Is Tesco a lesson in taking your eye off the customer?

tesco bagTesco’s share price has fallen 50% in a year. Profits dropped 6% in the year ending April 2014. In July, the CEO stepped down after failing to turn the company around. And, today, the company announced a “profit hole” of £263 million. It shouldn’t be a surprise then to hear that the company’s Chairman, Sir Richard Broadbent, has also announced his departure.

I was in London three years ago when former CEO, Sir Terry Leahy retired as Chief Executive, and it was front page news in every British broadsheet. Leahy had overseen the rise of Tesco from a perennial follower to Marks & Spencer and Sainsbury to become the largest British retailer, and the third largest retailer in the world measured by revenues.

And, Tesco had been an admired company. Their focus on the customer, and their success with the Tesco Clubcard made Tesco a “go-to” case study on how to leverage customer intelligence to provide personalized benefits to individual customers. And, thanks to the Clubcard success, dunnhumby became a household name among retailers.

But, thinking back to when Leahy stepped down, I remember reading the multitude of articles about the firm’s success and about its future. And, there were warning signs then. Over-reach in the US and outdated stores were cited concerns, but more troubling still was the reference to the firm taking their eye off the customer.

What’s happened over the past several years? Rewards for being a Clubcard member have been cut back, and according to press reports interviewing “insiders”, the focus shifted from the customer to making sure Tesco didn’t miss its numbers. Well, as Rick Perry would say, “Ooops!” Unfortunately, now for Tesco, they can only hope to be a case study of another kind – the turnaround story. A retail analyst with HSBC reckons a turnaround could cost as much as £3 billion.

From the outside looking in, it seems like Tesco shifted from an engagement strategy to a revenue strategy. And, if so, it backfired! While there are always a myriad of reasons for business success or failure – not all of which are visible from the outside looking in, I’ll be watching intently to see whether, and how much, the pendulum shifts back to the consumer – and to observe whether any such shift correlates with a return to business success.

Here’s wishing Tesco’s new executive team and board members all the success in the world!

Cheers,
Dave

What every brand can learn from T-Mobile’s “uncarrier” strategy

Since publishing the Customer Relationship Architecture report, one of the most common questions I’ve received relates to the notion of a collaborative customer relationship strategy. Among other questions, folks have emailed to ask which companies we would classify as collaborative. Well, as we state in the report, they aren’t all that common. And, even where they do exist, not many firms are executing on the strategy particularly well. We’re not in a position to disclose the companies that took the survey, but what we can do is provide some examples of companies that appear to be pursuing this strategy.

T-Mobile

t-mobile international fee ad

 

One company that comes to mind is T-Mobile. At least in the States, T-Mobile is pursuing a really interesting “uncarrier” strategy. I saw Peter DeLuca SVP of Brand Communications for T-Mobile USA speak at the recent Ad Age Digital Conference and he explained their approach as one that was rooted in customer understanding. Essentially, they looked at the major pain points that customers had with their carriers and sought to change the dynamic in the wireless industry.

How? By introducing policies and procedures that turn the traditional cellphone industry approach on its head. For example, they eliminated contracts. They offered to pay prospective customers’ early termination fees if they left competitors and signed up with T-Mobile. They introduced new ways for customers to upgrade to the newest phones.

When you think about these moves through the lens of a customer relationship architecture, each one feels like they checked the “understand your customers” and “apply that intelligence” boxes pretty well. But, let me give a personal story about where they check the “to the mutual benefit of the company and the customer” box. I was heading to Ireland just after Christmas and saw ads in the airport that claimed T-Mobile was no longer charging for data usage overseas. I was so skeptical I went to their website found the relevant explanation, read it with a fine tooth comb, and took screen shots of the pages in case I had to go back and fight any charges. Sure enough, my data usage while I was there was free. Fast forward a few months later and I received an email telling me that my bill was going to drop by $14 a month because the company was no longer charging for texts sent overseas. I was paying for both my wife and I to have unlimited international texting and they were simply eliminating the fee. It’s fascinating to me that in an industry renowned for the lack of customer concern, T-Mobile has changed the game for me as a customer and begun to act in our mutual interest – not just their own. The zero-sum game has ended.

Strategy or tactic?

Overall, T-Mobile appears to be pursuing a collaborative strategy. And, it’s only fair to point out that we could debate whether it’s out of necessity as the number four player or not. But either way, as a customer I feel that the company understands my pain points and is making strides to eliminate them.

I can think of lots of anecdotal stories about other companies. I’ve written previously about GoDaddy’s call to me that saved me money initially and had me gladly spending more with them by the end of the call. Or, I could point to BankUnited with whom I bank. I landed off a flight one day to three voicemails and an email asking me to call them. Before I had the chance, they called me again. A check I had written was about to bounce and they wanted permission to transfer money between my accounts so that I wouldn’t be hit with an overdrawn or returned check fee. They lost out on the $35 or whatever it might have been, but made me feel like they had my best interest at heart. Does that mean that GoDaddy and BankUnited are following a collaborative strategy? I’m not sure. So far, it feels more like a tactic than a strategy. That doesn’t make it a bad thing, but it does highlight the point that a collaborative tactic — while admirable in its own right — does not a collaborative strategy make.

T-Mobile is one company that stands out as approaching a collaborative relationship strategy — and not simply stringing together a series of collaborative tactics. Who else do we think of as collaborative? Some of the old reliables like Disney and Zappos also jump to mind, but I’m curious to hear about your experiences — who stands out to you either at a strategic or tactical level as collaborative? Email me or post a comment below and I’ll continue to post examples over time.

Cheers,
Dave

Announcing a consulting partnership with Targetbase

TB Element logo

I’m excited to announce a partnership with Targetbase which has hired Customer Helix to help establish a consulting practice — Targetbase Element — to service existing and prospective Targetbase clients.

The goal for the new division will be to help firms develop an optimal customer relationship architecture. “Customer relationship” is a loaded term thanks to firms’ history with CRM, but when Targetbase and I got together to discuss the idea of working together, we tried to strip away all the marketing-speak and acronyms and determine how we could collectively help firms. We reduced it all down to helping senior leaders to establish the right relationship for their specific company with their specific customers. We were in complete alignment that there isn’t and shouldn’t be a cookie-cutteer approach to customer relationships. So many elements affect the type of relationship that one can have — some of which are in a firm’s control, and some of which are not. So we plan to help firms determine what the right strategy is for them and their customers; assess whether they are set up structurally to deliver against that strategy; and determine where to invest to either remove barriers or execute even more effectively.

Ultimately, we’ll evaluate four things: the desired customer relationship strategy for the firm; how well it executes on that strategy; the consumer’s expectation in a relationship with the firm; and how well those expectations are being met. Once we know the answers to some or all of these questions, we can help firms to align in the mutual interest of the consumer and the firm.

Going back to my Forrester days, I was always impressed with Targetbase’s strategy offering, so I’m flattered to be brought on board to help them establish a more formal and standalone strategy consulting group. I look forward to bringing my thought leadership to the table and have begun by conducting a survey of 200 customer-facing professionals to better understand their current and desired approach to customer relationships.

To learn more, see the Targetbase Element site, their blog, or see my “consulting offerings” page here.

Cheers,

Dave

Research report: Consumer relationship strategies

Customer relationship architectureWe’re delighted to release a research report that we’ve been working on for the past few months focused on the nature of company/consumer relationships. Ignoring the CRM-esque acronyms and buzzwords, we set out to understand the current state of how firm’s approach relationships with their consumers. To ground the research, we surveyed 200 consumer-facing professionals at large North American firms, and interviewed scores of others.

The research is founded on three simple questions that we see as key to any relationship:

  • how well do you know your customer;
  • how well do you apply that knowledge; and
  • to who’s benefit?

Based on the results, we identify 5 distinct relationship strategies

  • non-relationship-focused;
  • revenue-focused;
  • experience-focused;
  • engagement-focused; and
  • collaborative.

We don’t advocate that any one strategy is better than another. In fact, one of the headlines in the report is that “The ‘best strategy’ is the one that’s right for you.” But, we found lots of opportunity for improvement for most firms. For example, while 58% of survey respondents are “company focused” (i.e. either non-relationship or revenue focused), 52.5% wish they were “consumer focused” (i.e. either experience-focused or engagement-focused) and a further 17% desire to be collaborative.

Meanwhile, despite these aspirations of more consumer-centric strategies, as few as 0 to 24% of firms perform well at their specific strategy (defined as a 4 or 5 out of 5 in our scoring).

The research goes on to show how relationship strategies permeate the entire business and have broad impact on business culture and results.

If you’d like to take the survey and receive a free diagnostic that shows your current strategy and “score” assessing how well you perform against that strategy, you can do so for free here.

I hope you’ll take the time to read the research and take the opportunity to examine your current relationship strategy.

Cheers,

Dave

Expectation is context

If “the message is the medium”; I reckon “the expectation is the context”.

It’s probably true of most things, but I’m really hung up on the idea of how our expectations create context for our experience and satisfaction with a brand. Sure, it’s pretty obvious that if we’re paying hundreds of dollars for a meal, we expect a very different experience than if we’re paying less than twenty. But, I’ve been thinking about this partly in light of my previously documented JetBlue experiences, that it’s not just the money we spend, but the expectations that are set. Based on my previous experiences, I expected more of JetBlue. Just as I expect more of Apple, and Zappos, and Disney based on my experiences. So, when one of those companies falls down, it’s more bothersome than when even a competitor of theirs underperform.

But, here’s the good news: it works both ways. I had an experience recently when I got a call from a GoDaddy “strategy consultant”. Initially, I kicked myself for not screening the call. I have multiple GoDaddy accounts – some of which are about ten years old (yes, dating back to way before those Super Bowl ads). But, I’ve always thought of GoDaddy as the WalMart of domain name purchasing — cheap and relatively easy. Well, this strategy consultant was calling to explain that I could structure my relationship differently and wind up saving myself a pretty significant chunk of change. I was using bits of multiple services — a couple of email addresses per domain, for example — and this guy showed me how I could consolidate them and then cancel some. Only after about 20 minutes on the phone, all focused on saving me money, did he ask me if I wanted to consolidate renewal dates and extend them to benefit from a bulk rate. By then I was on a GoDaddy high. I was happy to extend my contracts and maybe get this wonderful gentleman a bit of commission; and obviously to save myself what ended up being a couple of hundred dollars. And, yes, I know that I saved myself money the way my wife does at Bloomingdales (“look at all the money I saved, honey”), but GoDaddy had so exceeded my expectations and delivered value for products and services that I use and will continue to need, that spending the money was a no-brainer.

Amazon, JetBlue, and Apple aren’t the only firms that could learn a thing or two!

Cheers,

Dave

It all depends on what you call it…

I’m on a bit of a classification or categorization kick lately. For some reason, it bothers me when I read about my Pebble being described as a “smartwatch”. I don’t think the watch itself is smart. It’s simply a display for what a real smart device — my phone — is beaming to it. Is it wearable technology? I guess, kinda. But isn’t a regular wristwatch wearable technology? So then, a connected device. Sure, but apparently, it’s one of about 3,000. As it relates to my watch, it really doesn’t matter to me. And, either way, I love the watch. But, in other areas, how we classify things does matter.

Given my background, one of the things I’ve been thinking about of late are classifications within the marketing services ’space’ — that is, everything from marketing service providers, agencies, or outsourced providers. It’s probably no surprise that I’m particularly interested in those of the the data-driven, digital, and engagement oriented types. I’m having lots of conversations with these service-oriented companies that no longer know what to call themselves (“are we an MSP, an agency, or something else?”) as well as marketers and customer experience professionals that don’t know how to choose a provider (“everyone claims to do the same thing and we have no way of distinguishing them”). So, I’m keen to look closer at this and perhaps even put forward a classification of sorts that might be helpful. I’d love to hear from you if you have thoughts about where things are headed.

Separately, or maybe, relatedly, I’m interested in corporate goals as they relate to customers. I’ve getting ready to publish the results of a survey of professionals responsible for customer relationships, and while I haven’t yet got all the results tabbed, it’s already clear that respondents like to think of themselves as customer-centric, or as focused on customer experience, and yet when you look at responses to other questions, there is little control being given to customers and little emphasis on customer-percieved value. As I look at the data, I’m keen to see if there’s a way to classify a firm’s approach to customers – for example they may claim to be experience focused, but what needs to be in place for them to be able to check that box and actually prove that they are? I’ll hopefully be able to publish a perspective in the next week or so, but if you already have a perspective, again, I’d love to hear your thoughts.

Cheers,

Dave

Not stuck in park!

I don’t expect to get a great customer experience from local Government services. Which, made it all the more pleasant when I did. I went to my son’s school late last week for a presentation that he gave (and he did amazingly well). All of the school parking spots were taken, so I parked at a meter.

ParkMobile emailAnd, the meters in the town are clever. Sure, you can fire in your quarters and try to remember what time you have to get back to the car. Or, you can manage the entire process through an app. I’ve used the app for a while now, but on this occasion it led to an excellent customer experience. Why?

  • It was fast. I pulled up the app, punched in the four-digit code on my meter, confirmed which car I was parking (I had it pre-loaded), and accepted the price (including the 35 cent usage fee) which was billed to my registered credit card. I completed the transaction half way between the street one block away, where I’d parked the car and the school. It was a lot quicker than had I had to go in to a local store and grovel for quarters.
  • It provided a service. Ten minutes before my time expired, the app alerted me that my session would end soon. I had lost track of time and was grateful of being reminded.
  • It provided a valuable utility. Rather than having to run back to the car, I was able to extend my session on my phone. Yes, I paid another 35 cents for the privilege, but I was more than happy to do so.

Meanwhile, the town benefits too. There’s probably some form of monetary benefit — for example, if I remove my car before my time expires, there isn’t a way for me to transfer the excess time to another driver. For some percentage of the day, some meters will earn double time.

And, if they are using the data to its potential, there’s a lot to gain. They can tell which parts of town are busiest at what time of the day — potentially determining where to open up new parking areas, or changing parking rules to reduce the time that people can park in specific areas to allow for greater turnover.

But, listen, here come the privacy over-reactors! They don’t want the town knowing this and tracking that. But, I’m a huge believer that we’re generally willing to trade personal data for utility and value, and these smarter meters delver both. Who knows, in time they could even deliver more – it’s not hard to foresee a feature that highlights where there are meters that are (or should be as long as other drivers aren’t overstaying their welcome) available for drivers in search of a parking spot — after they’ve pulled over to safely look at their smartphone, of course.

Value and utility from a local Government? I’ll take it!

Cheers,

Dave

Your competition isn’t who you think it is

Your customers enjoy greater and faster access to new products and services every day — from apps to wearable devices to co-created solutions. And you compete with all of them. Even if they don’t compete with you.

What do I mean? How we access information and interact with companies is changing. Consider:

  • One of my go-to weather apps is Dark Sky. It’s an algorithmic masterpiece that predicts the likelihood of rain in my exact location down to the minute. And most of the time it’s right.
  • I no longer look at my phone when it rings, or when I get a text message or reminder alert. I glance at my wrist [or rather the Pebble watch that’s on it] and decide whether I need to go to all the effort of reaching into my pocket to grab my phone.
  • I buy $2 and $3 products via Amazon Prime with a single click and get them shipped for free within a couple of days.

But you don’t compete with a weather app, a bluetooth watch, or even Amazon, right?

Well, you might not compete with them directly. But, I increasingly expect every company that I interact with to understand the context of where I am and provide me relevant information, just like Dark Sky. I expect my experience with products to make my life easier or better, the way my Pebble does. And, I want the convenience end cost effectiveness of buying even small items and having them shipped without the shipping costing more than the item I’m buying.

In other words, I increasingly expect you to deliver an experience that competes with Amazon, and Apple, and Disney, and USAA, and Zappos, and Jet Blue, and so on. It doesn’t matter whether you compete with these companies directly. They’ve raised the bar of what I, as a consumer and customer, expect. And if you can’t match those expectations, my impression of you has diminished and I’m more likely to consider one of your actual competitors than I was before.

If you’re not already, it’s time to start benchmarking yourself against the best-in-class, customer oriented business, not just against your traditional competitors.

Cheers,

Dave

Customer focus isn’t that hard!

Since I wrote the other day about Apple, I had a bunch of emails and conversations that seemed like veiled attempts to defend Apple, disguised as a question. They went something like, “Why are you picking on Apple. Nobody does this well. Isn’t it really hard?” To which my answer is yes, it’s hard. It’s really hard. But, it’s not that hard that companies should get a pass. I can’t imagine how difficult it must be to work for a company when you are stuck behind policies and procedures that prevent you from helping a customer. And, yet, most firms exist in this state.

And, it’s tempting to point to the Disney’s and USAA’s of the world that do this better than most. But, I found myself in these conversations referencing two much less well known examples.

Lisa Lindstrom, a board member of Avanza Bank in Sweeden presented at Forrester’s Customer Experience EMEA Forum last year and shared a story with the crowd about the Chairman of the bank who hosts a customer event every year, walks amongst the crowd greeting them and listening to their stories, and even gives out business cards with his personal cell phone number on it.

Then, last week at Neolane‘s customer conference in Boston, I saw a great presentation by Robb Barrett of the Cancer Treatment Centers of America. Robb was engaging and funny. But above all, he was empathetic. He mentioned that at every executive and board meeting, a “customer” or patient is invited to attend. Sometimes it’s a celebrity; sometimes it’s someone sitting in the lobby that gets invited on the fly. The board and the management team ask them questions, find out what it’s like to be a customer, and learn what they could do better.

Later at the bar, I spoke to Robb and he explained that this isn’t a lip service or feel-good initiative. He has seen the chairman of the board change policies with the customer right there in the room. For example, on learning that family members visiting patients hadn’t been able to eat late at night, he called the cafe manager to see if it could be kept open longer and made the decision there and then to do so. It might seem simple, but imagine these kinds of examples replicated multiple times a day, every day. And, not just by the Chairman, but by every employee.

Yes, in these cases it’s a senior executive asking the question and making the decision, but that’s kind of the point. If these actions aren’t taken at the top, how can firms ever expect them to happen lower in the ranks?

And, sure, Apple isn’t the only company that could do this better. Every company could. But, no matter where you sit in the organization, it starts with asking the question of customers. And, caring enough to do something with the answer.

Cheers,

Dave

Are you better than Apple at letting your employees help your customers?

I’m a mac fan. Not one of those loony, raving fans, but I do have an iPhone and an iPad, recently bought a MacBook Air, and there are several other versions of iPhones, iPads, iPods, etc scattered throughout our apartment. On top of that, I’ve bought iPads for my mother and my mother-in-law to allow us to FaceTime and let them see my kids more often.

Apple store stairs

So, I’m bought in to the ecosystem. Like so many other apple customers, one of the things I enjoy most about their products is the ease with which you can flit back and forth across your devices.

When I bought the MacBook Air a few weeks ago, I stumped up an additional $99 for Apple’s “One to One” membership — a kind of personal trainer service to help you improve your mac-savviness. But, when I logged on to the site today, I was told my membership had expired. So, I called Apple. First, I got a voice activated system that told me it could understand complete sentences and then kept trying to send me to the wrong place (and, no, it wasn’t Siri). When I finally got through to a live body, they told me that I should contact the store where I bought the membership, since that’s where my membership is tied. I pointed out that that wasn’t very convenient since I bought the membership in New York and live in Florida. I didn’t see how I was going to get much personal training in without flying to NY on a regular basis.

So, I was transferred over to AppleCare, the technical service and support people that I had paid a further $249 to access. They also told me that I needed to contact the store, and went to great lengths to explain that One to One is not part of AppleCare. In the end, I spent 30 minutes being passed around to various people, none of whom were able to help me.

Everyone I spoke to over at Apple was extremely polite. At one point, I was disconnected between transfers and got a call back from the intended recipient, who was up-to-date on the issue. But, ultimately, it left me with an awful impression of Apple. The smooth interplay within their software and device ecosystem is completely missing in their internal structures and processes. None of the several people I spoke with were empowered to own my problem and help me solve it. In the end, I got the situation resolved, but it wasted a silly amount of my time for something that should or could be as easy as flipping a switch or punching in a number.

It’s easy to point fingers, of course. But, how many of your processes, policies, and systems get in your employees way and prevent them from serving your customers better? If you know the answer to that, start solving the problems! Your employees and your customers will thank you.

Cheers,

Dave

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