The DIY Customer Service Learning Project

Let’s say you have to learn a new skill.

It could be something to do with customer service. Something that would elevate your service game. What would you do?

OK, I mean after you procrastinate a bit. What then? 

Would you:

  • Sign up for a class?
  • Read a book?
  • Google it?

All of these seem like natural solutions. None of them are very efficient.

That’s why I launched a Do-It-Yourself Learning Experiment on the Inside Customer Service LinkedIn group. The goal is to identify best practices for self-directed learning. 

Over the next few weeks, I’ll be posting updates on our progress. We’ll look at the challenges, techniques, and successes.

The idea is simple. Most of the skills we acquire come from informal learning. This first post is all about getting started.

Self-directed Learning Defined

We tend to think of learning as a formal activity. 

Examples might include attending a class, taking an e-learning course, or participating in a structured program. Informal learning is quite different. 

The American Society for Training and Development published a white paper in 2009 called Tapping the Potential of Informal Learning. It offered this definition: 

A learning activity that is not easily recognizable as formal training and performance support. Generally speaking, it takes place without a conventional instructor and is employee-controlled in terms of breadth, depth, and timing.

The truth is most of our learning happens informally. 

Research from the Center for Creative Leadership has popularized what's known as the 70-20-10 rule. It's a rough estimate of where employee learning generally occurs:

  • 70% - challenging assignments
  • 20% - developmental relationships (bosses, mentors, etc.)
  • 10% - formal training

Here's what that might look like in a customer service context. Think about a skill you have, such as serving angry customers. How did you learn it?

You may have taken a class somewhere. (My new class on lynda.com, Working with Upset Customers, is a good resource.) You might have talked through a tough situation with a boss or a co-worker.

But, I bet you learned the most from experience. You noticed some things that worked well with an upset customer and some moves that definitely didn't. 

 

Benefits of Self-directed Learning

Sugata Mitra won the 2013 TED Prize.

That’s a pretty big deal. It’s awarded each year to an “individual with a creative, bold vision to spark global change.” The prize includes $1 million to help make that vision a reality.

Mitra’s vision was building cloud-based schools. It was born out of an amazing experiment where he installed a computer in a wall in New Dehli slum and then watched what happened.

The results were truly amazing, as you can see in Mitra’s TED talk.

What does all this mean for us?

Mitra’s experiments prove that self-directed learning has the potential to deliver three major benefits over traditional classroom-based learning:

  • Faster. We can learn faster when our curiosity and need are driving the bus.
  • Better. The learning experience is more immersive and enjoyable.
  • Deeper. We tend to learn much more when we’re self-directed.

Mitra focused his research on K-12 education. There’s no reason the same principles can’t apply to the corporate world. In fact, one of the big trends in training is something called flipped learning that leverages similar strategies.

The promise of flipped learning is clear: better learning for less money.

 

Getting Started

Self-directed learning requires a fundamental shift in thinking.

Learning must be a means to an end. The point is to learn a new skill so we can do something that we can’t do now. That’s a big switch from how most corporate training is delivered now:

Old approach:

“I’m going through training.”

New approach:

“I’m learning so I can do something new and useful.”

This mind-shift has already proven to be an interesting challenge. 

I reached out to a handful of people before I launched the DIY Learning Project. Would they be interested in participating? Most quickly replied with an enthusiastic “Yes!”

Things changed when I asked them to commit to doing something new. Some had trouble articulating their goals. Others felt pressed for time, even though a new skill might help them use their time more efficiently.

Real learning is scary and exhilarating at the same time!

So, keep an eye on this blog over the next few weeks as I report back on our progress, our lessons learned, and the challenges we encounter along the way.

How Headlines Lead to Sad Customer Service Stories

Headlines can be seriously misleading.

Let’s take a quick detour from customer service and look at an example from the NBA. The Los Angeles Lakers are getting bad press. Lots of it.

NBA teams have just entered the free agency period. The Lakers are trying to rebound from the worst record in franchise history last season, but elite players don’t want to sign with them.

Here’s a sampling of the headlines:

  • Laker Mystique is Dead (SB Nation)
  • Has Franchise Lost Its Mythical Allure? (Hoops Habit)
  • Lakers Are In Denial of Shrinking Status in the NBA (LA Times)

You get the idea.

The point of all these articles is the Lakers are no longer a team that top free agents want to sign with. The glory of seasons past has now faded.

These headlines also distort the truth. 

The Lakers have never been a top destination for elite free agents. Shaquille O’Neal (1996) and Jamaal Wilkes (1977) are the only marquee free agents they’ve signed since moving to Los Angeles in 1960.

If we aren’t careful, these misleading headlines will point us in the wrong direction. Data is an antidote to hype. Whether it’s building a title contender in the NBA or a team of customer service all-stars, a little analysis can go a long way.

 

Misleading Customer Service Headlines

Here are a few typical customer service headlines that can be misleading:

  • Our people need training
  • We need more people
  • Yelp is evil

These headlines frame a perspective about the content of the story. It’s convenient, and perhaps lazy, to stop there. 

A closer look at each headline reveals a different story.

 

Our people need training. 

The Hype: Send poor performers to a customer service training class and they’ll magically become awesome. 

Sad Twist: The problems don’t go away, but you’re still out the cost, time, and lost productivity associated with the class.

The Truth: Training alone rarely solves performance problems. Other solutions are often required. I once did the math and discovered that when it comes to improving service, training is on average just 1 percent of the solution.

 

We need more people

The Hype: Hire more people and we’ll magically become awesome

Sad Twist: You overspend on hiring and the problem still exists. Later, you’ll need to lay off employees in a desperate bid to cut costs.

The Truth: New people won’t make problems go away if you don’t first fix the underlying issues. A recent blog post provided several alternatives that could be much more effective.

 

Yelp is evil

The Hype: Yelp is just a place for disgruntled customers and unsavory competitors to ruin your business. There’s no solution here. Run for the hills! 

Sad Twist: Your mistrust of Yelp becomes a self-fulfilling prophecy as more and more upset customers write scathing reviews.

The Truth: Yelp is good for business. Yes, plenty of reviews are fake (16 percent, according to Yelp). However, businesses that master Yelp end up driving more revenue. Yelp estimates that businesses add an average of $8,000 in revenue just by activating their free account.

 

Finding the Truth

It always helps to look at the data and then draw conclusions. 

Let’s go back to the Lakers for a moment. They’ve won a total of 11 NBA championships since moving to LA in 1960. Each championship team had elite players who were considered among the best in the league. 

Let’s look at how each of these elite players were actually acquired:

  • Jerry West (draft, 1972 championship)
  • Wilt Chamberlain (trade, 1972 championship)
  • Gail Goodrich (draft, 1972 championship)
  • Kareem Abdul-Jabbar (trade, 1980, ’82, ’85, ’87, and ’88 championships)
  • Jamaal Wilkes (free agent, 1980, ’82, and ’85 championships)
  • Magic Johnson (draft, 1980, ’82, ’85, ’87, and ’88 championships)
  • James Worth (draft, 1985, ’87, and ’88 championships)
  • Shaquille O’Neal (free agent, 2000, ’01, and ’02 championships)
  • Kobe Bryant (trade, 2000, ’01, ’02, ’09, and ’10 championships)
  • Pau Gasol (trade, 2009 and ’10 championships)

The path to glory for the Lakers suddenly looks different. The data suggests that shrewd drafting and cunning trade deals are a better bet for turning around the Lakers.

Sometimes, it’s as easy as making a list. Other times, a bit more analysis is required. 

My Needs Analysis course on lynda.com provides three basic steps for analyzing data. It’s presented in the context of designing a training program, but it could be used to solve other problems too.

  1. Set clear goals
  2. Gather data
  3. Analyze data

You can watch a preview of the course here. A lynda.com subscription is required to view the whole course, but you can get a 10-day trial account.

Why Customers Are Naturally Negative

“If it bleeds, it leads.”

It's a popular maxim in news reporting. News directors and editors know that people are fascinated by the negative. Accidents, violence, and tragedies get us talking.

Sadly, the same is true in customer service.

Your customers are naturally wired to focus on the negative. Great service feels good, but service failures are what people remember.

This post examines customers’ negativity bias. I’ll share some compelling evidence, the science behind it, and offer some solutions.

Negativity Stats

Let’s start with a statistic you’ve probably heard of:

Customers will tell 10 people about a bad experience, but only 5 people about a good experience.

This venerable stat came from a 1980 study conducted for Coca-Cola by Technical Assistance Research Programs, Inc. (TARP). 

John A. Goodman, one of the study’s authors, shared some additional insight in his book, Strategic Customer Service. His research across other industries consistently showed that customers will tell twice as many people about a bad experience than they will a good one.

Goodman found that online, the ratio of negative to positive word of mouth grows to a whopping 4 to 1.

In The Effortless Experience, authors Matt Dixon, Nick Toman, and Rick DeLisi examine the impact of good versus bad experiences on customer loyalty. They found that customer service interactions are nearly 4 times more likely to drive disloyalty than loyalty!

On a micro level, wait times provide another great example. Research reveals that when people get to choose which line to stand in, such as at the grocery store, they get agitated when they pick a slower line. Oddly, they don’t feel a corresponding positive feeling when they choose a faster one.

On a macro level, there’s the common feeling that customer service is steadily going down hill. Of course, this isn’t really true:

Source: ACSI

Source: ACSI

Clearly, customers are focused on the negative.

 

Negativity Bias

Guy Winch Ph.D. is a psychologist, author, and TED Speaker. He literally wrote the book on complaining. (I highly recommend it - it’s called The Squeaky Wheel.) 

Winch told me these scary customer service stats can be attributed to our natural instincts:

Our brains are wired for a negativity bias, which means we are much more likely to recall and to be impacted by negative experiences than by positive ones.

In his book, Your Brain at Work, David Rock explains that our brain’s emotional center, called the limbic system, is responsible for this negativity bias. 

The limbic system fires up more intensely when it perceives a danger compared to when it senses a reward. The arousal from a danger also comes on faster, lasts longer, and is harder to budge.

So, negative feelings are more memorable because they’re more powerful. But, are we naturally drawn to negative stories or do we just remember them better?

Research conducted by Marc Trussler and Stuart Soroka suggests that negative stories are indeed more alluring. They conducted an experiment where subjects were asked to read political news stories. Participants were presented with a mix of positive, negative, and neutral headlines.

The results?

Trussler and Soroka found that positive news stories were 26 percent less likely to be read than negative ones.

This negativity bias naturally creeps into customer service. Winch sums it up this way:

Customers might have ten positive interactions with a company and yet a single negative experience can still compromise their customer loyalty entirely.

(Note: Winch does some fascinating work and I’ve quoted him before. Check out his Ted Talk on emotional hygiene.)

 

Solutions

People who watched G.I. Joe as a kid might remember that every episode included a short PSA that ended with the catch phrase, “Knowing is half the battle.” 

That certainly holds true here. Understanding your customers’ natural negativity bias can lead you to a few solutions. 

 

#1 Avoid broken promises

Customers rightfully expect companies to do exactly what they say they’re going to do. For example, if you go to a restaurant and order a meal, you expect to get the meal you ordered, prepared properly, and delivered in a timely fashion. 

This isn’t rocket science. It certainly isn’t the stuff of legend. It’s table stakes. I call these basic promises.

Breaking your basic promises is extremely aggravating to customers. You can explore how it feels with my interactive guide to stuff your customers hate.

Before you go out and add that awesome new feature to your product, make sure the basics already work.

 

#2 Be really good at something

In their book, Uncommon Service, Frances Frei and Anne Morriss make a compelling case for trade-offs. 

Companies can’t excel at everything. It’s just not feasible. So, a better strategy is to be really, really good at something your customers care about and let the less important areas slide a little.

Here are some great examples:

  • In-N-Out Burger provides outstanding food and great service, but the trade-off is you might spend 15 minutes waiting in the drive through line (it’s so worth it). 

  • Southwest Airlines allows people to fly at low cost, but the trade-off is there’s no assigned seats and no first class.

  • IKEA sells stylish furniture at a low-cost, but the trade-off is their furniture isn’t built to last for generations.

The point is you can’t be all things to all people, so be the best you can be at something your customers really want.

 

#3 Fix service failures

John A. Goodman’s customer service research led him to a surprising discovery. Here’s another quote from his book, Strategic Customer Service:

A customer who complains and is satisfied by the resolution is 30 percent more loyal than a noncomplainer.

The data suggests that fixing service failures provides an incredible opportunity. Yeah, no brainer, right? Sadly, most problems go unnoticed and unresolved.

There are three reasons behind this:

  1. Customers often don’t complain
  2. Employees frequently fail to share complaints with management
  3. Managers don’t realize a complaint is really an iceberg

If you can overcome these three obstacles, you can get really good at problem resolution. And, if you can do that, your customers won’t have anything negative to talk about, will they?

 

Want to Learn More?

You can gain new skills by checking out my new training video, Working With Upset Customers.

The course available on lynda.com, so you’ll need a subscription to view the entire thing. You can get a free 10-day trial here.

Here’s a preview:

An Interactive Guide to Stuff Your Customers Hate

Do you know how your customers feel when things go wrong?

Today’s your lucky day! This interactive blog post will show you. It will help you experience the problems that frustrate your customers the most.

Why is this important?

It will help you develop empathy. That’s the ability to understand what a customer is thinking or feeling. The only way you can develop empathy is to go through a similar or relatable experience.

That’s why I’ve written this fun house of horrors blog post. You’ll truly understand what aggravates your customers if you can make it through all the way to the end.

Are you ready? Here comes the first test.

Test #1: The Big Secret

Before reading the rest of this post, stop and click the link below. It will reveal my biggest secret for defusing angry customers. Once you’ve read my big secret, scroll down to read the rest of the post.

Secret Way to Defuse Angry Customers

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Yes, that link was deliberately broken. I’m sorry to do that to you, but you’ve just experienced Gripe #1. 

Gripe#1: Customers hate it when your product or service is defective.

Customers really have a hard time when a company breaks a basic promise. This isn’t going the extra mile stuff. It’s just doing exactly what you said you would do. 

OK, I’ve fixed the broken link. Please click on the link below before reading the rest of the post.

Secret Way to Defuse Angry Customers

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Arrrrgh! The link was broken again! You’ve just experienced gripe #2:

Gripe #2: Customers hate it when you don’t fix a problem.

It seems so basic yet it happens all the time. They have to contact your company multiple times, but nothing gets fixed. You’ve got to prevent problems from happening over and over again.

Now, it’s time to learn my number one secret for defusing customer anger. This time, I promise you the link isn’t broken. Please click on the link.

Secret Way to Defuse Angry Customers

Once you’ve read my big secret, scroll down to read the rest of the post.

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I’m impressed if you’ve made it this far. How did you get here?

Did you give up and just skim? Don't worry, customers often give up after a few problems and take their business elsewhere. You now know how that feels.

Did you experience all five horrors in this blog post? 

Then you know that empathy is the biggest secret to defusing angry customers.

51 Resources for Learning About Customer Service

Beware of the person who thinks they know it all.

Elite customer service professionals know something the rest don't. You must never stop learning. Each day is an opportunity to gain new skills, insights, and perspectives.

So, where do you start?

Here are 51 terrific resources you can use to deepen your customer service knowledge. Most are low-cost or no-cost. Your biggest investment will be your time.

Books

The great part about a book is it can go really in-depth into a particular topic. Here are some of my favorite customer service books. (And yes, I've read them all.)

  1. The Amazement Revolution by Shep Hyken
  2. High-Tech, High-Touch Customer Service by Micah Solomon
  3. Be Your Customer’s Hero by Adam Toporek
  4. Delight Your Customers by Steve Curtin
  5. Uncommon Service by Frances Frei and Anne Morriss
  6. Reinventing the Wheel by Chris Zane
  7. Strategic Customer Service by John A. Goodman
  8. The Science of Service by Wendi Pomerance Brick
  9. The Ultimate Question 2.0 by Fred Reichheld and Rob Markey
  10. What's Your Purple Goldfish? by Stan Phelps
  11. The Effortless Experience by Matthew Dixon and Nick Toman
  12. Human Sigma by John H. Fleming and Jim Asplund
  13. Service Failure by Jeff Toister (I can't leave out my own book!)

 

Blogs

Reading blogs is a great way to stay up to date on the latest customer service trends. Here are some blogs that I enjoy on a regular basis.

  1. Shep Hyken's Customer Service Blog
  2. Customers That Stick
  3. CX Journey
  4. Communicate Better Blog
  5. Help Scout Blog
  6. 360 Connext
  7. Customer Experience Matters
  8. One Reach
  9. Provide Support Blog
  10. Zendesk Blog
  11. The Retail Doctor Blog
  12. Loyalty Blog
  13. CustomerThink
  14. Fonolo Customer Service Blog
  15. Win the Customer

Pssst! You can receive a free copy of 10 Customer Service Activities to Supercharge Your Team if you subscribe to my Inside Customer Service blog. 

 

Training Videos

Why go to a training class when the training class can come to you? There's a growing collection of customer service training videos on lynda.com. You'll need a subscription to view courses in their entirety, but you can get a free 10-day trial.

  1. Leading a Customer-Centric Culture
  2. Customer Service Fundamentals
  3. Using Customer Surveys to Improve Service
  4. Managing a Customer Service Team

 

Twitter

You don't need to post updates on what you had for lunch. Twitter is a great resources for discovering customer service ideas and connecting with customer service leaders.

  1. Who to follow: ICMI’s Top 50 #cctr Thought Leaders
  2. Call center Tweet chat: #icmichat (Tuesdays at 10am Pacific)
  3. General customer service Tweet chat: #custserv chat (Tuesdays at 6pm Pacific)

Tip: You don't need a Twitter account to follow hashtag conversations. Just click on the links above.

 

Conferences

OK, these are definitely not low or no-cost. They are wonderfully immersive experiences where you can learn about the latest trends and meet a lot of customer professionals and thought leaders. Here are four conferences I've attended and can recommend:

  1. CRM Evolution
  2. Customer Service Experience
  3. Contact Center Demo (Save $200 if you use code SPKR at checkout.)
  4. Contact Center Expo

 

Organizations

There are many organizations that focus on providing cutting-edge research, engaging content, and educational opportunities. They typically have a lot of free resources and content on their websites plus additional content and research for a fee.

  1. International Customer Management Institute (ICMI)
  2. HDI (focused on technical support)
  3. Customer Experience Professionals Association (CXPA)
  4. Society of Consumer Affairs Professionals in Business (SOCAP)
  5. Professional Association for Customer Engagement (PACE)
  6. Contact Center Networking Group (CCNG)

 

LinkedIn

There's a wealth of great customer service discussions and information to be found on LinkedIn. Your own connections are a terrific start. Here are a few more resources:

  1. LinkedIn Pulse: Customer Experience Channel
  2. Inside Customer Service Group
  3. ICMI Group
  4. Customer Service Champions Group

 

Podcasts

I've found this is a great way to spend time while traveling. Planes, trains, or automobiles - you name it! I'm still discovering podcasts, but here are two I enjoy:

  1. Crack the Customer Code
  2. The Net Promoter System Podcast

 

What Else You Got?

These are 51 great resources but I know there's more. Many more. So, what else would you recommend for someone with an insatiable customer service curiosity?

An Amazingly Simple Shortcut to Improve Customer Insight

You could solve a lot of problems if you better understood your customers.

This can be a real challenge. Budgets are sometimes tight. Deadlines are short. Resources are spread thin.

I recall a time when a simple shortcut came to me like a bolt of lighting.

Years ago, I served on the board of directors for my local ASTD chapter. This was the American Association for Training and Development (now known as the Association for Talent Development). My role was Membership Director.

We were discussing member participation at a board meeting. Specifically, we were discussing a lack of attendance at certain events.

In the midst of our discussion I realized that few board members were attending events themselves. An idea struck and I posed this question to the group:

Why aren't you attending events?

Board members gave me a range of excuses.

  • They were too busy.
  • The events weren’t at convenient times or locations.
  • The topics weren’t interesting to them.

In many cases, they simply forgot.

Lightbulbs starting going off. Weren’t these the same reasons why our members didn’t attend events? 

The discussion quickly turned to solutions. We focused on rethinking our events to make them so compelling that people absolutely had to be there. We varied the times, days of the week, and the locations. 

Most importantly, we each made a personal commitment to attend the events the really interested us and invite some of our friends and colleagues.

It took awhile to implement some of these ideas, but attendance steadily began to climb. We had discovered the secret of empathetic insight.

Applying Empathetic Insight

This type of customer insight comes from putting yourself in your customers’ shoes. Try to imagine how your customers think and feel. Answer key questions from their perspective.

Here are a few examples:

Hotel associates might learn how to improve room cleanliness by asking themselves, “What do I look for when I check into one of our hotel rooms?”

Employees at a software as a service company might learn how to reduce customer churn by asking themselves, “What do I find most frustrating about our product?”

Retail associates might improve sales by asking themselves, “Why don’t I personally buy more from my store?”

The goal is to try to see things from your customers’ perspective by imaging yourself as a customer. In theory, you’re the most educated, loyal customer. If something bothers you, it must really bother your customers who don't have the same insider connection that you do.

This may sound snarky, but I really do wish cable company executives would take a half day off of work and wait around their house for somebody who doesn’t come. My guess is that would be the fast demise of the four hour appointment window.

 

Words of Caution

We have to be careful to acknowledge that this approach is prone to error.

You’re not every customer. You might not even be the typical customer. You might even be a little weird. 

Imagination won’t replace solid data. You should still gather voice of customer data, whether you use a survey (see my how-to course) or choose one of these five alternatives.

However, empathetic insight can augment your data collection. At ASTD, our empathetic insight exercise changed the types of questions we asked our members and the data we collected. It was a great starting point, but not a panacea. 

We also realized that it would be hard to attract members to our events if we weren’t excited about them. That really pushed us to raise the bar on what we offered.

 

Why Culture Initiatives Fail

“We’re working on culture this year.”

I wish I had a dime for every time I heard an executive make that announcement. I’d have a lot of dimes.

It seems like everyone wants a great culture. One that’s customer-focused. And why not? A strong culture promises many benefits:

  • Employees will happily do the right thing
  • You’ll attract top talent
  • Customers will sing your praises

CEOs like to boldly announce that culture is a priority. Even Comcast is getting in on the culture game by announcing a major new initiative.

Most of these initiatives will fail. Here are three reasons why.

Undefined

It’s hard to be good at something if you can’t define it.

The vast majority of organizations I talk to do not have a clearly defined culture. I’m not referring to the standard set of cultural artifacts like mission, vision, values. Let’s face it - most of those are hollow and empty.

I'm talking about something real. A clear compass that points people in the right direction.

The litmus test is to ask any random employee to describe the culture. Chances are, you’ll get a puzzled look or an answer that’s inconsistent from one person to the next.

The few companies who succeed with culture ensure every employee can answer three questions:

  1. What is our culture?
  2. How are we doing?
  3. How do I contribute?

 

Mimicry

Culture initiatives fail when companies try to copy someone else’s culture. 

That doesn’t stop companies from trying. A CIO once told me he wanted his team to be like the Apple Store. When I pressed him for details, the best he could do was say, “I want them to be good at service. You know, like the Apple Store.”

There’s a long list of books extolling the greatness of other company’s cultures. The Nordstrom Way, The Disney Way, The Virgin Way, The Cleveland Clinic Way, and the Southwest Airlines Way are on all sale right now. 

The absolute peak is when you can turn your culture into its own brand. The Ritz-Carlton and Disney offer classes on how to be more like them. Zappos now charges 10 bucks a head to tour their Las Vegas headquarters. 

Trying to copy another company’s culture fails because it’s their culture, not yours. Each company is unique. And, copying another culture ignores all the hard work the other company needed to get where they are today.

Great cultures can provide ideas and inspiration. But, they’re not paint-by-numbers guides.

 

Delay

Culture initiatives don’t work when they’re a side project.

Here are a few excuses I’ve heard for delaying a culture initiative:

  • “We’re knee-deep in system stuff right now.”
  • “We’d like to do it, but we don’t have the funding.”
  • “We’re focused on employee engagement right now.”

These excuses are convenient, but they really reflect a deeper misunderstanding about culture. Developing a strong culture is core. It’s fundamental and strategic.

A great culture would help make all of those decisions easier!

You have to live your culture if you want it to succeed. In-N-Out and McDonald’s started with the same three words to define their culture, but only In-N-Out actually lived them.

Treat it as a side project at your own peril.

 

Building a Strong Culture

You might want to start by reading about a successful cultural initiative.

Here are two resources to help you build your own customer-focused culture:

These resources can help, but there are no short-cuts. Culture initiatives can only succeed through a deep commitment.

Defining Your Customer Can Be Complicated

Identifying your customer is fairly straightforward in some businesses.

Let’s say you own a restaurant. Your guests would be your customer. You might also include vendors and employees as customers under part two of the definition. But there’s no confusion that guests are your ultimate customer.

It gets more complicated in other organizations.

The nonprofit Goodwill has three major customers. The people who donate clothing and other items, the people who shop in their thrift stores, and the people who receive jobs and job training.

Organizations like this have to decide how to manage the needs of their different customers. This is especially true when there's an apparent conflict or limited resources. 

There could be trouble if you choose poorly.

A retail associate serves a customer.

Who is a customer?

The definition of a customer is broad. Here’s the traditional definition from Dictionary.com:

Customer (noun)

  1. a person who purchases goods or services from another.

  2. Informal. a person one has to deal with.

I prefer an even broader definition:

A customer is anyone you serve.

This could represent a wide range of people you encounter in your job.

  • People who purchases goods or services from your company.

  • Coworkers who depend on you to do their jobs.

  • Vendors who rely on you to serve your customers.

For example, imagine you work in customer service department for a furniture store. The people who buy furniture are clearly customers. Some customers elect to pick up their purchases from your company’s warehouse, which makes the warehouse employees your customer since they depend on you to properly inform customers on pickup procedures and availability. Other customers opt to have their furniture delivered, which makes the third-party delivery company your customers as well since they depend on you to accurately schedule deliveries and set reasonable expectations on the service they provide.


Franchisees are forgotten customers

Companies in fast food, retail, and other industries that sell franchises have a customer who is often overlooked, but extremely important: the franchise owner.

McDonald’s has long had a reputation for poor customer service. I once wrote a post detailing how their problems boil down to three areas:

  • Lack of focus

  • Lack of quality

  • Lack of control

It’s that last part that’s starting to bite them.

Franchisees operate over 90 percent of McDonald’s locations. That means most of McDonald’s customers aren’t actually served by a McDonald’s employee. 

The franchisees aren’t too happy. A recent article on Slate described McDonald’s relationship with its franchise owners as “the bleakest it’s been.”

Rent has increased an average of 26 percent over the past five years. Meanwhile, year over year same store sales are down 4.2 percent.

Now McDonald’s wants its franchise owners to invest an estimated $120,000 to $160,000 in it’s new Create Your Taste initiative. The Create Your Taste program is designed to allow people to customize the burger they order using an interactive kiosk.

Many franchise owners resent the additional investment. It will take a significant chunk out of short-term profits while making operations even more complicated.

McDonald’s can’t turn around it’s fortunes unless it improves it’s relationship with franchisees.

 

Customer definitions are tricky

Many industries have complicated customer relationships.

Hotels are a good example. In a typical hotel, one company owns the building, another company owns the brand, and a third company manages the hotel. 

Let’s say the property is getting a bit old and needs some upgrades. The brand might dictate the type of upgrades that need to be made. The building owner has to find a way to pay for the upgrades. And the management company has to keep guests happy until they all can sort things out. 

That’s are a lot of interests to manage.

Insurance is another example. Many companies have independent brokers who sell and service their policies. They must keep these brokers happy to ensure policy holders receive great service. At the same time, insurance companies must keep tabs on their brokers to ensure they’re representing the company fairly and accurately.

It’s enough to give you a headache if you aren’t paying careful attention.

 

Take Action

Here are two exercises to help you identify your customers, and improve your customer focus. The first is to make a list of the groups of people you serve, and the service you provide to each one.

This short training video will walk you through the process.

The second exercise is to create a customer-focused mission or vision. This could be your organization’s mission or vision statement, or a separate statement that clearly identifies your primary customer and the service you provide.

Take a look at Goodwill’s mission as an example:

Goodwill works to enhance the dignity and quality of life of individuals and families by strengthening communities, eliminating barriers to opportunity, and helping people in need reach their full potential through learning and the power of work.

Donors are important customer, but only to the extent that they help fulfill the mission. If a donation isn’t ultimately helping people reach their full potential through learning and the power of work, Goodwill doesn’t want it.

Let’s look at State Farm’s mission for a for-profit example:

The State Farm mission is to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams.

I can tell you from experience that State Farm and their independent agents are aligned around the same mission. In 2001, I traveled to Houston to help my in-laws recover from a flood. My father-in-law's truck had been completely submerged in water and was totaled. His State Farm agent showed up the next day with a check in hand so my father-in-law could buy a replacement.

It required coordination between State Farm and it’s agents to make the same thing happen for hundreds if not thousands of customers who were similarly affected.

Meanwhile, people in the neighborhood who had other insurance companies waited days for their insurance company to lend a hand.