Most of the projects I work on day in and day out involve data to varying degrees. I use data quite extensively in all of the assessments I do on organizational and operational performance. I use it heavily whenever I benchmark a company’s processes versus a comparable peer group. Data is at the very core of any target setting process. And, of course, data is (or at least should be) the beginning, and a continuous part of any gap analysis and any subsequent improvements that follows.

Today, the hunger that organizations have for good data has reached such unprecedented levels, that whole industries have developed in and around the domain of what we now call “Business Intelligence” or BI. Having consulted to organizations over the last three decades, I’ve seen this hunger level increase steadily throughout the entire period. But no more so than in the past few years.

However, despite all the gyrations that we’ve gone through over the years, one of the first things I hear from C-Suite Executives is that they still feel “Data rich and information poor”. So I’ll start this post off in the words of late President Ronald Regan by asking, “Are we better off or worse off than we were 4 years ago (in terms of translating data into useful and actionable information)?”

So are we better off than we were 4 years ago?

As any good politician, I would have to hedge a bit, and say yes, and no. And appropriately so I think.

We are most certainly better in our ability to “access” the data. If you’ve lived through the same decades as I have , you will remember the painstaking efforts we all made to extract data out of those proverbial “source systems” (when “SAS routines” had nothing to do with the SaaS of today). Everything from the data inside of our source systems, to the tools we use to access the data, to the ways in which we report and visualize the results has moved forward at lightening speed. And so, from that standpoint, we are, in fact, better off.

But on the other side of the coin, our tools have, in most cases, outpaced the abilities of our organizations and their leadership to truly leverage them. At a basic level, and in part because of the technology itself, we often have more data than we know what to do with (the proverbial “data overload”). Some would say that this is just a byproduct of how wide the “data pipe” has become. And at some level, that’s hard to argue.

But I think the answer goes well beyond that.

“Data rich, information poor”…still?

In large measure, yes. The bigger issue in my view is the degree to which the organization’s skills and cultural abilities enable (or better said, disable) them to effectively utilize data in the right ways. Most companies have put such a large premium on data quality and the ability to extract it through their huge investments in IT infrastructure and financial reporting, that it has in some ways forced leadership to “take it’s eye off the ball” with respect to the way in which that data is operationalized.

So from the perspective of using the data to effect smarter operational decisions, I’d say the successes are few and far between.

Of course, you can google any of the “big 3″ IT vendors and find a myriad of testimonials about how much better their decision making processes have gotten. But look at who’s doing the speaking in the majority of cases. It is largely from the Financial and IT communities, where the changes have been most visible. But it’s in many of these same companies where operating executives and managers still clamor for better data and deeper insights.

So while at certain levels, and in certain vertical slices of the business, the organization is becoming more satisfied with its reporting capabilities, translating that information into rich insights and good fodder for problem solving still poses a great challenge. And unfortunately, better systems, more data, and more tools will not begin to bridge that gap until we get to the heart of some deeper cultural dynamics.

Needed: A new culture of “problem solvers”

Early in my career, I was asked to follow and accept what appeared to me at the time to be a strange “mantra”: “If it ain’t broke, ASK WHY?” That sounded a little crazy to me having grown up around the similar sounding but distinctly different phrase: “If it aint’t broke, DONT fix it”.

That shift in thinking took a little getting used to, and began to work some “muscles” I hadn’t worked before. For things that were actually working well, began asking ourselves “why?”. At first, we began to see areas where best practices and lessons learned could be “exported to other areas. But over time, we quickly learned that what appeared to be well functioning processes, wasn’t so well functioning after all. We saw processes, issues, and trends that pointed to potential downstream failures. In essence, we were viewing processes that were actually broken, but appeared to be A-ok because of inefficient (albeit effective) workarounds.

“Asking why?” is a hard thing to do for processes that appears to be working well. It goes against our conventional thinking and instincts, and forces us to ask questions…LOTS of questions. And to answer those questions requires data…GOOD data. Doing this in what appeared initially to be a healthy process was at first difficult. You had to dig deeper to find the flaws and breakdowns. But by learning how to explore and diagnose an apparently strong processes, doing that in an environment of process

failure became second nature. In the end, we not only learned how to explore and diagnose both: The apparent “good processes”, and those that were inherently broken. And for the first time in that organization, a culture of problem solving began to take root.

Prior to that point, the organization looked at problems in a very different way. Performance areas were highlighted, and instinctively management proceeded to solve them. Symptoms were mitigated, while root causes were ignored. Instead of process breakdowns being resolved, they were merely transferred to other areas where those processes became less efficient. And what appeared to be the functioning parts of the business, were largely overlooked, even though many of them were headed for a” failure cliff”.

Indication, Analysis, and Insight

Few organizations invest in a “culture of problem solving” like the one I describe above. Even the one I reference above, deployed these techniques in a selected area where leadership was committed to creating that type of environment. But throughout industry, the investment in generating these skills, abilities and behaviors across the enterprise, pales in comparison to what is invested annually in our IT environment. And without bringing that into balance, the real value of our data universe will go largely unharvested.

There are a myriad of ways a company can address this. And some have. We can point to the icons of the quality movement for one, where cultures were shaped holistically across whole enterprises. More recently, we’ve seen both quality and efficiency (more critical to eliminating waste and driving ROI) get addressed universally within companies through their investments in the Six Sigma, and more recent Lean movements.

But if I had to define a place to start (like the business unit example I described above), I would focus on three parts of the problem solving equation, that are essential to building the bridge toward a more effective Enterprise Performance Management process.

Indication– We need to extend our scorecards and dashboards to begin covering more operational areas of our business. While most of us have “results oriented” scorecards that convey a good sense of how the “company” or “business unit” is doing, most have not gone past that to the degree we need to. And if we have, we’ve done it in the easier, more tangible areas (sales, production, etc). Even there however, we focus largely on result or lagging indicators versus predictive or leading metrics. And in cases where we have decent data on the latter, it is rarely ever connected and correlated with the result oriented data and metrics. How many companies have truly integrated their asset registers and failure databases with outage and plant level availability? How many have integrated call patterns and behavioral demographics with downstream sales and churn data? All of this is needed to get a real handle on where problems exist, or where they may likely arise in the future.
Analysis– When many companies hear the word “analysis”, they go straight to thinking about how they can better “work the data” they have. They begin by taking their scorecard down a few layers. The word “drill down” becomes synonymous with “analysis”. However, while they each are critical activities, they play very separate roles in the process. The act of “drilling down” (slicing data between plants, operating regions, time periods, etc.) will give you some good indication where problems exist. But it is not “real analysis” that will get you very far down the path of defining root causes and ultimately bettersolutions. And often, it’s why we get stuck at this level. Continuous spinning of the “cube” gets you no closer to the solution unless you get there by accident. And that is certainly the long way home. Good analysis starts with good questions. It takes you into the generation of a hypothesis which you may test, change and retest several times. It more often than not takes you into collecting data that may not (and perhaps should not) reside in your scorecard and dashboard. It requires sampling events and testing your hypotheses. And it often involves modeling of causal factors and drivers. But it all starts with good questions. When we refer to “spending more time in the problem”, this is what we’re talking about. Not merely spinning the scorecard around its multiple dimensions to see what solutions “emerge”.
Insight– I’d like to say when you do the above two things right, insights emerge. And sometimes they do. But more often than not, insights of the type and magnitude we are looking for are usually not attainable without the third leg of this problem solving stool. Insight requires its own set of skills which revolve around creativity, innovation, and “out of the box” thinking. And while some of us think of these skills as innate, they are very much learnable. But rather than “textbook learning” (although there are some great resources on the art of innovation that can be applied here), these abilities are best learned by being facilitated through the process, watching and learning how this thought process occurs, and then working those skills yourself on real life problems.

Dont forget “line of sight”

A few days ago I wrote a post on the concept of “line of sight” integration of your performance management content and infrastructure. It’s important here to reinforce the importance of tracking all of this back to that underlying construct.

The process of operationalizing information, is but one of many in the “line of sight” chain from your company’s vision, to the operational solutions that manifest here. And this process of operationalizing change is only a beginning of the journey you will make to translating these gains into ROI for the business (what I’ve referred to before as “value capture” or “value release”).

So as you navigate your path through the above activities, its useful to keep it in context and remember that the desired end state is to enable your business to see that clear “line of sight” from the very top of the organization right down to the work-face.

* * * * * * * * * * * * * * * * * *

There’s not enough space in a post like this to elaborate as much as we could on each of these. And creating real cultural change clearly involves more than a few quick bullet points. But as has been my tradition in this blog, my intent is to introduce you to principles and techniques that can get you started on this journey, or increase the ability for you to navigate the road your on.

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