Proactive versus Reactive Customer Experience Management

Analytical Culture, DataBase Marketing

The data-based business model was customer-centric long before this idea became a buzz phrase. When you have detailed data on your customers and your operations, you understand a lot more about how the customer experience directly affects profits. This means you can quantify the value of reducing process defects before they impact the customer.

For example, in catalog (and a few great web retailers) you know what it costs to process a return on both the business side and the customer side (customer value / LifeCycle issues) and you do everything you can to prevent that return from happening – up front. This means before you launch a new product:

* Fulfillment reviews it to make sure it is shippable and the packaging is going to protect the product in transit

* Customer service reviews the product to make sure the packaging and any instructions are clear to the customer and won’t generate costly calls to customer service or usability problems. If the packing is incomplete, it is either rejected, modified with an insert, or at the very least, discovering this defect generates a training class for the reps who are going to take the calls.

* Marketing reviews it to make sure that the item and usage fits the brand image of the company, and that the purchase history of customers purchasing similar items / categories does not raise red flags (defection rate, LifeCycle).

This is what I would call a Proactive stance on customer service and experience management. The Proactive stance understands “value” is a two-sided equation and that to maximize customer value to the company, you must maximize company value to the customer – including the removal of process errors that whack people off (you don’t want to make people Cranky). It strikes me that most offline retailers and many online retailers are Reactive; they wait for crap to hit the fan and then they do something.  That doesn’t mean that some or even many don’t provide great service when stuff hits the fan.

But it seems to me many of these folks don’t work nearly as hard to prevent it from hitting the fan in the first place as the folks who really know the costs / customer value destruction surrounding defective product selection.  Or for that matter, any defective operational process directly affecting the customer. Responding to complaints is much more expensive than preventing them, and the folks who feed on customer data know this. The data enables a proactive analytical culture that can support the additional care / expense required up front before a product is even available for sale, because the downstream negative affects are quantifiable.

Top flight customer service / experience management would mean that there is significant effort to prevent problems from happening in the first place, not responding to them after they happen, no matter how good the response is. How much effort would it take to make sure packaging, instructions, fulfillment, web site copy, and so forth don’t create problems that would have to be solved later? That’s a base requirement, in my opinion. Better, how about taking the same touchpoints and actually making them work harder to deliver a positive experience?

I suspect most so-called “empathy” for the customer / experience takes place on a generic level; it’s a “standards” kind of thing for treating customers. Listen to the complaint. Empathize with the customer. Respond in a calm voice. Etc. This is reactive empathy and in today’s world, the baseline expectation of the customer. If you really want to make it to “surprise and delight“, you need to engage in Proactive Empathy.

There is a great deal of difference between a culture of reactive customer empathy and a culture of proactive customer empathy; and there is a big financial difference between “I’m sorry” and no complaint in the first place.

Marketers interested in direct contribution to profitability and increasing Marketing Productivity will seek out their peers in the operational silos and start creating and managing proactive empathy for the customer through each process of the business. And the smartest of them will be able to actually prove how much incremental profit embracing a proactive empathy for the customer culture generates for the company.

The Deconstruction of Marketing

Analytical Culture, Analytics Education, Marketing / Tech Interface

Seems to me these days “Marketing” is being deconstructed into a bunch of pieces.  When I was coming up through the ranks, Marketing included Customer Service plus all the stuff now called CRM, Customer Experience, and all the related ideas.  The person in charge of Marketing was in charge of all these things.  It made so much sense to manage a business this way, because to control your fate as a Marketer, you had to control or at least influence all the customer touchpoints.  So why are these responsibilities being split off into little sub-cultures today?

The answer is they’re not really; that’s just the way it looks to me, because every industry I worked in for 25 years was rich with customer data and we used that data to prove why it made so much sense for Marketing to be in charge of all these aspects of the company interface with the customer.  We proved time and time again that by exerting cross-silo influence where the customer was involved, Marketing could generate much improved profitability.  Every Marketing program worked even harder towards generating profits when Marketing got all the silos aligned.

So I guess it just looks to me (and some other data-driven Marketing folks) like these functions are being split out of Marketing.  The reality is that many companies never had any of these data-driven functions before, and when they start getting access to customer data, they created these areas as new entities.  The question: why not create them under Marketing?  This approach sure would have saved a lot of trouble in CRM, for example. 

And I suspect the answer is the Marketing folks took one look at this new data-driven world with the associated need to have a basic understanding of technology issues, and said, “No thanks, I’ll stick to Advertising and PR”.  And as Marketers let go of / failed to capture control of these key operational touchpoints with the customer, they essentially devolved Marketing from a strategic C-Level force into “MarCom”.

And that’s a real shame.  This splintering of Marketing Management by technological issues is a waste of time at best and a long term problem at worst.  Ultimately, after we go through all this CRM and Chief Experience Officer stuff and whatever else you want to call it (seems like a new name every day), people will realize that all of this belongs in Marketing.  And then we’ll just need some brave Marketing folks who think they can handle it to step up to the plate and really make it work.  If you’re a mid-level MarCom person and want to start preparing for this transition, start making some friends in Finance, Technology, and Customer Service.  Find out what it is that keeps them awake at night, and think about how Marketing could help solve their problems.

And to jump-start your brain towards making Marketing decisions based on customer data rather than using nameless, faceless GRP’s, try taking a look at the business side of web analytics.  You’ll be amazed at how much of it transfers directly to Data-based / CRM / Customer Experience Marketing.  Why?  Because the web analytics community has decided best practices require a cross-functional team approach with a focus on Customer Experience and a requirement to examine the Financial implications of actions taken.  Web analytics teams are a functioning microcosm of what Marketing used to be, and what it should be in the future.

Lab Store: Managing Customer Experience

Analytical Culture, Lab Store, Marketing thru Operations

When Ron wrote this great post on Marketing’s responsibility for managing customer experience (more on process improvement from me here), I thought I would relate this simple example from the Lab Store.

We sell some exotic pet food that is meant to be a continuity item – the customer buys it every 3 months or so.  This product offering is, of course, designed to extend the Customer LifeCycle.  The food is a “staple” meaning it is generally kept in the cage at all times to supplement the fresh foods fed to the animal.  This food is not as appealing to the anlmal as say, fresh fruit, but it’s an important part of a well rounded diet for the animal.  The feeding instructions on the web site are extensive – portion size relative to fresh food, when to feed, amount to feed, etc.

So we start analyzing the repurchase rate of this staple food that is supposed to be our “back end” and it is dismal relative to expectations.  Why?  Have the customers switched to a different, cheaper source?  Are they not feeding the diet plan we suggest?  Is this even a “marketing problem”?  Well, in the Lab Store, anything related to customer behavior is a marketing problem.

So we grab a sample of the customers who passed the re-order point Tripwire of 3 months without ordering again and ask them, Why aren’t you ordering the staple food?  And the answer is “The critters don’t like it”.  Really?  That’s a surprise; we know the animals generally eat the food.  So we ask about portion size, are they following the diet plan?  And they say, “Not really, when they didn’t eat the staple food, we thought they would be hungry and so we gave them more fresh food.  They never ate any of the staple food”.

And there you have it.  We don’t need to ask any other questions.  The animal is not going to eat the boring staple food when they are being overfed the fresh food.  This is like asking a kid if they would rather have spinach or candy; one is good for them, the other tastes better.  And the customer isn’t going to buy staple food the animal will not eat.

The problem is, this “fresh food only” diet is unhealthy for the animal; they are not going to get critical nutrients they need from the staple food.  But, this exact feeding scenario is covered on the web site; we’re already communicating this issue to the customer.  So it’s not a marketing problem, right?

Wrong.  That is the marketing problem – the information is on the web site.  We started including a package insert with the staple food containing the very same info as on the web site, except now, of course, it was “contextual”; delivered in exactly the right place and at exactly the right time – when the customer opened the staple food package.  And magically, the repeat purchase rate on the staple food increased 32%.

The point is, if we had been off “marketing” and not paying attention to the Potential Value of the customer by setting up the Tripwire, we’d have never found this flaw in the process.  And by fixing it, we increase the return on all the acquisition marketing we do, because the LifeCycle of the customer has been extended.

Marketing Productivity, indeed.  More Lab Store tales to come.