Customer focus defined

Customer focus refers to an organization’s orientation toward satisfying actual and

prospective customers’ needs. It involves developing a deep knowledge of:
 Who the business’s customers are
 What those customers want
 When and how they want it
 What they’re willing to pay for the value they receive
Today’s customers are increasingly well informed about the products and services they can
choose from. At the same time, they have the ability to share their experiences immediately
and widely. For these reasons, customer focus—taking actions to understand and satisfy your
customers—is important not only for your organization's profitability, but also for its
reputation.

Customer focus can help you: *

 Acquire customers. By developing deep knowledge of your current customers, you gain
clues to where you should look for new ones. And you learn how to boost the number and
quality of referrals through existing customers.
 Retain and develop customers. When you identify your best customers, you can create a
steady stream of revenue by encouraging them to continue to buy products. You can also
sell them a variety of items from your different product or service lines. And as their
relationship with you grows, you can personalize offers or even create new offerings that
serve their changing needs.
 Reduce costs. As you build relationships with customers and they learn more about your
company, its product lines, and its processes, the cost of serving them may decline.
Why customers defect
From product focus to customer focus
Many managers see their organization’s offerings as the core of the company’s business.
They assume that introducing a new product model or lowering prices will persuade people to
buy from them and not from a competitor.

But in today's business climate, a number of forces are eroding this product-centric view: *
 Technology. Technological advancements and knowledge are spreading faster than ever.
That rapid diffusion makes it easy for rivals to quickly copy product and service
innovations.
 Globalization. Many businesses now operate around the world. That global presence
wipes out geographic advantages—such as lower labor costs—that some companies
previously enjoyed.
 Consumer power. Consumers have access to vast amounts of information about
companies, their offerings and prices, and their competitors. To remain viable in this
environment, many businesses end up offering steep discounts, only to be undercut by
someone offering lower prices—or even free products or services.
 Intangibles. Customers often base their purchase decisions on intangible qualities,
including a company’s trustworthiness, values, service quality, reputation, and reliability. *
Given these factors, businesses can no longer try to compete on product innovation or price
alone. Instead, they must understand and cater to customers’ needs—sometimes before
customers even know what they want.
Rather than asking, “How can we get customers to buy more from us?” managers today need
to ask very different questions—such as:

 “Who are our target customers?”

 “What problems do our target customers have?”
 “Why do our customers buy from us and not from someone else?”
 “What else do they need from us?”
Only by putting customers front and center can companies pull ahead—and stay ahead—of
their rival
What is a customer?
Customers take many forms. Identifying yours may be more complicated than you might
think.
Types of customers

There are several types of customers. For example:

 Consumers. For business-to-consumer (B2C) companies, customers are individuals who
buy products or services. Products range from clothing and medications to computers and
real estate. Services could include anything from insurance and college tuition to haircuts
and financial planning consulting.
 Organizations. For business-to-business (B2B) companies, customers are other
organizations. Such organizations may range from startups, large corporations, and
distributors to government agencies, nonprofits, and educational institutions. Like
individual consumers, such customers—often called clients—may buy products as well as
services.
 Internal customers. These are individuals and groups that are served by other individuals
or groups in the same organization.
Customers’ changing needs
Regardless of whether they are individuals or organizations, customers’ needs are constantly
changing. For instance:
 As some people approach retirement age, they become more interested in travel and leisure
activities than they were earlier in their lives.
 A company that is in the process of restructuring its operations may decide to outsource
some internal functions to external service providers.
 Many consumers in fast-growing emerging economies with improved standards of living
now want high-quality products and services. And they’re willing to pay a premium for
such offerings.
To stay competitive, organizations need to continually gather data on their customers to
understand their shifting characteristics and requirements. Gaining insights about the actual,
rather than assumed, needs of your customers helps ensure your products and services provide
what your customers truly want and need both now and in the future.
Beyond tools and technology
Tools and technologies—such as customer relationship management (CRM) systems and
customer satisfaction analytics—are important in the quest to get closer to customers. They can
help managers understand what their customers buy, which customers are most profitable, and
many other details.
But this kind of data in itself is not enough to sharpen an organization’s customer focus. That’s
because once you have insights into your customers, you need to use that knowledge to deliver
value to them.
That value goes beyond sending mass email promotions or offering seasonal sales. It involves
ensuring that the offerings your company develops—and the way it delivers them—meet the
current and future needs of a targeted set of customers. And this process requires the effort and
commitment of the whole organization—from frontline staff and managers to C-suite executives.
Get Feedback From Customers
Getting feedback from your customers about your organization and its offerings can help you
craft strategies for serving them better.
“Listening posts” make excellent tools for gathering such feedback. Listening posts include:

 Your organization’s website. Solicit general feedback on your site and post email
addresses for designated contact people. Scan forums on your site, and look at competitors’
forums to see what people are saying about your company and its offerings.
 Social media. Monitor what people are saying about your company and its products or
services through social media sites and through consumers’ websites and blogs.
 Market research. Conduct—or hire a market research firm to conduct—studies or surveys
on consumers’ demographics, lifestyles, preferences, opinions, and buying patterns.
 Focus groups. Bring together an informal group of customers from a target market to test
an initial product or service idea. As the concept develops, conduct more extensive focus
groups.
 Customer service process. Analyze customer complaints and use the resulting insights to
generate strategies for keeping customers happy.
 Follow-up satisfaction calls or surveys. After a transaction, contact the customer to find
out how everything went. Ask a few simple questions about the products and services
involved—and about the customer’s experiences with your company.
Observe customers
Another way to collect valuable data is to go into the field and watch how your customers use
your product or service—or those of your competitors—in real life. You’ll find out what they
like, what they don’t like, and how they would improve your offering.
EXAMPLE

At a company that made photocopy machines, observers in the field found that client companies often
placed the copiers in storerooms. People visiting the storerooms to retrieve supplies frequently stood on the
copy machines to reach high shelves. Knowing this, product designers created a copy machine strong
enough to support a person’s weight.
To learn how customers use your product or service:
1. Get out in the field. Send a small team to observe customers. Ensure that the team
includes people from diverse disciplines. An engineer may notice mechanical functions,
while a designer may see space and form. Have the team watch as customers carry out
normal routines involving your product or service—or that of a competitor.
 2. Capture the data. Have team members capture data through silent observation and
through asking a few open-ended questions, such as, “Why are you doing that?” and
“What’s your most memorable experience with [the activity being observed]?” Observers
may carry a list of questions to prompt their own observations, such as, “What problems is
the user encountering?” Consider having the observers create videos, audio recordings, or
photographs to capture subtle body language, facial expressions, or tone of voice that may
convey important information about what customers are experiencing.
3. Analyze the data. Look at all the data collected by the team. Consider whether any of it
suggests problems or needs the customers may be experiencing. Present the data to
colleagues who did not take part in the observation. Ask these individuals if they see any
additional problems or opportunities.
Anticipate customer needs
To learn even more about your customers, consider what else they might want—but don’t
yet know they want.
To do this, strive to see your customers’ worlds through their eyes, not yours, using these
strategies: *
 Understand your customers’ choices. Analyze the range of companies your customers
buy from. You’ll gain insights into which offerings they’re choosing to use and why.
You’ll also better understand your competitors, including possible strategic moves they
might make.
 Track customers’ experiences. Follow customers as they go through every point of
interaction with your company—including placing an order, asking questions, raising
complaints, and paying for products or services. Notice any breakdowns in this process.
Then use your insights to improve your offerings or the way you do business with
customers.
 Learn together with customers. Include customers in learning opportunities such as
seminars and conferences. You may gain insights into their current challenges, which
could in turn generate ideas for new offerings.
 Foresee customers’ future needs. Use tools like scenario planning to assess what
customers might want tomorrow, given changes in their lives, new technologies, and
market shifts.
Identify your target customers
Successful businesses know exactly who their most profitable customers are—and they focus on
creating offerings to please them. If they spend too much energy chasing the wrong customers—
for instance, those who switch from company to company, lured by the cheapest prices—they
stray from what they do best. They also risk alienating their profitable customers.
You and others in your organization need to determine who your target customers are and what
they expect—and then strive to delight and retain them.
EXAMPLE

Some customers engage with particular brands or products, not only in terms of the quantity of their
purchases, but also in their passionate attitude toward them. One study of 124 consumer packaged goods
categories found that this type of “superconsumer” on average represented only 10% of a category’s
customers but accounted for 30% to 70% of sales and an even higher share of profits. Based on this
knowledge, a U.S. food company developed a growth strategy focused on a set of its superconsumers that
led to new product launches and generated millions of dollars in additional sales. *
 Reconsider customer-loyalty claims
*

Evaluate customers on loyalty and profitability

*
It’s easy to think that customer loyalty automatically translates into profitability—and that
companies should therefore try to keep all their customers as long as possible and treat their most
loyal ones especially well.
But the link between loyalty and profitability is surprisingly weak—and complicated. The fact is,
not all loyal customers are profitable. And not all profitable customers are loyal.
EXAMPLE

A high-tech service provider launched a customer-loyalty program that cost $2 million per year. Five years
later, the company discovered that half of its loyal customers barely generated a profit. And half of its most
profitable customers bought high-margin products once—then disappeared.
Your target customers should be those who are both loyal and profitable. To assess and predict
loyalty and profitability, for a given purchase period, look at:
 Time between a customer’s purchases
 Average profit that a customer generates
This information gives you a sense of each customer’s likelihood of buying again and
profitability.
Many companies make the mistake of calculating customers’ value based on revenue, not on
profit. But when customers buy only low-margin products, serving them may cost more than the
revenue they generate. Thus they won’t be profitable.
F R O M T H E C OL L E CT I ON

The Mismanagement of Customer Loyalty

Not all loyal customers are profitable, and not all profitable customers are loyal. Surprised? Learn what—and
who—to focus on.
Read More

Categorize customers
Use your analysis to categorize customers based on their loyalty and profitability. Customers in
each category will differ in terms of fit between your offerings and their needs, and in terms of
their profit potential:

 Category

Profitability/ Loyalty

Fit between your offerings and their needs

Profit potential

 True Friends
Profitable and loyal

Good
 Highest

 Butterflies
Profitable but disloyal

Good
High

 Barnacles
Unprofitable but very loyal

Limited
Low

 Strangers
Neither profitable nor loyal

Little
Lowest
Then customize your loyalty strategies to each of the four categories:

 Category

Loyalty strategy

 True Friends
 Don’t communicate too often, or they’ll ignore everything.
 Reward their loyalty with exclusive access to special events and high-quality, limited-
supply products.
 Butterflies
 For the short time they buy, get as much as you can from them with hard-sell offers.
 After their purchasing drops off, stop investing.

 Barnacles
 If you think they have more money to spend, offer them products or services related to
those they’ve already bought.
 Strangers
 Identify early.
 Invest nothing.
Create more promoters—and fewer detractors *

What Customer Loyalty Means

 ABOUT
 BIO
 TRANSCRIPT
Michael Schrage —Fellow, MIT Sloan School of Management
Customer loyalty is no longer simply about repeat business. It’s also about the kind of influence your
customers have on your brand and your sales.
T O OL

Customer Loyalty Strategies

T O OL

Worksheet for Creating Promoters

Download Tool

Mine your target customers *

Once you have identified your target customers, use surveys, market research, and other tools to
mine them for information.
That means finding out:
 What they want
 What they need
 What they will require in the future
With this knowledge, you can begin to personalize your offerings and your approach. You can
also use this information to acquire new customers who share characteristics with your target
ones.
EXAMPLE

A U.S. insurance company formed to serve a specific target market: better-than-average drivers. Working
in agricultural states, the company’s agents were members of the community. They stayed in constant
touch with their customers, learning about what they needed and wanted. The company designed its
marketing efforts to attract members of the target market and to keep those customers happy. For instance,
to reward customers’ good driving practices, the firm gave discounts to drivers at the end of three accident-
free years.
Build an emotional connection *

ARTICLE

Connect feedback to action *

You can gather data about your customers and their habits, collect feedback on your offerings and
your company, and observe customers as they use products or services. But all that information is
meaningless unless you use it to take actions that deliver additional value to your target
customers.
EXAMPLE

You work for a company that manufactures premium kitchen and bathroom fixtures. Customer surveys
indicate that your distributors need help communicating the competitive advantages of your company’s
products to contractors and homeowners. These advantages include innovative design and ease of
installation.
You suggest that sales representatives sponsor workshops in distributors’ showrooms to show contractors
how easy the products are to install. You also advocate development of compelling new floor and window
displays to showcase the products’ decorative appeal.
Use these steps to design solutions to the customer problems or needs you have identified:
1. Brainstorm. Heed the five rules of brainstorming: defer judgment, build on others’ ideas,
hold one conversation at a time, stay focused on the topic, and encourage even seemingly
wild ideas. Consider including some customers, noncustomers, or competitors’ customers
in the brainstorming session. Provide tools for conveying and capturing ideas.
2. Narrow the field of solutions. Determine your criteria for choosing solutions. For
example, for each idea generated, ask:
 What product or service functions are essential from our customers’ point of view,
and what are “nice to have”?
 What are our cost constraints?
 What are our size or shape constraints (for a product)?
 What are our time constraints for developing a new offering or feature?
 In what ways must the product or service be compatible with existing products or
services?
3. Develop prototypes. Prototypes—rough, early versions of a product or service solution—
clarify the concept of the new product or service. They can also stimulate discussion with
potential customers.
2019 © Harvard Business School Publishing. All rights reserved. Harvard Business School Publishing is an affiliate of

Harvard Provide—don't just extract—value *

Some companies try to extract maximum profit from customers without delivering more
value to them. But this strategy is likely to discourage repeat customers and erode a
company’s reputation. To avoid making this mistake, master practices for providing value
instead.
Value-extraction tactics
Companies that use aggressive value-extracting strategies often:
 Have rules they want customers to break, because doing so generates profits.
EXAMPLE

A retail bank sets particular interest rates and fees depending on the minimum balances consumers agree to
keep in their accounts. If a customer’s balance falls below the minimum, he pays penalties. If it climbs
well above the minimum, the customer is stuck with a low interest rate.
 Make it hard for customers to understand or abide by the rules, so they’re more likely to
break them.
 Rely on contracts to prevent customers from defecting.
EXAMPLE

A health club knows that its most profitable customers are those who sign up for long-term memberships
but then rarely visit the club. So through confusing contractual language, the club makes it hard for such
customers to extricate themselves from the contract.
These kinds of strategies can enrage customers. They may then retaliate against a company
with lawsuits, mass defections, and negative word of mouth.
 The Golden Rule
 ABOUT
 BIO
 TRANSCRIPT
Fred Reichheld — Bain Fellow and Founder, Loyalty Practice, Bain & Company
The secret to stellar customer service? Treat people the way you want to be treated.
Value-provision practices
To provide value to customers, adopt practices that are transparent—and put their satisfaction
first.
EXAMPLE

A mobile telecommunications company began offering a pay-as-you-go pricing plan with no hidden fees,
no contracts, and straightforward, reasonable rates. It attracted nearly 5 million subscribers and boasted a
customer turnover rate well below the industry average.
Use these steps to identify and act on opportunities to provide value to customers:
1. Map customers’ activities before, during, and after they use your product or service (your
customers' "journey").
EXAMPLE

In the air travel industry, customers’ “before” activities include deciding where to go and how to get there,
booking flights, and getting to the airport. “During” activities include getting to and experiencing the
destination. “After” activities include leaving the destination, finding transport, coming home, and paying
the bills for the trip.
2. Look for activities where customers could be provided with more value than what they’re
currently getting.
EXAMPLE

An airline decided there was opportunity to provide travelers with greater convenience in getting to
airports and with greater comfort in waiting for their flights.
3. Identify ways to provide the new value.
EXAMPLE

The airline joined with limousine companies to take business-class passengers to many airports and check
them in free of charge. It also invited those passengers to its lounge—which offered showers, free
manicures and pedicures, and haircuts.

Simplify customers’ choices

*

Many customers value simplicity in the purchase decision process. In fact, research has
shown that when people have an easier time gathering and comparing information about their
purchase options, they’re more likely to:
 Follow through on an intended purchase
 Buy the product or service repeatedly
 Recommend the offering to others
To provide value in this form:
  Help consumers navigate information sources. Minimize the amount of research
customers must do while moving toward a purchase. And personalize the process.
EXAMPLE

An upscale automobile manufacturer learned that consumers who search online for a general term like
“luxury sedans” are at an early stage in the purchase decision process. Those searching for a specific
company or model name are at a later stage in the process. The carmaker began guiding early-stage buyers
to the latest reviews of its sedans, and later-stage buyers to enthusiastic owner communities.
 Build trust. Enlist trustworthy product or service advisers rather than relying on
recommenders who merely push your offering to prospective customers. Aggregate your
advisers’ advice, and make it easy for people to find and use it.
EXAMPLE

An amusement-park company established a “moms' panel.” Members of the panel—veteran visitors to the
parks—answered questions from consumers considering a visit, such as “Where are the best places to
watch the parades?” The company posted panel members’ profiles on its website, including the ages of
their children. These details helped consumers assess the trustworthiness of the advice they were getting
and judge how well the advice applied to their own situations.
 Make comparing options easy. Provide tools to help customers identify and weigh the
product or service features most relevant to them.
EXAMPLE

A company that made a line of shampoos comprising dozens of offerings created an online decision guide
to its products. The guide made it easy for consumers to narrow and tailor their choices. One-click
questions about hair type, length, and other factors (such as color treatment and volume) helped site
visitors quickly sort through all the products to find the best ones for them.
Some customers want to be teased
*
F R O M T H E C OL L E CT I ON

To Keep Your Customers, Keep It Simple

For many consumers, the rising volume of product information isn't empowering—it’s overwhelming. Learn
three tactics for simplifying customers' purchase journey.
Read More

Make service a competitive advantage

*

Today, providing top-notch customer service isn’t enough. To offer customers the most
value, you need to know how to manage their perceptions of that service.
Understand customer perceptions
Three forces influence how customers perceive—and thus feel about—a service encounter:
 Sequence. People prefer service encounters that improve quickly over time and that end on
a positive note.
  Duration. People judge time differently, depending on the circumstances. When mentally
engaged, they don’t notice that time is passing. And when a pleasant encounter is seen as
having many stages, people perceive it as longer and more enjoyable.
 Rationalization. When an encounter turns sour, people look for a single cause. They
conclude that deviations from rituals caused the problem. And they blame individual
employees, not systems.
Manage customer perceptions
To manage service encounters in ways that foster positive perceptions among customers:
 Get bad experiences over with early. These include unpleasant news and long waits in
line.
 Finish strong. Remember that final impressions—not first ones—stay in customers’
memories. So make those last impressions positive.
EXAMPLE

An airline helped travelers with baggage collection and ground transportation—the last stages of their
travel. This inexpensive service made passengers feel cared for.
 Segment pleasure—and combine pain. Break pleasant experiences into multiple stages.
Blend unpleasant ones into a single stage.
EXAMPLE

Managers of a high-tech trade show create multiple stages for pleasant experiences by spreading plenty of
product demos (attendees’ favorite activities) throughout the show. They combine—and reduce—pain by
allowing attendees to register for the show and sign up for sessions online.
 Give customers choices. People feel happier and more comfortable when they believe
they have some control over an uncomfortable process.
EXAMPLE

When customers complained about slow repairs to their home appliances, the repair company let them
request faster service for urgent problems, slower for less urgent ones. The company was transparent about
the different prices for these two levels of service.
 Stick to rituals. Perform repetitive, familiar actions—such as sending handwritten thank-
you notes—especially during long-term, professional-service encounters.
Business School. Make customer focus everyone’s job
Focusing on customers isn’t just for people working in the marketing or sales department—or
for frontline employees who talk with customers every day. It’s for everyone, no matter what
role they play or where they work in the organization.

Consider these examples: *

 Department

Examples

 Accounting
  Learns about a customer’s need to receive invoices in a format that matches particular cost-
accounting requirements.
 Makes a minor change in the way invoices are formatted and saves the customer hours of
data reentry.
 Logistics
 Engages with the receiving department at the customer end to expedite product flow.

 Purchasing
 Finds packaging that fits the stacking requirements in the customer’s warehouse, reducing
the customer’s breakage and inventory-holding costs.
 Product Development
 Observes customers using a product.
 Figures out how to redesign it to better suit customers’ needs.

 Information Technology
 Collects, analyzes, and distributes customer data.
 Integrates the information generated by the organization’s customer relationship
management (CRM) system.
 Helps managers interpret the data.
 Human Resources
 Studies frontline employees to identify capabilities, work processes, and attitudes essential
for serving customers.
 Develops communications and training strategies for strengthening those capabilities,
processes, and attitudes.
As these examples suggest, no matter what function your group serves in the organization,
you and your employees can improve your customers’ outcomes.
The Ripple Effect of a Great Work Culture
 ABOUT
 BIO
 TRANSCRIPT
René Carayol — Visiting Professor, Cass Business School
An organization’s culture powerfully shapes how people behave and how they do their work. Culture can
therefore be more important than strategy for sharpening your organization’s competitive edge.
T O OL

Worksheet for Engaging Employees

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Engage employees
*

To help build a customer-focused team, start “from the inside out”—by focusing first on
engaging your employees. That means treating them with respect and expressing appreciation
for their contributions. It also involves supporting their professional development and giving
them the tools and training they need to achieve success in the workplace.
When you engage your employees, you:
  Model how customers should be treated. That makes it easier for employees to know
how to serve customers properly.
 Strengthen employees’ job satisfaction. When employees are satisfied with their jobs,
they’re more likely to have a positive attitude toward serving customers. Customer
satisfaction improves, which can lead to increased sales and profitability.
 Improve employee loyalty. The longer employees stay with a company, the better they
know customers and understand how to serve them. This continuity in service can further
strengthen customer satisfaction.
Select for attitude, train for skills
Skills—such as processing orders or developing products—can be taught. But it’s hard to
train someone to have the right attitude. For your organization to succeed, all employees need
to have a customer focus—even workers who spend little or no time in front of people
outside of the organization.
EXAMPLE

A talented but self-centered software programmer delays product releases and makes life miserable for her
teammates. Her attitude problems go unchecked. The most highly skilled people eventually defect—
worsening delays and leaving customers frustrated.
To hire the right people:
 Articulate the most important attributes of your best employees.
 Explain these attributes and qualities to job candidates. You’ll encourage them to self-
select into or out of a position.
 Consider a variety of creative recruiting techniques, such as involving customers in the
selection of new hires.
 Ask your best performers to suggest job candidates. Winners attract winners.
Invest in a mix of training
Offer a mix of training in both interpersonal and technical skills. Training in interpersonal
skills is especially important for employees who spend a great deal of time interacting with
external customers.
Improve Training with Experiential Learning
 ABOUT
 BIO
 TRANSCRIPT
Bruce Harreld — Senior Lecturer, Harvard Business School
Model employee training on creating the experience you want for your customers.
Provide tools and support
Give employees what they need to excel in their roles. First, identify forms of value that
customers want. Then ensure that your group has the tools and support systems it needs—
such as appropriate technology and workplace design—to provide that value.
Also make sure that any new tools and support systems you consider align with your
organization’s strategy. Aligned tools and systems will:
 Help your group better deliver the results customers want
 Improve the way work is carried out—for instance, by making processes more efficient
 Coordinate with the tools and systems used in other areas of the business
Allow latitude—within limits
 Give employees the freedom to make quick decisions and recover decisively from missteps
with customers. When you show that you trust them to make the right decisions, their job
satisfaction, loyalty, and productivity increase.
To grant latitude within limits:
 Remove or alter processes or procedures that impede employees’ ability to make
decisions.
 Set limits in one of two ways. Clearly define what employees can and cannot do, or define
a core set of standards that employees must meet but give them the freedom to decide the
details of how to do so.
 Make sure that the latitude and limits enable employees to meet customer needs—and
deliver the results and service value that customers want.
 Determine whether you’ve given your employees enough latitude by asking them if
they feel micromanaged. Ask them what decisions they feel they could be making that they
are not allowed to make now.
Empower Your Customer-Facing Employees
 ABOUT
 BIO
 TRANSCRIPT
Chris DeRose — Coauthor, “Judgment on the Front Line”
To get the intelligence you need about what customers really want, give more power to the employees who
know them best: your frontline staff. These five tips can help.
Reward for results
Recognize and reward your people for providing forms of value that customers want. Tie
rewards directly to achievement of customer-related goals.
To reward for results:
 Determine the customer-related goals you want employees to achieve. The more
specific and measurable, the better.
EXAMPLE

Solve 80% of customer problems within 24 hours of the initial complaint.

 Align rewards with your organization’s mission and culture.
EXAMPLE

If getting people to work cooperatively is a company goal, avoid setting up a highly competitive reward
structure.
 Look for creative ways to recognize individuals or groups.
EXAMPLE

Establish programs in which awards are given by peers or by customers. Or share profits with those who
participated in generating them.
Frontline Employees

 ABOUT
 BIO
 TRANSCRIPT
Rob Markey — Global Practice Leader, Customer Strategy & Marketing, Bain & Company
 To advance your company's mission, focus employees on winning customers' loyalty, not on analyzing
customer feedback metrics.

Encourage employees to innovate *

Innovation isn’t just about churning out new products or services or adding new features to
existing offerings. And it isn’t limited to the people in the product development or design
functions. Innovation is about creating new forms of value for customers—something that
people throughout the company can and should do.
To create an atmosphere that encourages people to innovate for customers:
 With your team, brainstorm ways to help customers reduce costs, mitigate risks, save time,
or boost their own profits. Also explore ways to improve the quality of experiences
customers have with your company and its offerings.
 Recognize employees who try new approaches to providing more value to customers—
even if those approaches aren’t perfect.
 Give people time and, if possible, funding to experiment with ideas for easing customers’
pain points.
 Encourage employees to ask themselves, “What is the essential purpose of my role? What
outcome do I deliver that generates real value for customers? How can I better fulfill that
purpose or deliver that value?”
Tap the Wisdom of Frontline Employees
 ABOUT
 BIO
 TRANSCRIPT
Chris DeRose — Coauthor, “Judgment on the Front Line”
Your frontline employees are your best source of customer knowledge and creative ideas for serving
customers better. This five-step process helps you tap their collective wisdom to become a truly customer-
centric organization.
T O OL

Worksheet for Assessing Team Climate for Innovation

Download Tool

Collaborate to improve the customer journey *

Your organization has many customer “touchpoints.” These are critical moments when
customers interact with the organization and its offerings. Examples include:
 Visiting your company’s website
 Exchanging emails with various personnel
 Phoning to ask a question
 Being visited by a sales or service representative
Companies tend to focus on perfecting particular touchpoints—but they often fail to take into
account customers’ overall experience. Even when individual interactions with a company go
well, shortcomings in the process as a whole can erode customer satisfaction.
 EXAMPLE

At a pay TV company, salespeople focus on closing new sales by phone. They don’t know what happens
after they hang up the phone. But in later dealings with the company, customers often feel frustrated by
confusion over the installation process, hardware options, and channel lineups. Because sales reps seldom
hear about these concerns, they can’t take actions to preempt them during their initial exchanges with
customers.
Identify customer journeys
To be truly customer focused, different functions in an organization must work together to
identify—and improve—specific “journeys” that customers experience across multiple
touchpoints.

EXAMPLE

The pay TV provider creates a cross-functional team to redesign its entire new-customer onboarding
experience. It also changes its expectations: The sales agent, technician, call-center employee, and back-
office agent together assume responsibility for a trouble-free installation instead of simply handing the
customer off to the next touchpoint.
Shape your customer journey *

Adopt a collaboration mindset

To improve the customer journey, people in your team need to let go of any silo mentality
they may have—the notion that their department or function is separate from all others in the
organization.

Encourage team members to adopt a collaboration mindset by shifting their thinking in three
areas: *

 Silo belief

Consequences

Collaboration belief

 “I own this area.”

 People assume that individuals in different functions can’t understand one another’s areas
of expertise.
 They identify only with their own area (“I’m a marketer, not a process expert”).
 They dismiss others’ ideas.
“I have ownership over my direct responsibilities. But I must remain open to others’ ideas, regardless of

their functional expertise.”

 “It’s not my job.”
 People are devoted to their job description.
  They don’t believe they’re accountable for metrics beyond their direct responsibilities,
such as customer satisfaction and engagement.
“I’m accountable for my direct responsibilities. But I’m also accountable for working with others to satisfy

customers.”
 “Knowledge is power.”
 People closely guard knowledge as a way to gain and exercise power.
 They see a competitive advantage in “being in the know” when others aren’t.
 They don’t realize that they can achieve more clout by becoming a reliable source of useful
information.
“The more we know, the more we can grow. We all become more valuable the more we keep each other
informed and share ideas, resources, and other knowledge.”
Some companies take collaboration a step further by involving their customers and other
external stakeholders in the design and improvement of products, services, and even internal
work processes. This process of “co-creation” focuses on the experiences of all stakeholders
(for example, employees, customers, and current and potential suppliers), who have a wide
range of perspectives. By interacting with each other, either in person or on online platforms,
they can bring their diverse perspectives together to generate new ideas. For this approach to
be successful, it’s important for the company to set boundaries around what can and what
can’t be “co-created” so everyone is aligned with a clear strategic direction. *
EXAMPLE

A chain of coffee shops received suggestions from customers that it should start selling nutritious food. A
challenge for the product marketing department was to find out what the customers really meant by
“nutritious food,” how much they’d be willing to pay, and so on.

To address these questions, the department hosted a discussion including customers, managers, in-house
nutritionists, and potential suppliers. The conversation raised issues such as a concern that the smell of hot
food might mask the stores’ coffee aroma, changing the whole “coffeehouse” experience. By coming to a
shared understanding of what being a coffeehouse means, the group was able to resolve this and other
concerns.

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