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What will it take to develop a customer-centric culture? 03 May 2022 699

Michael Ruckman is the founder and President of Senteo. He is also a senior advisor at Efma. He discusses the importance, but also the difficulty, for banks to instil a culture of customer relationships in their employees. 

In February 2001, on my first visit to Russia as a consultant for PricewaterhouseCoopers, I visited a bank branch to prepare for the presentations that I had scheduled with potential clients.  As I walked into the branch, I was stopped by a security guard wearing a bullet proof vest and holding a machine gun who asked, “What do you want?” (“чё надо?”)  A bit shocked by this tactic and not sure what to say, I let the translator with me do the talking.  The rest of the visit was not much better, and the various contacts with branch staff were met with a lack of interest, no sincerity, and a generally negative tone.  When I asked the translator if this behavior was because I was a foreigner, she assured me that it was usually the same or worse for Russians. 

From this point, I understood that there was a lot of work to be done in building a customer-centric corporate culture in businesses in Russia, and I have watched the development over the past 20 years as a consultant, a banker, and a customer.  While Russia, and pretty much all of the former Soviet Union and Soviet bloc countries, may have had what I might describe as a service culture deficit, the topic of a customer-centric culture is still quite relevant pretty much anywhere in the world today.  

For the past 26 years, I have consistently promoted the idea that great customer experiences are key to maintaining competitive advantage and reducing price sensitivity, and most businesses have been working diligently to tune their operating models (people, processes, and technology) for efficiency, consistency, and quality.  Unfortunately, humans have proven to be the most inconsistent element of those operating models, and businesses unable to provide positive, engaging, and fulfilling customer contacts consistently, are rapidly losing customers to online channels that provide the ability to find the lowest price in just a few clicks.  This has been happening for years, but the COVID-19 pandemic has greatly increased the speed and visibility of this transition. 

Of the many things that we have learned from the isolation and social distancing brought on by the pandemic, two of them seem to represent a turning point in the urgency of forming a customer-centric corporate culture: 1) human contact is important, in fact essential, for developing loyal (and profitable) customer relationships, and 2) we have all learned that we can buy almost anything online without the need for human contact (and usually at a lower price).  For most businesses, these two little facts should be both terrifying and motivating, especially coming out of the pandemic.  Basically, without a consistent corporate culture focused on quality of contacts, customer experiences, and, ultimately, customer relationships, businesses run the risk of increased price competition and significantly less loyalty from customers. 

Culture in the business context

The many definitions of ‘culture’ typically include elements such as differences in social behavior, values, customs, norms, habits, or just the way groups of humans do things. The application to a business setting typically has more focus on specific conduct within the boundaries of the business environment (branches, stores, offices, contact centers, etc.) and amongst the participants (employees, teams, customers, partners, etc.) that are engaged in business activities (innovation, production, sales, service, relationship management, etc.).  Basically, this boils down to how people are doing things in this particular business, and here we find two huge problems: 1) human behavior is often irrational, unusual, and inconsistent, and 2) businesses are typically poor at managing consistent behavior, especially over longer periods of time.  

Companies often motivate employees to behave in a particular manner by defining rules, standards, and measurements and then coaching or even punishing those that do not conform to the generally accepted behavioral norms and targeted results.  This approach has never really worked, but it still seems to be common in most companies today. On the other hand, companies rarely take the time to build an environment conducive to the right behavior, to inspire team members to behave properly and consistently both individually and collectively, and to reward role models and teams for regularly raising the standard and for guiding others to improve.  Why?  It’s hard!  There’s no quick fix.  And most people do not understand the intricacies of human behavior or the proper deployment of mechanics used to influence behavior. 

If that’s not enough, there is also a common conflict of interest between those in management and those on the front line interacting with customers.  Management must make budget, reach their KPIs, keep up with share price forecasts, and every other motivator that will drive them to keep the front-line employees focused on the result.  But the focus on ‘how’ the result is achieved (the way groups of humans do things) disappears, which causes a degradation of consistency and adherence to the established behavioral norms of the organization (culture).  The long-term effect of this constant focus on ‘what’ and not ‘how’ is often revealed in scandalous stories of companies doing horrible things just to achieve the targeted results regardless of any stated values or cultural norms. 

Corporate culture development imperatives

Few people will dispute the role of humans in positive, engaging, and fulfilling customer contacts, memorable customer experiences, and quality customer relationships, but only a handful of companies have mastered the difficult task of developing and managing consistent human behavior in these areas, which is entirely an issue of guiding the development of corporate culture.  For those that have tried, it is apparent that the traditional approaches to managing people and operations are insufficient for the complexity of the task at hand.  The modern toolset for this task may seem strange for those brought up in the world of classical management theory, but there really is no other option considering 1) the need for workforce adaptivity with ever changing needs, preferences, and behavior of customers, 2) the need for emotional and social intelligence as a basis for empathy (both between team members and for customers), and 3) the need for consistent behavior both as individuals and as teams.  

The basic tenets of classical management theory were designed for stability in production environments, and, unfortunately, this has not changed much over the past 100 years.  The world, however, has changed significantly, and with globalization and digitization, customers have access to more providers of the same or similar goods and services than ever before.  This has dramatically increased the speed of change in customer behavior, needs, and preferences, and teams unable to adapt will be relatively useless for customers who will seek other providers to satisfy said needs and preferences and adapt for their behavior. Teams must have the ability to make decisions and adapt their approach and even processes to match the context of different customer scenarios, which requires a significant overhaul to the management models of the past, designed for stability and ‘top down’ decision making. 

Teams also must ‘feel’ the customer.  Empathy, or the ability to “walk in the shoes of others” will be essential for understanding how to adapt for specific needs, preferences, and behavior.  Understanding things from the customer’s point of view cannot be accomplished at the system level without specific training in the areas of emotional and social intelligence. Crucially, these training courses are not as simple as establishing some standards, forcing staff to memorize them, and then patrolling the business environment and punishing those that don’t fully comply. 

Simulation-based training and allowing teams to play the roles of both staff and customers, will condition more consistent responses to different customer interaction scenarios and allow team members to be more confident in their collective behavior. 

Even more difficult is building team empathy with a unified approach to not only understanding and adapting for the customer, but with empathy and flexibility amongst the members of the team as well. Team-based simulations in the actual work environments of the teams will help to develop and tune the dynamics and choreography of team behavior when interacting with customers and build a ‘team personality’ that will be apparent to customers, helping customers to feel confident that the team is reliable and consistent in its responses to their needs and preferences. 

From this point, motivation programs must be designed to minimize the effect of aggressive sales goals and provide clear indicators for the quality of the sale – have customers purchased what they want and need, or have we forced the sale or convinced the customer to buy something they really do not need or want?  In addition, structured and concise measures of the quality of customer contacts and the quality of customer relationships will provide a longer horizon for motivation that stretches far past the immediate sales goals to focus front line teams on longer-term goals of loyalty, stability, and profitability of the customer base. 

And finally, a new approach to customer feedback measures is desperately needed.  Most companies are using Customer Satisfaction Indices or Net Promoter Scores as measures for the effectiveness of front-line staff.  We all know today that these methodologies provide a measure based on the difference between customer expectations and their current understanding of how the business fulfilled those expectations.  But what if their expectations were low in the first place?  What if a competitor exceeds those expectations in a manner that is unique, engaging, and memorable?  In this case, those methodologies can only provide a measure of past performance and will always offer poor correlation as indicators of future behavior.  Also, as measures for front line staff, these methodologies do not sufficiently isolate the quality of contact between humans and may include factors that are outside of the control of the people on the front line (pricing, terms and conditions, product functionality, system errors or faults in usage, etc.), which is often unfair to the front-line teams.

To create an environment supportive of the right behavior and conducive to the development of a customer-centric corporate culture, companies must provide the appropriate training for their front-line staff interacting with customers, along with the motivation to behave in the interest of long-term, quality customer relationships.  Companies must also use appropriate methodologies to measure customer feedback and the performance of teams based on the factors within the team’s scope of responsibility.  All of this seems quite simple, but, as I mentioned before, only a handful of companies today have mastered this task.

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