Customer Behavior and CRM Advocate

Gary Lemke over at CRM Advocate  does some nice work.  Every day he asks a thought provoking question related to CRM and asks readers for their “take” on the issue.  Over the years he’s exposed me to a lot of good thinking and I encourage you to take a look at his blog.

A few days ago the subject was Daniel Kahneman, a psychologist who won a Nobel prize — in economics.  Kahneman and his colleague Amos Tversky laid the foundation for behavioral economics and challenged us with the idea that, while economics studies the rational behavior of individuals in the marketplace, we are not always very rational.  That means at least some of the time we are doing logical things for emotional reasons out there in the good old market.  Without fingering any single behavior this idea nonetheless explains a lot.

So with Kahenman as the basis, Lemke asks how often we do things in the marketplace that are emotional vs. rational.  He says,

“Now, let’s use to 80/20 rule and suggest that most customers in search of service (for example, calling the call center) lead with emotion. And let’s use the same 80/20 rule to suggest that business objectives and business processes drive primarily rational behaviors understanding that individual employees still possess emotional attributes.

The startling conclusion (and graphic) is that only about 16% of the time are both sides dealing in a rational/rational manner.  The big winner at 64% is “rationally dealing with the emotional” i.e. rational vendor dealing with emotional customer.

Yikes!  This doesn’t make any attempt to grade emotion from under control to crazy but it’s still valuable.

I don’t know if the 80/20 rule obtains here, but as I told Gary, it sure feels right.  If that assumption is even close (and I bet it is) then it is the best explanation I’ve seen for a focus on the customer experience.  Forget the rules, the metrics for call handling time and all the rest.  More likely than not you are dealing with an emotionally driven customer who needs some TLC.  Dispensing TLC all day is a hard job and perhaps this is one of the silent reasons driving people to social networks to solve problems.  What better place to find someone who empathizes with you?

The Howard Moskowitz Factor

In a Ted Talk from 2004 that I watched a the other day, Malcolm Gladwell spoke about Howard Moskowitz.  You might recall the New Yorker writer made a name for himself with the publication of The Tipping Point and several other works that focus on the unpredictable things that people do in the course of normal lives.  Gladwell’s Ted Talk gave me an insight about CRM.

Howard Moskowitz is a Harvard educated psychophysicist — whatever that is — who has made his bones in market research.  Moskowitz works in the food industry of all things and his great insight was that very often there is no single, perfect version of a product just as there is no single monolithic customer.  There are several product types that are attuned to the needs of clusters of customers.

Moskowitz’s contribution was in discovering that there is not a single big bell curve of a market for most things but he also showed that the market is not infinite or even made up of innumerable markets of one.  He showed that there is a multiple but finite number of clusters, of horizontal customer segments, in anything.  His breakthrough was to show that there are sizeable markets for multiple kinds of spaghetti sauce and that sauce is not a monolithic idea.

To be a little technical, this means that one’s Platonic conception of sauce, in this case, might match many other people’s notions of what sauce should be but, if given a choice, many might discover that they like something different.  In the case of spaghetti sauce Moskowitz’s research replaced a single kind of sauce with six types ranging from traditional to garlicky to chunky to spicy and more — just check your store shelves.

By evolving from a one-size fits all approach to one that embraces customer diversity Moskowitz was able to improve customer experiences with food products from coffee, to cola, to spaghetti sauce and beyond.  Embracing diversity goes by the name of horizontal segmentation and it applies equally well to food products as it does to other customer experiences.  For what is a food product but a customer experience in material form?  Horizontal segmentation seeks to understand what customers want and then to deliver it.

In our own design of customer experiences we often ignore horizontal segmentation and simply try to deliver an experience that most people will find acceptable, which is to say our Platonic conception of the experience.  In fact, smart companies are designing customer experiences leaving nothing to chance.  But what’s acceptable to the big Bell curve is very different from wowing the customer.

In customer service, for instance, we’re at least on the right track because service suites offer a range of communication modes today.  With these modes a customer can at least select the setting of an interaction.  But what about the content of the interaction?

This issue highlights the importance of social media tools that capture customer input and render it in the moment.  They can do what Moskowitz did for a fraction of the cost and time.  If a vendor or service provider can be in the moment with the customer, a vendor is more likely to be able to respond to a need as it happens.  This amounts to horizontal segmentation on the fly or just in time horizontal segmentation.

If you link together enough such interactions you can deliver a differentiated customer experience in the same way that you deliver a movie by rendering a lot of still frames in rapid succession.  But note that the key is in the ability to rapidly respond, it has less to do with the medium you use and it’s about as far away from the metrics we love to track like time in queue or ensuring we use the customer’s name or anything else that is temporal but off the mark.

Horizontal segmentation on the fly solves part of a problem.  It helps us get through a customer experience at hand but it doesn’t give much insight into better alternatives.  If Moskowitz had stopped at the sauce at hand, today we’d have a very good conception of traditional spaghetti sauce but we’d be unaware that deep in the marketplace there were opportunities for more chunky or garlicky concoctions.  The sauce companies made a lot of additional money catering to new tastes but only once they had done the research and began to offer multiple alternatives.

So while being in the moment is important it’s not enough.  It’s still critical to use social tools to ask the marketplace open-ended questions in order to capture unique insights.  You don’t know where these insights will lead but it’s a sure bet that they are literally the secret sauce for differentiated products and customer experiences in an era when commoditization is turning our perspective into shades of grey.

The meta customer experience

Last week I looked at an interesting downside of social media.  Social media makes it possible for anyone with very little effort to start a blog or social group that thrashes a vendor.  Generally speaking the people behind these sites have a gripe that has a fragment (or more) of truth in it and it would be harder for a corporation to fight these annoyances than to simply let them be.  That strategy implies that the publicity acquired by fighting is greater than what’s gotten if the perpetrators simply do their thing.  Twisted up in all this is the concept of the customer experience.

Customers who take the time to start a blog or other social site with the title “[your company’s name] sucks” are more than a little bent out of shape as evidenced by the effort they spend dragging your name through the mud.  In part one of this series I showed how I discovered this trove of social CRM research just waiting for some analysis.  This week it’s time for analysis.

As I mentioned in part one it is amazing that much if not many of the critiques of companies have less to do with actual product or service issues and more to do with what I call Level 2 customer experience but we could also call it the meta experience.  The meta experience in on full display at the “BP Sucks” sites where people tear into the oil company for its runaway oil well in the Gulf of Mexico and other issues.  People these days aren’t disposed to love oil companies and the disaster appears to have put them over the edge.  Other oil companies have their detractors too but none except Exxon have a greater negative following.  As the largest company in the world, Exxon is in a class by itself.

Even categories of entities you’d think were or should be immune from the phenomenon get rung up.  My best example is the Ivy League colleges.  Yep, the Ivies.  You would have thought that people who get there would have nothing to complain about but in this free-swinging era you’d be disappointed.  Some of the Ivies have suckometer readings that would make a corporation blush.  Topping the list of Ivy League schools on the suckometer is Dartmouth with a very healthy About 1,080,000 results (0.38 seconds).

Why is this?

Well, to coin a phrase, I guess if you live by the customer experience you also die by it.  The entities that have some of the greatest problems seem also to be the ones that have least control over their customer experiences.  Many companies today actually try hard to design good customer experiences.  In an interview with Greg Gianforte, founder and CEO of RightNow, recently I learned about how hard that company tries to design its own customer experiences and how they try to instill the importance of design in their customers.  I think it’s working too.

But what few of us ever expected is the idea of the meta experience — the experience your customer has as a result of mere insinuations made my your company, usually in a different context.  Starbucks is a good example.

Starbucks sells an experience much more than it sells either coffee drinks or edibles and that experience shapes how its customers perceive the company and — surprise — how they see themselves.  Starbucks is not alone in this and when a company falls down over some issue that affects how people see themselves, fans become detractors.

Clearly, if you care about what your customers think and say about you then not only do you need to design the primary experience but you have to look out for unintended consequences or blowback from every action you take — a.k.a. the meta experience.  That sounds hard and perhaps it is, but here are some ideas to help.

1. Understand what you stand for and make it part of everyday life.  Companies used to have (still have?) mission statements that often included words about ethical treatment of customers, employees and vendors as well as concrete descriptions of what they do.  For instance, Google is famous for a somewhat tarnished and unofficial one-sentence summary, “Don’t be evil”.  People are watching so it might be time to dig up the mission statement and make sure it influences your business decisions.  You know, walk the walk.
2. Test your customer experience design with real people.  This is really just a quality control step and I’ll bet lots of companies engineering customer experiences only go so far as to test if anything breaks along the way and see if every sub-process ends properly.  You need to ask real people who are not interested in your profit and loss statement to break the design before deploying it.
3. Think outside the box.  In this case the customer experience design itself.  Use communities to gather data about your customers’ attitudes, needs and biases.  If you run the community right (get help if you need it) and people freely reveal their thoughts, the process will reveal things you would never even think about in a million years.

This is important.  In market after market today, the pecking order is already established — we know who is number one and who is supposed to be trying harder.  In other words, there are fewer green fields to go after and few net new customers to get.  The way to growth and profitability today is to keep the customers you have and now and then steal some from the other guy.  Providing inadequate customer experiences — even unintentionally — is a sure way to lose in this zero sum game.

Experience is in the eye of the beholder

Last week in New York, I began some field research in social CRM that will result in a longer paper later this fall. One of the things that interested me was the level of frustration and, well, anger that some customers have for some of their vendors.

It’s a mixed bag, really — some people take great umbrage at Starbucks (Nasdaq: SBUX), others at a social networking site, and still others target their ire at oil companies, their colleges or even retailers.

In my research, there isn’t a single industry — or vendor, for that matter — that doesn’t have a group of antagonists.

This should surprise no one, but in the age of the Internet, some people might stew in their own juices over a problem or slight — either real or imagined — that happened just yesterday or one that goes back several years, but many others take action by airing their gripes online. If this is the age of transparency, it is not simply about vendor transparency — customers have a lot to say on the idea and they do.

Everyone Has Their Enemies

For part of my research, I relied on the highly subjective and unscientific international expression of annoyance and resistance to corporate affronts — I searched on the phrase “[insert name here, please] sucks.” Dear reader, I understand your delicate sensibilities, and I assure you that my interest in this research and the use of this mild form of profanity is not at all prurient — it is used in the furtherance of science. Think of me like a doctor or a photographer for National Geographic.

My reasons for beginning this quest are not germane to this piece but will be explained in the paper. Nonetheless, the more I searched, the more I realized that any company you can think of that serves the mass market has its detractors. These detractors have reached a personal level for frustration or loathing sufficient to cause them to invest many hours of their time to initiate Web sites and blogs to drive their points home and to invite others to likewise vent their frustrations.

In all but the smallest number of cases, searching on “___ sucks” brought to the screen not thousands or tens of thousands of hits but hundreds of thousands, and in many cases millions of them.

Dissatisfaction on 2 Levels

Here’s where it gets interesting. It is no surprise that some people have problems with corporations that supply them with life’s necessities. I can’t say that I have read or analyzed more than a small speck of the rants online, but after spending several hours with these for a, I feel safe in stating this preliminary conclusion: People are less dissatisfied over products or services than you might think. They are much more likely to have problems with their customer experiences.

But saying the customer experience is an issue really understates the point, which is that it appears there are at least two levels of customer experience to contend with. Moreover, it is the second level that gives many corporations agita, or at least it should.

The two levels? Thought you’d never ask.

Level One is the customer experience that the company knows about and in many cases designs around.

Level Two is the customer experience expectation that has developed in the customer’s head.

A company may not even be aware of Level Two — how could it be? It’s completely subjective. But level two is where companies falter, often badly, because of the impressions they have unwittingly encouraged to take form in their customers’ crania. More on Level Two shortly.

A simple example is all we have room for here, so it will have to suffice until the paper is ready. Note there are loads of variables in this data that are unaccounted for, and controlling for them will probably inform the work of thesis writers for the next generation. You are welcome.

Starbucks is the example. Searching on “Starbucks sucks” brought back 335,000 hits in 0.15 seconds — the number of hits seems large but broader research proves it to be middling at best. If you want some really scary numbers, try “BP Sucks” — about 2,510,000 results (0.38 seconds), according to Google (Nasdaq: GOOG), or “Facebook sucks,” clocking in at a whopping 24,300,000 results (0.19 seconds).

Case in Point: Starbucks

Reading the posts on these sites provides a clear understanding of Level Two. To be sure, there are Level One critiques of products and services — the absence of non-dairy creamer or the extra charge for soy in espresso drinks, for example. But extensive reading shows that many more of the complaints deal with Level Two and aspirations.

For instance, the reason many people patronize Starbucks’ shops is the vibe. People want to associate with Starbucks because it reflects the image they have of themselves in a Gatsby-esque way — it shows how they want to see themselves on their best hair days. They seem to see themselves as kind, ethical, caring and nurturing people.

So when Starbucks has a disagreement with African coffee growers over trademarks and the price of raw beans, people complain. They also complain about the wages and low level of tipping for the baristas and they are happy to supply reports from Oxfam on the African situation and information about a successful lawsuit over tips in Los Angeles by baristas against the chain. Two sides play this game — consider the Starbucks water brand “Ethos.”

These and many other examples of Level Two failures point out the downside of living by the customer experience. It seems to me that many large companies have taken the approach of doing their best on Level One customer experience and of working to ensure that Level Two never gets totally out of control, a la BP (NYSE: BP).

What can a company do about it? Plenty, as it turns out, but it requires a different kind of thinking and another column. Next week, part two of this piece on how to approach the Level Two customer experience.

The IP your customers can give you

I wasn’t sure what the reaction would be to last week’s column on customer experience.  Maybe I hang around with vendors and other analysts too much because customer experience is a hot topic among us and it’s generally seen as a good thing.  But judging by last week’s mail and some further digging at the Harvard Business Review’s website, it appears that there are at least two camps with decidedly different views on customer experience.

The mail from last week was very positive and many people wrote to tell stories about encounters with vendors that were very pleasant but unproductive.  For instance, Cary Fulbright wrote about an experience with PacifiCare Health insurance that took nine months to resolve.  And another writer, Mark Hochhauser, wrote about difficulty upgrading Comcast service that should have been free but wasn’t.

I decided to do more digging at Harvard Business Review and got more of the same.  HBR’s blog has numerous articles by business gurus who describe similar situations.  The common denominator I see in all these sources is that companies — wittingly or unwittingly — leave their support people hanging with nothing between them and irate customers but scripts and pleasantries or scripts about pleasantries.

Too often companies are using “customer experience” as a firewall between themselves and customers.  Instead they should see that customer experience is only half of what they need to be doing.  Customer service is often a repair mechanism for something that went wrong up the line.  In manufacturing we learned a long time ago that building quality into a product has to be done at every step of the manufacturing process.  If you wait until the end and perform a perfunctory quality inspection, you will only catch the most egregious problems and your service and repair business will boom, which is not a good thing if you are providing a warranty.

The other half of customer service and the thing that balances out “Have a nice day!” is overt and outbound customer engagement.  If you want to build quality into your products and especially your services, you have to know what works and what doesn’t and if you wait for a customer satisfaction survey to do it you have missed the opportunity.

Instead, this is where social media should come in.  We’ve done a good job of using social media to market and sell, to the dismay of some, but what we haven’t wrapped out brains around — at least not enough — is how to use social media to proactively reach out to customers.  It’s too bad because the result of that outreach is intellectual property (IP) and by not gathering it a company is leaving money on the table.

Most often we think of IP as the stuff that the engineers, designers and others develop and patent in the back office or in operations.  There’s no need to patent the IP of the front office because it is unique to the company and at any rate a patent would spill the beans to your competition.  But think about it, if your customers open up (and they will) and tell you how to make your products, policies and services better isn’t that worth a lot?  Companies that use customer experience to deflect haven’t figured out yet that they are deflecting IP and with it the ideas that can help make them great.

Getting back to last week, if Toyota had been more customer focused over the last couple of decades they might have seen the braking and acceleration problems as opportunities to gain valuable IP and help burnish their image as a company you should want to buy a car from.  But multiple recalls suggest that the company’s attitude was that it would like to be customer focused if the effort wasn’t too costly.

So what was the cost?  Set aside the dead people for a moment.  According to the AP, in February 2010 car sales were up 13 percent over the same month in 2009.  Ford was up a whopping 43 percent while Toyota was down 8.7 percent.  Prior to the recalls Toyota had been challenging GM for leadership but as of last month Toyota’s share was 12.8 percent, GM was 18.1 percent and Ford had 18.2 percent.  Ford sold more than 42,000 more cars than Toyota in February.

The tough thing about customer experience is that a company has to feel it in its bones.  A software vendor can provide products that enable you to implement your vision for customer experience, but that’s it.  If the vision doesn’t extend from fixing the problem in customer service to fixing root causes and sustaining a culture of customer focus fueled by harvesting the IP that customers can provide, you might be toast.  If I was a CRM vendor I would be sensing an opportunity right now.

Customer experience as IP

Thanks to all of you who took the time to comment on yesterday’s post.  The response was very positive both in emails and in comments.  The experience showed me that there are at least two schools of thought on the subject.  One side is the vendor and analyst camp, which is supportive of the customer experience idea.  The other side is customers who have seen the results and many of whom are not impressed.  I consider myself in the middle.  I understand the usefulness of customer experience ideas but I am not persuaded that the empathetic approach is enough.

I went digging at the Harvard Business School website and found a trove of commentary by business gurus on the shortcomings of customer experience and if you are interested in the subject, please check it out.  What comes across in all this is that while a focus on customer experience is nice — even good — it’s not enough if there’s no culture behind it.  Not just any culture but one that sees customer input as more than a bother but as a real opportunity.

I have started calling the information that customers want to share with their vendors, intellectual property because it is.  Customers have valuable information that can benefit their vendors exclusively and it’s free if a vendor knows how to ask.  The asking should take place in communities set up to gather the information and such communities also can help surface new product and service ideas.  Even policy can be influenced through communities and it’s all intellectual property.

So what might it mean if vendors aren’t collecting this freely available IP?  They’re probably leaving money on the table.  Now, with that in mind, should customer service or customer interaction be seen as a cost or a hidden benefit?

Can Customer Experience Block Progress?

Customer experience reared its head in my life this month.  My phone service went out which was not a catastrophe for me because in addition to the landline (which went out) I have a cell and a nifty VoIP line that lets me talk through my computer.  Parenthetically, I love my VoIP line because — though I live in the Boston area, the VoIP line has a 415 area code, which you may know is San Francisco.  I don’t know if it’s my heart that’s out there but certainly a piece of me lives in San Francisco and for some reason that makes me happy.

At any rate, the landline went down, first with an annoying background hum and then I lost dial tone.  I’ve become an old hand at diagnosing the problem because it happens every winter when a certain manhole gets some water in it.  When the weather dries up the problem recedes into memory but it comes back every winter.

I am also something of an expert at summoning the phone company by filling out the obligatory form on the web site and, because I am a repeat customer, I have a special phone number that I can call directly.  Actually, after this latest round I have multiple numbers down to supervisors’ and technicians’ cell phones.

No matter.  The problem I had got fixed a couple of times and each time I got calls from customer service, some of which were automated, telling me that the phone company had wrestled the problem into submission.  In one incredibly ironic moment, when the phone company’s survey team called to check on my satisfaction with the service, the hum came back on the line and the person on the other end had to admit that she couldn’t hear me well because of it.  So, the problem is solved as I write this but the weather is threatening so it remains to be seen whether the fix is permanent.

I thought I could use this experience as sort of a thought experiment in customer experience.  I am happy to admit that the way the phone company handled my problem was top notch.  Everyone seems to have been trained in customer empathy — a term that I prefer over customer experience.  But empathy only goes so far.

Over the years I have seen a parade of empathetic phone company representatives, usually the technicians who stand outside on rainy days or climb down into the wet manholes to make the repairs.  These people do everything that they can to provide service but what’s management doing?

The technicians fix the problem and they do a great job but it’s management’s job to zero in on the root causes and spend the money necessary to eliminate the possibility of repeat.  So the question I have is this: Does management hide behind customer experience optimization in order to deflect more serious problems?  And if so what does this say about the proper use of CRM?  In helping deflect customer issues, has CRM become part of the problem instead of the solution?

I have always been skeptical of the customer experience movement for this reason, because if you can focus on the generic “experience” instead of putting processes in place that actually solve problems this is what you get.

My landline woes are a tempest in a teapot; being without phone service these days is not a hardship since most of us have multiple lines that get to us one way or another.  So it’s easy to watch the resolution play out with a sense of detachment but consider the mess that has become the Toyota recall fiasco.

As the congressional hearings investigating the problem of sudden acceleration played out I heard about and read story after story of customers who experienced unintended acceleration and the common denominator was never found to be a mechanical or electrical problem.  Toyota refused to believe an electrical problem could exist.  Instead the common thread was dismissal by the company or by the US Department of Transportation of the complaints.  Often the finding was operator error.

What I saw was stonewalling over ever really trying to locate the problem wrapped in polite letters and diligent dealers trying to figure it out.  Customer experience.

All this has a tragic dimension because people have died due to the problems with these cars.  Even more tragic though was this heartbreaking revelation.  I was watching Ed Shultz on MSNBC on the day of the hearings before the House Energy and Commerce Committee.  Shultz was interviewing Bruce Braley (D-IA), one of the committee members, and mentioned the case of Koua Fong Lee of St. Paul Minnesota.

Mr. Lee was sentenced to eight years for criminal vehicular homicide because his 1996 Toyota Camry accelerated on an off ramp and plowed into another car, killing a father and son and leaving another child a quadriplegic who later died.  Lee’s defense at trial was sudden uncontrollable acceleration but the jury didn’t believe him because, heck, he was driving a Toyota and we all know how reliable Toyotas are.  Sadly, Lee’s story is not unique.

As far as I am concerned, customer experience had a part in killing those people.  It gave a company a way to deflect a serious problem while pretending that it was doing the right thing.  Customer Experience is an important part of dealing with customers but it should not be seen as a panacea.  Companies have to take responsibility for top notch business practices that address root causes.  Customer experience is table stakes at best and when it comes to building sustainable customer relationships it is not good enough.

Sell specific benefits

I was in a conversation with the CEO of a CRM company the other day discussing the latest moves in the industry over ideas like SaaS, single tenant and multitenant deployments.  It has occurred to me and I said this to the CEO, that we spend far too much time and brain matter on the delivery model and too little on how we provide value to the customer.

It’s a problem that you see a lot if you know what to look for.  It happens whenever one vendor or even an individual comes up with an idea that seems to attract customer attention.  Once that happens, the competition is all over the idea like flies on a fresh meadow muffin and the whole competition moves to one dimension.  I’ve seen it on numerous occasions in my ten years covering CRM and the single tenant vs. multitenant debate is just one example.  Other examples include the customer experience and social CRM.

Now, to be sure, all of these ideas are important but they also hit wide of the mark.  The mark ought to be how I as a vendor deliver value to you the customer and whether that value is sufficient to warrant a purchase.  Ideas like low cost and fast implementation or improving the customer experience are, by their nature, designed to appeal to the buying influences in the complex sale of CRM.  They appeal to the CFO or the CEO.  Customer experience may appeal to the VP of sales or the VP of service and so on.  But you can’t take any of that to the bank.

There is an implicit assumption in all of this, that a CRM product is in all other respects the same as all others in the market and that this single idea is the one worth contending over.  That’s a road to disaster if you ask me because only one company can be the best at the attribute in question and then everyone else is scrambling for second place.  That’s a path — no, make that a short cut — to commoditization.

It’s a harder sell to talk about the customer’s needs and what makes them unique and deserving of unique treatment — often the customer doesn’t know and the sales representative might not have the training or knowledge to help figure it all out and sell to those needs.  Too often in early markets customers buy market leading products regardless of their merits and vendors accommodate this need by bragging about market share.

If we could focus more on how we deliver specific value, the sales and marketing conversation would be richer and you might actually see one vendor competing for business based on a specific need as well as other vendors competing on delivery model or price etc.  But that’s a scary place to be if you are a sales person.  Your customer wouldn’t necessarily be comparing you with the other guys in an apples to apples way so how would you know if you were winning?

Selling has always been a numbers game meaning that sales people needed to see as many people as possible, have as many contacts and opportunities as possible in the hope of closing some of them.  That was the original assumption of CRM.  But if you are at all cognizant of the marketplace these days, tightness in the credit markets has caused a significant amount of demand destruction and that has changed the terms of selling.

We don’t have full pipelines because of demand destruction or, if we do, there are many more suspects who can’t buy for one reason or another tied to budget.  In this world selling the advantages of your delivery model or your low cost may not be as valuable as telling your customer specifically how your product can help make money or save it.

We’re in a cross sell/up sell market today in which we’re trying to sell something else to a customer that has bought from us before.  In that climate it should be easy to talk about using products that enhance a specific business process or function.

Customer experience or service product?

There is a difference between a customer experience and a service product and it is worth noting the distinction.  We seem to obsess about the former and almost ignore the latter and that’s too bad because I think there is money to be made in the difference.

The distinction reminds me of the big discussion that went on a few decades ago over quality.  At the time imports from around the world, but principally Japan and Europe, were cleaning our clocks because they were perceived to be of higher quality than domestic brands.

In typical American fashion we mounted a comeback strategy to bring our quality up to world standards and for a while smart business discussions were all about quality.  It reminds me of the last few years and the relentless emphasis we have placed on the customer experience.  Let me say that emphasizing anything as fundamental as this can’t be bad, in moderation, but there’s more to consider.

My interest in the customer experience was provoked by a long series of calls between my wife and our mortgage company, a typical big bank.  The problem was that the bank had failed to pay our property taxes though it was clearly their responsibility because they collect the money each month and hold it in escrow.  The problem got worse as we waded into it.  Not only did the bank not pay our tax bill but also they had inadvertently paid someone else’s with our money.

My wife had a series of calls with bank representatives who work in the call center.  Each bank agent promised to fix the problem, each tried to reassure us and each was pleasant and professional told my wife to have a nice day at the end of the call.  My wife ended each call thinking that the agents were “nice” and that the problem had been solved.  Unfortunately, there was no follow up and here I will let you imagine the rest.  After four “nice” conversations the problem is still there.

Now if this was a manufacturing problem I would say that the product is broken and that the bank has a quality problem.  The typical response when quality became an important value in manufacturing was to improve final inspections and it worked.  Certainly a lot of inferior product was kept from the customer but the manufacturer also ended up with a lot of products that needed fixing.  Clearly something else had to be done and that led to the idea of designing quality in rather than inspecting for it.

I think our focus on customer experience is a lot like focusing on quality.  Just as you can’t separate quality from the whole manufacturing process you can’t separate the customer experience from offering a high quality service product.  My wife is more tolerant than I am and left each encounter (so far) encouraged that the situation would be rectified.

Intense focus on the customer experience has left us with a hollowed out service product, at least in this case but I will extrapolate here.  It appears to me that the bank might be incenting people to be nice but also to pass the ball and not care too much if the ball falls on the ground and dribbles away.

This experience vividly shows me and I hope others that there are two parts to customer service — the customer experience for sure, but also delivering a quality service that goes well beyond being nice or professional or any other qualifier that to attribute to the people involved except one.  You still have to get the job done, and CRM needs to ensure that aspect as much as it addresses the experience.

Customer experience or service-product?

Last week I made the suggestion that we have over done our reliance on customer experience as a customer intimacy tool — something that I stand by.  The idea of customer experience looms large and there is no denying its power as a theme in CRM.  But if our interpretation of customer experience is off the mark, as I think it is, then what is the right approach?

First, by way of review, customer experience has come to mean a literal experience had by a customer with a vendor, product or service rather than a product or service cultivated — through value add — to be an experience.  The customer experience as we know it today is a method of establishing customer intimacy and it is only one of several intimacy strategies that we should consider using — along with product line extension, product enhancement and marketing.  All of the other intimacy strategies require some greater knowledge of the customer, especially understanding customer attitudes, which can be gained through communities and other social media whose focus is information gathering rather than message or idea elaboration.

What separates customer experience, in my mind, from other intimacy strategies is that all the other strategies deal with “the thing itself”, either a product or a service.  Customer experience is a meta-intimacy strategy because it operates at a level of abstraction above the thing itself.

It strikes me that when we talk about the customer experience, what we really mean is our service-product.  That might seem like a distinction without a difference but it is not.  The hyphen between service and product is deliberate.  In conjoining the words it emphasizes an idea that might not be strange to us but it is often subliminal.

Customer experience, is generic, a thing to be achieved through prescribed processes within an organization, an outcome with few inputs.  A service-product on the other hand, is more open-ended.  It takes whatever shape a customer gives it and it is different from brand to brand, person to person.  A service-product also has this key difference from an experience — it captures or ought to capture customer input well beyond the hoped for conclusion of satisfaction.  A well-executed service-product looks for root causes, captures data and influences future company decisions about product and brand.

Replacing a customer experience orientation with a service-product idea will do several things for any company.  As I have tried to say elsewhere, the current description of customer experience amounts to little more than the “ordinary care” that hotels owe guests.  But no one competes on ordinary care because it is so easy to supersede.

We try to develop customer experience as a way to differentiate and while that may be a good thing, some products and services simply cannot be cultivated into customer experiences.  Consider root canal.  It is a service that will never be cultivated into an experience — except for the pain killers as one experienced patient told me recently.  If we attempt to convert a service like this into a customer experience we run headlong into a wall.  Far better to look for ways to improve the service product than attempt to make it something it is not.  Also, since only some services can be cultivated into true experiences, it can relieve managers and line of business people from the contortions necessary to attempt to achieve a customer experience.

A true service-product orientation is an instant differentiator.  Like any other product, a service-product can be differentiated based on customer input.  In contrast, a pre-determined customer experience is a playbook to be executed and the customer is almost a by-stander.

The good news is that many companies already approach the customer experience as a service product and they are highly successful at knowing their customers as well as ensuring their satisfaction.  Notwithstanding this success, I believe it is critical to get our terms right, to focus on the service aspect rather than sticking to the literal meaning of experience.  If we fail to get our terms coordinated we risk ignoring real opportunities for innovation in our businesses.  And at some point an ossified customer experience idea will fail to meet the needs of those whose need is for service-products.  When that happens we will wring our hands and ask how and why CRM failed us.  Of course it won’t be CRM that failed but our vision.