Your organization needs processes for:

• Identifying customer and market requirements
• Identifying and innovating products and services to enter new markets, attract new customers, and expand relationships with existing customers
• Enabling customers to seek information and customer support, conduct business with you, and provide feedback
• Determining and deploying the key support requirements for each customer group
• Determining which market customers and markets to pursue
• Using customer, market, and product/service information to improve marketing, build a more customer-focused culture, and innovate
• Build customer relationships and market share
• Manage customer complaints to resolve them promptly and address the causes of the complaints

Best practices to consider:

• Since people in the organization deal with customers daily, they assume that they know what customers require but have never validated their assumptions, which is a critical first step to improving customer satisfaction and loyalty.
• New product and service development processes involve customers in evaluating ideas and features.
• The organization also involves customers in identifying support requirements, which are then deployed to all employees who interact with customers, with measures of performance on those requirements in place and reviewed.
• Determining which customer groups and markets to pursue and which products and services to provide is an ongoing, strategic process that builds on core competencies and innovation.
• Understanding that very satisfied customers are much more loyal than satisfied customers, the organization identifies exactly how to deliver high levels of satisfaction at all stages of the customer life cycle.
• Customer complaints are sought, captured, and analyzed to improve processes and increase customer satisfaction.

Common problems areas:

• The lack of a rock-solid understanding of customer requirements produces a shaky foundation upon which to build customer relationships.
• Customer support requirements are not identified, validated, or systematically deployed, which leads to support failures and lost customers.
• Companies settle for satisfied rather than very satisfied customers, which makes it harder to retain customer and build relationships.

To read more about building customer relationships, click on these articles:

• Meaningful Innovation
• A Baldrige View of Customer Experience
• Seeking Very Satisfied Customers
• Kano Satisfaction Model
• Bottom-Line Value of Customer Engagement

CDW had been using Net Promoter to measure customer satisfaction and brand health. You get a Net Promoter Score by asking one question of your customers—How likely is it that you would recommend your company to a friend or colleague?—and then grouping the responses by promoters (those who answer the question with a 9 or 10), passives (7-8), and detractors (0-6). You subtract the percentage of detractors from the percentage of promoters to get your Net Promoter score.

This has been a leading edge measure for many companies because it helps them identify opportunities to improve customer satisfaction. CDW decided that Net Promoter was too one-dimensional so, with the help of the person who developed Net Promoter, it went to a three-question approach that, according to Calvin Vass, CDW’s senior manager of research, looks at “different dimensions of the relationship; what the customer plans to purchase with us, if they are committed, and what they would do if we went away.” Vass is quoted in “Is Net Promoter Really the Ultimate Question?” by Drew Neisser (Fast Company, October 20, 2010).

CDW segments its market into two groups, Active Customers and Less Active Customers. It surveys the first group quarterly, receiving more than 100,000 surveys per year. It surveys the second group monthly with more than 800,000 inquiries annually. “We are always trying to bring [the second group] more deeply into the franchise,” said Vass.

CDW’s senior leaders review customer feedback quarterly and act on their analysis to improve performance, such as launching new customer retention initiatives in 2009. One initiative involved asking customers what types of technologies they were interested in rolling out in the next couple of months. “Through this research,” Neisser writes, “CDW identified 12,000 customers interested in specific offerings that were passed onto the sales team. These leads were turned into 200,000 quotes and 108,000 orders placed, amounting to a whopping $230 million in additional revenue.”

CDW responds to any negative feedback or problems identified by its customer surveys. It’s quick and positive response to more than 7,300 complaints has helped boost customer loyalty.

Another initiative involved the formation of three customer “communities” comprised of 300 small, 300 medium, and 300 large business customers. CDW asks each group for input on advertising, product, and operational issues, and it encourages members to communicate with each other. “They can ask another member about a specific type of technology,” said Vass. “It is a very vibrant back-and-forth conversation, certainly not one-way at all.”

The goal of any customer satisfaction measurement system is not the score: It’s using the information from the survey to improve customer loyalty and bottom-line results. CDW offers innovative ways to do both.

To read more about customer loyalty, click on these articles:

• Seeking Very Satisfied Customers
• Kano Satisfaction Model
• Recommendability Boosts Revenues
• Be Careful How You Measure Customer Satisfaction
• Bottom-Line Value of Customer Engagement

The quote comes from “A post-industrial A to Z digital battledore,” which lists his 26 favorite neologisms (even though most are not newly-invented words). Several thought-provoking definitions relate to meeting customer requirements including:

• C is for Choice: “Digital commerce enables niches” because “given the choice, people will take the choice.”
• F is for the Free Prize: “People often don’t buy the obvious or measured solution to their problem, they buy the extra, the bonus, the feeling and the story.”
• I is for Ideavirus: “Ideas that spread win, and you can architect and arrange and manipulate your ideas to make them more likely to spread.”
• K is for kindle: Not the ebook reader. “The internet responds better to bonfires that are kindled over time, to ideas that spread because the idea itself is the engine, not the hype or the promotion.”
• O is for the Orangutan: “The primate is the best way to think about how people interact with websites. They’re like monkeys in a psychology experiment, looking for the banana. If your website offers a banana, people are going to click on it.”
• R is for remarkable: “In a world without effective, scalable advertising, remarkable products and services are the single best way to succeed.”
• T is for Tribe: “The opportunity for marketers today isn’t to sell more average stuff to more average people. The opportunity is to find and connect and lead tribes of people, taking them somewhere they want to go.”

You can see all 26 neologisms here. To read more about the new marketplace, click on these articles:

• Creating a Unique Customer Experience
• Stakeholder Mapping
• Walk in Your Customer’s Body Armor
• Serving Customers through Shopper Marketing
• Bottom-Line Value of Customer Engagement
• 9 Ways to Get Closer to Customers

I’m talking about Delta Airlines. I was scheduled to fly back from Lexington, Kentucky, on Monday night at 7:30. I heard an announcement that a flight from Atlanta to Lexington had been delayed so I checked with the Delta rep at the gate to see if that was my airplane. It wasn’t. I joked about how lucky I was to get a plane coming from Detroit. She said the flights from Atlanta and Detroit seemed to alternate having trouble.

As take-off time approached, we were told that the plane’s engine wouldn’t start and a mechanic had been called. Twenty minutes later he showed up. About 45 minutes later we were told the plane was ready to go and we trudged out to the last plane leaving Lexington that night.

Once everyone was settled and the door closed, we waited and waited and waited for the engines to start and cheered when they finally kicked in. We taxied for take-off and then we taxied some more. Lexington is a small airport so if you taxi for ten minutes, you know something is wrong and, sure enough, we found ourselves back at the gate. The pilot told us the crew had reached its time limit and couldn’t continue. Did I mention this was the last plane out of Lexington?

So we stood in line for a half-hour to get rebooked the next morning and get hotel vouchers. The hotel shuttle driver joked about how often he picks up Delta fliers that time of night. The hotel clerks joked about Delta being its best customer. We who could not get home were not amused.

Flying back Tuesday morning, I sat next to a woman who flies Delta regularly from Atlanta to Minneapolis and she said when she gets to the company she’s working with, the people always ask for her travel horror stories. One time the plane flew with the landing gear down because they feared that if they retracted it, it would stay retracted. She had lots of stories.

I want to add that every Delta employee I interacted with was polite and helpful. This is not a people problem. It’s a system failure. The system for maintaining airplanes and scheduling them and meeting the schedules isn’t working. It sounds like it hasn’t been working for awhile. System failures are management’s problem. Delta has a serious leadership problem.

Customers beware.

To read about excellent customer service, click on these articles:

• Stakeholder Mapping
• Do You Trust Your Customers
• Walk in Your Customer’s Body Armor
• 9 Ways to Get Closer to Customers
• Bottom-Line Value of Customer Engagement

Located in Quarryville, Pennsylvania, Stoner makes specialized cleaners, lubricants, and coatings, primarily for car care. In 2003, it became the smallest company to win the Baldrige Award.

“We first learned about Baldrige in 1991 through the local Lancaster County program,” said Rob Ecklin, Jr., Stoner’s president. “We started to familiarize ourselves with the criteria then.” Stoner became the first company in the county to win the award in 1995. A few years later it submitted its first Baldrige application.

“We like to learn, to challenge ourselves and to be challenged,” said Ecklin. “Only a small percentage of companies truly want to improve. We’re one of them. We get excited about performance excellence. This is not a sexy business. It’s not high tech. Not flashy. But we’ve been able to get extraordinary results from ordinary people.”

Stoner gets these results by expecting every employee to be a leader. It involves all employees in setting the direction for the company. It uses teams to flatten the organization and push accountability to the front lines. It reinforces accountability by giving every employee the authority to spend up to $1,000, without supervisor approval, to resolve customer questions or complaints promptly. As a result, Stoner’s retention rate for key customers is better than 98% and less than 1.5% of all customer transactions result in below expectations feedback.

Stoner offers no special benefits programs and its pay scale is slightly under the local average, but its employees earn far more than average through a program that pays 20 to 50 percent bonuses for functional team results that are linked to corporate goals. “Most people are skeptical of the program because the percentages are so large. The way they see it, the biggest drawback is giving up control and autonomy, but you have to do that for variable compensation to work,” Ecklin said.

You can’t give up control and autonomy without total confidence in the quality of your workforce. As Stoner’s general manager, Rob Marchalonis, said, “We try to hire the best, give responsibility and freedom, and share the rewards.”

To learn more about Stoner’s world-class management system, click here.

Now an unlikely company has brought in trainers from the Ritz to show their dealers how to create a consistent sales experience and create loyal customers. The company? Cadillac.

According to an article in Bloomberg Businessweek, “Cadillac has copied Ritz’s pocket-sized ‘Credo’ cards, which explain how customers should be treated.” Cadillac service managers now have greater flexibility to “wow” customers. One dealer in the Chicago area gave employees $300 to $500 in “wow” money, which may be an iffy proposition if the employees haven’t been trained in how to dole out that money responsibly. The last I heard, new employees at the Ritz receive more than 250 hours of training in their first year of work, and a good part of that training is in customer service. Without the training, the “wow” money may just become, “Wow, look at all the money we wasted.”

It’s all about the culture and the management system. Companies that try to emulate one chunk of a world-class system without having the culture and the other key elements of the system in place may see short-term improvement, but it won’t last. The system will absorb the change and return to the way things used to be. It will snap back. You cannot change a culture—you cannot improve just customer service or just employee engagement—without changing the system.

Hopefully, Cadillac understands that since it has something else in common with Ritz-Carlton: It also won a Baldrige Award. Unfortunately, that was 20 years ago. My guess is that little remains of the leadership and management system of those glory days.

Click here to read the Bloomberg Businessweek article, “What Cadillac Is Learning from the Ritz,” by Jeff Green and David Welch, June 17, 2010.

To read more about Ritz-Carlton, click on these articles:

• Leaders in Customer Service
• World-Class Employee Orientation
• Ground Zero for Customer Service

Pal’s continues to conduct annual internal assessments because, as Crosby states, “I’m a real big believer.” Like other world-class companies, Pal’s benefits from asking and answering key questions that reveal how the organization works. The snapshot produced by this exercise becomes the engine for change, improvement, and success.

The questions explore all areas that are critical to an effective management system. Many of the questions have never been asked, which means many of the areas they address have never been evaluated. And therein lays their power.

A few years ago I asked these questions of senior leaders at an organization that dominated market share in its industry. One question in particular solicited a variety of responses. The question was: How do you determine key customer requirements and expectations?

Many of the leaders talked about how they interacted with their customers daily. Others mentioned customer surveys, complaints, and lost customer interviews, among other approaches. Nobody described a process. I asked how they used the information from these sources to determine customer requirements and they said they knew what their customers required because they talked to them every day. In other words, they had no process for determining customer requirements. When the resulting assessment pointed this out, the senior leaders heatedly debated the issue until the head of the organization agreed with its accuracy. A few months later they hired a market research firm to help them formally nail down those requirements.

Now consider how Pal’s answers that question. First, it describes of number of listening and learning posts for gathering information from its customers: telephone and mall interviews, drop-in and mail-in surveys, “Marketing by Wandering Around,” on-site interviews, and Web-based surveys. It feeds the information from these sources into an extensive marketing research process that includes what customers like or dislike about Pal’s and specific competitors and why they choose one restaurant as their favorite. It also evaluates competitor products and services, uses industry and competitive data to predict future trends in customer tastes, and analyzes sales data and customer input to rank their requirements and expectations. The Customer Focus Assessment Team analyzes all of the data to build customer relationships, while the Leadership Team uses the data evaluate and improve existing customer/market focus processes.

They began by using the data to identify customer requirements. They then translated these requirements into key business drivers for the company. Based on sound research and thoughtful analysis, Pal’s knows what its customers require and it knows what it must do to meet and exceed those requirements. That’s a firm foundation for any company.

To read more about knowing your customers, click on these articles:

• Be Careful How You Measure Customer Satisfaction
• Bottom-Line Value of Customer Engagement
• KEYSTONE: Customer Knowledge
• 9 Ways to Get Closer to Customers
• Ground Zero for Customer Service
• Customer Loyalty Myths