6 surefire ways to build a customer-centric business (Rockefeller Habit #6)
Criticism. Sometimes it can be hard to take. It’s so easy to get defensive and try to blame everyone else. And yet, to be successful in business, you need to build a culture that actively seeks criticism and insight from customers. If you go looking for praise, you’ll find it. But it won’t take you anywhere. You won’t improve as a result of it.
The sixth Rockefeller habit is all about pulling this thread together to make progress. If you take a systematic approach, week in, week out, you’ll soon locate the pulse of your company, keeping your finger well and truly glued to it as time passes.
In my experience as a Scale-up Coach, I find clients are often insular and inward-focused. Their knowledge of their customers, competitors and operating environment is limited. As we kick-start our strategy sessions, they tell me ‘We’re amazing at X’ but when we get down to the nuts and bolts of attribution mapping, they stumble over comparisons with competitors and their knowledge of core customer.
So how do you start to fill in these gaps? By putting your customers centre-stage. Here are some surefire ways to make this happen.
1. Introduce Net Promoter System
Since the Rockefeller Habits were written, a huge number of metrics and systems for tracking customer satisfaction have been designed. In my opinion, NPS is the best by far. The brain-child of Fred Reichheld, it’s a direct response to more traditional customer satisfaction surveys that always seemed to focus on patting yourself on the back and saying, ‘We’re not shit’! You know the ones. 32 questions long, delivered annually to your long-suffering customers. They’d take three months to administer, another three months to analyse and there’d be no resulting plan. Ultimately, you’d come out with a random customer satisfaction score of 3.42 or something equally meaningless. What a total waste of time.
Fred built on the work of Xerox and HP, looking at correlating the satisfaction score with future customer behaviour. He spent two years refining a single, all-important question. It needed to link the survey responses with actual customer behaviour (purchasing patterns and referrals) and ultimately with company growth. He tested a number of forms of words and eventually landed on, ‘Would you recommend (name of company) to a friend or colleague?’ The answer to this question is given on a scale of 0-10. If customers give you a 9 or 10, they are a ‘promoter’, a 7 or 8 they are ‘passive’ and 0 – 6 a ‘detractor’. Subtracting the total number of detractors from the promoters gives a Net Promoter Score of anything between -100 to +100.
By taking this approach, Fred revealed that only a small sliver of customers that really, really liked a company would refer it and spend more money. He’d built a simple-to-administer system for collecting, analysing and working on data. I’ve written in more depth about NPS in previous blogs. When we introduced it at Rackspace, we used Clicktools to gather all the feedback. This told us which customers needed to be called based on what they’d said in their ‘free text’ feedback. As we were doing these surveys every week, we used NPS as a reason to ring them up and ask, ‘Can you tell us more about the incident that meant you gave us a detractor score?’ This leads me on nicely to my next point.
2. Get all managers to speak to one customer every week
Make this non-negotiable. From now on, every one of your managers and executive team should talk to one customer every week. This simple step has the power to transform your business. The conversations should be looking for answers to four questions: How is the client doing? What’s going on in their industry? What do they hear about your competitors? And how are things going with your company’s service? When I’ve tackled this in the past, it seemed to work better if I began by talking about the wider industry before focusing in on the client. People are more likely to open up if you keep it general at first.
This is by far the best way to find out what’s going on in your environment. Unless you’re regularly mystery shopping your competitors, you’re unlikely to gain this wider intelligence. You’re also looking for actionable insights into ways to improve your service. And it’s so important that this is properly recorded. In the past, I’ve used a CRM system to track these conversations and check that all managers were having them.
You’re likely to face resistance at first. People think you’re asking them to cold-call. You’re not. You want them to ring an existing customer who already has a relationship with your company. They’ll say they’re too busy. Doing what? Wasting their time in pointless meetings maybe? Tell them it gets easier over time. It’s like brushing your teeth every morning and evening. Once you’re in a regular rhythm, it becomes second nature. No need to overcomplicate it. You’re only asking them to speak to one client per week. Persuade them to put that time in their diary now and every week until eternity. Or use an administrator to do this for them.
Executive-level staff need to be allocated the more strategic accounts. Any resulting actions should then be given to the relevant Account Manager who’s responsible for following through. And you need someone to be policing this whole approach to make sure these conversations are happening every week, without fail.
3. Segment your customer base
It’s fascinating to me. I’ve lost count of the number of times regular conversations with customers resulted in new business. I guess it’s not surprising when you think about it. If you’ve got someone at a senior level taking time to talk to a customer, it’s likely they might spot an opportunity during that conversation.
You can use NPS to trigger who your managers should be talking to. Even if you don’t use NPS, you should spend time segmenting your customers. When I was MD at Peer 1 in Southampton, we had 13,400 customers globally. After analysis, we realised that 60% of our revenue came from the top 5%, or about 500 customers. We knew we needed to double that small group of customers, as this would double our business in only 3 years. Therefore, we were laser-focused on ensuring they had the highest level of care and attention. The pulse we were taking was the right one. Be careful of this. Businesses have a habit of treating all customers the same. You need to be strategic.
Similarly, look at how you allocate resources to revenue. Typically, as businesses scale, resources tend to get fixed. At Peer 1, 5% of our customers represented 60% of our revenue. But when we looked at the resources allocated to them, we discovered they only had 6% of our staff looking after them. We were over-serving smaller customers and massively under-serving the larger ones. That top 5% of customers were growing 4% month on month gross. Meanwhile, the bottom segment of customers was shrinking 1% over the same period. If we switched the lion’s share of resources to the top tier and the low-value customers had all churned in one day, it wouldn’t have made any difference. It’s not hard to guess what action we took once we’d realised this!
4. Share customer feedback at executive and management meetings
It’s time for your Executive Team to leave their ivory tower. They need to get their heads up from the busy work of the office and go talk to some customers. How else do you make sure your strategy is validated, week in, week out? They need to understand what’s important to customers so that when they have strategic discussions, they can solve issues better, and more profitably, than anyone else in the world. They need to be a step ahead.
Customer insights should be discussed at weekly executive team meetings, guiding every decision. Similarly, when your executive team meet with managers to share the DNA of your business, get them into the habit of discussing the things that customers have said about you, your competitors and the wider industry. This isn’t about how you fixed a problem. This is about the soft data of everyday niggles that annoy customers. Knowledge is power.
Evidence shows that this will give your business the edge it needs. In 2016, The Harvard Business Review published the results of a survey which showed that salespeople who really understood their niche and industry were consistently 170% above target. Whereas other salespeople with the same, A Player credentials but more limited industry knowledge plateaued at 125%.
5. Record all customer feedback
At the very least, you need some kind of polling system where your staff can record conversations with customers. Having gained feedback, they need to go into a system to see if anyone else has had the same issue. They can then add their vote to it or, if not, create a ticket or observation. The best systems have a piece of software off the back which allow you to create a knowledge base. Say the customer’s observation was about a new product they were finding difficult. Your member of staff could look in the knowledge base to see whether it was a new issue and kick-start the process.
With this in place, you can run a report on the top things that staff are noticing. Brilliant! Having tagged the customers affected, look at whether they’re low or high value. Then you can prioritise fixing them. Go back to the people who submitted the issue and tell them it’s time for another phone call – the best kind – to let their customer know that the issue’s sorted. Jira is a great platform for bug-tracking but there are loads of others. This approach was so useful at Peer 1 when we launched a new, cloud-based tool.
6. Second guess customer issues and stay one step ahead
In the context of seeking criticism, you can start to be quite aggressive. A great example would be customer abandonment. Every time a customer abandons whilst on the phone to your company, treat it as an incident. Someone needs to go back to that customer and say, ‘We’re really sorry you gave up when you were in the queue. Do you still have an issue? Can I help?’ Every time a customer gives you any type of query, treat it as a complaint and track the volume.
Take a leaf out of Amazon’s book. ‘The Best Service is No Service’ to be specific. This brilliant book was written by the first Global VP of Customer Experience at Amazon, Bill Price. He describes how every company should aim to work harder to reduce the demand for customer contact rather than spend time and effort dealing with those contacts. This changed the customer service paradigm by removing any reason for Amazon’s customers to contact them in the first place. They looked at every one of their inbound enquiries, working out what they could have done to ensure the customer didn’t need to call. Maybe they needed to fine-tune their FAQs or perhaps tweak their system to make it easier to work with.
After four years taking this approach, Amazon’s revenue had quadrupled but their customer care resources had stayed the same. This had a massive impact on their ability to drive profitability into their organisation. It also saw them with world-class NPS in the 80s. They’d got obsessive about removing any friction with dramatic results. It drove free delivery, free returns, better packaging and a zero-hassle response to replacing products. If something doesn’t turn up, Amazon will immediately send a replacement – no quibble. The scale of their business is such that they can afford to take the hit on a few customers taking the piss. It’s cheaper to trust people.
Ultimately, all of this comes from a proper, rock-solid analysis of core customer. It’s vital to work out which customers you want to serve, what their problem is and how you can help. The sixth Rockefeller Habit is saying that, once you’ve nailed this, there’s a solid framework for putting your customers at the centre of your business. There’s really no better way of ensuring your finger stays on the pulse.
Written by business growth coach Dom Monkhouse. Find out more about his work here.