Business Intelligence

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The Demand-driven Innovation and Growth (DIG) model is a systematic and repeatable process for identifying and then exploiting profitable growth opportunities. DIG focuses not on better products but on creating a change in the everyday lives of consumers.

Demand-driven Innovation and Growth (DIG)
1. Focus closely on what people do, not what they say
2. Make your offerings highly relevant
3. Develop a plan and a strong bias for action

DUG 1 Focus closely on what people do, not what they say

The traditional starting point for a business is typically summed up as: ”Find a need and then develop products or services that meet that need.” That sounds good until you consider what to do when people aren’t even aware of their needs and don’t know how to express them? In other words, how do you measure demand demand for an entire product category that does not exist yet?

With that in mind, a better approach to coming up with innovative products that would otherwise remain hidden opportunities is to ask these kinds of questions:

What are people actually trying to accomplish in their business or personal lives each day?

What kinds of items typically find their way no to their daily ”To Do” lists?

What are their main priorities each day?

What is the context within which all of these things need to get done–physical, social and cultural?

The idea here is to immerse yourself in the daily life experiences of your customers. By doing that, you come up with the three main building blocks–their goals or aspirations, the activities they engage in and their respective priorities. Once you understand the customer’s goals, activities and priorities, you can then get a clearer picture of their actual needs and frustrations.

So how does all this happen in practice? There are usually five steps involved:

1. Start by building your customer knowledge database: identify all the customer’s activities, goals, priorities, needs and frustrations. You may do this by getting them to keep a diary, by interviewing them or simply by observing them.

2. Next group these activitits into meaningful clusters: assemble clusters of similar tasks or those thet have common themes and priorities. In practical terms, if you can come up with around ten or so key goals that describe how your product fits into the lives of your customers, you’ll be doing well.

3. Now layer in your prior customer research to this common framework: all the information you have about customers that has been buried in market research reports nobody ever has time to read. By cross refencing all of your research with what you have found out about the overall demand landscape, you can make an estimate of the size of demand in each cluster.

4. Evaluate each demand cluster with respect to its strategic value: perhaps in terms of the relative priority customers assign to each cluster, the fit with existing distribution channels and possibly market attractiveness. Determine how much competition there will be from alternative product offerings in this step.

5. Analyze how your current brand fits into the big picture perspective: whether there are differences between how people actually use your product and how it has been positioned. If there are differences between planned use and actual consumption, then you can decide whether that unplanned use is an indicator of an even better way to sell your product or service in the future.

People as a rule do not seek products or services. Products or services are merely means to get things done or to spend time their way, to enjoy and experience life. The moments and episodes of experiences are where we find pleasure. Hence it is extremely important to explore people’s quests beyond needs and wants.

–Erich Joachimsthaler

Beyond basic needs and wants lie more passionate quests to fulfill desires, pleasures, and cravings. Attaining a deep understanding of the behaviors of customers in context helps explore these powerful forces in our lives. Ultimately, we cannot appeal to customers effectively unless we tap into their dreams, urges and fantasies.

–Erich Joachimsthaler

The demand landscape maps the inersection of behavior (activities, projects, tasks and to-dos driven by goals, needs,urges, sensations, hopes and desires in the social-cultural context) with the capacity of an innovation to fit in and embed itself in the way in which people operate every day. The main insight governing the construction or mapping of the demand landscape is that people cannot tell us what they do not know and have not experienced. It is far more important to experience and watch what they do. Each activity in which a customer engages has associated with it a whole host of needs. In order to see further, you have to dig deeper.

–Erich Joachimsthaler

DIG 2 Make your offerings highly relevant

Once you understand what potential customers are genuinely interested in doing, you’re then ready to start thinking in more detail about what growth opportunities are available to you.

Bear in mind that you’re trying to uncover hidden opportunities that customers themselves cannot see and that conventional market research does not uncover. To achieve that, you need to step back a little and look at things through the lenses of three entirely different perspectives:

1. The customer perspective: from the context within which the customer lives, what are their everyday concerns? Customers generally have limited resources, so if you look at the trade-offs they are willing to make, this can be helpful. You should also look at adjacencies for hints. For example, a Japanese company developed an odd-tasting liquid with medicinal properties that sold well in Japan but not in Europe until it was positioned as a breakfast alternative for people on the go. By taking full advantage of this adjacency, sales took off.

2. The market perspective: what groups of customers are doing to increase their overall product satisfaction. Here, you’re trying to look at potential products from unexpected andles, so you need to think about substitutes (What would they use if your product was not available?), enhancers (What do they also buy at the same time to improve their overall experience?) and naysayers (What do those who do not buy your product use in order to achieve roughly comparable things?)

By looking for opportunities from the perspective of the broader marketplace in this way, you might be able to turn the market figuratively on its head and come up with some original ideas and concepts. Keep in mind though that you’re trying to do here is probe the potential opportunities available by coming from unexpected directions rather than attempting to develop me-too products. This is an entirely different specialty than attempting to reverse engineer what has succeeded for others.

3. The industry perspective: which in essence requires that you do three things:

Challenge the existing industry assumptions.

Examine any changes in the environment.

Explore alternative business models.

What you’re looking for here is changes in the underlying dynamics of the industry that open up new commercial opportunities that have never before been feasible or practical. The fundamental challenge is to find ways to change the industry’s prevailing business model to something that is much more relevant and applicable to the everyday lives of customers. Sometimes the marketplace itself will throw up obvious discontinuities, while at other times the availability of alternative business models that were never before possible may be the catalyst for change.

Opportunity Space Sweet Spot
1. Customer Perspective
2. Market Perspective
3. Industry Perspective

Overall, what you’re trying to engage in is some structured thinking about potential new opportunities. This is not brainstorming in the conventional sense where you generate lots of ideas in the hope of having a few gems worth keeping. Rather, it is a systematic approach to generating innovative yet practical ideas.

In and of themselves, opportunities do not create value. For that to happen, the right opportunities have to be executed. This is why it’s vital that you not only identify potential opportunities or innovations but also that you then go on and structure and calibrate this opportunity space in a rational way. You have to formulate a strategic blueprint for action if these opportunities are to bear fruit.

What you’re really trying to do is to develop the most viable ”growth platforms” of the future. A growth platform is a collection of innovative products, services, capabilities, tools and methodologies that combine to create customer advantage for your firm. Growth platforms typically arise:

When new products are used by customers in entirely unanticipated ways.

When people start structuring their daily lives around using your existing products in new and different ways from those first envisaged.

When you start delivering on your customer’s new or unarticulated needs.

One important element of introducing structure into the opportunity space is to identify the ‘’sweet spot” for your firm. The sweet spot is where you should compete. It’s where you have the customer’s permission to be. Or another way to look at it is that it is where the opportunity is optimized for your firm. A great example of hitting the sweet spot is Steve Jobs and the introduction of the iPod. The iPod could easily have been positioned as an accessory to an Apple Computer, but instead Steve Jobs adroitly positioned the iPod as a separate growth platform altogether. He then struck deals with other companies to license their material and design products around the iPod. The end result was that the iPod has become a highly successful consumer product in its own right rather than something buried in the accessory section of a computer manufacturer with a 5- or 6-percent share of the market.

So how, exactly, do you go about structuring an opportunity space and trying to identify the market sweet spot? There are usually four steps involved:

1. Determine the logic used by the marketplace: or in other words analyze the marketplace and see what patterns are emerging. Explore everything from the perspective of understanding customer behavior. Use the consumer perspective to evaluate their needs, wants and patterns of behavior. See if you have a growth platform warming up in the wings that has the potential to transform the very behavior that is currently driving the consumer’s problems or consumption. Observe and immerse yourself in the customer’s point of view so you can decipher what signals the marketplace is sending.

2. Explore all the alternatives: which may require some trial and error tests to be made. Cross the traditional boundaries and try some different things and some novel ways to structure the demand landscape. Think about any unexploited opportunities in depth. If you’re very fortunate, one or more potential new growth platforms will come into focus as you do this.

3. Define your demand-first growth platforms: something that leverages what you do well to deepen the relevance of your product or service, your brand or your capabilities. A viable growth platform will increase the chances that customers will assimilate what you offer into their everday lives. Growth platforms create customer experiences that are transformational rather than incremental. It may be helpful to think of your growth platforms as laser beams that focus what you offer (your capabilities, products and services) on specific clusters of customer demand.

4. Evaluate your opportunity space: so you can build a solid business case for moving forward. Quantify the level of demand so you can say what the size of the opportunity is. Link the growth platform to people and segments of the market so you get a feel for what will be involved. Link everything you know in a structured way so the overall size of the commercial opportunity can be made apparent.

In God we trust. Everyone else bring data.

–W.Edwards Deming, quality guru

Essentally, this stage of the DIG model provides the discipline that tenders the opportunity space useful. From an innovation perspective, the lesson is this: rather than innovating in product, technology, or service, or new marketing tactic, the structuring of the opportunity space calls for innovating around a demand-first frowth platform–a focus on how it transforms people’s everyday lives or work. This starting point for strategy, innovation and marketing is far more meaningful and valuable for the firm than existing practices that call for innovation out of context and projecting a new design, product, or technology into consumers’ everyday lives from the inside of the company out.

–Erich Joachimsthaler

DIG 3 Develop a plan and a strong bias for action

Companies that do not explicitly define, structure, analyze, and prioritize their opportunity spaces often chase romantic dreams about big ideas and breakthrough new products or services but fail to realize those dreams. They try to fast-track innovation; they focus on mere improvements of individual products and waste precious energy and resources because their offerings don’t truly hit the mark. And worse, they miss the biggest opportunities for growth that an unbiased demand-first, outside-in perspective provides.

–Erich Joachimsthaler

The key strategic questions that arise at this stage are:

Which growth platform should we focus on initially?

Why?

What should our sequence of action be moving forward from here?

How can we best achieve and sustain customer advantage?

What product innovations will be necessary?

How should we allocate our resources so as to genuinely achieve customer advantage?

There is a danger that having got thus far with the DIG methodology you then regress to considering your array of possibilities from a onedimensional point of view. You have to be aware that your natural tendency now will be to slip back into the mode of driving change from inside your organization–changing this or that because customers will be sure to like that and so on. You’re far better off if you stick to the model and start asking the tough questions. This step is centered on activating and then harnessing new growth platforms. You now need to go from thought to action. Thus, in this third stage, you need to be thinking about corporate strategic issues at the same time that you’re considering what is happening in the everyday life of each customer. This balancing act is difficult, but once you get over any starting gate glitches, you can then develop a definitive strategy that will guide your way forward.

What’s required is a strategic blueprint for action. To come up with a robust strategic framework, there will be three key considerations:

1. Objectives–What exactly are we trying to achieve?
Your objectives are obviously your organization’s primary goals. These need to be simple and measurable. They also need to be realistic, but at the same time make you stretch. Strategic objectives can take any of a wide range of forms, and may include targets of profitability, head count, market share, shareholder return, etc. The more details you embed in your objectives the better, so include relevant detail about time horizons, impact on the customer experience and so forth.

2. Advantage–With what resources and capabilities do we achieve this objective?
Most firms equate this with the concept of competitive advantage. This for them becomes a matter of looking at leveraging core competencies better than others. The DIG model, by contrast, requires firms to think solely in terms of customer advantage. Look at what you can do to become more absorbed and assimilated into your customers’ lives. Look at which daily customer activities you will enrich and what resources you will be using to provide that enrichment.

3. Scope–In what domain will we compete?
Traditional thinking about a firm’s scope concentrated on deciding in which product categories or industries the company would compete. From the perspective of the DIG model, scope is defined in the context of the customer experience. Scope therefore becomes a question of deciding which specific customer needs your firm intends to serve. You products and services are the tools you will use to meet those needs. They have to be carefully considered. Providing customer advantage is of paramount importance. Scope is all about embedding links between what you offer and the everyday lives of your customers.

Note that your strategic blueprint has to be specific and well-formulated. Not only does it need to be lived by your firm, but it also needs to be well received by customers. The only way this will happen is if it connects with every relevant touch point in their everyday lives.

It’s not enough just to come up with a strategic blueprint. You also need to create a corresponding experience and activation plan to go with it. To generate these kinds of detailed plans, two different perspectives will be required:

Experience and Activation Plan
Map the desired customer purchase experience
Analyze the point of purchase transaction

Perspective #1
Map the desired customer purchase experience

To define this in dethail, you have to:

Understand how customers become aware of you.

Know where and how customer choices are made.

Understand how people purchase your products.

Have a good feel for how your products are used.

Overall, you need to analyze and research the entire customer experience from beginning to end.

perspective #2
Analyze the actual point of purchase transaction.

Doing this will generate a touch map that incorporates all of the various ways customers ineract with your organization. Such an assessment helps define the relative importance of each touch point and how each contributes towards the desired ideal. Analyzing the point of purchase transaction itself itself can also be worthwhile. Having considered this, you may look at ways to simplify the purchase process, to reduch the steps to purchase, to integrate digital technologies into the transaction, and more. This analysis might also highlight one or two levers or marketing activities that could be worth deploying more fully because of their effectiveness. This perspective is well worth integrating into your plans moving forward because it allows the all important issue of customer perceptions to be brought to center stage. These perceptions strongly influence customer choices and preferences, so they are important to bring into your future plans.

Once you’ve armed yourself with refreshed and accurate information on these perspectives, you can then draw up your detailed blueprint for how to get into action. Your blueprint should now have some kind of definitive logic that will guide the way forward.

As a case study of how this happens in practice, consider the example of State Street Boston Corporation. State Street (established in 1792) was a financial institution focused primarily on asset custody–keeping accounts and tracking securities held by institutionsl investors. When Marshall Carter was appointed as State Street’s CEO in late 1991, he arrived just at a time when the focal point of the industry was changing from transaction processing to information services. Carter was smart enough to note that the balance of power was rapidly shifting from the institution to the customer, and he wanted State Street to become positioned so that it could take advantage of these new opportunities that were arising.

Carter started by exploring the everyday world of customers. He noted that there were three distinct phases where these people needed detailed financial information:

1. Pretrade: where they were analyzing the market.

2. Trade: actually making a purchase.

3. Postrade: where investments are tracked.

Historically, trading had generated 60 percent of State Street’s revenues, pretade services 24 percent and postrade 16 percent. Carter realized that as information became more valuable, State Street’s traditional revenue streams would obviously slow down. Carter therefore decided to refashion the firm from an outside-in perspective. More specificall, Carter decided to place a balanced emphasis on the entire investment process from pretrade, to trade and then postrade.

Carter and his management team came up with a three point strategic blueprint for State Street:

1. State Street reorganized its sales and service teams so customers could build strong personal relationships with one person who could access all of State Street’s capabilities. There was no need for customers to get familiar with different people in the organization if they wanted to access other services provided by the firm.

2. State Street developed and projected a strong brand strategy. This was not based on the concept of being a one-stop shop for investment advice, because that’s what other firme were already trying to do. Instead, State Street foused more intensively on serving institutional investors worldwide. State Street also developed a communication strategy that emphasized this area of expertise and focus.

3. State Street launched a new suite of products, capabilities, tools,technologies and services that expanded the company’s lines of business quite significantly. These value-added offerings were in the pretrade, trade and postrade sectors. They were all designed to help institutional investors gather information and then manage their portfolios more efficiently.

Defining opportunities in terms of needs and wants–even unmet, latent or unarticulated needs–is too narrow and simplistic a perspective. It misses the point, failt, fails to anticipate the future, and tends to short-change the innovation and growth process. Managers become fixated on attributes and improvements of the feature set, and fail to generate a comprehensive understanding of the complicated, multidimensional daily experiences that people are living or working around. Whether it is a high-level and complex industrial purchase transaction or a simple emotional consumer purchase, managers never fully understand the real motivational forces of consumption and purchase. The company obsesses ove serving customers, or winning the product innovation game, but misses what matters to people altogether.

Within nine months of this demand-first-based strategic repositioning, the newly refocused State Street Corporation realized not noly analysts’ revised expectations but Carter’s higher aspirations for total return for shareholders. It broke dramatically out of its sluggish bank-PE ratio of 14 to 16 times earnings into the 22 to 30 times earnings ratio more commonly associated with high-performance, high-growth information technology companies like Bloomberg and data processing companies like ADT. Today, State Street is the number one servicer of U.S. mutual funds, the number one investment manager of U.S. mutual funds, the number one investment manager of U.S. pension assets, and the number one provider of foreign exchange services worldwide.

The strategic blueprint is the unique set of instructions that a company creates for itself to ensure discipline and to activate its growth platforms and guide the processes that follow.

A well formulated strategy expressed in terms of objectives, advantage, and scope ideally captures the way forward for a firm–how it should grow, where it will grow, through which growth platforms. It defines what job needs to get done by every member or unit of the firm. The activation plan brings a company full circle in terms of perspective from the outside in to the inside out.

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Most companies try and innovate from the ”inside out”–improve products, talk to customers and generally do more of the same. A better idea is to innovate from the ”outside in.” This means trying to look through the eyes of the customer and change how they live, work and play for the better.

Products and Customers
1. Develop better products
2. Understand
3. Find more

Traditionally, companies have approached innovation from an ”inside out” perspective–develop better products and you’ll automatically attract more customers and your business will thrive. Therefore, companies:

Try and differentiate their product offerings: which is fine, except everyone gets so busy making marginal improvements that nobody looks beyond current offerings for new growth opportunities.

Organize the marketplace into tidy segments: which is helpful, except when new segments arise that nobody has even dreamt of.

Attempt to grow by merger and acquisition: which is all right, except everyone focuses on making the marriage work rather than accessing new markets.

Extand their brands into adjacent markets: which is okay for incremental growth but no good for accessing dynamic and emerging new markets.

Listen to their customers: which again is fine, except customers only evaluate the future by what are already familiar with. They won’t demand what they don’t know is technically feasible.

All of these practices are valuable to a point, but they share a fundamental weakness: they are all using the organization’s point of view and perspective. They never go beneath the surface and examine what it is customers want. Lacking this big-picture perspective, it’s easy for companies to miss growth opportunities that are literally right before their eyes.

A much better way to innovate is to work from the ”outside in”: understand what it is customers are trying to achieve and then deliver on the custoner’s unexperssed desires, dreams, fantasies and so forth.

Products and Customers
1. What do people want?
2. What can’t they buy yet?
3. Why do they buy?

Put another way, to look from the outside in will require that you look at the marketplace from a broader vantage point altogether. This means going:

Beyond understanding your existing customers and looking instead at the underlying behavior of people.

Beyond existing brands and portfolios.

Beyond arbitrary classifications like categories or industries. These are blurring anyway.

Beyond organizing your company around functions and instead giving all you people a challenge to improve your value proposition.

Beyond the arbitrary boundaries and silos created by strategic business units.

Beyond the habitual domains most of your people are already familiar with so fresh ideas can be cross-pollinated and grafted in.

The logical end result of an inside out perspective is to achieve a competitive advantage in the marketplace. By contrast, the logical end result of the outside in perspective is to achieve a customer advantage that hopefully is unique.

When a company replaces the pursuit of competitive advantage with the pursuit of customer advantage as a guiding principle for the enterprise, the now focus does not mean that it must necessarily undergo a complete reorganization, either in its structure or in its practices. In fact, the new focus may not even require a company to scrap the strategies it has already been successfully using to promote and expand existing product lines. Instead, those activities are temporarily de-emphasized permit the elasticity required to see the opportunities in plain sight, to identify new opportunity spaces and to find and execute strategies and actions that create new growth and help to reinvent the core business model.

If I had asked customers what they wanted, they would have told me they wanted a faster horse.

How to Find and Execute Your Company’s Next Big Growth Strategy

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If you genuinely want to bring successful and innovative products to market again and, focus on doing three things:

Understand the people you’re trying to serve as the individuals they are and learn what they are truly trying to accomplish in their daily routines. Know the context within which they live.

Forget all the golden rules about how to succeed in business today. Instead, innovate across people’s behaviors. This is the only way you’ll be able to define the spaces of greatest commercial opportunity because they will be things nobody has yet imagined.

See yourself from the ”outside in.” Formulate your strategies around the way people behave. Go beyond satisfying the needs and wants of your customers and instead engage customers by coming up with innovations that fit their behaviors like a glove. Have a goal of creating genuine transformational experiences and not just communicating the features and benefits of what you have to offer.

For the last twenty-five years, I have investigated why some innovations, business models, business strategies, and marketing and branding tactics hit the mark, and why others do not. Throughout my research and experience, one idea has surfaced consistently: the biggest, best, brightest, and most successful opportunities for innovation and growth are right here, in front of us, and we often don’t see them or act on them. These opportunities are yours for the spotting and taking. But to see them and profit from them, you first must abandon some of the tried and proven conventions of innovation, marketing, and strategy formulation; you must discard some of today’s common assumptions and management practices and adopt a fresh way of planning and executing your strategies today and your innovation and growth strategies of tomorrow. It is my hope to show you how.

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Don’t simply look at customer service needs as an irritation. Look at each contact as a chance to listen to and learn about your customers. Listen to the feedback they give and see whether there aren’t some hidden gems embedded in there. Let customers teach you the best way to grow your business.

Instead of spending money on conducting market research to find out what makes your customers tick, you should instead make it a point to pick up on what your customer service people are already hearing day in and day out. Customers requiring after-sales service are rarely if ever shy about telling your people what they think. All you need to do really is organize yourself to pick up on these clues and do something worthwhile with all this information.

The three keys to making this happen are:

1. Teach your customer service people how to listen and when to do it
2. Find smart ways to listen which are also cheap and effective
3. Turn what you hear into viable action within your organization

1. Teach your customer service people how to listen and when to do it: because if you look around your organization, you’ll probadly find that there are already front line staff who interact with customers hundreds or even thousands of times each workday. Encourage all these people to workout whether the complaints they are hearing or the issues they are resolving are one-off incidents or more indicative of systemic problems. Train people to listen for underlying causes, themes and systemic trends. Encourage them to try and get to the root causes of problems and then to track how often those causes lead to people calling in. It may be helpful to have weekly team meetings where front line staff can share their war stories about what customers are saying at the present time. Another alternative is to establish one central database where all complaints, insights and customer suggestions are collected and then made available for managers to analyze.

2. Find smart ways to listen that are cheap and effective: or put differently, develop a broad range of listening posts and then gear everyone up to take advantage of that information. The possible techniques you can use to listen are very broad:

Set up in-store kiosks and run surveys.

Invite customers to fill out comment cards.

Offer opt-in e-mail surveys.

Have easy-to-use feedback options on your Website.

Conduct post-sale telephone surveys.

Record some actual service calls for analysis.

Analyze the notes that customer service people keep for recurring themes, emerging trends or noteworthy key words or phrases. Correlate this data.

Build automated feedback tools into your company Website, into customer warranty enrollments, into every contact you have with your customers.

Set up company blogs or wikis where customers can leave their feedback, ideas and suggestions for others to agree with or disagree with.

3. Turn what you hear into viable action items within your organization: use all this feedback to drive actions that improve things rather than retaining the status quo. By gathering feedback, you’re raising customer expectations that things will change for the better, so you’d better be using this material to drive some ongoing improvements. The cycle in action here is:

1. Capture the insights embedded in customer feedback
2. Establish root causes and set priorities for improvements
3. Set clear accountability for improvements
4. Execute solutions that provide benefits for customers and your organization

Learning what customers are saying is all well and good, but this information only becomes valuable when it is backed up with action to address the various issues being raised. Obviously, it will take effort and organization to mine the data and establish the themes and issues customers are speaking about. It might be helpful to establish an “improvement council” that meets periodically to review the data, set priorities and establish who will be accountable for making the right things happen.

You would expect the senior management of your organization to need to sign off on the specific recommendations that get made, but until you have a cycle going, it’s unlikely any improvements will get made. Someone has to take responsibility for establishing what needs to happen and then allocating the resources that will be required to make it happen.

Stop coping with customer demand for service, which simply increases customers’ frustration; instead, challenge customer demand for service so that, ideally everything works perfectly, eliminating defects and confusion so there is no need at all for customers, ot even prospective customers, to contact the company for information or for help.

–Bill Price and David Jaffe

Delivering improved service is rarely the responsibility of the customer service area alone. Companies need to work out who is accountable for service and reated issues, have a range of mechanisms to make that accountability stick, and involve all the departments to deliver Best Service.

–Bill Price and David Jaffe

There is no excuse for companies not to listen. No additional investment in customer research is required; companies will obtain huge insight from the contacts they are getting today. They need, first, to be prepared to listen. Then they need to apply the techniques that allow them to tap into all the free or cheap forms of feedback that their customers and staff can provide. Listening is not the end game, however improvements for the customer and company. Many companies are stuck today in a cycle of measurement that doesn’t drive action. Companies that are service leaders use these sources of feedback to drive continuous improvement. They build it into the fabric of how the business runs. What is critical to making this improvement cycle work is not just the listening part but also allocating the resources to discover what it’s telling the company and bow to fix it.

–Bill Price and David Jaffe

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Always remember that your customer service people are not the cause of your problems. They lie elsewhere and they need to be addressed. Identify the real owners of the ongoing problem and make them accountable to set things right. Empower your customer service people to do the right thing for customers.

It’s a myth to expect your customer service manager to be responsible for all the reasons why customers contact your company. In reality, contact centers generate very few reasons for customers to be unhappy at all. It’s time to get rid of the silo mentality and let the true generators of the problems customers strike stand up and be identified.

1. Tear down the walls–identify who is truly responsible for the issues
2. Make accountability stick–let the issue owners resolve root causes
3. Empower the front line–so they can do the right thing for customers

1. Tear down the walls: identify who is truly responsible for the various issues that end up at the customer contact centers for resolution. If you identify the underlying root causes of issues, then the real owners can be encouraged to take action. This allows customer service to get beck to supporting the customer rather than making an attempt to mop up problems caused by the company shooting itself in the foot.

The real problems here are usually:

Lack of information: because contact centers tend to report on how fast they handle customer complaints rather than the underlying reasons why the contacts occurred in the first place.

Ignorance: no genuine attempt is made to ascertain who owns the root causes of the most common problems faced by customers. It’s not at all easy to decide who or what is the cause of dissatisfied customers, and therefore this often gets in the “too hard” basket. To get to the bottom of problems, its often necessary to ask “Why?” at least five times. For example:
1. “Why did the customer call us?”
2. “Why did he or she get that letter from us?”
3. “Why didn’t we know he or she had already paid?”
4. “Why doesn’t our system allow for different methods?”
5. “Why doesn’t past payment history get factored in?”

You can always tell when you’ve identified the real owners of customer problems because that person will own the part of the business that drives the customer contact and the person will have the authority and budget required to fix the root causes. If the owner you’ve identified doesn’t meet two criteria, keep looking, because you have not got there yet. In most companies, the real owners of root causes tend to be direct reports to the CEO.

2. Make accountability stick: let the issue owners analyze and then resolve the root causes. Deciding who is accountable and who in theory “should” be doing something about it is all well and good, but that’s just the beginning of the story, not necessarily the happy ending everyone wants. More than likely, the owner of the problem will respond with:

Denial–”Your data is obviously incorrect.”

Anger–”Don’t be absurd.”

Refusal–”Even if true, we’ve got better things to do.”

Bargaining–”Our budget is already allocated.”

To overcome these kinds of reactions, there are really only three approaches you can take:

Get some old-fashioned sponsorship: which usually means getting the CEO to champion accountability and make it an important part of his or her agenda. If the CEO won’t apply pressure from the top, it’s hardly surprising nobody else takes any notice of the issue.

Reset your targets to make them more meaningful: or in other words, develop new targets that incorporate the needs of customer service. Add performance indicators that draw attention to the changes required to improve customer service delivery. Get everyone pulling in the same direction.

Provide financial accountability: by charging customer service costs to their true owners. Make each department show the true costs of providing customer service that it is generating in its financial statements. This is a certain way to draw attention where it genuinely falls due.

3. Empower the front line: so they can do the right for customers. Allow the people who come face to face with dissatisfied customers make decisions and take actions that will produce the best results for customers. Let them do this with minimal supervision or oversight. Drop having a blanket policy that must be followed whenever a specific situation arises. Instead, train customer service people to be “enablers” who are free to figure out what it will take to make things right from the customer’s point of view. Then back these people to the hilt.

When you empower customer service personnel in this way, you demonstrate that you trust their judgment to act responsibly. You allow them to structure solutions that make sense to customers and that are also fair and reasonable for the company. Inevitably, this also generates cost savings for the company, because you don’t need to provide ongoing supervisors to sign off on everything customer service people want to do. You liberate the front line and turn them into customer satisfaction generators rather than cost minimizers.