Customer Experience, Systems Thinking, Analytical Thinking & Organisational Design.


To be customer-centric requires business capability to design and to consistently deliver a unique and distinctive customer experience to a selected set of customers in order to acquire, retain and to develop them efficiently.

I was privileged to be taught by the late Dr Russell Ackoff at The Wharton School and he re-enforced my long held belief that one of the major challenges organisations face when trying to transform their business models to become more customer-centric is a lack of systems thinking. Dr Ackoff produced extensive research, insights and knowledge into how systems thinking is the only way to approach organisational development. He explained that many of the challenges we face in trying to understand our organisations such that we can transform them, come from using analytical thinking.

Systems thinking is an approach that views the organisation as a whole (end-to-end) comprised of many parts (functions/silos), yet, at the same time, it is more than the sum of the individual parts. (To deliver a unique and consistent experience requires the organisation to be joined-up – to operate as a single seamless entity.)

Dr Ackoff added that a system is also defined by the function it fulfils in the wider system – this speaks to our organisational role in society and community and embraces the stakeholder universe including, in addition to society,  partners, employees, customers and investors.

Dr Ackoff regularly likened the idea of a system to the human body or to a motor-car. He explained  the 3 principles of the system being defined by the function it fulfils in the wider system (universe) as follows:-

  1. Each part affects the behaviour of the whole. (If the heart and lungs are not functioning correctly then this will affect the well-being of the entire body) – think Leadership Team?
  2. No part has an independent effect on the overall system ( The ability for the muscles to get someone to walk in a straight line will depend on the balance maintained by the inner ear)
  3. The system itself has properties which none of the parts have (If a hand were cut off, the hand would be unable to write. It is the whole system, the whole body, that enables the hand to write)

These principles highlight the challenge many organisations face as they aspire to develop the capability to deliver unique and distinctive experiences. Trying to understand the organisation capability by analysing and restructuring various operating entities in isolation (e.g. let’s optimise the contact centre and make it really efficient.) doesn’t lead to the transformation required. Sadly, in the above-mentioned contact centre example, ‘efficiency’ measures such as average handling time and  # calls answered per day by agent, are the antithesis of customer-centric capability – a customer may want information or may want a problem solved – he/she is not interested in the fact that the agent may have an average handling time target of 2min, 30 seconds, for example.

Taking the analogy further the parts (functions) of the organisation need to mesh together, to be joined up in such a way that they operate seamlessly – to be designed in such a way that they’re supportive of the strategic outcome of the business. The linkages between and across areas of specialisation need to be refined and appropriate for the intended experience. It’s the view and understanding of the whole organisational system as well as an understanding of the universe that allows the organisation to determine where it wants to create it’s ‘high contrast signature experience’ – where it wants to stand head and shoulders above the competition, where it is going to be unique. No business can be the best at absolutely everything.

As per Dr Ackoff, this is akin to taking apart each and every motor car in an attempt, through analysis, to find the best engine, best transmission, best steering, best braking system, best suspension……..best everything. Trying to put all of these ‘best’ parts together would result in an absolute mess as nothing would fit. Trying to scrutinise every part of the system and aggregate an understanding of the parts, doesn’t allow an understanding of the whole. Applying the principles of systems thinking allows an understanding of how the pieces/parts fit together.

Your thoughts?

A blended set of measures are critical for customer-centric operationalization


What company doesn’t want to be customer-centric? It’s highly unlikely that any executive wakes up in the morning and makes a statement along the lines of – “Customer-Centricity is not important to us and we shouldn’t consider it!”

That said, to move beyond the lip-service that is so evident around this topic/set of capabilities requires both courage and a commitment to a transformational journey.  Surely everybody with some understanding of change management principles recognises that transformation requires an amended set of measures and/or the addition of some added measures to ensure focus and accountability? Financial metrics and the achievement of profitability targets are, of course, non negotiables.  Today, however, organisations have to balance profitability with social conscience and need to focus much more on stakeholder relationships. The most important stakeholder in almost all cases is the customer.

I’m regularly asked what metric should be used to measure customer-centric capability. The reality is ‘a measure’ is not sufficient. Trying to craft a customer strategy, develop customer-centric capabilities and operationalise those capabilities isn’t going to be supported by ‘a measure.’

The purpose of this article/discussion isn’t to wax lyrical about the strengths and weaknesses of individual metrics. It is to share a suggested ‘blend’ of measures that are needed if an organisation is serious about a customer-centric transformational journey.

These are illustrated below. Most will be familiar with Customer Satisfaction, Employee Satisfaction, Voice of the Customer and Net Promoter Score. The 2 measures that have less of an understanding are SCHEMA® and Customer Effort Score.

Customer Measures Matrix

 

 

 

 

 

 

Very briefly, SCHEMA® is a leading indicator and measures the customer-centric capability of an organisation. It measures how well a business is optimising customer profitability and compares against global benchmarks. It’s a leading metric because, from this level of understanding, an organisation is able to quantify and identify where it needs to build capability to enable it to be customer-centric – in other words what capability is needed to design and deliver a unique and distinctive customer experience in order to acquire, retain and develop targeted customers efficiently.

The Customer Effort Score is another metric that I am hugely supportive of as ‘effort to engage’ is becoming an increasingly important indicator of ‘willingness to do business with’ as well as loyalty. Quite frankly, it’s astounding how difficult it is to do business with many organisations (after all – why should we care about or be expected to adhere to processes that make absolutely no sense to us – why should we have to put up with broken, inefficient engagement capability that wastes out time and requires effort from us?)  Who has any loyalty and wants to support a business that is difficult to do business with.

I chair a senior learning forum called The Customer Council (TCC) and at the end of 2012 we invited Dr Nicola Millard from BT to address TCC. BT have become somewhat of a ‘poster child’ when it comes to Customer Effort Score in action. Have a look at this video, by Dr Nicola Millard, on the topic of Customer Effort: Help or Hype?

http://www.youtube.com/watch?v=U5iBs_Kac3U

Customer-Centric Transformation: What Good Looks Like – Penetration – Increasing Customer Value – Part 14b of 14c


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

 

 

 

 

 

 

 

This week we are dealing with Penetration which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and includes Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Penetration dimension relates to the ability to develop more value from existing customers through cross-sell and up-sell activities to improve return on customer investment. Formal management of high value customers and key accounts is a critical part of this. It also requires clarity as to how you deal with low value customers from a development perspective, if at all. The 3 sub-components of the Penetration dimension are ‘Understanding Customer Value,’  ‘Increasing Customer Value,’ and ‘Managing High Value Customers.’ Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Penetration

“Delivering sustainable and superior business performance requires the on-going development and growth in the value of your customer base. To do this you need to have an in-depth understanding of your customer value so that you can identify opportunities to increase this value. This potential uplift is then supported through relevant propositions, cross-selling, up-selling, indirect value creation and expansion of existing product usage. In treating different customers differently, high value customers should also be given special attention so that the right team equipped with the necessary budget can deliver on their specific needs.”

What Good Looks Like – Increasing Customer Value

  • Value development is managed as a business discipline (like acquisition or retention) with: clear ownership / responsibility; detailed planning; specific propositions; checks that it is generating incremental value.
  • Active stimulation mechanisms are in place to increase usage / value / frequency of purchasing the organisations’ core products.
  • Opportunities to sell ‘up’ to a higher level of value are sought and supported by appropriate offers, especially at point of sale.
  • Cross-selling is driven through both outbound and inbound channels, based on clear rules-of-engagement and prompts to ensure appropriate offers are made from the organisation’s whole portfolio.
  • Low value customers are identified against clear definitions and specifically dealt with so as to drive up their value or at least prevent it being made worse.
  • The valuation of customers and stimulation of this value extends beyond pure transaction value, into areas such as advocacy and referral.

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y

Customer-Centric Transformation: What Good Looks Like – Penetration – Understanding Customer Value – Part 14a of 14c


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

 

 

 

This week we are dealing with Penetration which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and includes Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Penetration dimension relates to the ability to develop more value from existing customers through cross-sell and up-sell activities to improve return on customer investment. Formal management of high value customers and key accounts is a critical part of this. It also requires clarity as to how you deal with low value customers from a development perspective, if at all. The 3 sub-components of the Penetration dimension are ‘Understanding Customer Value,’  ‘Increasing Customer Value,’ and ‘Managing High Value Customers.’ Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Penetration

“Delivering sustainable and superior business performance requires the on-going development and growth in the value of your customer base. To do this you need to have an in-depth understanding of your customer value so that you can identify opportunities to increase this value. This potential uplift is then supported through relevant propositions, cross-selling, up-selling, indirect value creation and expansion of existing product usage. In treating different customers differently, high value customers should also be given special attention so that the right team equipped with the necessary budget can deliver on their specific needs.”

What Good Looks Like – Understanding Customer Value

  • Definitions of how customer value is calculated have been agreed and implemented for the current, to-date & future/lifetime value levels. Proxies have been developed where real data is not available.
  • Analysis has been carried out of value distribution across the customer base and there is clarity about what each of the main value drivers are (e.g. acquisition rate, attrition rate, product holding, market cost etc.).
  • The development of value (upwards and downwards) over time at the absolute level and at the share-of-spend level is understood for different types of customers.
  • Opportunities to develop customer value are identified based on analysis of current purchase patterns, predictive modelling and any other identifiable indicators.
  • Staff are clear on how much value varies between customers and the critical importance of taking special care of the most valuable.

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y

Customer-Centric Transformation: What Good Looks Like – Acquisition – Converting Sales – Part 13d of 14


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

This week we are dealing with Acquisition which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and includes Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Acquisition dimension focuses on the specific, practical activities that will support you to increase both the quality and volume of new customers. Acquisition explores ways in which you can increase the size of your customer universe and your share of it. The 5 sub-components of the Acquisition dimension are ‘Understanding Acquisition,’  ‘Identifying New Prospects,’ ‘Managing Interest,’ ‘Converting Sales,’ and ‘Setting up & Activating.’  Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Acquisition

“A customer-centric Acquisition approach begins with a clear and intimate understanding of your customer universe and the factors that impact your ability to sell to them. Acquiring your share of this customer universe is achieved through appropriate targeted marketing activity across a broad range of relevant channels and media, and interest generated is managed effectively so that prospects are kept warm until the sale is closed. While the sales process itself should focus on closing the sale, it should also take into account effective lead management, specific sales targets and rewards and careful controls over pricing. Customer-centricity also recognises that new clients have not been secured until you have taken them through an experience-based initiation process, where they are made to feel welcome and are well informed.”

What Good Looks Like – Converting Sales

  • Sales targets and rewards are ‘scientific’, recognise differences between the types of customers (brand-new, won-back, re-purchasing) converted and drive the most appropriate behaviours in the sales channels.
  • Sales Leads are distributed, followed up, monitored and reported on in a way that balances the best experience for the customer with the most beneficial result for the organisation, irrespective of where the lead was generated or the channel through which it was received.
  • Pricing is actively used as part of the acquisition mix, but this is done on an analytical and controlled basis to prevent profit being given away that cannot be recovered later.
  • Sales processes and support mechanisms are focused on supporting the ‘close’, sharing in the customer’s excitement and finally celebrating the sales success.
  • As much as possible is done to prevent even starting on selling activity with potentially ‘bad’ customers and this can be effectively stopped where necessary.

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y

Customer-Centric Transformation: What Good Looks Like – Efficiency – Controlling Costs – Part 12b of 14


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

 

 

 

 

 

 

 

This week we are dealing with Efficiency which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and include Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Efficiency dimension seeks to manage costs from a customer profitability perspective and evaluates costs in reference to the value of the customer for whom those costs are incurred. The 2 sub-components of the Efficiency dimension are ‘Calculating & Allocating Costs’ and ‘Controlling Costs.’ Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Efficiency

“In treating different customers differently, your organisation needs to develop the capability to optimise customer profitability through the efficient calculation, allocation and control of customer costs in retaining, acquiring and developing your customers across all segments and channels. This enables you to perform value analysis in a way that supports your customer engagement within the defined profit bands per customer and per segment, and if need be, influencing their behaviour to reduce the cost-to-serve or even terminating them as customers if necessary.”

What Good Looks Like – Controlling Costs

  • The relative costs of acquiring, retaining and developing customers by each channel are understood and have an influence on customers’ allocation / entitlement to each channel. Maximum acceptable acquisition costs are calculated for each customer type and mechanisms in place to stop acquisition activity or hold back sales costs (commissions) if necessary.
  • Marketing costs are controlled by formal optimization, moving towards inbound targeting and by reducing or stopping marketing to some customers where the cost cannot be justified.
  • The drivers of cost-to-serve variations are understood and the overall cost-to-serve level is being reduced by changing buying behaviours and maximizing the use of self-service wherever possible.
  • The various costs of failure and wastage are understood and fully considered in work to improve customer processes.
  • The organisation has an ethos, relevant definition and sensitive processes that allow high cost (compared to revenue) customers to be stimulated to leave.

 

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y

Customer-Centric Transformation: What Good Looks Like – Efficiency – Calculating & Allocating Costs – Part 12a of 14


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

 

 

 

 

 

 

 

This week we are dealing with Efficiency which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and include Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Efficiency dimension seeks to manage costs from a customer profitability perspective and evaluates costs in reference to the value of the customer for whom those costs are incurred. The 2 sub-components of the Efficiency dimension are ‘Calculating & Allocating Costs’ and ‘Controlling Costs.’ Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Efficiency

“In treating different customers differently, your organisation needs to develop the capability to optimise customer profitability through the efficient calculation, allocation and control of customer costs in retaining, acquiring and developing your customers across all segments and channels. This enables you to perform value analysis in a way that supports your customer engagement within the defined profit bands per customer and per segment, and if need be, influencing their behaviour to reduce the cost-to-serve or even terminating them as customers if necessary.”

 

What Good Looks Like – Calculating & Allocating Costs

  • Communication of dissatisfaction is encouraged from customers both directly and via staff. It is pro-actively drawn out by internal processes, even if there is no formal complaint.
  • Complaints via regulatory bodies are dealt with enthusiastically and in a way that ensures their response standards are always met. Formal complaints received directly from customers are dealt with consistently across the organisation, to clearly defined standards which are themselves transparent to customers.
  • Analysis of complaints extends to deep ‘root-cause’ levels and reporting is reviewed by very senior managers who are told the whole story.
  • Issues likely to cause widespread dissatisfaction are dealt with quickly and incisively, using social and traditional media, making use of advocates and fans wherever possible.
  • Relationship recovery is seen as an integral part of the dissatisfaction management process and is applied re-actively and/or pro-actively against a clear set of criteria of where it should be applied.

 

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y