Has Mediocrity Become the New Business Standard?

What’s happening to organizational standards? It’s hard to pick an exact date, but I’d suggest that prior to the financial crisis many organizations, of all shapes and sizes, were striving to evolve and improve on a year by year basis. There were certain areas of the business that organizations were trying to constantly evolve and it wasn’t just around the product or service offering, but around areas like customer service, quality and the brand or external image. Organizations were striving to develop or enhance their reputation and performance; and were focused on sustainable growth.

 

Yet since the financial crisis and the continual growth of social media – the drive to enhance customer service seems, for example, to have come to a sudden halt. Even high end ‘luxury’ brands aren’t looking long term any more, but just focusing on the moment and the desire to maximise short-term income, even at the expense of the potential for long term customer loyalty.

 

For some reason organizations and business schools are promoting the idea that customer loyalty doesn’t really exist and hence now ‘preach’ that trying to ‘create’ loyalty is a waste of time, money and effort. And this is the biggest mistake organizations are making – the selfish focus on short term profitability, is leading to a decline in the focus on sustainable growth and the business environment is becoming more of a constant short-term ‘hustle’ to entice customers to buy their products and services.

 

A short-term focus is a very mercenary approach to business, but this seems to be becoming the rule rather than the exception. The impact this has on the organizational set-up and organizational culture is astronomical – yet when you analyse the set-up and culture you need for a short-term only focus you can sadly see the attraction.

 

A short-term focus doesn’t only imply a scant regard for customer loyalty, but also implies a scant regard for employee loyalty too. With a short-term focus organizations just see their employee base as a resource to maximize short-term profitability and nothing else – the advantage of this short-terminism, is that you don’t have to worry about investing time and effort into talent pipelines and succession planning, as you don’t see your workforce as a long term investment. If and when people leave you either replace them internally or recruit from outside, but it’s done on a case-by-case basis and not some fancy business methodology.

 

The other advantage of this short-term outlook is that you don’t need to recruit the ‘best’ anymore just basically a ‘warm body’ that can ruthlessly pursue short-term goals, with the added advantage that you don’t need – in fact don’t want – great leaders, you want leaders who can implement command-and-control behaviours with their employees just to get the job done.

 

Organizations accept that some customers may be upset – in fact if there isn’t a reasonably high percentage of unhappy customers, then they actually know they are doing something wrong; as in ‘their world’ there are plenty of ‘new’ customers in the sea and they perceive customers as not being that bright in the first place; and even if the service or quality isn’t as good as ‘advertised’ they know a proportion of the ‘upset’ customers will still be dumb enough to come back and buy again, as it’s ‘easy’ for them.

 

Business has become so easy for short-term focused leaders, as customers have become less caring and believe it or not, actually expect poor service these days. In fact if the customer doesn’t ‘see’ mediocrity they might even think something seems too good to be true. Hence there’s no doubt that it’s today’s customer base that is encouraging this acceptability of mediocrity in the workplace.

 

Same goes for culture – short-term focused organizations simply don’t care about building a positive organizational culture, it’s just not important to them. The culture they want is one where employees focus on short term profit maximization at all costs and nothing more.

 

This makes business life so much easier as building or transforming a culture takes real time and effort; as well as a unique skill set. So not having to worry about a strong, positive culture that allows for sustainable growth is manna from heaven for today’s short term focused, weakly led, organizations.

 

What’s worse and is the cherry on the cake, is that the younger generations actually see these new mediocre business practices as the new definition of ‘business excellence’ and are redefining the norms and expectations of business. Leaders who wouldn’t have stood a chance in a ‘sustainable’ long-term view organization are now seen as today’s strong leaders as they drive their employees to meet ruthless short-term targets.

 

Of course, if you don’t understand the concept of sustainable growth, customer loyalty, etc. what chance do you have of developing a future focused organization – it would just be a foreign concept to you and without the skills you wouldn’t even know where to start.

 

History has shown us that industries and organizations evolve over time – but we all need to take a long hard look at the current direction being taken by too many organizations of all shapes and sizes.

A short-term focus creates an organization that operates at a level of mediocrity, it fails to develop true leaders and in the process creates a talent pool of weak, mediocre leaders that simply know no better.

 

This has all been allowed to happen over the last few decades as customers have demanded less, complained less and accepted a lot less. The future of business is in our hands – we can demand excellence to force organizations to strive for it – or we can accept mediocrity and that’s exactly what we’ll get.

What's Happened to Customer Service?

Understanding your customers is becoming a complex task for most organisations in the 21st Century; not just because market segments have become a highly complex multi-dimensional matrix of customer types – but because most organisations no longer see customer service as a primary factor in organizational growth – more as a minimalistic requirement in their quest for profit maximization.

 

This approach to customer service has been developing since the 1980’s – when organisations started to take advantage of ‘customer loyalty’ built up since the end of the Second World War. Once an organization has a loyal customer base – it’s easy to see how some high ranking individual with dollar signs in their eyes – could see this group of people as easy prey for making a quick buck – and hence the slide in customer service began.

 

Of course the customers partly encouraged this behavior because, even when they suspected the world might have changed and that they were now being fleeced for their money, they still kept loyal to the brand. Some customers might send letters to the CEO expressing their dissatisfaction – but as long as they received some potentially believable apology, they would quickly forgive and continue their loyalty – because for years prior to this they had received great service and quality, so how could this have changed.

 

Customers just didn’t see the complete change in business and the associated ethics and didn’t realize that the quest for long term sustainable success and growth through dedicated customer care was a business school theory rarely practiced in the ‘new world.’

 

Generationally this had a huge impact on differing customer views to purchasing and the concept of loyalty. The young generation – not used to doing deals on a hand-shake and the concept of customer loyalty – entered the world of consumption like a duck to water, not expecting good customer service and quality products, and just looking for the best deal. They knew how to use ‘new’ technology to find that best deal and simply felt this was how business is done, and how it should be done.

 

The slightly older generations – those now in their 50’s and above – still remember a time when being someone’s customer actually meant something and hence many of these customers still long for those good old days – and in a way, with today’s seemingly constant market volatility – so should today’s organisations.

 

Customers are your business – they define your growth, your profitability and your sustainability – everything else is developed around them. This current short term view to business – brought about in no small measure by greedy shareholders has not helped anybody – and definitely not the average shareholder, looking to make money over the long-term not the short. In fact the only people this new approach to treating customers has helped is the institutional investors who don’t give a damn about anything more than making more money today than they did yesterday – regardless of whose expense that comes at. It’s not that they just don’t care about organisations, they don’t care about their employees or their customers – they just care about making an extra buck – whatever the cost of that buck might be to ‘normal people’ through their long term savings or pension schemes.

 

In this global business environment what today’s organisations need, as well as the countries they service in terms of taxes and employment, is sustainability (it doesn’t even need to be sustainable growth). To have sustainability you do have to have the right product at the right price, and to be innovative in your offerings, in terms of future needs – but what you should also want is a loyal, ‘sustainable’ customer, who will stay with you on your journey and during that journey help attract new customers to your products and brand – offering a win-win for everyone involved in the business process.

 

Michael Porter wrote about competitive advantage in his book of the same name – but few organisations consider competitive advantage any more when it comes to their strategic thinking around customers and customer service. Maybe it’s the fault of their boards or their advisors, but industries with high churn rates, like telecoms, energy and even gym membership – seem to be significantly more focused on short-term profit maximization that long term sustainability – much more than creating that elusive concept loyal customer in the 21st Century.

 

Organisations through their CRM strategies have turned today’s customers into what they are – it’s not the customers fault – they are what business have made them to be.

Do Consumers Allow Themselves to be Ripped-Off?

Through the centuries we’ve had various significant era’s from the industrial age to the tech age; but will history look back on this time and consider it the rip-off age. Has the focus on profits and profit maximisation been the green light to take unfair advantage and rip-off customers?

 

The energy sector has been criticised for many years for not passing on the benefits they gain from drops in global energy prices; especially when as an industry they are so quick to pass on increases in energy prices. Though there has been a lot of talk about this sector taking advantage of their customers by not passing on price decreases – it has never gone beyond talk, and customers haven’t taken up the challenge of taking on these supposedly ‘untouchable’ companies.

 

An article in the Daily Mail on 14^th July highlighted how “Ofgem has announced that the Competition and Marketing Authority in the UK will investigate the energy market to establish if major players are taking advantage of price movements to unfairly boost profits”; and the same article also highlighted how “complaints about energy companies are at a record level in the UK amid growing anger over inaccurate bills.”

 

The insurance sector is guilty of reducing insurance cover, leaving consumers far less covered than a few years ago and worse still paying more for this reduced cover.

 

The banking sector seems to have hit the headlines on a regular basis for breaking some kind of rule to maximise their profitability and now current account customers could be paying over the odds for their overdrafts, a recent in-depth study revealed in July. In the UK the Competition and Marketing Authority recommended a full inquiry amid concerns that consumers are finding it hard to compare costs, thereby stifling competition.

 

It’s not just the leadership of organisations in various industry sectors that are at fault - as consumers have been aware of their treatment for years and have not had the courage of their convictions to stand up and take the fight to companies that rip them off. Possibly strategically these ‘bad’ organisations have worn the ‘fight’ of their consumers down over time, to the extent there is wide spread apathy from consumers who have no energy to take any action – believing there’s nothing they can do – so they just put up with the constant abuse by certain sectors, telling themselves that this is just the way it is.

 

This of course is just a green light for some organisations to continue with their poor business practices – since their customers just keep coming back for more.

 

Governments are also to blame for not taking a much firmer stance on many issues where consumers are clearly being taken advantage of for organisational profit – remembering that many of the executives of these firms participate in share schemes where they make money on top of their bonuses from these ‘shady’ practices.

 

With the consumer base being so apathetic to challenge big corporates, these sectors will continue to operate with impunity; because it’s become part of the business culture of these sectors and is sadly an expectation of shareholders. So it will take more than talk to bring some form of ethical fairness to strategies that focus on ripping off the customer in front of their eyes.

 

What’s unique about these industries is the majority of people believe their behaviour is unfair to downright criminal and yet nothing is done to rectify the situation and protect the consumer. Even those reading this far will be feeling apathetic to the situation and it’s a lot worse for the older generation – where we’re actually asking the elderly to be street smart and business savvy which is just so unreasonable.

 

Nothing is likely to change until consumers start standing up for their rights and using their group consumer power to force ethical change – until this happens, consumers will continue to moan amongst themselves – but nothing will actually change until they make a stand.

 

Is 'Good' Service a Myth or an Opportunity?

The concept of experiencing good customer service seems to have taken a nose dive in the last decade. Where people who have a good customer experience, often seem to respond with ‘surprise’, more than anything else, as good service seems to be something most people simply don’t expect to encounter anymore.

 

When you ask people about customer service these days they normally reply with horrendous stories and cynicism. This is especially true on social media sites where anyone expecting good service these days seems to be labelled naïve and out of touch with reality. 

Speaking to a colleague recently about customer service, he relayed an experience with a company in New York that he phoned for a quote – in fact their advertisement encouraged potential customers to phone for a quote. When he was given the price, he replied that he was looking for something a little cheaper than the price quoted; and the reply from the ‘shop’ was; “then why the f..k are you phoning me then?”

Unsurprisingly they didn’t get his business – and one has to wonder how the company survives. We also don’t know if the person who took the call was the owner or not; but that just opens up more questions and concerns.  If it was the owner then one assumes he makes so much money he doesn’t care who he upsets and how many clients he loses; or how many people hear about his approach to customer service. If it was an employee then the owner isn’t blameless, as they have put them in this front-office role and one wonders if this approach is part of the employees training.

The good news is that for those looking for a unique competitive advantage that will make them stand out from the crowd of competitive offerings – then good customer service is one influencing factor that is just ‘out there’ waiting to be utilized once again. Once you get beyond the rhetoric, everyone responds well to good customer service – whether they are cynical about the concept of service or not. It isn’t just a basic competitive advantage, but it is a key influencing factor that will encourage the customer to repeat purchase and even to become loyal over time, assuming the price and quality also meet their expectations. 

Though we must remember that customer service includes the whole package – it’s not just the ‘buying’ experience, but the ‘functionality’ of the purchase and the fact that it also meets and/or exceeds the customer’s expectations.

In most cases good customer service doesn’t cost an organisation anything -  as it’s mostly about attitude and values, and it’s something the organisation either instills in its work ethic or it doesn’t, ensuring it recruits the right people and then trains and develops them in the right way.

So if it’s so easy, why don’t organisations, from the small family business to the large corporate, spend the time developing a customer centric culture? And the answer seems to be that they simply have a lazy approach to business and a feeling of entitlement around their position or status. It’s a sad reflection on many leaders who represent and instil the culture of their organisations, that they don’t see service as a key function of their business offering. Appearing to consider customers as ‘things’ or ‘throughput’ rather than individuals – where these short-sighted organisations are simply interested in the ‘purchase’ – where they seem to believe that the “are you going to buy, if not don’t waste our time” approach will somehow miraculously lead to sustainable business growth.

In the next few years there will be a definite change in the business environment across all business sectors – where some ‘smart’ organisations, looking to increase their market share and wanting to influence their sustainable growth, will see that customer service is a simple win-win scenario for them to embrace and implement. They will appreciate that if leaders and employees can get over their own feeling of importance and concentrate on giving the customer a ‘great experience’ then the organisation will earn a sustainable benefit and a special place in their market segment.

 

What Drives Customer Service Levels?

It’s often not clear what makes one organisation give better customer service compared to another; or why within the same organisation, one individual will seem to have a natural ‘gift’ to want to look after a customer, whereas other individuals give the impression that they couldn’t really care less.
 

The media is full off articles about poor service, though hardly ever on the front pages anymore – where you’ll have stories about Vodafone still holding people to their mobile phone contracts, even after they’ve died; or banks like Santander losing client’s money and not being in a rush to find it or simply fobbing customers off who ask for a basic service. Stories in the press are mostly about large corporates giving poor levels of service, but this doesn’t mean that it’s only large corporates that give poor service (as we’re probably only to well aware); it seems to happen within all sizes of organisation and across most, if not all, industry sectors.

So what drives some organisations and individuals to genuinely want to offer customer service and to respond when they find that their standards fail; and what drives other organisations and individuals to not really care about the customer and service, and how does this segment actually get away with it?

In some industry sectors, size definitely matters, where organisations are in a quantity rather than quality driven environment. The mobile phone industry, banking, insurance, etc. are all quantity based businesses – where there seems to be a wide spectrum of acceptable levels of ‘customer service’ which not only differs across the different organisations, but can differ significantly across different branches within the same organisation.

In these industries there can be a disconnect between the ‘vision’ that the executive desire, compared to what actually happens on the ground in respect of recruitment, training, day-to-day management, complaints procedures and follow-up. Though if there is a disconnect then it’s the executive who are accountable for making sure that their corporate vision for customer service, is translated through to action on the ground.  

At the other extreme there are small, often one-man organisations, like plumbers; electricians; garden service; home renovations; etc, that also seem to cover the whole spectrum with respect to customer servce to the people focused on giving great service and value for money; to those that seem to get a ‘kick’ out of ripping people off, and even more amazingly not only getting away with it, but being able to continue operating in their chosen profession.

Whether a large corporate or a small one-man firm, most are in business to make money and to make some form of profit so they can at least survive where, and I’m not sure if it’s the exception or the rule, some firms want to maximise their profitability, regardless of the potential loss of long-term customers due to poor service.

The fact is, whether we like to admit it or not, the customer receives the service that they and the organisation are prepared to accept, i.e. you will be treated, how you allow yourself to be treated – meaning that most of the time customers don’t complain enough as, it takes time and effort and there’s often a cost involved, whether it’s phoning the customer complaints line or putting a stamp on a letter.

Admittedly this is a very generic statement as customers in some countries are more prevalent to complaining than others; and the laws for consumers are much tighter in some countries compared to others – so it’s not just about the customer, but the legal and cultural ‘set-up’ in your own country.

Another key issue at this particular point in the global economic cycle is that the majority of people have become much more cost conscious during the economic downturn and hence focus more on price than service – though that doesn’t mean they’ll accept inferior quality products or services; unless in their perception it equates to value for money or they simply cannot afford to complain.

The concept of service and the levels they want to give squarely rests with the organisation – and it’s the leadership’s responsibility to ensure that the standards they require and envisage as part of their strategy and image, are transformed into action on the ground.

But it's customers that allow poor customer service to raise its head and become an acceptable behaviour, whether it's an organisation, a branch or an individual – because not only don’t we complain enough, but ‘we’ also go back and ask for more – simply reinforcing the bad behaviour as acceptable.

 

Are Organisations Looking After Elderly Consumers?

Back in 1984, Charles Schewe mentioned in an  article that “the usefulness of ‘minorities’ as a means of segmenting markets has been a fertile area for market researchers for many years, but that they have largely neglected the elderly, those consumers over the age of 65. Marketers have failed to fully explore or understand the dimensions, character, and potential of this market. Furthermore, marketing activities directed specifically at this ‘older’ market seem to be a missed opportunity of sizeable importance. From a sales and profit potential, the elderly market is well worth the research effort necessary to secure accurate information about how to satisfy them. The elderly constitute a significant and growing market, where women outnumber men 3 to 2 and only 5 per cent of these seniors live inside institutions. Only 10 per cent of them live with children. Household size logically is reduced as is full-time employment. While health is generally poorer, only about 15 per cent require special health or social services. The elderly are not poor. Per capita income in households headed by 65+ persons is but 7 per cent lower than the general population average; and it has been estimated that the elderly need only about 60 to 80 per cent of former income to maintain their standard of living, and are given to ‘dis-save’ rather than to hold on to their assets.”

 

Nearly twenty years later in 2003 research by Yany Gregoire highlights that little has been done to address the ‘elderly consumer’ both from a strategic, service and product focused perspective. In fact if you read academic articles on this subject most still site references going back to the 80’ and early 90’s because so little seems to have been done since then.

 

Part of the problem is that you have to be ‘elderly’ to understand this segments needs and concerns; and if not elderly you have to have been performing the role of a carer to even start to understand all the dynamics that are going on. The problem is that you have young minds trying to imagine their older counterpart and in my experience, as a carer, missing their needs, expectations and hence the opportunities by a mile.

 

It’s worth remembering that the over 65 age group is a significant market size now, and is just going to grow in size in the future becoming a ‘powerful’ market force to those that can learn to understand their needs and communicate with them effectively. The steps behind the theory are no different to any other target-market segment, you must understand their expectations and create the products and/or services meet them.

 

Another part of the problem I’ve noticed is that many ‘front-office’ staff simply don’t have the patience to deal with this ‘target-market’ – so as they show their frustration, their customer either walks away or hangs-up the phone and the potential sale is lost. Worse still this customer segment will not forget and will not engage with that firm again – contrary to what many seem to think, this age group are very ruthless when they receive poor service (whether real or perceived) and yet can be extremely loyal to the company or individual that gives them the service they need.

 

Two key facts are that, firstly this is already a huge lucrative market segment that is only going to get bigger – so it’s worth making some effort to listen to their needs and attract their custom; and the second fact is that, if you’re lucky, you’ll be that age one-day so treating people like you’d like to be treated is an old axiom worth remembering.

 

Organisations are missing out on real opportunities within this ever growing target-market and hence are leaving the door open for sme’s and entrepreneurs with the right vision and patience, to carve out a nice little niche for themselves – which if developed correctly will give them a loyal and growing customer base, and a sustainable business going forward.  

 

References

 

Charles D. Schewe. (1984). Buying and Consuming Behavior of the Elderly. Findings From Behavioral Research. Advances in Consumer Research. Vol. 11, p.558-562.

 

Yany Gregoire (2003). The Impact of Aging on Consumer Responses: What Do We Know? Advances in Consumer Research. Vol. 30, p.19-26.

How Do You Create a Successful Brand in the ‘Service Sector’?

“In an era of rapid growth of service firms, both researchers and practitioners have come to acknowledge that employee performance plays a vital role in the success of a service brand. Unlike with product brands, for which consumers’ perceptions of a brand derive predominantly from a product’s tangible features, customers’ perceptions of a service brand depend highly on the behaviour of frontline staff. Thus, the task of getting employees to build and strengthen an organisation’s brand image -  to act as “brand champions” - is a challenge for service firms in many industries,” (Morhart, Herzog and Tomczak, 2009, p.122). 

The concept of ‘brands’ and ‘brand building’ is mostly associated with products, or is discussed where a ‘service brand’ has already been established. But when it comes to the service sector, actually developing a strategy to develop and create your own ‘service brand’ is often left out of most discussions. For some reason it’s assumed that your ‘brand’ which can be mistakenly assumed to be the same as ‘reputation’ is something that either does or doesn’t develop over time, where you have little influence over the speed of the service brand in the market place. But this is a mistake. 

Building a brand in the service industry is just as important as building one in a product driven industry. This means firstly you have to know what service you’re building your brand around – as often the ‘service’ you describe yourself as and on which you build your brand, can in itself be your competitive advantage in a highly competitive market segment.  

Take ‘dentists’ for example – this service industry has been mostly associated with pain and suffering in the past – so the opportunity to build a ‘brand’ around your firm in this industry may appear impossible to some. Yet some dentists have already been able to differentiate themselves from their competition by refocusing their primary service offering, seeking to ‘promote’ positive aspects of their full range of services that will attract the attention of the consumer – where you’ll find certain dental chains and practices that focus their attention on promoting  services that improves ‘your smile’. A service offering that is attractive to many in today’s image conscience society.

Through differentiating the service they offer – they already start to differentiate themselves and create a more positive expectation in the eyes of their potential customers.  

The next thing service firms must look at, though sometimes I’m not sure if it’s done consciously or not, is creating a ‘brand name’ that is attractive and can be used as the foundation to creating a global service brand. 

One of the obstacles for many service firms when it comes to brand development is that they already have a company name and through pride, ego and stubbornness, don’t want to consider changing it, even to create a ‘new’ service brand. So Joe of Joe Plumbing will often not even consider a name change, even when it’s shown that Joe’s Plumbing is unlikely to become a global brand as it stands…. 

So looking at your ‘operating name’ and creating a unique ‘brand name’ that can be developed in the market place is something every service firm should consider as part of its strategic process. 

Then once you have the basics in place – a potential ‘brand name’ and an exciting ‘service offering’, then the brand will be developed through the service you and your firm offer - where the greatest influence over creating a positive or negative brand image with your customers will be your front line staff.  

What can organisations do to enhance brand-building behaviours among their employees? 

Morhart, Herzog and Tomczak (2009) found that different leadership styles had either a positive and negative impact on employees being brand champions, where “a highly transactional style was counterproductive in terms of followers’ motivational condition. Owners and managers would do much better by opening their minds to a transformational leadership approach, which would entail behaviours such as articulating a unifying brand vision, acting as an appropriate role model by living the brand values, giving followers freedom to individually interpret their roles as brand representatives, and providing individualised support by acting as a coach and mentor. This would allow followers to experience the feelings of relatedness, autonomy, and competence in their roles as brand representatives, which would ultimately spill over into the commitment, authenticity, and proactivity that characterise a real brand champion,” (p.138). 

So if you run an organisation in the service sector, however small you may be – it’s worth spending the time to look at your brand strategy – as you may be pleasantly surprised the impact this has on your growth, when you get your brand and your brand image right. 

References 

Morhart, F.M., Herzog, W., and Tomczak, T. (2009). Brand-Specific Leadership: Turning Employees into Brand Champions. Journal of Marketing, Vol. 73, Issue 5, p.122-142.

How Do You Set Expectations at the Right Level?

We all have different expectations for everything we do – some are very consciously calculated and others more subconscious, but our ‘expectations’ affect our lives on a daily basis. So how we create and respond to our expectations will have an impact on our lives in general. Expectations impact everything, from our personal relationships and our day-to-day interactions with others (in and outside work) to how much we enjoy eating out or enjoy a holiday and yet we rarely seem to review and assess how realistic our expectations are.

We all know how different people have completely different expectations for exactly the same activity – in fact there isn’t one ‘activity’ that everyone has the same expectation for. So how do we deal with this in business and how do we minimise discrepancies in expectations.

Getting expectations ‘right’ has an impact on how we optimise the efficiency of effort and ‘enjoy’ what we are doing. But this doesn’t mean that we can simply lower our expectations on everything, so that we’re always ‘happy’ – because expectations are linked with standards and ethics.

Lower expectations too far and standards start to drop, which can start a total decline in standards and/or values. But, similarly at the opposite end, if your expectations are too high then you’re likely to be constantly disappointed, which from a leaders perspective means that you’ll be constantly unhappy and your staff are likely to be constantly demotivated – which leads to a decline in performance and a loss of respect for the leader.

Expectations are ‘created’ through personal knowledge, experience, as well as feedback from others (that we may or may not trust, i.e. sometimes we can be misled leading to incorrect expectations – like when you watch a movie trailer, which leads you to have high expectations for a movie that you then end up being disappointed with).

So in business the word ‘expectations’ gets mentioned quite a lot; in describing meeting customer expectations, or staff expectations, for example, or how a vision creates an expectation of a future state – but how well to we manage the ‘creation’ of expectations in the first place and are leaders and organisations as a whole doing enough to align ‘expectations’ throughout the organisation – both from an internal and external perspective.

If not, then an organisation mustn’t be surprised when either customers become confused with the level of service they receive or different departments and/or individuals have different perceptions about how well they are meeting the organisations expectations of them, leading to different levels of perceived operational efficiency (which can cause chaos when it comes to appraisal time and an employee thinks they’ve met expectations and their boss has a different perspective).

So executives and managers need to spend more time clearly defining and aligning expectations in their organisations – where expectations are a two way street. This has a significant impact on a multitude of activities and factors within a business; which strangely are rarely discussed, except in the very best organisations – for example, discussing what is expected to be required from an organisation (at the individual level) to reach the ‘vision’ and, just as importantly, what the expectations are once the vision has been reached.

If these simple expectations aren’t discussed organisations mustn’t be surprised when in reaching a specific objective, the leadership is ecstatic, but their staff are demotivated and disappointed; as this will simply be because expectations have not been aligned and discussed. 

The reader will probably think that the points raised are simply common sense – yet in our day to day lives much of our disappointment, demotivation and even conflict is caused by non-alignment of expectations. How many ‘arguments’ do you have in your personal life that can, in the end, be simply put down to a difference in expectations? And how once expectations are discussed and aligned life becomes much smoother; whether it’s agreeing about household chores, to who’s going to get the take away on the way home, to what shade of white the wall is going to be painted.

As individuals we, too often, project our expectations on others, assuming that since these are our expectations, they must align with the other parties – and are often shocked to horrified when these expectations aren’t met and even more shocked when we find the other parties expectations were nowhere close to ours - where this leads to disappointment, mistrust and even anger.

So to make your life easier, whether a leader or a staff member, always take the time upfront to discuss expectations with the other individual or group for any task you are involved with – this will ensure expectations are aligned, (which through the process  may even lead to a restructuring of the task, for the better). And as a leader, when you’re selling your vision of the future, take the time to discuss expectations with everyone involved, to ensure that everyone has the same expectations from the outcome and the process.

How Personal is Your Personal Information?

“Using software to monitor the transmission of data from a Google Android mobile phone onto which a range of basic apps had been downloaded – The Sunday Times (4^th March 2012) discovered that private information – including telephone numbers, email addresses and even the phones location had been sent to companies in China, India, Israel and the United States,” (p.9).

Now I’m not an ‘app’ person, but I’m becoming more and more aware of people trying to access my personal information, which they don’t need to have. It makes me very suspicious of what is going on behind the scenes and where this might lead in the future. There are already too many reports of identity theft, which can destroy the lives of the ‘real people.’

Of course, in some cases we must blame ourselves, as according to a poll by YouGov, 70% of people do not read the terms and conditions before agreeing to them. But then some of these terms and conditions make ‘War and Peace’ look like a short read and where the language they use ranks in the category of ‘bullshit baffles brains.’ So I imagine the majority of these 70%, naively trust the service provider, thinking ‘what’s the worst that could happen’ – which is great, until the worst does happen.   

Another part of the problem is that the people developing apps in many cases are simply focusing on the ‘app’ and the fortune they hope to make from it – rather than the detail behind their service. As one app owner said “since we are still beginners in the app development business, we might have been a bit naïve and didn’t even think about such things. We will contact the company trawling this information from our customers and ask what the reasons are behind getting such information about users through us.” 

Of course, asking and stopping are two different things and I’d feel a little happier if the immediate response to these allegations were to prohibit the ‘theft’ of one’s personal information.

What about Google’s new, all en-compassing privacy policy, where the search engine has now combined all the information it holds on users, gathered from its Gmail and YouTube services.

Google, which receives most of its $38 billion annual revenue from advertising, says this will help to ‘personalise the experience’ of users, allowing search results and accompanying adverts to be tailored to their individual habits. Users cannot opt out, although there are ways to minimise the amount of information Google can access.

Privacy campaigners have however branded the move ‘creepy’ and the European commission has questioned its legality.

And it doesn’t end there – “last month the scope for fraud from the use of personal data was highlighted when US officials revealed how Indian call centre staff had posed as ‘phantom debt’ collectors to swindle millions of dollars out of more than 10,000 Americans,” (Mahmood, M and Ungoed-Thomas, J; 2012; p13). “Officials think more than 20 million calls have been made over the last two years with collectors using aggressive and language to demand payments for debts that did not exist. The total cost of this one fraud has been estimated at £3.2 million.”

As Mazher Mahmood and Jon Ungoed-Thomas mention “the Indian authorities and British firms who take advantage of the low wages paid to call centre staff have sought to play down the threat of security breaches. When details of 1,000 British consumers were sold to newspapers by an IT worker last year, the Indian government – anxious to preserve the reputation of an industry worth an estimated £3.7 billion a year –described it as a freak accident,” (p.13).

Senior officials in India said “as far as we are concerned, officially the position is that there is no problem of people here selling stolen personal information- simply because none of the banks or other large companies pursue complaints against criminals stealing the data.”

Yet for a small sum of money the Sunday Times reporters were able to get hold of 45 different types of data of customers having Mastercards or Visa cards with banks using Indian call centres including; first name, last name, address, account, city, postcode, alternate number – that can be a mobile number, office number, date of birth, bank name, name on card, card type, card number, start date, sort code and CCV (card code verification) number.

So will we ever really know what’s happening with our personal data, if we don’t have the technology to check for ourselves? We are having to put our trust and ‘data’ in the hands of people, who clearly don’t earn or deserve that trust, assuming that nothing bad will happen to us (which, naively, is a bit like a smoker assuming that cancer is just something that happens to someone else).

References

Henry, R. and Newlands, P. (2012). In a flash, your details are on a server in Israel. Sunday Times, 4^th March 2012, p.9.

Mahmood, M and Ungoed-Thomas, J. (2012) Tuppence a fact: the starting price for your stolen life. Sunday Times, 18^th March 2012, p.12-13.

Is ‘Deceiving the Customer’ the new Competitive Advantage?

In a front page article in the Sunday Times (5^th Feb, 2012) they report that “the car giant Toyota secretly requires its dealers to turn a blind eye to an array of faults with brand new cars.”

It’s reported that “former dealers and technicians have spoken of their outrage about the ethics of the policy, which meant that they had to ignore some defects found during routine services and repairs on new cars. The policy does not appear in the warranty manuals given to customers but its existence is set out in internal documents seen by The Sunday Times and in a confidential manual given only to dealers.”

They go on to report that “the secret policy instructs dealers only to fix defects in new cars if they relate to safety and reliability or if they have been flagged up as a problem when the customer brought the vehicle into the garage. According to former dealers and technicians, this means garages could disregard a category of faults during routine service – including clutch problems, clicking steering columns, corroded alloy wheels, rusty brake discs, oil leeks and faulty wing mirrors – if they had not been mentioned by the customer.

What’s even worse (if that’s not bad enough) is that “dealers also felt that the secrecy policy was a rip off because customers could suddenly be told of a list of previously unmentioned faults when the warranties expired. The customer would then have to pay for the work on the car.”

Of course as with many stories in the press we are left to make our own judgement and expect the views on the ‘truth’ of this story will be split both ways. The newspaper reports that “Toyota said last week the minutes (where this issue was formally raised) reflect only the ‘misguided’ concerns of one dealer. It said the issue had been properly addressed at the time and had not been raised since the meeting” – though to be honest, having seen how some big corporates work, that doesn’t surprise me – I can image the poor employee been hauled over the coals and in no uncertain terms told if he/she ever brings the issue up again that they will never work again…. “The national council of Toyota dealers last week wrote to this newspaper saying its members regarded the warranty as among the best in the industry.” Which depending how cynical you are – could bring big smile to your face.

It gets worse because the paper reports that “Toyota’s warranty auditors perform spot checks on dealers an can fine them up to four times the cost of any non-safety related repairs they found to have been carried out without receiving a customer complaint,” and then the bit that got my attention and made me realise that this was probably true – “Toyota said that the maximum fine was very rarely imposed.” – which, for me, confirmed that the policy did exist.

In fact later in the article it’s reported that “Toyota has claimed that its secrecy policy is commonplace in the industry,” – so I guess we all better rush out and by ‘push-bikes’ or some other mode of transport….

Apparently Jon Williams, the managing director of Toyota GB, was on the phone to The Sunday Times within hours of the reporters putting their story to him. He promised to drop everything and travel to London the following day. William and two other executives who accompanied him produced an independent report that said the firms warranty policy had the highest rate of dealer approval in the UK motor industry. The Toyota executives initially denied that Toyota had any policy of refusing to recognise ‘add-on-repairs’ – a term for faults that are not reported by the customer – until the Sunday Times reporters produced the organisations confidential warranty policy manual, which clearly states that this is the case.

The report concludes by stating that “it is unclear why Toyota chooses to burden its customers with extra bureaucracy by insisting that they book their cars in to the workshop all over again when technicians find defects with their cars, rather than repairing them on the spot.” Though can personally think of many reasons why they might have to re-book, where, for example, the ‘extra’ time to fix the ‘new’ fault might simply be too long for the technicians to complete with the work load they already have for that day. Which could lead to delay in fixing other customers cars – who had booked and were expecting to pick up their vehicle on the same day.

They also conclude with the fact that “nor is it obvious why Toyota operates a complex audit system that can penalise dealers for repairing faults under warranty that are unknown to the customer if, as Toyota says, its technicians are free to tell customers of any faults they discover.”

What’s scary about this story, if only partially true, is how the world has changed in 50 years. There was a time – yes there really was – when employees took pride in building and manufacturing products, and not just cars. A time when there was a genuine desire for the customer to ‘be happy’, where the logic was that not only would the customer repeat purchase but would also ‘encourage’ their friends to purchase, by telling them about their customer experience.

So I guess the moral of this story is to complain about everything – just to be safe.

As a post script, in today’s Sunday Times (12^th Feb 2012), they report that “the car giant Toyota faces investigation by the motor industry regulator over its secrecy policy of ignoring some faults in new cars,” – so maybe the truth will be heard.

However many questions will remain unanswered for now, including, what this will do to customer confidence in the automotive sector and maybe more importantly what kind of people work for organisations that allegedly deceive the customer – but this is another story for another day.

References

The Sunday Times. Toyota accused of deceiving customers. 05.02.2012. p.1-2.

The Sunday Times. If the customer doesn’t make a complaint, don’t fix the car. 05.02.2012. p.12-13.

The Sunday Times. Toyota faces inquiry over ignoring faults. 12.02.2012. p.16.

Do All Organisations Recognise the Importance of Customer Equity?

Customer equity places customers at the centre of a firm’s activities, recognises customers as strategic assets and seek to measure the value of a customer (across the many relationships that the consumer has with the company) in order to measure marketing productivity. Thus, understanding how people make the consumption decisions and using that information to better serve the consumer is a central goal of marketing, (Holehonnur, A., Raymond, M.A, Hopkins, C.D and Fine, A.C., 2009, p.166)

In their search to understand their customer’s organisations use various techniques which can include customer surveys, focus groups, customer relationship marketing (CRM) systems, customer platforms for generating feedback and even the relatively recent customer-generated content and social-media networking sites. These techniques and methodologies can be used at the macro level, product level, regional level and/or various forms of demographic levels (age, gender by product by region, etc).

The theory is quite sound and well tested, yet there seems to be a highly-significant correlation between the most recent customer experience and their ‘response’, where a singular bad experience can negate a life-time of good service, in respect of the response, but even then may not necessarily change the customers buying pattern.

This highlights that what customers say at a point in time and what customers actually do, when it’s time to make their next purchase can be significantly different.

Holehonnur et al, highlight how the customer equity framework is composed of value equity (which is driven by quality, price and convenience), brand equity (which is driven by brand awareness, attitude toward the brand and consumers’ perceptions of brand ethics) and retention equity (which is driven by loyalty programmes, affinity programmes, community programmes and knowledge-building programmes). And where Holehonnur et al (along with many others) mention that value equity, brand equity and retention equity have been suggested as drivers of customer equity, (p.168).

But some organisations in the 21^st century seem to take a different approach; looking to marginalise the customer, seeing them as a ‘problem’ to their success, rather than a ‘solution.’ These organisations are usually large and have significant market share and seem to adopt  a ‘couldn’t care less’ approach to value, brand and retention and use a less than ‘transparent’ approach to attract the ‘customer’ in the first place. But once ‘hooked’ and signed up, these organisations take little to no interest in providing a service – being big enough to ignore the ‘bleats’ of dissatisfied customers.

Also, cleverly, they ‘hive’ off the customer satisfaction responsibilities to ‘call centres’, where minimum waged staff have to endure the anger and frustrations of dissatisfied customers, on an hourly basis - while those responsible within the organisation enjoy their business lunches and golf days, with business tycoons and celebrities.  Organisations that fit this mould include firms like Vodafone and Orange, who have a clever strategy of wearing the disgruntled customer down through attrition, to the point that the majority of customers just throw in the towel and give up their complaining – towing the company line as planned, like good little sheep.

This seems to be especially true in the more ‘developed’ nations like the US, UK and other European countries (and where I use the word developed loosely). Where these customers feel so much more disenfranchised that they no longer expect ‘good’ service and approach their purchasing decisions with that in mind – it’s just a ‘cold’ purchase, based on price and convenience – with no promise of a repurchase.

It’s worth remembering that in the business theory, value equity is defined as the consumer’s objective assessment of the utility of a brand, which is formed by perceptions of what is given up for what is received. There are three main drivers of value equity, namely, quality, price and convenience. It’s interesting that they mention an objective assessment of a perception which I would have thought didn’t make sense – how can you be objective about a perception? Or at least how you can be truly objective about a perception – if you don’t know how accurate your perception is? But maybe that’s just me. 

At least brand equity is defined as the customer’s subjective and intangible evaluation of the brand (the product or service offered by the firm) and the firm, above and beyond its objectively perceived value. The three key drivers of brand equity are defined as brand awareness, attitude toward the brand, and corporate citizenship and duties, yet I wonder in the real world how much weighting each of these have on the customers ‘real’ brand awareness – and whether the 21^st century customer is currently ‘calculating’ the brands corporate citizenship; and especially whether these ‘corporate citizenship’ assessments are based on fact or corporate hype.

In my experience too many large organisations are taking less and less interest in the theory of customer equity and are re-writing the business rules, especially where ‘customer contracts’ are involved in industries like, mobile, Internet etc – where these organisations have two sets of customer rules. First the ‘trap’ where they give all the hype to attract the customer to sign the contract (a bit like the approach to selling time-share or selling second-hand cars); and then once you’ve signed the real reality sets in and you realise that you are nothing more than just a number in their system, rather than an individual human customer – and if you want to leave – leave – but it will cost you.

References

Holehonnur, A., Raymond, M. A., Hopkins, C. D. and Fine, A. C. (2009). Examining the customer equity framework from a consumer perspective. Journal of Brand Management. Vol. 17, Issue 3, p. 165-180.