by Bruce Kasanoff
Two changes will in the way you compensate employees can produce significant increases in sales and profits, while your firm also elevates the level of customer experience it provides.
Imagine that your CEO is convinced: to be competitive in the years ahead, your firm must use customer experience as a differentiator. You have one month to create a master plan that will accomplish this.
The CEO is also a no-nonsense, results-oriented leader with no tolerance for plans that take more than 60 seconds to summarize. How do you balance his need for simplicity with the overwhelming complexity of customer experience systems and strategies? Relax; all you need are two steps.
Tie compensation to two goals
Your plan needs to change the way people are measured at your firm, on two levels.
First, people should be compensated to develop modular capabilities that enable your enterprise to provide the customized services that form the foundation of customer experience. You need to be able to customize most of the services and products you offer.
To evaluate success in this regard, examine how easy and quick it is to repurpose or reuse work that a team has done. Can the program they built to ship packages to distributors also serve to find the cheapest way to deliver products to consumers? Can you replace one part – the power supply – in a printer to make it useable in Japan instead of the United States?
Second, people should be compensated based on their ability to constantly broaden the services of your firm used by each valuable customer. The key question here is: how else can we satisfy the needs of this customer?
Success here is not becoming a conglomerate. You are not trying to build market share, but rather “share of wallet.” Success is focusing on the most valuable relationships you already have and working relentlessly to deepen and strengthen them.
No longer just ask, “Did we generate more revenue this year than last?” Now, you must ask, “Did we generate more revenue from our most valuable customers this year compared to last?” Too many problems can be masked through acquisition of new customers. Likewise, you need to adopt similar metrics for your most valuable employees and partners, ensuring that your efforts are resulting in more loyalty and profits, not less.
Customer experience results emerge naturally
If you take these two straightforward actions, customer experience success will emerge naturally at your firm. You don’t need to specify which software packages to install or which customer experience initiatives to launch. Others will figure that out based on their superior knowledge of their own areas.
Modular capabilities make it profitable for a firm to support customer experience. Customization because routine and cost-efficient, and in many cases costs will go down, not up as you start to tailor the way you treat each valuable stakeholder. Much of this cost savings comes from the elimination of waste and the reduction of inventory levels. Often it is cheaper to customize a product in response to a new order than to hold inventory in stock waiting for an order to come in.
Obsession with constantly broadening the services you offer each stakeholder will create a culture in your firm in which your teams are hungry for individual feedback. They will listen more closely because they need to know what else your firm can do for this stakeholder.
Your firm will adapt faster to changing markets
In a traditional product-driven firm, most feedback is ignored. A customer tells your salesperson their needs, and that salesperson tries to sell one of the three products she has to offer. There’s little she can do with such feedback, because the firm has a limited and inflexible product offering.
But a firm that makes these two changes is able to respond to feedback by customizing the products and services they deliver. Almost every time a stakeholder says, “I wish this was different,” you can make it different.
In such a firm, change and adaptation is natural; it happens daily, one person at a time. Contrast this with product-driven firms, where change can be wrenching because it happens so rarely.
By focusing your people on two initiatives, modular capabilities and constantly broadening services, you’ll motivate them to make the right decisions. They will evaluate vendors and technologies based on their ability to support modularity. They will seek out customers, partners and employees that are most likely to respond well to a constantly expanding set of services.
What if you don’t do this?
What if you don’t implement both of these changes?
The first one obvious, and thus doesn’t require much explanation. Without modular capabilities, your costs will be higher than your competitors and you will be much slower to respond to changing individual and market needs. In other words, you will be toast.
But it’s not as immediately obvious why it is so important to constantly broaden services in order to support customer experience. To understand this point better, let’s think about the way each of us think about our personal financial services needs.
With how many financial services providers do you want to build close relationships? Are you interested in having such a relationship with every credit card provider, local bank, investment advisor and stockbroker than can find your mailbox or phone number?
Most people want one or two comprehensive financial services relationships. One would be most convenient, but it leaves you at the mercy of a single company. What if their rates skyrocket or their service levels plummet? Two keeps your options open while still making life convenient.
So if you are the product manager of a credit card, is it practical to think about using customer experience as a differentiator? The answer is no, unless you can coordinate your actions with a broad enough range of financial services to meet the customer’s needs. Few customers want a relationship with a single credit card; but some want to be able to access all their credit cards, bank accounts, loans, mortgages, and investments from a single provider.
When it comes to customer experience, size is an advantage, if companies implement the two steps I’ve outlined here. The more you can do for a customer, the better and broader your abilities to customize services based on their feedback, the more likely you are to maintain that valuable relationship for life.