Wednesday, May 31, 2017

Brand Maintenance

The following are notes from a presentation about the decline of quality in the brick-and-mortar service industry – while the speech was about restaurant management, the content seems to have direct application to customer experience in any channel or industry.

The speaker cautioned about four warning signs of a company in decline:

  1. Employees no longer care about the customers.  When a customer identifies a problem, the employee refuses to acknowledge it or take any action outside of their routine duties to solve it.
  2. Maintenance is poor.   There is basic and obvious neglect in the physical environment: peeling wallpaper, a thick coat of dust, dirty or broken furniture, worn-out tableware.  All of this seems superficial, but is significant as a symptom.
  3. Commitments are not made or honored.  The company’s basic promises to customers are not being kept.  Customers are stalled or brushed off in hopes they will go away and simply accept that their expectations will not be met.
  4. Employees show no initiative and merely follow orders.   Rather than going above and beyond the call of duty to ensure customer satisfaction, employees take a not-my-job attitude and do nothing to address the problems they see.

Each of these are immediately visible to customers, and many of them exasperate or disgust them.  The customers who feel a strong affinity to the brand will complain, in hopes that their experience is an unusual incident, and in hopes that management will take steps to remedy the problem and recover.

Customers who do not feel an affinity for the brand will not complain, but they will also not return to do business with the firm.   Because they do not have experience with the brand, they do not see these minor deficiencies as exceptions to otherwise excellent service quality because they have never experienced excellent service from the brand.   The service, as deficient and unacceptable as it is, is what can be expected of the brand.

The concept of the ”brand halo” suggests that customers will be forgiving, but only for a time.  The halo dims, and the customers forget the way things used to be, or accept that the deficiencies they experience are the new way of things and that is what they can expect from the brand going forward.   So experienced customers become disillusioned customers, and eventually former customers of the brand.

Customer advocacy is briefly mentioned: any customer who advocated for the brand is personally disgraced when a friend or acquaintance takes their recommendation and has a disappointing experience.  If the problem is not amended, the advocate no longer advocates for the brand – and even if the problem is amended, there is reluctance to advocate.  In this way, the poor experience of new customers diminishes the brand equity with established regulars.

When the level of service falls to such a poor level, this creates opportunity for competition to move in and take away customers simply by doing the basic things that your firm should have been doing all along.   This is often the very method by which newcomers and upstarts topple industry giants who have become inattentive and apathetic.

In the end, it’s about maintenance – and maintenance may be unglamorous, but it is critical because the reputation of a brand is not permanent: all the work and money that has been poured into establishing a reputation is wasted if nothing is done to maintain that reputation.

And it is simply a matter of being inattentive: the management of a firm must not be so focused on the new that they neglect to maintain the old.   They must not be so focused on the big things that they let the little things slide.   In the end, a brand can only remain strong by being attentive to the little old things that customers have come to expect of it.

Wednesday, May 24, 2017

Looking for Good People

Like most LinkedIn users, I periodically get a wave of overtures from recruiters when firms are seeking to fill position with experienced candidates – it’s validating and gives me a sense that I’m in a growing profession – but this recent round I have become sensitized to the words “looking for.”   It’s a fairly standard and entirely sensible in a recruitment letter to say a firm is “looking for” experienced candidates, “looking for” certain skills, “looking for” those who are capable of accomplishing specific things.   But for whatever reason, those two words are beginning to get under my skin.

A company looks outside its own operations to obtain from the outside world the things it is unable to do for itself, or is unable to do as effectively as other firms – services that must be outsourced or contracted because the company does not have the core competence to do these things for itself.  A firm must look for a vendor to provide payroll accounting or social marketing because it simply isn’t any good at those tasks, and hasn’t the first idea how to develop that capacity internally.

Considered in that light, a firm that is “looking for” good people is implicitly admitting that it doesn’t know how to make its own – and must lure away workers who were trained in other companies, those who presumably have the competence to not merely hire and use talent, but to grow talent internally.  In a broad sense, it’s the tragedy of the commons – with every firm assuming that other companies are able to train and develop talent so that they can hire it away.

So the question arises: what firms are capable of making good people to fill the need of other firms that do not?  A partial answer might come from my recent experience in rebuilding a department after all their experienced employees departed within a period of months.  This firm is the hands-down leader in customer experience, with customer satisfaction ratings that left the second-place firms far behind – but when it sought to grow the discipline within the organization, it filled all the top slots with outsiders (people from firms who were second- or third-rate) and the experienced people, feeling unrecognized and unrewarded, sought positions in other departments or outside the firm.   This company grew good people, but failed to retain them.

And thus begins the downward spiral: a company does not invest in developing talent because it also does not invest in retaining talent.   Such a firm can only lose its best people, into whose professional development it has invested a considerable amount of time and money.  It then comes to the conclusion that it is not worthwhile to develop talent because some other firm will simply hire its good people away (which is a kind of psychological denial of its own inability to retain them).  And so it stops developing good people and starts to hire them from outside.   (But in this case, if you are the leader in a given field, the personnel of other companies are not as good as the ones you have, and have lost.)

And in the same situation, I was faced with a significant problem: if experienced people had left, then experienced people had to be hired to replace them.   There wasn’t time to hire a flock of recent graduates and bring them up in the profession – or at least, that was the response I got when I made that suggestion.  It was the same response I had received when I made the same observation years before: that there weren’t many greenhorns in the ranks to replace the old salts when they matriculated or left their positions.  So the net result is that the senior staff was all hired from firms that were not as good, and these second-rate individuals would be the new leadership to train the junior staff.   The prognosis in such a situation is not good.

I expect this situation is far from unique: a firm seeks to develop talent internally, then fails to reward and retain the talent they have developed, and their most talented individuals are lured away by other companies who lack the ability to develop their own talent, who are “looking for” and willing to adequately compensate people who developed skills at other companies that fail to retain them.  The folly of this is clear, but folly is perennial.

And so, I despair there is not a firm who sustainably grows and retains its talent – that through a brief period of crisis or a sustained degradation of culture, even a firm that has the capability to make good people out of raw recruits will cease to do so, and join the many who are “looking for” talent that it cannot (or will not) produce internally.   It’s perhaps a healthy thing that the giants of industry should crumble and make way for the next generation, perpetuating the cycle of life and death in the corporate jungle.

Wednesday, May 17, 2017

Sleeping Watchdogs

It’s fairly well-known that older generations (Silent and Boomer) are more easily influenced by advertising than younger generations (X and Millennial).  The various explanations for this phenomenon, such as media saturation, rang hollow – but a chance conversation with a few members of the Silent Generation led me to better understand their relationship with advertising.  They believe the watchdogs are still awake.

More explicitly, when asked why they believed the claims of an advertiser, the response was invariably that “they wouldn’t let them advertise it if it weren’t true.”
When asked who “they” are, these watchdogs that would prevent advertisers from making false claims, their answers were the media and consumer protection agencies.

Older generations believe that the media is selective in accepting advertising: that when an advertiser buys a magazine or television ad, the publication or network reviews the advertisement and validates that the claims will be delivered upon.  They also believe that consumer protection agencies are proactive in doing the same – that there is some mechanism by which claims are tested and only those which are true are allowed to be communicated to the general public.

Perhaps this was true in the golden days of their youth – I cannot speak to the past – but in the present day, the notion that the media, consumer protection agencies, or anyone stands between a deceptive advertiser and the general public seems incredibly na├»ve.  

The media are paid by their advertisers, and will run almost any advertisement that anyone is willing to pay them to run.   The one exception is that if an advertisement would be offensive to their audience (by whatever standard), the medium realizes that it would do them financial harm (by causing member of their audience, whose attention they wish to sell to other advertisers, to tune out).   I am unaware of any instances in which a television channel, radio station, magazine, billboard rental, or any other medium was ever held accountable for the content of the advertising it helped to promulgate.

Consumer protection agencies, even those backed with government authority, are not proactive.   They do not have the mechanism to be proactive (there is no required review of an advertisement before it is published), nor do they have an interest.   In the same way that the police can only respond after a crime has been committed, so must the protection agencies wait until deception has occurred and damage has been done before they have any basis to take action – and even then, they bear the burden of proof that there was deception, and that any damage was a direct result, both of which are very difficult propositions.

In all, it is more a matter of faith than fact: the older generations rest on the assumption that the watchdogs are awake and that any advertising message that reaches them can be believed – so they do believe it.   Meanwhile the younger generations are skeptical of advertising and have no such assumptions, nor are they likely to become more trusting and gullible as they age.

And understanding this premise, it makes better sense why advertising is less effective with younger generations in the marketplace, and unless the watchdogs wake, it is doubtful that advertising will ever regain its credibility.

Wednesday, May 10, 2017

Research for Innovation

While I am general a strong proponent of research-based approaches to innovation, I often see research being misused in a way that prevents research.   Either the wrong kind of research is conducted, or its results are used in the wrong way, and the result is that an innovation effort becomes an efficiency improvement: no significant changes are made, but the results are marginally improved.

This is because research, by its very nature, is focused on present practices and present results.    The researcher seeks to discover what people are doing right now (or more accurately, he seeks to discover what people have done in the recent past) and those who consume the research use it to propose methods by which existing customers can keep doing what they are already doing and new customers can simply imitate the behaviors of existing ones.   It’s more of the same, perhaps slightly different.

To be innovative, one must disregard what people are presently doing and define a new way to achieve the ultimate result toward which their behavior is intended.  That is, rather than considering the things that people are presently doing, an innovator must seek to discover why they are doing those things – what goal they are attempting to achieve by their actions.

It could well be (and often is) that people are doing the wrong things to achieve their goals, or at least things that are not as efficient or effective as they could be.     Even if people claim to be happy with what they are doing and the results they are getting, this is not to be taken at face value.  There is the psychological tendency to justify past decisions and defend current practices, as well as the tendency to satisfice and accept a margin of frustration or disappointment.

And if the outcome of an “innovation” effort is to keep doing the same thing with minor adjustments, then the customer is being supported in the existing behavior without a substantial improvement.   It will be easier to “sell” the new idea because it isn’t really new at all, and the customer will experience a slightly lesser degree of frustration and disappointment than he presently does, but with less need to change.

In this sense, most of the existing secondary research is not suited to innovation: it tells us what people are doing, but not why they are doing it.   And that information is difficult to collect and even more difficult to quantify.   It requires probing deeper than a multiple-choice questionnaire, and applying greater effort to the analysis of the data collected – which may be one reason that so few sources are conducting the proper kind of research for innovation, and cling to the methods that gain information that justifies a continuation of business as usual rather than disruptive change.

Wednesday, May 3, 2017

Customization as the Abdication of Design

In an earlier post, it was considered that customization is a form of satisficing, an unhappy compromise between the cheapness and availability of mass-produced products and the expense and patience that must be abided to have something personalized.  But very often, customization represents an abdication of design: the maker provides an array of options for customers to customize the product to their own liking, because the designer has no idea what that might be.

The drawback to this approach is that it assumes that the customer has expertise.   To choose the product options that would best serve their needs, the customer must be highly familiar with the product, their needs, and the correlation of the two.   Where customers are not experts, their choices are made almost randomly, or at best on specious and superficial reasoning: the customer may choose a frivolous option (the color of a vehicle) over a more functional one (its cargo capacity).   

A second drawback is the additional effort necessary to learn the customization tools, which can often be overly complicated, again resulting in poor choice that will be discovered later.   This may be manifest in the inability to use a specific tool for a specific reason, or in the cognitive overload that results from too much choice, which causes customers to disengage or make a superficial decision to simplify the buying process, to the detriment of the ownership experience.

While the company may feel that it is exonerated from dissatisfaction due to the skill and choice of the customer, the customer still regards the product as unsatisfactory holds the maker to blame for his dissatisfaction.   The company is not typically held liable in the legal sense, but this is merely a short-term mitigation, as the customer’s perception of the maker is diminished considerably.  A disgruntled customer is seldom a repeat customer, and often a dissuader of other prospects.

There are of course mitigations to this risk: the maker may help the customer to understand their options and their impact on the ownership experience, or to visualize the totality of their choices before the purchase is made, but a mitigated compromise remains a compromise – it is “less bad” rather than “better” in terms of having a meaningful impact on the outcome.