Bank Of America's Tough Decision Shouldn’t Be Tough At All

I was both encouraged and perplexed by an article in The Wall Street Journal that described the internal debate at Bank of America over how to grow revenue. One side of the debate wants to charge new fees for basic services like checking accounts. And who do they want to charge? Their unprofitable customers who “typically have less than $50,000 in annual household income.” Those customers do little business with the bank, and Bank of America reportedly loses a couple of hundred dollars a year on them.

The other side of the debate wants to raise revenues by getting these unprofitable customers to buy more financial products from the bank — for example, get a credit card or buy a CD or take out a mortgage. If that happened, the problematic customers would generate enough revenue to become a money-making proposition for Bank of America.

If I were picking the winner of this debate, the decision would be easy. A growth plan that depends on extracting ever-increasing fee revenue from the very people who can least afford to pay it – for services that were formerly free – doesn’t seem like a growth plan at all. But getting a bigger share of those same customers’ wallets by selling them products that they’re going to buy from someone is a strategy that’s already working today for a bank that I’ll talk about in a minute.

The real question in this debate should be, how can Bank of America get its unprofitable customers to do more business with it? The answer: Provide a vastly improved customer experience — toe-dipping will not get the job done.

Read more

Hurricane Sandy Scorecard: NSTAR 1, Verizon 0

Like millions of Americans who live along the Eastern seaboard, my family got hit by Hurricane Sandy.

Now don’t get me wrong: Compared with residents of New York, New Jersey, and several other states, we had it easy in our little suburb north of Boston. Even so, there were a few exciting episodes, like this tree that fell on my neighbor’s house.

Fallen tree on power lines

And then there was this power line that came down on the sidewalk across the street from our home, about 4 feet from where I had been standing 20 minutes earlier (I had been talking to a firefighter).

What fascinated me, however, was what came after all the excitement: service recovery by our electrical utility and telecom provider.

Let’s start with our local electric utility, NSTAR. As you can probably guess from the above, our power had to be cut. To restore it, NSTAR needed to coordinate with both our local fire department and our local public works department in order to get that giant tree off the power lines before it could repair them.

When I looked at the job ahead for the utility, I guessed that we would be without power for at least a day. But exactly 12 hours after NSTAR cut power so that the burning lines wouldn’t pose a hazard, the tree was gone and our electricity was restored. In fact, NSTAR beat its own estimate by about 90 minutes.

Read more

Verdict: Samsung Galaxy Is Not Cool. This Is Winning?

An appeals court in the UK just decided that the design of the Samsung Galaxy does not infringe on Apple patents for the iPad.

Why? Well, the opinion by Judge Colin Birss concluded that, "They are not as cool.”

That’s pretty damning. Consider that customer experience occurs at three levels: meets needs, easy, and enjoyable (emotionally engaging). So what the judge is really saying with his ruling is that the emotionally engaging iPad differentiates itself  based on customer experience — whereas the Samsung Galaxy does not.

As a result of this ruling, Apple must run ads in newspapers, magazines, and on its website publicizing the fact that the two designs are different.

Does anyone else see the irony in that? I don’t know whether Apple can get away with what I’m about to suggest, but here’s the ad I’d love to see it run:

"Official Government Verdict: The iPad Is Cool And The Samsung Galaxy Is Not Cool  

According to a recent ruling by an appeals court in the UK, the Samsung Galaxy isn’t cool enough to be considered a copy of the Apple iPad. Here is what the judge said in praise of the iPad:

'The extreme simplicity of the Apple design is striking. Overall it has undecorated flat surfaces with a plate of glass on the front all the way out to a very thin rim and a blank back. There is a crisp edge around the rim and a combination of curves, both at the corners and the sides. The design looks like an object the informed user would want to pick up and hold. It is an understated, smooth and simple product. It is a cool design.'

What did he say about the Samsung Galaxy?

Read more

Softbank Acquisition Of Sprint Will Shake Up Customer Experience In The Wireless Industry

Softbank, which owns Japan's third-largest mobile carrier, just announced that it will buy a 70% stake in Sprint Nextel. What exactly will that mean for wireless customers?

First, a little background . . .

In our new book, Outside In, my co-author Kerry Bodine and I describe the customer experience turnaround that CEO Dan Hesse engineered at Sprint. By relentlessly identifying the top problems that customers called to complain about and then systematically eliminating those problems, he took the company from having the lowest customer satisfaction rating of any major US carrier to having the highest customer satisfaction rating. Fewer unhappy customers meant fewer calls to Sprint's contact centers. As a result, Hesse recently reported that Sprint saves $1.7 billion a year from averted call center contacts.

Hesse’s current challenges have centered around shareholder displeasure with the cost of licensing the iPhone and the cost of building out Sprint’s high-speed network capabilities. As I said in a previous blog post, that lack of shareholder support seems strange to me. Isn't it obvious that it's critical to offer customers the smartphone they want and a fast network with a lot of capacity to support that phone — especially in a world where they have so many choices? It should be.

In contrast to current Sprint investors, Softbank President Masayoshi Son understands that smartphones and the networks that fuel them are essential: Not only is Softbank already building a high-speed network to help it compete in the smartphone war in Japan, but also Son said that the iPhone 5 was a trigger for the Sprint deal.

Read more

Why Some Companies Succeed — For Now — Despite Their Poor Customer Experience

Last week I got a question via email from one of Forrester’s clients, who asked:

“How do you explain the success of companies that consistently provide a poor experience but perform well financially?”

I wish more people asked this question because it shows that they’re thinking about customer experience in the right context: as a path to profits. Here’s my answer: Creating a superior customer experience is the most important thing that companies need to do. But it will never be the only important thing they need to do.

My co-author and I describe the relationship between customer experience and other factors that lead to business success in Chapter 13 of our new book, Outside In:

“Is customer experience a silver bullet that will kill off all your company's problems and make your stock price soar? No. If there is such a bullet, we haven't seen it. The fact is, regardless of your customer experience, you can still get clobbered by a big, strategic threat like a new market entrant (Netflix if you're Blockbuster) or a substitute product (digital photography if you're Polaroid). That's especially true if the new market entrant or the provider of the substitute product offers an amazing customer experience (Amazon.com if you're Borders or Barnes & Noble).”

When you have a virtual monopoly, you can get away with providing a poor customer experience right up until you can’t.

Read more

NFL Owners Just Learned A Lesson About Bad Customer Experience. Did You?

I’m not the biggest NFL fan in the world, but now that I live in Boston, I follow the Patriots. I think it’s actually a requirement of citizenship.

And I do have a passing interest in some other teams. Who doesn’t love watching anyone named “Manning” throw a football? (Unless it’s against the Pats in the Super Bowl.)

With that as background, may I say that the now-ended lockout of NFL refs set the low watermark in football customer experience? Yeah, customer experience — not just for all those who buy tickets, but for all of us who “pay” for the games with our time by watching ads.

Lest we forget, let’s count some of the ways that the replacement refs ruined our Sunday afternoons and Monday nights:

  • Stopping the game every other play to try and figure out what really happened. Football is supposed to be a sport, guys, not a meeting of the local debate team.
  • Making game-changing calls that the replay showed were dead wrong. Hey, if you screw up, 'fess up — then make it right and move on. My sixth-grader knows that, so why doesn’t Roger Goodell?
  • Clogging the air time on ESPN with self-righteous defenses of their bad calls. (Okay, that didn’t happen on Sunday afternoons or Monday nights, but it was worse because it spread more pain across three weeks when all I wanted was to see the top 10 sports plays from the previous day. Argh!)
Read more

You Asked, We Answered! Questions From Webinars About Our New Book, Outside In — Part 1

On September 19, my co-author Kerry Bodine and I delivered two webinars outlining the concepts in our new book, Outside In: The Power of Putting Customers at the Center of Your Business.

We received so many questions that we couldn’t answer them all during the webinars. So we split them up, and we’re answering them (in brief) in two blog posts. Here is Part 1. You can see Part 2 from Kerry here.

How many full-time employees are needed to build and maintain systematic customer experience processes?

Becoming systematic about customer experience isn’t about adding people to your company. It’s about changing the activities that the people you have today perform. Instead of proposing projects with no consideration for how those projects will affect customer experience, for example, add a mandatory customer experience impact assessment — as companies like FedEx, Fidelity, and Bank of Montreal do.

Are there benchmarks for measurement? Can you please provide some guidance for what a “good” customer experience is?

If you want to drive business benefits like increased sales and positive word of mouth, create a customer experience measurement framework and then start by benchmarking against yourself.

Read more

Hire The Will, Train The Skill

If you scroll down, you’ll see a link to part two of my appearance on Jim Blasingame’s talk show, The Small Business Advocate. Among other things, in this segment, we talked about one of the keys to customer experience success: hiring the right employees.  

Hiring is one of the tools for creating a customer-centric culture that my co-author Kerry Bodine and I describe in our new book, Outside In. Although hiring is fundamental, it’s something that many hiring managers get wrong. That’s because they’re still looking primarily at what their candidates know — their job skills — and not focusing enough attention on to who their candidates are

Here’s why that’s a problem. You can teach people how to perform tasks, whether it’s stocking shelves or doing the books. And you can teach them enough about your products and services to be able to help your customers. But if they’re people who don’t want to help customers, you’re not going to teach them to be different people.

Are there really that many people out there who just don’t want to help customers? Yes. That’s a lesson Kevin Peters, the president of Office Depot North America, learned several years ago.

Kevin asked all 22,500 store associates to take a personality assessment test designed to evaluate employees’ skills, behaviors, and aptitudes as they related to serving customers. To his surprise and disappointment, a significant percentage agreed with statements like, “If the job requires me to interface with customers, I’d rather not do the job.”

Read more

When It Comes to Total Returns, Customer Experience Leaders Spank Customer Experience Laggards

Whenever I talk about the business impact of customer experience, there’s one thing that always grabs people’s attention. It’s an analysis done by Jon Picoult of Watermark Consulting, who took five years of data from Forrester’s Customer Experience Index and constructed two model portfolios. One is a portfolio of the top 10 publicly traded companies in the index (customer experience leaders), and one is a portfolio of the bottom 10 publicly traded companies in the index (customer experience laggards).

You can read details of how Jon conducted his analysis in our new book, Outside In, and in this post on Jon’s blog. The results are striking. Over the course of the five-year period, the customer experience leaders spanked the laggards in stock performance. The leader portfolio had a cumulative total return of +22.5%, compared with a -1.3% decline for the S&P 500 market index and a -46.3% decline for the laggard portfolio.

Five-Year Stock Performance Of Customer Experience Index (CXi) Leaders Versus Laggards Versus S&P 500 (2007 to 2011)

Customer Experience Leaders Portfolio deliver 5 year return of 22.5 percent

What follows is an interview I recently conducted with Jon to get his thoughts on why making a compelling business case for customer experience is so challenging — and so important.

Read more

Customer Experience Disciplines Apply To Small Businesses, Too

I had fun last week speaking with talk show host Jim Blasingame, the “small business advocate.” (In fact, listening to the first segment of the show — embedded below — I was probably having a little too much fun at first.)

One reason I was keen to do the show is that I’ve been thinking a lot lately about showrooming. You’ve probably heard about showrooming — maybe you’ve done it yourself. It’s when a customer goes into a retail location to touch and feel a product and then goes online to buy the product at a lower price.

Showrooming causes a particularly acute problem for small business owners. Their very existence is at stake: Just last weekend, I walked by a small bookstore in Concord, Mass., and saw a sign in the window that said, “If you see it here, buy it here, to keep us here.”

I sympathize with that small store owner’s plight, so I’d like to offer some advice: Putting a sign in the window that begs people to buy from you is the wrong approach. Do customers want to “keep you here” because of convenience? Nope. They can get lower-priced products delivered the same day at little to no shipping cost. Do they want to add you to the list of charities they support? No, and you don’t want that either — you’re in business to make a profit, and you probably take pride in being able to do just that.

Here’s a better way to compete: Focus on delivering a superior customer experience. As a local business owner, you have the chance to know your customers better than any website can know them — even the increasingly sophisticated websites that make recommendations based on past behavior. If you develop that understanding and marry it with expertise about the products or services you offer, you’ll have a winning combination.

Read more