by Cindy Barnes
People are saying to us, ‘I’m not bothered that you’re a council and you do the bins, you are trustworthy, I know that you won’t get it wrong, you’re not going anywhere.’ This value proposition has been embedded through our early marketing activities and now we are trying to understand what the price points are and the potential volumes.
Futurecurve helped crystallize these ideas and the policy; the philosophy and communications with staff have flowed from that. Our councillor members are now using it, as it helps them to understand that we can turn ourselves into a business entity from within. A lot of people don’t understand how we can do this: transitioning from one thing to the other without stopping the council and re-creating a company in the same building overnight. It’s what I call Möbius strips, where you are on the inside of the loop and then you track the thing around and suddenly you are on the outside of it without having stopped and started again.
Action
We started this conversation about taking AVDC in a new direction well before we created our plans to change. You do not want to lose your customers but equally you need to transition them to what the business will need to be doing in the future. You need to have the value proposition discussion and ask: ‘What is it in someone’s life for which we are the solution?’ You cannot sweat the stuff that the customer didn’t want in the first place. Our positioning is that we need to be either helping someone to tick off the things on their to-do list, resolving someone’s pain because they cannot get a plumber or enhancing someone’s leisure or pastimes or social activities.
It is a failure of leadership if you don’t reframe the world for people. It is not a case of saying, ‘Join me on the barricades’ and then saying ‘Where did that Exocet come from?’ because they will say, ‘Well, weren’t you paid a lot more money to see it coming?’ To help with that reframe we have designed a commercial competency framework, identifying the behaviours we need, which is not just about selling, it is about knowing your customer, thinking from their perspective outwards, and we will be stepping everyone through a behavioural assessment this autumn that will lead to people being able to step into different roles, maybe from where they used to be to ones they would be better off doing. There is a sense of evolution and a bit of revolution in that we are going to be recruiting on attitudes, not aptitude, recalibrating the behaviours of our people with more of a commercial focus and philosophy and I think we are the only council that is doing this at the moment.
We now have business-to-consumer, business-to-business and council-tocouncil offers. We have launched a commercial arm, which has two brands: Limecart, which offers home and garden services, and Incgen, which has a range of business service packages. As we have been prospecting, talking to other councils, we are offering packages that help other councils based on our own experience of raising new income streams (such as setting up a lottery). Our lottery generated £60,000 for good causes in six months; we turned our £1.5 million loss-making planning department into a profit centre of £500,000. Only this week, we have sold two consultancy packages to two different councils. These are small steps into a ‘peer to peer’ approach to sharing our knowledge to get other councils to accelerate their change through the steps we have taken, sharing our learning rather than letting others go through the loop themselves. So those things are earning us money as well.
Results
Our value proposition is underpinned by the whole Digital Revolution and our deciding five years ago to be infrastructure-less in terms of IT. We are the first council to move all our IT systems to Amazon’s web cloud. We want to reflect how people live their lives and a digital interface is critical. We launched ‘My Account’ this year, which now has 20,000 users who can now do online the standard stuff they need to do, like check their council tax or their licence progress, and they can now do this when they want to do it, when it is convenient to them. That infrastructure, software and staffing usually costs councils a lot of time and money. We are trying to do things that are common to customers, not just citizens; we use Salesforce, which is not a normal brand that a council uses. We are using cloud providers to improve our back office systems and have introduced cloud telephony through local providers wherever feasible.
It is starting to build from a zero base. In fact, we have been quite pleasantly shocked at how much has been achieved in a calendar year and how rapidly it is scaling, and the question we now have is how we resource the delivery of that for customers who are hungry for it.
Learnings
If you are thinking ‘My business doesn’t feel like it’s working’ or ‘I’m stuck’, then you have to be truthful about what you want to do versus what you are doing. Are you trying to spin off the business or inflate its value quickly, or trying to recover the customers you have lost to a competitor? Are you thinking legacy – do you want to hand on the business? What is the purpose of the business, what are you trying to do as a business? Being truthful will give you clarity over the purpose of your business, its purpose in the current context and in the future one.
Confront the brutal truth: what is the value proposition that is going to deepen your purpose or explore your purpose? And try thinking from the customer experience backwards – What is it that you are the solution to? What problem or pain can you solve? – rather than thinking: ‘Why aren’t they buying the gold teapots that I’ve spent 20 years making?’
Is your leadership up to accepting that this is a different business to the one you thought you were in and have you got the kind of temerity, the guts and the energy to switch it? Being clear about your business model also means understanding where the money will come from. What does the business need to be to fulfil people? By using the value proposition emotionally, technically and service-wise, it builds a sustainable and credible business that ultimately cements trust with your customers.
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Realigning around a common vision
Creating a common vision about what an organization wants to accomplish is a good start: aligning all the processes, structures and behaviours towards achieving this vision can then follow. Most large organizations do not have an authentic vision beyond making money or reducing costs and have nothing around which to realign their activities. In addition, in very large corporations, making these changes takes time, and many face the pressures of quarterly reporting to shareholders. Yet some organizations have been brave and far-sighted enough to attempt these changes. They have found a way to design a programme that could be fully implemented in discrete parts of the business and yield measurable benefits in a relatively short time frame.
In the global telecommunications division of a major technology company, the business simply wanted to improve major global account management. Many companies in this position would have put all their account managers through a skills course, but this organization took a different approach. The management decided that they should develop a value proposition for (and with) each individual customer. In this case, the customers were extremely large corporations that spent significant amounts of money with this division.
The process of interviewing senior executives within the accounts revealed a great deal about how and where more value could be delivered. This effort was then brought to life during working sessions with each customer. As a consequence, the technology company realigned the type of work it delivered, how the offering was presented, packaged and sold, and how it solved the customers’ problems. A senior vice president described the outcome as: ‘an amazing difference to how we won better work from existing clients. I highly recommend using the value proposition building process to uncover where value is and is not being delivered.’
Both this technology company and AVDC consciously applied the 2nd Law of Value Proposition Selling – the customer is part of the business system – illustrating how implementing this law positively transforms business practice.
Changing perspective
After all, how can a business understand its v
alue (and negative impacts) without asking the customer? It cannot. Customers are the final arbiters of the value that any business delivers. The challenge is how to extract this information from customers in order to obtain a clear and honest picture of what the customers genuinely like and dislike about doing business with a particular company.
Traditional interviewing techniques don’t work. Surveys don’t uncover the emotional drivers, nuances and the meaning of human behaviour. Directed questioning leads interviewees down a narrow pathway where much valuable information is lost. Furthermore, scripted questioning with ‘deskilled’ interviewers can result in missed opportunities to uncover rich and relevant feedback. A great deal of the most important feedback is not quantitative, rather, it is qualitative; it is about emotions and feelings and it is these that are crucial to the understanding of a customer’s relationship and likely future behaviour with any business. The ability to view the customer from that customer’s own perspective is critical.
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CASE STUDY Global Financial Services Co
World-renowned ‘Global Financial Services company’ (GFS) had a long-standing problem with retail customers in Europe, whose reluctance to use their services was damaging sales and consumer loyalty. Psychology-based research revealed that the company’s strategy was not connecting with the strong emotional motivations that drove these customers. Once GFS had used this insight to develop a new value proposition, it was able to devise a sales and marketing strategy that resonated with retailers, leading to an upturn in service acceptance and transactions.
Challenge
GFS had problems with retail customers across Europe. Around half were suppressing transactions – adding surcharges, refusing consumers, deactivating their accounts and avoiding becoming customers in the first place. Naturally, this was having a knock-on effect on the company’s European business, hitting consumer loyalty and making it harder for the company to attract new customers.
For five years, GFS had tried different strategies to tackle this problem. Backed by annual quantitative research, it had tweaked pricing, offered incentives and run continuous new customer sign-up campaigns. However, none of these initiatives had any lasting impact on the retail customer problem. More recently, individual countries had developed new customer value propositions and sales propositions, with mixed success.
Solution
GFS now wanted to develop a Europe-wide value proposition to tackle the retail customer problem. Seeking to base this work on a deeper understanding of its retail customers, it chose to develop a value proposition based on qualitative research involving over 300 in-depth retailer interviews and retailer–customer observations, coupled with internal research.
The findings of this psychology-based exercise came as a surprise, revealing that the GFS customer strategy was out of step with what retail customers actually wanted. While the company was promoting rational benefits, their small retail customers were driven by emotional motivations, such as wanting control, gaining recognition and building trusted relationships. For GFS, this key insight unlocked by the qualitative research was a revelation.
As GFS had not understood this motivation, retail customer attitudes towards it ranged from ambivalent to actively hostile. Beyond the service ‘brand halo’, retail customers saw no value in the company’s offering, especially as its pricing and service levels were not seen as competitive.
This research was used to devise a new European-wide value proposition based around the three value pillars: trust, choice and control, and the researchers then worked with the customer teams at GFS to turn these value pillars into a tangible strategy. This strategy included new products, a new service model, new working practices, and a new communications approach that started with a ‘reparation’ message.
Result
The value proposition project has been the turning point for GFS in its relationship with retail customers. Client, sales and customer service teams now all have a model that helps them to understand and predict retail customer behaviour.
Within the first six months, transactions from retail customers were significantly increased. A global advertising campaign, launched as part of this new ‘relational’ communications approach, saw 20 per cent more people using local retailers in 2014, spending £36 million more than in the previous year in the UK alone.
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Customer interactions, the good and the bad
One good example of how not to interact with a customer is a recent interaction that one of our clients, Laura, had with a multinational telecommunications company. As one of a small handful of phone and broadband providers, it focused most of its efforts on technology and streamlining its systems to be cost-effective. As a result, unless a customer wanted to buy something, it was virtually impossible to speak to anyone in the UK who worked for the company.
At best, a customer could be directed to a call centre outside the country and speak to individuals who could rarely solve the problem and took unhappy customers through a closely scripted conversation. At worst, the only help was via scripted question and answer (Q&A) sessions on the internet. Customers who make the effort to phone a business are already frustrated: often angry and unhappy. Adding steps and effort to resolving problems only increases these negative feelings.
In keeping with this distancing from the customer, the telco was one of the first businesses in Europe to remove its executives’ names from any easily accessible company materials. There was no approachable human face to contact. So the customer had to go through the company’s systems to resolve any issues and these systems were set up for the convenience of the company rather than the customers. Over time, its customers became easy prey for new market entrants. So as other, easier options became available when new entrants moved into what was previously the telco’s own space, the company was hit from all sides – provision of home phones, mobile phones and broadband services – by other entrants in the market.
Laura’s story illustrates how badly the company understood the impact it was having on its customer base. Having been a customer for more than 25 years, she finally switched to a new home phone and broadband supplier. The minute the telco was informed that it was losing a client, it finally contacted her – a real person took the initiative and phoned from a local-based call centre.
The question was asked, ‘Why are you leaving?’ and Laura responded, ‘I’m moving to a company where real, empowered people answer the phone. They listen to me and try to resolve my problems without my having to fill out forms and engage in web-based interrogations. Furthermore, they stay in touch and keep me informed of the progress of any issue. Can you do that?’
The call-centre person went back to the script and, instead of answering the question, replied: ‘Because you have been such a long-term, loyal customer we are prepared to offer a contract at a reduced price.’ Laura was outraged. The complaint had not been acknowledged and the response was even more annoying. She responded, ‘Do you mean that as a loyal customer I have to threaten to leave you to be offered a better price? Why didn’t you just offer me that price without my having to take this step?’ The call-centre person had no response. ‘Besides’, continued Laura, ‘I am not leaving because of price. I would even pay a little bit more just to have good service and speak to people who understand the context of my issues!’
This example is not exceptional. These conversations occur many times every day across a wide variety of business types. Laura was not listened to and could not speak to someone who was empowered to solve her problems. The result? The telco lost a customer it need not have lost. It usually takes far more motivation for a customer to change a supplier than just to tolerate an existing one. High customer churn and low customer loyalty should ring very loud alarm bells in any business. And the reason for churn is rarely just price; it is usually about company processes and behaviours.
Was the telco right or wrong? It really doesn’t matter. In this case, what mattered was
the customer experience. If Laura were the only customer who felt frustrated and angry, then the company was probably doing things well. If, however, many customers felt the same way, then they would be leaving as soon as they had a viable alternative. Ultimately, numbers provide the verdict.
Matt Dixon from the Corporate Executive Board, says of his research into his book The Effortless Experience (Dixon, Toman and DeLisi, 2013):
What we found was that the majority of customer service interactions tend to create disloyalty. The reason they do, and I think we all know this as consumers, is that when we reach out to a company with a problem and we need the company’s help fixing it to get it to work the way it’s supposed to, is they force us to repeat ourselves and they transfer us all over the place to different departments, they send us to their website; we get turned round in circles, we can’t find what we want and then we have to pick up the phone and call. Companies create disloyalty in these moments of need because they force the customer to put a lot of effort into getting their problems fixed. And so it’s no real surprise at the end of these service interactions that customers leave actually more disloyal to companies. Customers don’t want choice, they want guidance.
Not all customer stories are bad. Some companies do get it right and do the best thing for customers and for the business. The telco example (above) is the opposite of an effortless or ‘frictionless experience’. An ideal frictionless customer experience is one in which the customers are not even aware that they are having an experience. They simply have their problems solved or their needs met. Companies such as PayPal have almost achieved this level of service with their customers and lead the way in designing processes that are effortless for customers.