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0:08 (Alex) – Good afternoon it’s now after noon at 12 past 9. My name is Alex Allwood and I’m CEO of The Holla Agency, A Customer Experience Company and I’m also your host today for CX LIVE. I am joined by Dr Linden Brown who is the author of the book “The Customer Culture Imperative” and I will be speaking to him about creating a sustainable customer-centric culture. If you would like a complementary copy of my book settle in and I am going to give you more information of how you can get a copy of it later on in the show.
1:00 (Alex) – Today is a special day we’ve got Customer-Centric Culture Expert Dr Linden Brown. He has published 16 books in the field of marketing, strategy and leadership. Linden is chairman of MarketCulture Strategies, A Silicon Valley company focused on measuring the level of customer-centricity in organisations. His research has resulted in a unique web based tool for benchmarking the level of customer-centricity in organisations against a global database. Just to throw to Linden and a big hello and I’d like to hear a little bit about you Linden with 16 books in your portfolio.
1:50 (Linden) – Hi Alex, nice to be talking with you and obviously talking about the subject of Customer Experience & Customer Culture. My original training really was in finance and accounting. My first job was with Cadbury in Australia and I chose that job just because I like chocolates I think. It also led me from finance and accounting into sales and marketing at a fairly early age. After some experience in that business particularly in marketing and when you start to teach marketing you realise how little you know and how much research you really should be doing to be able to do that well. That’s when the books really began they began as textbooks around marketing. There were several around marketing, international marketing and the area of marketing really leading into this book “The Customer Culture Imperative” which has come out of that long history of teaching, consulting and actually practicing marketing. So that’s where the books come from and that was that latest one that you showed.
3:20 (Alex) – Lets have a discussion about customer centricity and what it takes to build genuine customer culture so employees can deliver great customer experiences? What I am finding is that companies today claim to be customer focused and they are undertaking research and customer feedback and they claim a high degree of focus in their marketing and sales. They aim to provide prompt responses to customer problems but what they are struggling with is analysing and acting on feedback to actually solve customer problems and to satisfy needs. have a Few companies culture where the customer is truly at the heart of their organisations; where products, services, processes and touch points and the decisions are made on rewarding customer interactions. Often what I find is that employees don’t understand the role that they play in Customer Experience and they’re not accountable or rewarded for driving change that improves experience. So I thought what we might start off with is to look at what is a customer centric culture? Can we start by defining what a customer-centric culture is?
4:54 (Linden) – I think it involves at least a couple things that are very important. One is just a way of thinking about the customer that is what we think of as a customer mindset, that’s kind of a starting point. The second part is behaviour, how we think and what we actually do. I think you touched on the important elements. Its really about the culture of an organisation, a customer culture is a shared belief or mindset about the customers being the centre of the business and knowing what is best for customer and believing that is best for the company. That needs to go right through the whole organisation. The key point of it is it needs to be led from an old model and measured from the top. So the leadership at the top but also leaders at other levels of the organisation are really critical to developing this culture that is the mindset and the way we actually do things around here, around the customer. For companies that have a legacy of being internally focused that takes quite a bit of work and quite a bit of time particularly large businesses with a lot of people involved because you look at changing that way of thinking and that way of acting from being internal to external. So the thing that we realised in our research was that firstly this is cultural, it’s actually culture and the culture is so important because it drives all of the other things that we are doing which is you know recognising the touchpoints, getting feedback from customers and consumers and acting in some way providing customers with greater value and meet their needs better.
7:01 (Alex) – I’ve spoken to companies that were like “I’m doing very well, thankyou” Why does a customer-centric culture matter?
7:15 (Linden) – I think that’s a good question. I think there are still a lot of companies that are doing well but you know many of them are really on a crest of a wave if you can think of a surfer going in on a wave and it maybe a growth wave of some kind, an online business is successful and so on but they don’t actually see what is about to crash on top of them. This is what we talked about Alex, about distraction, the UBER effect on industries which is incredible and happening and we’ve seen it in a lot of industries and it’s going to happen to all industries eventually where you need to be adaptive; you need to have a culture that allows you to change and change in relations and in customer needs, requirements or new customer groups. So all of these things are important around customer culture and if you don’t have this you are at really high risk. The risk is really high for losing a lot of business and you can be really hard to relate if you become complacent about change.
8:40 (Alex) – When you were writing the book because you know business has changed in the last 5 years and certainly in the last 10-15 years. You looked at different industries – what are the industries that have been really affected by disruption and are they using culture for competitive advantage?
9:09 (Linden) – I think that industries that obviously have been affected, and many of those like Amazon for instance, are companies in the retail sector. You think of the bookshops that used to be around that are no longer around. So one of the biggest products that Telstra used to have was the Yellow Pages and that just totally disappeared but it was very profitable for a long period of time even after the wave was hitting for online services. I remember David Thodey saying “that one of my regrets is that we sold the Sensis business too late, if we sold it earlier it would’ve been worth $200 million more”. That was the kind of the impact that actually occurred. So I think you see it particularly occur in services businesses. When different types of products and services are being sold in different ways. We have a great example of that here in the northern beaches of Sydney. A company called Naked Wines that is purely an online business and is really starting to disrupt the delivery of the sales of wine in Australia. Not just here but also in California and UK where that business has been developed to really attack the large companies like Coles and Woolworths that have most of the sale of wine in Australia. Naked Wines now have more than fifty thousand angels they call it, their angel supporters that both harvest the wine and sell the wine into their membership base. That’s an example of the sort of thing that’s happening and so the service models and online models are affecting many industries.
11:26 (Alex) – Just continuing on from what a customer centric culture is. What are the benefits for customer centric culture?
11:46 (Linden) – Look we’ve been able to show that firstly there’s a direct connection between having a strong customer culture which drives a better customer experience and profitability and revenue growth and innovation. All of those things we found in our research and the research others have done shows that there is that direct link, so we can determine that various elements of customer culture link to parts of business performance like customer advocacy, like profit growth and so on. So one of the big benefits firstly is business performance I think that’s a key one. Another one is engagement of staff through having customers really happy with the way you are supplying a service or a product to them. They become advocates, they pat the employees on the back and employees and so on are very happy about that. So you get a much happier and more engaged environment and part of it is having a business when its really aligned around the customer it does creates the employee engagement and happiness. So I think you get benefits in profitability, customer advocacy, business being more adaptive; it’s to do with the ability to gain a more sustainable competitive advantage and how does that come about. It comes about because most services and products are becoming increasingly commoditised. The biggest difference now that is emerging within companies is their ability to deliver customer experience that makes customers want to become advocates and sell for them, their stories of their experiences with other customers within marketplace. There are a multitude of benefits that come out alongside profitability benefits.
14:00 (Alex) – I suppose especially when businesses are spending such large amounts on customer acquisition. I think it’s 8 or 9 times the amount on customer acquisition if they get their customers enjoying experiences they use more of their products and services and also recommend that experience to other people. You get that net effect of not only are you growing the customers that are using your products and services but also telling their friends about it so you are acquiring more customers
14:57 (Linden) – That’s right and you know there is a very good financial measure that is used to help us understand this and it’s called the lifetime value of the customer. It measures the length of time that you have a customer in the business over time, the amount of revenue that you receive from that customer, the margins from revenue that you receive from that customer, and the advocacy effect that creates the other customers that you’re talking about. Lifetime value of the customer really reinforces financially and also in people’s minds that having customers we develop from long time relationships is far more valuable to the business and far less costly to the business to have and keep than it is if you are saying to get new customers. If you can help the customers find you new customers then it will cost you much less. It actually comes from looking after existing customers first and we see a lot of companies that don’t do that. They focus on getting new customers and providing deals and the existing customers are saying why don’t we get this? It’s the same service but we are missing out on value here and that is a big mistake because of the financial aspect.
16:23 (Alex) – Share of wallet is something a lot of businesses talk about but don’t invest very much in and I always maintain that it’s easier to keep and retain customers if you are creating a great experience than to grow your market share. Measurement is a hot topic at the moment. Looking at a number of different research options and measuring customer satisfaction and customer centricity is high on businesses agenda. You have written extensively about measuring customer centricity. In fact you have written a whole book on measuring customer centricity. Can you tell me a little bit about how you arrived at that measurement piece? And the basis for your measurement.
17:22 (Linden) – We set out 8 or 9 years ago to really try and answer the question – what is customer focus or customer centricity? When you talk to people about a topic they have different viewpoints of what it actually means. The second thing is what is it? Can we measure it and should we measure it? Is it important? Does it drive business performance? If you have a strong customer-centric approach to your business the third thing was, – can we make all this tangible? Because it’s a little bit foggy this area of culture, particularly to the people that are working in the business, particularly when you want to change it to something like a customer-centric culture. What does it really mean? Where are we with it? We really did set about to measure it. We ended up being able to be both qualitative and quantitative with our research and a lot of research that had been done prior to identify what are factors that really define it and a way of actually measuring it. So we came up really with 8 factors that are elements of having a customer-centric culture and two of those are related to the customer. One we call Customer Insight, which is all about understanding needs of current customers that you have. Foresight or customer foresight is around understanding what the future needs might be of both future customers and your current customers. So one’s the now and one’s the future. Same with Competitor Elements we found two of those were important; that understanding existing competitors is important because it helps identify where you are strong and weak in terms of customer experience and what your value proposition should be in a competitive advantage. Future competitors are more important and we call that Competitor Foresight because a lot of those competitors like UBER, which was really not seen by the taxi industry it is another example. So Competitor Foresight is very important. The fifth one is Peripheral Vision and that’s the wide-angle vision. What is going to happen that is going to change and disrupt which of your customers receive value in the future through technology, economic changes, social changes all those sorts of wider external things. So those five are really externally orientated factors and performance indicators like innovation, profit growth, revenue growth, customer advocacy and satisfaction. And then we have three that we call internal enablers, things that need to go on in the business to help your understanding of what is going on outside the business and actually make it operational or work. One of those is cross function collaboration, a very important element for delivering a consistently high customer experience. And the third one is what we call strategic alignment and that is having everybody understand and buy in to the vision and values and what it actually means in my part of the business to deliver a great experience for customers. How effective is that? What can I do better to make it better? They were the 8 factors and we were able to measure those and make them tangible and identify exactly what those things are. We developed a survey tool, which is sent to people in the business at the leadership level first and then deep down in the business called the MRI – Market Responsiveness Index. We’ve now got a global database of more than 200 companies and several hundred business units where we’ve implemented the MRI into these companies and it allows us to benchmark any organisations against the best The database is orientated towards the best I think because we did start off in that database with companies like Amazon, Virgin and other companies which are known to be highly customer-centric.
22:24 (Alex) – You measure those 6 – 8 levers or 8 areas of the business. You measure it from an internal perspective, for example NPS measures the customer but you’re measuring internally and then you benchmark it against high performance customer centric companies. Is that correct?
22:50 (Linden) – That is right. That is a good way of actually putting it. What we are doing when we measure internally in the business there really are people in the business where we ask, what do you do? We are measuring capabilities of actually doing things to meet customer needs.
23:10 (Alex) – Right, Then what happens? So they have all this great data, lets say they might be weak in customer foresight or customer insight or they might be strong in peripheral vision. What happens then?
23:30 (Linden) – We found through studying a lot of these best practice companies there is a roadmap that they followed. If you go into any company at a point in time it will be doing some customer-centric, things there is no doubt about that they would be doing some customer-centric things unless it’s got a tradition like Monopoly and is only internally focused. So it’s using net promoter score as a way to measure advocacy and maybe customer satisfaction. It would be a lot of businesses are collecting a lot of information and doing a lot of data analytics. The big thing that really breaks down typically is number one its not shared across business so only parts of the business like Market Research and the customer insight department they have a lot of this information. The people who need to also know about what all this means and how the needs are changing are people in IT, finance that interact with the customer, people in HR that are employing people and training people around all of this. These groups often are totally neglected and don’t really have a customer-centric culture. So the first things that we do is we do the measurement and then we engage leadership and usually that would be the top ten people in the business and their direct report, so possibly fifty people if it’s a large business or might be ten people if it’s a small business. We then look at what are the sorts of initiatives that they should engage in to make a start in it. Now we know where we are weak so customer insight/foresight. One of the things that we recommend early on is what we call a Customer Immersion program where you get people that are not facing customers to engage with customers in some way either going into shops interacting with or listening to them, talking with them and getting feedback, or going to a call centre and listening. Even in some cases senior leaders have been trained to actually take calls from customers. It goes beyond that because what you need to do is not only do that but learn from that, report it back into the business and share insights across business so you are engaging people at all levels particularly those that are non customer facing. You may even need programs around customer facing where they are getting information from customers all the time but they are not necessarily reporting back and creating insights from that. That would be a starting point and then there are a number of steps that we recommend that are actually followed that will take you through the process of starting to identify customer-centric behaviours and using that as part of the KPI’s and tying rewards to it. We see now a lot of rewards are tied to Net Promoter Scores but they should also be tied to customer-centric behaviours, which makes that a serious thing as well because at the end it’s a score. You need to know what to do and need to know why customers are responding in the way they are on an NPS metric. There are some of the things in the book, the steps that are illustrated with case studies and examples of approaches of that.
27:37 (Alex) – Yes, we have a similar methodology to the one you just talked about in terms of brands getting in the game or starting the first steps of customer-centric transformation. We talk about the same things in terms of walking in the customer’s shoes and getting that deep customer understanding of what it’s like to be a customer. I think that many people within the organisation are customers themselves. So they think that they can apply their own understanding to change management within their companies. What they don’t understand is they are looking through lens of their own company and they actually need to go outside the organisation and see what their customers are experiencing to get clarity and deep understanding. In the interests of time I’ve got so much to talk to you about but we did start a little bit late. I’ve got to move on, I could talk to you all day about continuous innovation because I’m perplexed as to why we’re collecting all this data and not using it to start transforming areas of our business, but I need to park that just for one moment. I want to talk about your experience with the types of businesses and categories in Australia which are focused on creating a customer-centric culture. There is Forrester, that came into Australia last year and looked at the businesses which were really great customer experience companies. You’ve done a lot of benchmarking, what are the categories? What are the businesses that are high performance in Australia?
29:28 (Linden) – Look I can’t comment too much on industries but I can comment on perhaps some of the companies. For example in the airline industry there has been strong focus by Qantas, Virgin and Air New Zealand towards being much more customer-centric and I think as travellers we’ve experienced that improvement over the last few years. That would be an industry that is fairly customer-centric. Air New Zealand is probably the innovator among those companies. Years ago they really took the view from this really internal focus of we fly planes to we fly people. They are definitely trying very hard and I think succeeding fairly well at being customer-centric so that’s the airline industry. In the insurance industry another example is probably SunCorp in Australia. They have a number of insurance arms like AAMI and for some years have really been pushing customer- centric culture and being aligned more with customers so I think the service industry is very easily tracked. Banks would be another one, like the CBA for example but all the banks are trying to improve their customer-centricity but many of them are still coming from a technology standpoint. We’ve got this technology, how can we use it for customers? Rather than What are the customer’s needs? And solve that using technology and other things. There is still the mindset shift in a lot of those big businesses like the banks that still need to take place.
31:40 (Alex) – I think if you have a look at Forrester’s Index. Five banks out of ten for high performance brands are featured on that list and Bendigo bank was the number one performer. Why do you think a community bank was able to make it to number one where you’ve got the likes of Commonwealth bank which are also featured on that list with so much money to invest into understanding what is the right experience for the customers?
32:15 (Linden) – I think part of answer comes from their name. It’s a community bank, that immediately signals to everyone in the organisation that we are in this for the community and what that creates then is this strong strategic alignment. Having a strong strategic alignment, in this case the community, and going beyond the idea of making profit is a key thing that people working in an organisation would buy into so long as they can identify with that. The community and the element of community are the customers for Bendigo Bank. That would be one key thing with a very strong strategic alignment and also being smaller and needing to strive more and opening in different states as a bank requires you to be customer-centric and very good at that to succeed otherwise you won’t. I don’t know them internally I have never worked with them but that would be some of things that would be drivers I’m sure.
33:33 (Alex) – Yes, I wanted to pose the last question. This is a lunchtime show so it’s very short and sharp and like I said I could talk to you all day but we have to keep it nice and short. I wanted to ask you about – How do you make a cultural shift sustainable? We’ve got a change in leadership behaviour whereby a CEO stays now for 2 years – 2 and a half years and then moves on to another organisation. How do you make a cultural shift sustainable when you have so much change of leadership at the top?
34:19 (Linden) – I think it makes it hard and really, ultimately the responsibility lies with the board of directors and possibly the chairman. They are working most closely with the CEO but the board makes the decision as to which the next CEO is going to be. If they make a decision with a leader that is focused on money first and customers later that is what they are going to get and that will focus everyone in the organisation on that; you’ve got to meet the numbers, this week, this quarter and so on. As the priority I would say a board of directors becomes an important part of all this. It is driven from the top. You’ve got to get it down into the business, make it the culture. You need to have that embedded in their thinking and that does take time but I’m in favour of having a customer-centric leader or CEO that stays there for a long period of time
35:54 (Alex) – I would say that getting that at board level is considerally more difficult than at an executive team leader level. Have you seen any Chief Customer Officers that have been successful in having that conversation at board level and keeping it on the agenda?
36:26 (Linden) – Look I think one of the best examples is David Thodey who direct reports and was able to influence the board and keep them focused on customer-centricity as a key part of their focus. If you listen to some of those investors’ briefings when Thodey was in charge you can see they are customer-centric. I don’t know if that changed with the new CEO. Telstra did come a long way in the 6 years. He did say at the start, I want to be an agent for the customer and that is what is going to differentiate my leadership.
37:54 (Alex) – You touched on sustainability within organisations and keeping customer alive right across the business. I was in a seminar the other day on one of the Voice of the Customer platforms where they talked about The NRMA Strategy about bringing customer alive across all divisions and how they were doing that was creating a customer room where customer journeys are mapped out and you can see them visually and you can see how each stage of the journey was connected to each division and what continuous initiatives they were undertaking. Have you seen anything like that in other organisations?
39:33 (Linden) – There is a couple that I have experienced. One of them is Toyota and they have rooms like that where they are tracing customer journey, which is beyond the car. Lexus is very good at Customer Experience and creating tangibility. Salesforce is another one and they have in all their meeting rooms, they have a customer cut-out of a person and a listing in every room of their customer’s values and visions and questions you need to ask before you make certain decisions. They are creating tangibility and even in Telstra there is a room for people to think about customers. Instead of in their offices having the latest handsets or mobiles they have photos of customers.
40:41(Alex) – Time is not on our side. We have to go. Where can people get your book? The Customer Culture Imperative.
40:55 (Linden) – In Australia at Dymocks, online or in shop. You can also get it from McGraw which is the publisher in Sydney. Around the world Amazon is the main provider. You can get it physically, online or kindle.
41:33 (Alex) – I just wanted to mention to our viewers. Don’t forget the ADMA Digital forum 2016 on August 10th and 11th. I will be there on both days speaking in The Brightest Minds breakout where I will be talking about customer-centric innovation. You can pop along and say hello.
42:08 – Book giveaway of Alex’s book “Customer Experience is the Brand” & thankyou to Linden.
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