1. Believing that delivering your brand does not require the active and continuing involvement of leadership.
Most leaders stumble the mumble rather than walk the talk. Senior executives, having concluded that the brand is under-performing, decide that it is a result of the customer-facing staff behaving in ways that are off-brand. They then issue a memo exhorting employees to “Put Customers First” or something similar. Executives then return to the important business of focusing on the financials. The irony is that these are a lagging indicator and not the lever for improved business performance that many CEOs seem to believe.
2. Abdicating responsibility to Marketing, HR or Operations.
If the CEO or president recognizes that it will take more than rhetoric to make a difference, the next common mistake is asking the Marketing Director, HR Director, or Customer Service Executive to fix the problem. The brand and the customer experience must be owned by the senior management team. Each function has its particular part to play, but to be successful, these three functions must operate as a triad to optimize resources, efforts and budgets to create an organization-wide strategy for delivering the brand.
3. Segmenting by demographics or account size rather than profitability.
A common starting point for our work is collecting customer data to inform the definition of a promise and design the new experience. The most frequent client response to this suggestion is, “We already have lots of customer data and research, so you don't need to do that.” In reality, while most organizations undertake customer research and collect mountains of data, relatively few know who their most profitable (not largest) customers are. The fact is that a few customers will typically represent the significant proportion of your profit, and these are the ones to focus improvement efforts on.
4. Assuming that you know what targeted customers value most.
Okay, so maybe you do know who your most profitable customers are, but do you know what these customers value, and the three or four most important attributes which drive their intention to repurchase or refer you? Without the answers to these questions you may have data, but you do not have insight. Without insight you cannot differentiate. Without differentiation you do not have a sustainable strategy.
5. Installing a customer relationship management (CRM) system and believing that it will automatically improve revenues.
Global expenditure on CRM systems is reckoned to have increased from US$ 20 billion in 2001 to $46 billion this year. Yet one survey estimated that 55 percent of CRM systems drive customers away and dilute earnings. This is because most CRM systems are installed without any thought about how they will be used to add value for the customer. These powerful systems allow companies to collect knowledge about the customer that can be used to offer them products and services tuned to their particular needs and preferences, yet many organizations (and banks like Capital One are the worst) use them as a blunt instrument to stalk, rather than woo, the customer.
6. Assuming loyalty cards create customer loyalty.
This takes us on to a common myth: that loyalty cards actually create loyalty. In fact, most don't. Even worse, many cards create customer promiscuity because their rewards are usually incentives and discounts which attract customers who like a deal. These customers have wallets full of cards covering every eventuality. True loyalty cards are about the organization being loyal to the customer, not the other way around. They do this through offering benefits and value-added services that can only be enjoyed by the most profitable customers.
7. Getting your ad agency to define or refresh your brand promise, communicating this to your customers, and expecting that employees in the organization can, or will, deliver it.
The UK state-owned Royal Mail decided to re-brand to reflect the broader range of services that it was offering beyond the traditional mail service. It spent millions of pounds on consultancy, signage, communications and advertising, but failed to explain to customers how the new brand would create value for them. It also failed to address the underlying performance problems and this led to market cynicism over the new brand. In a highly publicized U-turn, the Chairman confirmed that the brand name Consignia was to be phased out, and replaced by ...The Royal Mail Group.
Abbey National has fallen into this trap by re-launching its brand and communicating a promise that it lacks the credibility to deliver. It would seem that the management effort has focused more on brand image than brand action.
8. Providing the same vanilla training as your competitors (often provided by the same training firm).
Most organizations provide customer service training, yet very few are differentiated in the services they provide. The reason is that vanilla training creates vanilla service. This is not to say that generic customer service training is bad; it is not. In fact, some training companies have award-winning programs that really help to improve customer-facing skills and make service more consistent. But if your goal is to differentiate from competitors, you require branded training. In other words, training that is designed to bring to life the values of your brand in a way that is consistent, intentional, differentiated and valuable.
9. Expecting to differentiate through your customer experience when all your measures and reward systems are volume related.
Peter Drucker's maxim that “what gets measured gets managed” is still true today. Yet most organizations focus exclusively on end-results measures. Market share, profitability and EPS growth are all vital measures of business performance but they are all lagging indicators. They are a result of differentiation, customer loyalty and brand preference. The answer is to move up-stream to measure and manage those activities that drive desired results. The customer experience is one of the most critical.
10. Measuring customer satisfaction and believing that it matters.
This takes us to the last on our list of ten most frequent screw-ups: believing customer satisfaction creates improved results. Organizational change company Forum Corporation found that 80 percent of customers who switch suppliers express satisfaction with their previous supplier. Satisfaction has become the price of entry, not the means to win.
The only true customer measure that correlates with improved business results is advocacy. We define advocacy as those customers who give top-box ratings for satisfaction. Nothing else counts, yet we see many organizations adding up the percentage of customers who give “somewhat satisfied,” “satisfied,” and “very satisfied” ratings, and then congratulating themselves that “92 percent of our customers are satisfied.” One very large bank has tent cards on the tables in its main reception at Canary Wharf making this very claim.
The harsh reality for most firms is that 80 percent of customers are vulnerable to competitive offers and fewer than 20 percent are advocates who will recommend you to others.
Contrast this with First Direct. This on-line bank attracts a new customer every four seconds through direct referral. Why? From my research, it appears to be because First Direct has systematically avoided the ten traps outlined in this article.
Adapted from an article first published by the Forum Corporation 2003.