The Extended Braintrust: Your Customer

C.K.Prahalad, in his intriguingly thought-provoking book "The Future of Competition", refers to two two "deeply embedded, traditional business assumptions" - that any company can create value unilaterally and that value resides exclusively in the company's products or services. There may still be exceptions, but it should be fairly obvious that the days of vendor-driven value creation that ignores the customer perspective is long gone. The feedback loop exists in myriad forms today and a firm's capacity for receptivity can become a powerful differentiating factor.

From a vendor perspective, the path to customer acquisition, satisfaction, and retention does not actually center around its products or services - a mistake often committed by both marketing and sales. Instead, it focuses on the customer. That is a notion that is difficult to grasp at most organizations where staff is ill-equipped in defining and articulating the value of its products and services in a context that the customer can appreciate. In an ongoing, consulting engagement with one organization that provides healthcare services, I have been working with sales in understanding the challenges they have been experiencing and their inability to translate interest among potential clients to actual revenues. Their market has been heavily commoditized, one that reveals itself in plain vanilla functionality and indiscriminate price discounting by a large number of players attempting to increase or hold on to market share. In probing their contact with potential corporate customers a refrain was hard to miss: that it was difficult to get through to the HR head (HR in most cases had ownership for employee benefits); that when a face-to-face meeting did transpire, they heard but did not listen; and the list of services appeared to get lost in an executive chain of evaluation and approvals. Simply - apply, apply, no reply. Has the vendor attempted to understand what is of value to the customer? What shapes them? Who is the real decision making authority and how they could be involved in designing a package of services that works?

This is a company looking to sign corporate contracts which are inherently more difficult than approaching the individual, end-customer. The difficulties here pertain to requirements for vendor evaluation and empanelment; a constant battle to hold the price in the face of competitive pressures that are used by the customer to play one vendor against another; non-exclusivity of most agreements; choice and optional use of services by its employees among the several vendors empaneled for benefits services; and fulfillment that elicits customer response and matches expectations. By contrast, snagging the non-corporate customer should be a cakewalk!

Defining, articulating, and delivering value is one thing. Retaining touch with the customer is quite another. Most telcos today face this problem where the customer understands the kind of value they expect. Some companies do a better job than others in developing products or packages around these values. The real trouble, that we all see in the world of telecom, begins after one has signed up either as prepaid or post-paid customers. "There's many a slip between the cup and the lip" goes an old expression and that is proved to a fault at most companies when reality bears a different testimony: in other words, when the cheery words from the ad agencies promising instant nirvana comes face-to-face with delivery and fulfillment. That's when customers willing to give the benefit of the doubt turn into hardcore cynics. Such a customer is ripe for desertion and almost nothing the company does can reverse weeks and months of indifference and callous disregard. Unfortunately, in hyper-growth industries - as telecom has been for some time now - where net customer acquisitions are positive by far, companies pay scant regard to deserting customers. Hindsight is 20/20 but the tide has already begun to turn when management wakes up to reality and the problem is not peculiar to telecom alone.

Customers can become deserters when there are competitive products in the product. To some extent, the network effect may restrain or delay a decision, but decide they will when the cost of continuing with an indifferent provider proves too compelling. Telecom, satellite television, banking, brokerage, courier services are all fair game in the customer's evaluation. Most of these are services and the reason is not unusual. Services have to scale capacity in the form of human resources in line with demand and when this falters - eg, when a company wishes to reduce or to have the same number of customer call center agents - quality suffers immediately. Services also require staff to be well trained and versed in the company's products or services even if they scale well and this could be a sore point with customers who wish to speak with someone who appreciates their problem and wants solutions. Finally, the real disconnect happens because most companies continue to exist in silos of departments, functions, and responsibilities. Hence, a customer seeking information about an order s/he has placed is transferred endlessly to people who have no visibility into the order or its fulfillment. We are beginning to see this happen with DTH players experiencing exponential growth. These companies, facing high capital costs and a challenging and competitive market, have resorted to endless variations in packages on offer - a theme that has been raised to an art of great and inexplicable complexity by the telcos. You may be a subscriber undertaking periodic recharge, but neither you nor the provider at the other end can tell you what exactly you are getting and how they are priced. Such is the nature of nonsensical differentiation that is foisted on the customer.

These are not new issues and have been discussed threadbare by academics and practitioners alike. Yet, the fact remains that few companies do a good job. How can organizations ensure that customers do not fall through the cracks? Three ideas come to mind:

First, dispense with the traditional "customer complaints" function and instead use the opportunity to integrate customer experience within the larger framework of product or process innovation. This is not as easy as it sounds: the organization has to have a sense and an overwhelming desire to innovate. So this would well work only with companies where senior management is serious about a culture of constant innovation and continuous, incremental, implementations. Many companies spend time and energy attempting to get employees to give feedback and ideas. Why not involve the customers as well, given that customers are the ones likely to spot or experience less-than-satisfactory performance? This pathway could well be routed through the employees in some manner and have them incented, thereby catching two birds with one stone - attendance to customer grievance and also having employees involved in sifting through them to cull the most appealing ideas that could be put up for evaluation, brainstorming, and implementation.

Second, provide a valid channel for customer access. Such an access has to be both physical - ie, clearly identified person(s) at each location together with phone, fax, and address where they may be reached - as also virtual in some form such as email or live chat. Contrary to fears, not all customers attempt to reach out to management, but providing such access both reassures and enables a mechanism for "release of steam". The benefits of this are immense: it allows an organization to retain the customer and even use the opportunity to upsell its products and services.

Third, keeping the customer engaged. Much of the problem lies in the fact that a customer perceives an organization that s/he deals with as a black hole where queries or complaints simply disappear into. This can be resolved in two stages, one automatic, the other manual. The automatic approach is to have an immediate stock response (by email, SMS, etc) promising that a representative would attend to their issues in short order. Such a promise has then to be followed up by a manual process by employees who are able to access information and are empowered to take decisions.
None of the above ideas are unique. But it behooves organizations with a real interest in customer focus to utilize them in a manner that does not result in customer flight while also benefiting from their complaints. Not all organizations would be able to implement these ideas even if they wanted to and that may be because of their position in the market that may run contrary to the greater resources - and, therefore, the cost - of getting more involved with the customer. That is a topic for discussion in itself. But, for those who do, integrating the customer (especially those with less-than-satisfactory experience) in the innovation process has important implications for product differentiation and leadership.