It's the Customer, Stupid!

Marketing Forum of the Institute of Management Consultants
Western Confab, October 29, 1998

First, let me explain that my title, "It's the Customer, Stupid!" is just a fun way of stating the obvious. This title evolved because I frequently work with clients where internal competition for the customer is stronger than the external competition, and organizations all to often loose sight of the customer.

What we're finding today is that banks and brokerage firms are operating as product companies - where "product silos" have developed around distribution networks and internal sales competition exists within shared delivery channels.

These systems pressure individual product managers and sales managers to achieve targeted volumes - often resulting in internal conflict and competition as separate product groups vie for the same customers. These prized customers have to fight their way through organizational obstacles to find the right department for the service they want.

Successful companies understand one essential fact: customers do not care about the company's organizational problems. They do not want to know about them, they do not want to hear about them, and they certainly do not want to see them in action. Winning firms organize to create value, not empires.

So - where should the focus be when client firms decide to evaluate their sales process? How about - on the customer! "Duh!"

It's almost too easy: When clients decide to evaluate their sales process, I recommend that they focus on their customers. And it's really a great way to stay out of the politics of the company. When managers are fighting over territories, the whole focus changes when you ask what's best for the customer.

How do you find out what the customer wants?

My first job after college was as a management trainee for a large regional department store. At least one day a week, every manager and buyer was on the sales floor - talking with customers and listening to them. Not just watching what they bought, sales reports could tell that, but watching which clothes they tried on and how they wanted to garments to fit. How did they accessorize the outfit and what were the acceptable price points? By the end of the day, we knew what to reorder and what to put on sale rack.

Later, I changed from the apparel industry to financial services, and I continued to listen to the customer. Even though it is quite common now for a consumer goods marketer to move into financial services, when I did this in 1982, there was quite a bit of skepticism about whether or not a non-banker could succeed in bank marketing. I faithfully went out to branches once a week, and was constantly bringing back "tidbits" to the other product managers - who were always amazed at the valuable information this "non-banker" seemed to pick up.

I asked the other product managers to go with me on the branch visits, but they never had time. After awhile, I began to get calls from regional managers to talk about new ideas. I'd built up credibility with them by getting to understand their customers' needs as well as the issues faced by front line employees.

I knew I was taking the right approach when one of the senior managers sent me a cartoon strip one day. The first frame showed a king in his court saying "I think I'll mingle with my subjects today." Next, the king is on the balcony of his tower looking down on the masses and masses of people. In the last frame, he has returned to his luxurious castle, saying "On second thought. . . " The regional manager had written a note to me that said: "You are the only one willing to leave the ivory tower - and you're the only one who really understands what our customers want."

That really stuck with me and so, as a consultant, I'm committed to helping my clients "mingle with the masses of their customers" in order to increase sales.

How to mingle with the masses.

One way to mingle with the masses, and probably the most expensive, is market research or using secret shoppers. Though these methods definitely have value, they are not always practical to do year round.

Another way is to talk to the front line sales people. At Wells Fargo, I wasn't dealing directly with customers during my branch visits; I attended weekly sales meetings or just sat in the coffee room and talked to tellers and customer service reps during their breaks. I asked simple questions like "What do customers complain about the most?" or "If you could change one thing in the bank, what would it be?" These discussions weren't revolutionary; they were simply about real problems and practical solutions.

Another way to mingle with the masses it to go to the best sales people and find out what they're doing. When I worked at Charles Schwab, we had one branch rep who opened eight times more trust brokerage accounts than anyone else in the company. I contacted her with a list of questions that we in the Marketing Department were developing for branch reps to use to, such as "If your net worth is over $600,000, a living trust may reduce your estate taxes. Would you be interested in learning more about the advantages of a living trust?"

I asked her what she thought and she was horrified, saying that the question was way too personal. This continued with most of the "brilliant" questions we had formulated until, in frustration, I asked what she said that resulted in so many new trust brokerage accounts. She replied, "I assume that everyone has a living trust and when they open a new account, I just ask if they want the title registered in the name of their trust. If they say they don't have a trust, I say, 'You don't? Oh my!' That always gets them interested."

It was the most simple approach, and one that none of us in marketing had thought of - or would ever think of.

For me, these are some realistic, inexpensive and proactive ways to learn great sales techniques. Either we, as consultants, can go out to the front lines for our clients or, better yet, we can go with our clients. Too frequently, our clients, being more senior in the organization, don't take time to talk with front line employees on any kind of regular basis. If these managers won't get out in the field, then they really need to be sure that their sales managers are out there - or that we're out there.


It's the also relationship, Stupid!

For years, marketing managers, sales managers and consultants have known that the bottom line in sales depends on the relationship. No matter how much research banks do, customers continue to tell them that the number one thing they want is to continue to deal with their own banker. This input is the same from upscale private banking customers to low-income neighborhood widows. You can do almost anything - raise fees, take away services - as long as you don't change their banker.

And this doesn't' apply only to banking. Several months ago I heard the president of Odwalla talk about brand importance and he told the story of one of his delivery men who told him how proud he was to work for Odwalla. But, you know, he told the president, much as I like this company, it's really the people on my route that are the most important. The company has great benefits and all, but on my route, we know each other and care about each other.

When it comes to brand loyalty, this president is no fool. He realizes that this truck driver could easily take most of his route with him if he went to a competitor. How many of you have had clients bemoan losing not only a key employee, but also the customers they took with them?

When bank managers first started to respond to customers' desire for one banker, they got burned when employees went to competitors. So now I work with my clients to help them support the personal relationship that customers want, while avoiding an isolated situation. I encourage them to present this as a win-win for everyone. Customers get to know back-up employees for when their favorite banker is ill, on vacation, or in a meeting. Employees get a support system that allows assistants to do most of the routine work while the relationship manager can focus more on business development and complex customer issues.

In private banking, we encourage customers to maintain the relationship with their primary banker, and the bank positions this relationship manager as the conduit to providing the customer with services outside the relationship manager's area of expertise. For example, if the relationship manager is a loan officer, he or she can bring in experts for trust services while still being fully involved with the client. Rather than sending a prized client to the trust department, the loan officer sets up a three-way meeting that he or she facilitates with the customer and trust officer. The relationship manager doesn't jeopardize his or her customer relationship if the trust officer performs poorly because the relationship manager stays totally involved and monitors the service quality.

Now we have a four-way win. The customer is happy that their favorite banker is still involved, the relationship manager is pleased to maintain control of this prized customer, the trust department gains a new customer, and the bank has tightened its grip on the customer because - even if the relationship manager leaves, it will be harder for the customer to move all these banking services. Most customers think that the assistant can help until someone new arrives. Plus, the trust officer is so nice and they're happy with the investment returns and it's such a hassle to move.

Meet with Top Customers Annually

I encourage my clients to meet with their top customers annually. One firm I know starts at the top where, every year, the CEO personally meets with the top ten customers of the firm. So do each of the division managers, and the regional managers, and the district managers and the branch managers.

While these face-to-face meetings show appreciation for the business, they're also a means of learning what's not working so well and for getting ideas of new things to do or new products to offer. On a monthly basis, employees at each level can get together to share what they're hearing.

When I worked at Schwab, the top executives attended a luncheon once a month with customers from one area of the firm, such as retirement products or active bond traders. This way, the executives learned general issues of concern to customers and they used the customers as a focus group for ideas they were considering.

All of this reminds me of the ad where a manager comes in and announces that that the firm has just lost their oldest customer to the competition, and he hands out airline tickets so everyone can get out in the field and talk to customers. Our job - as consultants - is to get our clients out there before they lose a key customer.

First-hand Experience

Most of you are probably aware of the Disney program where executives work in the park each year in different areas -- from concession stands to being Pluto to taking ride tickets. I recently heard the CEO of a Japanese Health Care firm explain how his employees spend three days in health care facilities working with seniors. They do everything - help them get dressed, feed them, make sure they remember to take their medication. He said that before this experience, it was easy for a manager to deny care for feeding and getting dressed, but after seeing how hard it can be for some seniors, the decision stays focused on each individual patient's needs.

Become a Customer

And what about this? Have clients become one of their own customers once a month. Have them try to buy one of their products, or try to set up a new account. Maybe you can develop a checklist for them to use in analyzing the process - from how easy or cumbersome it is, to the knowledge level and attitude of the employees. Try to figure out how you can facilitate having your clients "live" their customer's experience.

Or what about existing customers with problems? Be really daring and suggest that your client call his or her own help desk. If it's a good experience, then let's get some positive feedback to those customer service reps. If not . . . .

Two years ago, one of my clients did this and it resulted in an entire phone servicing unit being shut down. This executive had been receiving a lot of complaints about the unit and so decided to just try it for himself. His "problems" were basic and, not only did no one give him the correct information, they weren't even pleasant about it. If your clients don't want to do become one of their own customers, maybe you should.

Happy Employees

Before closing, I would be remiss not to mention one other "DUH" fact. Happy employees generate happy customers. And happy customers buy more. There has been a lot of press lately about Northern Telecom, MCI and Sears studies relating higher employee satisfaction to increased sales. It's a no brainer, but one to be aware of if you have clients with unhappy employees.

Customer Retention

The most important activity that I know for increasing sales is for our clients to secure the business they already own. It costs much more to bring in a new customer than to give really good service to an existing customer. And far too few companies - in all industries - are paying enough attention to keeping the customers they already have.

Make sure the relationship manager is happy and create a support system around that person to service the customer so that (1) more products are cross-sold and (2) should the key relationship manager leave, it's too overwhelming for the customer to think about starting from scratch somewhere else to build up such a wonderful group of people to take care of their needs.

I think one of the best ways to create consulting opportunities is by getting senior management involved with their own customers. One of two things will happen - either they will hear about problems that need to be solved or they'll learn about marketing opportunities - and we know they rarely have enough staff to move quickly to capitalize on these great ideas. I believe that we're truly doing our clients a service by getting them to mingle with the masses - nothing improves sales faster than staying in touch with the customer.