You get what you pay for.
There is something I always wanted to understand before I die. Why is it that when it comes to customer
service, most business leaders are like people who go to church without belief? They say the right words
on the right occasions but it does not affect the way they run their businesses. They are simply paying
advanced lip service to the idea of putting the customer first.
When many books have presented so much evidence and many case studies showing that being customer
driven is the best strategy for business success, I cannot grasp why most companies are internally driven
and spend more time thinking about their products than their customers. When statistics show that aiming
to retain customers is a more profitable strategy than endeavouring to acquire customers, why are most
business leaders hunters and not farmers? Why, I ask myself, do people not get it?
Thanks to Upton Sinclair, an American novelist born in 1878, I can now die in peace.
According to Sinclair, a social activist who needed to know why people refused to change: “You
cannot get a man to understand something when his salary depends upon him not understanding it.”
It all makes sense now. Business leaders will not want to understand the advantages of creating a
great customer experience if their own salary is linked to cutting costs, acquiring new customers, using
technology to reduce staff and maximising short-term financial results. I suspect the senior managers
of large corporates put all their efforts into gaining new customers and little into retaining customers
because their own bonuses are linked to market share and new customer numbers.
I was talking to the head of retail for a nationwide chain of stores the other day and I asked him
what his strategy was for getting a competitive advantage. He told me it was to offer superior value
and outstanding service. I then asked what his personal KPIs were. None of them had anything to do with
creating superior value or outstanding service. No wonder that chain is not renowned for delivering
great value and excellent service!
But this does not just apply business leaders. Last week I spoke to the CEO of a manufacturing business
who is turning his company from being product driven to customer driven. He told me that when he took
the job, sales people were rewarded for making sales and bringing in revenue. Not surprisingly, they
made promises the factory could not keep – usually without telling the factory. Today, their rewards
are linked to customer satisfaction and retention and the problems of over-promising and working in
isolation have disappeared.
Here are five steps to ensuring the KPIs and rewards for your staff will encourage them to understand
and do what you believe are the right things to do to build a successful business.
Step 1. Have clear, high level, over-arching goal that guides everything you do. This goal reflects
your understanding of what it takes to succeed in today’s business environment. In my businesses,
that goal is to have profitable customers who stay with you for a long time. This goal guides all business
activity. Anything that will help us to achieve that goal we consider doing, and anything that would
take us in the opposite direction is rejected out of hand.
Step 2. Choose a strategy to help you achieve your high level goal. If your aim was to have profitable
customers who stayed with you a long time, you would embrace the strategy of being customer driven,
for example. That strategy would then determine the way you do everything in your business from hiring
staff to product development to marketing.
Step 3. Develop a business plan consistent with your strategy. In our example, we would build a business
plan around customer loyalty and advocacy, creating outstanding customer experiences, delivering superior
customer value and selling value. Our plan would not include campaigns to attract new customers, win
market share or increase sales through low prices and discounting.
Step 4. Review all existing policies, business rules, and processes to make sure they are consistent
with your goal, strategy and business plan. I have seen many organizations develop a strategy around
being customer driven and then developed policies and processes that worked for the company and against
their customers. By the same token, I have worked with many companies that, having decided to become
customer driven, have reviewed their policies, business rules and processes and have been horrified
to discover how they treat their customers.
Step 5. Once you have completed the first four steps, you will be in a position to set targets, KPIs
and rewards. Make sure these are consistent with your over-arching goal and your business objectives.
I recommend every manager and team leader shares at least one KPI that is linked to customer retention
and customer profitability. That way, everyone is in it together and you will not have one department
or group undermining another. Make sure that no KPIs or rewards inadvertently conflict with the goal
of having profitable customers who stay with you for a long time.
Having the right targets, KPIs and rewards in place is paramount. As Sinclair said, “It is not
possible to get a man to understand something when his salary depends on him not understanding it.” Or
put another way, you only get what you pay for. Make sure you are paying for what you want to get.
|
