Just because you attach numbers to something doesn’t necessarily give it credence – Even Ron Burgundy can sniff that out. This scene from 2004’s Anchorman: The Legend of Ron Burgundy featuring Will Ferrell as the title character and Paul Rudd as Brian Fantana encapsulates a quote popularized by Mark Twain – “There are three kinds of lies: lies, damned lies, and statistics.”
Business decisions are often made on the back of statistics. Dr. Graham Hill has spent decades consulting for some of the largest organizations in the world. His work is grounded in research about customers, their behaviors, and what really drives them. We begin this week by digging into an oft quoted statistic regarding customer retention and profitability, and why it doesn’t make sense.
We discuss:
- The myth of customer loyalty
- Flaws in an oft-cited customer retention quote
- Limitations of NPS and other customer loyalty measures
- The importance of understanding the jobs customers need done
- What companies get wrong about personalization
- The value of customer service
Connect with Graham on LinkedIn
Music courtesy of Big Red Horse
Transcript
Rob Dwyer (00:02.842)
Thank you for joining another episode of Next In Queue. Today I've got Graham Hill, otherwise known as Dr. G in Queue. How are you, Dr. G?
Dr G (00:12.11)
Hi, Rob. Very good. Thank you. And how are you?
Rob Dwyer (00:16.122)
I am fantastic. Before we get started with our conversation today, I have to have to understand how does someone who got a PhD in biosciences and was a weightlifter get involved and end up as an analyst for British Airways? How does this happen?
Dr G (00:39.854)
That's one when you when you it's an interesting story. So when I was studying for my PhD, we were sent on a course to Hull University in north of England. And the aim of the course was to introduce PhD students into the pleasure of not being an academic but working in industry. And on that course, I met a really interesting chap from what was those days Anderson Consulting.
now Accenture. And he told me it's one of a sort of intellectually challenging problems and business class travel around the world and staying in nice hotels and seeing amazing cities. And I thought, hold on a second, so I can be slaving over a microscope down in the lab, learning nothing, or I can go and work for consultancy and have really interesting problems to solve in interesting places and get to see the world in the process. So I thought, where do I sign up? So I didn't sign up immediately. I actually went to the Milk Round at university.
I joined British Airways as an operations research programme analyst. I used to run the airco scheduling suite of software for British Airways for a bit of time before moving into consulting via KPMG as a systems analyst. So that's how I, the weight lifting was just something on the side. So that's why I moved from being a PHD geneticist, if you like, or a physiologist to being an operations research
endless program of pretty sure is enough that just 35 years of consulting various various things.
Rob Dwyer (02:15.418)
Well, it strikes me, you're not the first person that I've had on the show that went from hard science to something involved in customer experience. But what I notice about it is that your approach is very rooted in the scientific method. And I love that because it strives to get
Dr G (02:38.99)
Yes.
Rob Dwyer (02:44.538)
facts and actual behavior and not rely on on just theory or feelings and and I think that's really important you and I came to know each other because you actually were posting some content on LinkedIn and that content was about busting some specific loyalty myths and and we want to talk about
Dr G (02:52.814)
Yes.
Dr G (03:05.838)
Mm -hmm.
Dr G (03:11.054)
I remember.
Rob Dwyer (03:12.986)
customer loyalty today and how brands grow but I think we should start with an article that came out in 1990 called zero defections written by Fred Reich held which everybody knows from NPS and vain fame and Sasser and the the quote that comes out of that article and is oft cited
Dr G (03:31.758)
Yes.
Rob Dwyer (03:42.842)
is that companies can boost profits by almost 100 % by retaining just 5 % more of their customers. And you posted an article that refutes that. So tell us what's wrong with that quote and tell us about those two competing ideas.
Dr G (03:46.318)
Yes.
Dr G (03:52.718)
Yes.
Dr G (04:04.27)
Sure. So the first thing that's wrong with the quote other than the fact fact it isn't correct is you have to recognise where the quote comes from. And the quote isn't a result of experiment or even theory. The result was a mental experiment that Reichheld Reichheld Sasser had. They said, if this and then that, this would be the result. So it was a thought experiment. And as often is the case,
things that are attractive, great sounding memes, you know, soundbites, often to pick up a life of their own. And I think that's what happened. So as is often the case, things that get published, even though it was a thought experiment. And it's not just my opinion. So one of the great marketing academics of today, Sir Byron Sharp, the Aaron Begg Bass Institute in Australia, also wrote an article, effectively doing the same things I'm doing, is refuting the
the quote that Reichheld and Susser came up with, is a thought experiment. So if you have a thought experiment, you can think of anything and get the answers you want. So it's not based on empirical evidence. In fact, if you look at this work by Reinhardt and Kumar published in 2000, I think it was, they looked at whether people who are repeat purchasers or loyal customers, if you like, actually buy more, actually pay more and recommend more.
And they found that often that's not the case and that often new customers are worth more than customers who'd been with you in the past. So there's a whole variety of, and there's other evidence to come out in the meantime that basically says, yes, this was a thought experiment and it's not really the truth. And it's not grounded in empirical evidence. And where do I need to, you know, what do I need to say? It was just a thought experiment.
Rob Dwyer (05:59.194)
So I wonder how much of, for instance, NPS and willingness to recommend, like what is your general thought on all of that?
Dr G (06:09.998)
Yes.
Dr G (06:13.838)
Fine. So I think there's several things that come into this. First of all, willing to recommend a company and its products to another person. We know that that's something that's valuable. And the problem I have with it, I mean, MPS has a few methodological flaws like most measures, measurement systems have, CSET has the same thing. Customer effort score has the same thing.
earned value, the new version, if you like, NPS 3 .0, it's the same problems as well in different ways. But they're all valuable in terms of they provide one perspective on customers behavior. But what Reichheld promotes, you know, Fred Reichheld is a smart guy, but he's a salesman for Bain & Company and he's selling a pitch. The pitch is basically, hi Bain & Company, we'll do all these amazing things that are relatively simple.
and you'll do well as a consequence and that isn't necessarily the case. So, Reichheld's pitching, this is the only thing you need to know and that's rubbish. It's simply rubbish. So, back in the early 1990s, Kaplan and Norton came up with the balanced scorecard and they originally had four domains in the balanced scorecard. They had finances, so your perspective of how well you've done in the past, because obviously the finances we're in today...
is based on how you performed in the past and how you organize yourself. Then they looked at two present day sets of bundles of measures. So customer and process. So how do you work and how do customers feel things and look at things. And then they looked at a future set of measures around innovation and growth. So how are we going to be different in the future? I mean, think back to people like Peter Drucker saying the only things that great value in the company are marketing and innovation. Marketing is what sells things today. Innovation is what we're selling in the future.
that sort of idea. So out of this kind of balanced scorecard, the idea that you need a bundle of different sorts of measures to look forward, look around today and how you're performing, look to the past and only when you have this balanced scorecard do you have a good understanding of how you perform in the past, today and in the future. Having one measure, NPS, is obviously counterproductive, you know, counter to that idea from Kaplan and Norton. So I don't see it as
Dr G (08:33.998)
really very true and very valuable. All the orgs I work with, almost all of them use NPS. I actually think there's a better score than NPS, which is originally Rice and Hoffmeyer in the 19, early 2000s, worked on what they call the commitment model. And the commitment model, it's actually fascinating. The commitment model was, they worked in South Africa and they looked at people moving from one religion
to another religion. And the indicates that drove somebody was no longer committed to an old religion is now committed to a new religion. What happened to the people in that person? After that came the commitment model for customers. And whether you are completely uncommitted, you really don't care about this brand at all, or you are completely committed on the other extreme, and nothing you would do would ever make you not use that brand. So I think commitment.
type things is much better than NPS. It's a little bit more complicated, but that complication brings insight and brings intelligence that NPS simply doesn't have. So most companies have NPS, but it should be part of a balanced score kind of matrix. And I have no problem with that at all. That's an indicator of what people might, you know, whether you might recommend to somebody else is a useful thing. You know, as we know, people don't see what they do and they don't do what they say. So saying I might recommend doesn't mean I'm going to.
Rob Dwyer (09:58.362)
Thank you.
Dr G (10:00.43)
And of course, me recommending you to another organization, my organization, my company to another customer, doesn't mean you're ever going to buy anything. So there's always those things in mind. It's an indicator whether you're willing to recommend to another party. What I see happening now is that there's this suggestion now from Reichelt and Bain again, that this is the most important driver of business success is whether you're willing to recommend. And I think that's just a complete falsehood in my opinion.
Rob Dwyer (10:01.21)
Thank you.
Rob Dwyer (10:08.41)
Yeah.
Rob Dwyer (10:27.802)
It strikes me and I was doing my own thought experiment about willingness to recommend. And that was, there is a difference between my willingness to recommend if someone's soliciting that from me and my willingness to actively promote something. So long time listeners of the show will recognize that I'm a big fan of Lego.
Dr G (10:32.622)
Yes.
Dr G (10:47.118)
Yes.
Rob Dwyer (10:56.794)
I'm a big fan of Costco. These are, these are brands that I will actively promote, but there are other brands that perhaps you might go, Hey, Rob, you've used X. What do you think of it? Would it, would you recommend it? And that those two willingness is to recommend are very different because one is.
Dr G (10:57.486)
You too. I can see that.
Yes.
Dr G (11:06.35)
Yes.
Dr G (11:13.294)
Yes. Yes.
Rob Dwyer (11:26.074)
and the other is very reactive.
Dr G (11:26.318)
So.
Dr G (11:29.934)
The interesting thing is you don't need to have used a brand to be willing to recommend it.
Rob Dwyer (11:34.97)
Right, right.
Dr G (11:36.59)
So I remember going to a conference a long time ago where one of the great CRM academics, Adrian Payne, at the time in Cranfield, but now in Australia, he was standing talking about CRM and customer recommendations, and this is before NPS, and he said, everybody in the audience who recommends Virgin Atlantic put up their hand, and there's a forest of hands go up.
And it said, everybody who's never flown on Virginland, put your hand down. And more than half their hands disappeared because they'd never flown, but they were willing to recommend based upon the fact this is a popular meme. And a lot of people like to be in on the latest meme and to promote things that others have promoted as well. We're a social species. So it's like a sort of form of business gossip. I never flown on Virginland, but it's a great airline anyway. You should find it too.
Rob Dwyer (12:33.242)
So what I want to dig in today is customer loyalty. And let's just, let me start by asking a question. Are customers loyal at all?
Dr G (12:47.342)
So when you say loyalty, what do you mean by loyalty?
Rob Dwyer (12:50.842)
that's a great question. Let me ask you what do you define as loyalty?
Dr G (12:53.986)
We need to find things, don't we?
Okay, so I make a fairly easy distinction, which I'm not going to define any detail because it just becomes a bit too academic, between customer retention, I'm retained as a customer, so I would buy from you again, but it's mostly an economic thing. So we all have banks we've been with for many years. We don't love those banks, but we don't even like the banks, but we stay with them because...
Thank you.
Dr G (13:24.558)
It makes sense to do so. I've got all my accounts there. They have all my transactions there. All my monthly things get done there. And you know what? They're no worse than anybody else. So what would a boo? So it's an economic thing versus customer loyalty, which I think requires an effective and emotional attachment. So I have an affinity. But building that attachment is very, very difficult because if you think about human relationships, not the dumb system, we can't have similar sort of relationships. In fact, I don't think they can.
And there's research from Liliander and Ruse and earlier on it shows that's the case as well. Those relationships require things like mutual goals or shared goals. So we both want the same things and mutual commitment to each other. So I'm committed to you, you're committed to me and a degree of trust. And to be honest, I don't think most companies are willing to do those things. Customers might.
I don't think most customer companies are willing to do those things because they see it as being a liability and expensive and difficult and they don't want to do those things. So we would like to buy my stuff in the meantime. So what we have is a distinction between I'm cognitively, I think about being retained or I don't even think at all because it's just a habit versus I feel that I like you as a company and that for me is between retention and loyalty. And they are quite different, I think.
Rob Dwyer (14:53.114)
Do I need to generate customer loyalty to be successful?
Dr G (15:00.43)
Look at most large organizations. Look at the biggest banks in the world. Look at the biggest telcos in the world. Look at the biggest energy companies in the world. Do you think most customers are loyal to them from an effective perspective? I don't think so. But we are cognitively pretend because they're as good as all the rest. And I mean, I'm with a Scottish bank, even though I don't live in Scotland anymore. I haven't lived in there for 30, 40 years because I joined it when I was a student to go do my PhD in Edinburgh.
And they fulfill us a need for me in the meantime, but I don't transact them very often. I haven't tried them for quite a few months now because of circumstances. So I'm retained as a customer, but I'm not in any way loyal. And I think that's often the case. And if you look at switching rates, for example, in the UK, in retail banking, the UK government a few years ago wanted to make things really, because they thought there was too little switching of bank accounts and other utilities.
Rob Dwyer (15:44.378)
Right.
Rob Dwyer (15:47.866)
you
Dr G (15:57.262)
It's a bank is a utility from in my perspective. So they did a whole load of things, a whole lot of laws and a whole lot of changes and a whole lot of services they introduced to try and increase switching rate and hardly move the meter at all because people were comfortable where they were. We are a species, you know, a habit forming species. We are lay cognitively lazy. We couldn't have mized as we don't want to think about these things. It's a system one system two thinking from Kahneman. So we just did the same old things. In fact, incidentally, there was a
A little while ago, looking at the most effective mechanisms to drive changes in behavior. It's been a bit challenged by some people, but I think the underlying meta analysis is more or less okay. The least effective way to change behavior is telling them things. Here's some information, go and do something. No, I'm not going to bother because I'm sticking my way. I've got pathways I follow. The most effective way to change people's behavior is to create new habits. And people like BJ Fogg.
professor at Stanford has worked in this space for quite a long time. He's got a book called an approach and a book around tiny habits, changing lots of little tiny things in your life to help you in other things as well. So habit formation is key to all of this sort of thinking about how we stay and why we don't go. So I don't think loyalty is necessary for most companies, but it's desirable, obviously. If I can create a relationship where
you have a strong positive feeling towards me then that's probably going to make mean that you you buy more of what you're going to give to me anyway rather than buy competitors but I still buy from your competitors anyway because that's the way things are this is what Byron Sharp has shown us with the Loggitune research at EBR.
Rob Dwyer (17:39.706)
Right.
Rob Dwyer (17:48.666)
Yeah, it seems to me number one that there's a certain amount of friction that often prevents us from defecting from a particular brand, right? So you talked about banks and there's obviously it's to put it mildly, it's a hassle to change a bank. And so we don't really want to deal with the hassle. And so it doesn't matter if we don't love our bank as long as we don't
Dr G (17:59.694)
Yes.
Rob Dwyer (18:17.242)
Hate our bank as long as they are not causing us problems We're we're probably going to to stay with them. And so for a bank, it's probably way more profitable to focus on customer acquisition than it is on being really customer centric now those of us who really would love brands to be more customer centric might go well that kind of sucks for us, but
Dr G (18:19.086)
Yes. Yes.
Dr G (18:46.35)
Yes.
Rob Dwyer (18:46.49)
The reality is in business, depending on what your business is and what your model is, that it may be far more beneficial as a company to focus on acquisition than, again, this article talked about, than to focus on retention.
Dr G (18:53.262)
Yes.
Dr G (19:01.262)
Yes.
Dr G (19:05.326)
Yes.
So there was a great article written by the late Clayton Christensen and the article, the gist of the article was around skate to where the money will be. It was a play on, you know, Wayne Gretzky, the great, I'm going to be very careful here, I think Canadian ice hockey player said he always skates to where the puck is going to be, not where it is, but where it's going to be. And he's there when it arrives. So Clayton Christensen always had skate to where the money will be.
And this is where we get into this conversation about there's a continuity of thinking about loyalty from one extreme, Arwen Ahuvia, who's a professor in the USA, talks about brand love and the Houston work in the past, lots of academic research looking at brand love. That's a fairly extreme position to take. And I don't see strong evidence in the academic literature or elsewhere for brand love. In fact,
It was a survey by Habas a few years ago, repeated in 2021, that looked at customers' opinions about brands. And one of the surprising findings, replicated from the earlier research, was that customers either would not notice or would easily find a replacement if 75 % of their brands literally disappeared tomorrow. So that tells you a lot about one love and brand liking, even brand caring, if you like. It was like...
Rob Dwyer (20:28.09)
Yeah.
Rob Dwyer (20:31.674)
No.
Dr G (20:33.102)
My brand's gone, what brand? What are you talking about? I'm just going to use something. One of the brands I use anyway, because one of the findings that we see from the work of Byron Sharp and Jenny Wimaniuk at EBI in Australia is that if I'm a very heavy buyer of your category, you know, your Coca Cola, for example, then I'm probably going to be heavy buyer of other brands in the same category as ours. Can we buy Pepsi and Dr. Pepper and whatever, and 7 -Up or whatever the brands are available.
And their research shows this stands for both subscription and non -subscription services. If I'm a heavy user of Amazon Prime, I might well have a Sky subscription and I might well have a Netflix subscription and a Disney subscription as well. But also works across B2C and B2B across multiple categories in multiple countries. So it becomes this this heuristic about how we think about people buying behavior.
I might be a loyal, I might be a high heavy purchaser of your product, but I'm going to be heavy purchaser of other people's products as well because that's the way things go. So the consequence of that is if you want to grow my loyalty, you need to grow the market share because there's a strong relationship between market share and loyalty. So loyalty clearly exists, but I think for most people, what you're looking at as a company, you're really saying is where's the best return for my investment?
Now, people like Peter Fader, who is not quite so brand love as Armin Ahoovia talks in his books around customer sensitivity, talks about trying to build strong emotional bonds with customers. But my perspective is that's quite difficult. We talked about building relationships is not quite the same. The relationship with a company versus a person is quite different, but there's some similar principles, but it's difficult and expensive.
Whereas Byron Sharp would say, and he writes in his have runs grow one or two and then genuine Maniuk in her books around brand differentiation. It'll come back to me in a second. Anyway, her books are on brand health and what have you. I seem to tell you when you can't remember where isn't that? They talk about the fact that if you want to grow your brand, then you're better off focusing on customers who are either not customers at all or who are like users.
Rob Dwyer (22:58.042)
Hmm.
Dr G (22:58.638)
the probably the best position to say is to take is so if you understand the economics of customer acquisition and customer cross upsell and on sale, then you skate to where the most money will be. It probably won't be in building even stronger relationships with clubs that are already giving you all their money. Other than the money they give to people also in other brands in the same category.
But you need to have that detailed understanding of the economics of customer acquisition, growth and what have you before we can make those choices. The research I've seen, just as aligned with Sharpe and Romaniak, is that it's often new customers coming in or like users, you can persuade to buy one more item, becomes the most effective way to spend your marketing budget. And then we get into the whole thing about, which I don't want to talk about today, around am I
building a brand or am I trying to activate sales? Cause they are quite different in the work of Binance and other work as well. that suggests that we need to be spending a lot on building a brand because that builds mental availability. But actually the best search engine is not Google or Bing or any of the new LLM tools or Reddit. The best searching is what's in your head. And if, if you have that strong mental association because of
Rob Dwyer (23:59.098)
Mmm.
Dr G (24:22.126)
branding of various kinds or experience or engagement comms or recommendation then when you come to enter the market at a category entry point you might like to purchase. So building a brand driving that whole thing forward as well as having the sales activation which means you need to know when people enter the market. So it's quite a complicated picture but that's why you know we have marketing science and that's why I never take it but I hear amazingly good things.
about Mark Ritson's mini MBA for marketing, which I would love to do at some point, but not at the moment.
Rob Dwyer (24:57.338)
So I gotta say, you may have spoken some sacrilege about people buying both Coke and Pepsi, same person. I have never seen that in the wild, but maybe it happens, I don't know.
Dr G (25:05.134)
well, me.
Equally, I'd say it could be Dr Pepper instead, rather than the competing between Pepsi and Coca -Cola.
Rob Dwyer (25:15.226)
Right. So I do wonder as we're having this conversation and we're talking about buyers being promiscuous with brands, how much that applies in the B2B world versus B2C. Certainly B2C, we know that is the case. But what about B2B? Is that
Dr G (25:36.43)
Yes.
Rob Dwyer (25:44.73)
the same or is there a difference because I may only need a particular service and I'm just going to choose.
Dr G (25:51.374)
No, it's done. It's a good question. I think, again, Byron Sharp and Jenny Ramanick answered that question for us. So their research at EBI looks at B2B and B2C industries or classes of customer. They find pretty much the same relationship in B2B and B2C. So recognizing B2B is more complicated. You often have a buying committee.
These are more expensive things as more logic, perhaps a little bit less emotion involved. And although, you know, we, how we process information and how we make choices is the same either way, but there's more structure in B2C, B2B sales. So, but there are evidence to suggest that there is an element of promiscuity as well. Some, some things if we're probably buying steelworks and then you probably only have one Bessemer converter, whatever it is that you use today.
But for other things, the evidence is that people buy for more than one category, for more than one provider in a category, for whatever reason. And the same with, you know, we look in the fridge and there's more than one yogurt. It's the same category, but for different purposes. So that subtlety, different use of purposes, I think, is what drives me. My experience in having worked in B2B is obviously a life of consulting and consulting sales. It was that most of my clients are pretty much all the larger corporate ones.
I have at least half as different consultants involved. There's no Lordy one particular consultant. Strategically, you might engage BCG, my favorite actually, or McKinsey or Bain, or Roland -Burgen in Germany. But for SIs, you're going to have Accenture and E -Wine, Deloitte and PWC. And for other more specific things, we need expertise rather than general skills, then you're going to use boutique consultancies, like the ones I typically work for today. I was at PWC and QB &G before.
Now I only work with boutique consultancies. So all of my clients are promiscuous buyers.
Rob Dwyer (27:49.626)
That's fascinating. You know, one of the things that I think the CX industry or maybe it's the marketing industry is focused on to drive loyalty is this idea of personalization. So let's talk about personalization. And ideally, like, what are we getting wrong about personalization?
Dr G (28:18.254)
That's a good question. How long do we got left? The recent McKinsey survey suggests that when they asked customers whether they want personalisations to make, I think 81 % said they want personalised products, services, experiences. But 86 % said they weren't getting them and they were dissatisfied with the consequence. So if you look through all the literature,
Rob Dwyer (28:21.05)
Hahaha!
Dr G (28:46.414)
all the surveys, all the reports, all the academic literature, out of that comes sort of what I think of as the three Rs of personalisation. What could we say they want? You can bring me into three categories. The first one is what I call respect. So I want you to remember me. I want you to recognise, I want you to be able to recognise the fact that I've been accustomed for a long time and I've bought all the things from you, which is a challenge because...
Most companies are not focused on the past. Thanks for your service. It's like, but I'm focused on what you're going to buy in the future. So customer lifetime value is a future facing metric. But from the customer's perspective, the customer loyalty to element, the equivalent customer lifetime value is going back in time looking at what I bought and to think I deserve respect for being a customer. So that's the first R. The second R is what I think of as
Dr G (29:46.478)
Recommendations. So recommendations of newer, better products and services when the moment arises. But I think actually the most important, I want to get beyond respect and recognizing recommendations that only comes in at a category, any point when I'm thinking about buying something new or makes sense to do so. The biggest category is what I think of as reinforcement. So that's reinforcement of the value I get from your products and services from using them. So.
Rob Dwyer (30:15.482)
So.
Dr G (30:15.726)
of the things we need to recognize is that products and services typically only have value. when I use them. And I use a simple example of a spade. So a spade only really has value when it's used to dig. So, and that's a functional job to be done, digging the earth using the spade you bought, is having that tool. But customers always have two other sorts or three other sorts of jobs they want to get done. They want emotional jobs too. So I want to feel about myself.
We have social jobs, how they want to be seen by others, and they often have associated jobs as well that come with your functional job. So in the spade, it's quite interesting. So it's a simple tool. So the functional job of digging the soil is the primary reason why you would buy it and use a spade. If you don't use it, it has no value, except if you love spades. I'm not talking about brand love behavior, but just to be, you're a collector of spades. You have
long series of spades you know shared for many many decades or centuries this is the latest one your latest fiscous stainless steel spade that's an emotional job about how i want to feed myself i've got another spade out of my collection and amongst spade aficionados there's a social job of showing off to others what spades you've got so okay for most of us spades just at all rather than being an emotional or social job to be that needs to be done as well but of course there are associated jobs as well so having a
Spade is part of a collection of garden implements you need to be able to till your soil properly in your garden or your field or whatever. So it becomes a, as soon as you're keeping your tools in order, et cetera, they go together. So customers have these jobs to be done and they hire tools and companies to get help. And those, the way they do that is by interacting and that in those secret interactions are the journey that customers have. So it all goes back down to what the customer is trying to do. If you want to build emotions with customers, then
I always say focus on what they're trying to get done, their jobs to be done. Focus on the functional job. If you do that job really, really well, people probably leave with a strong positive view of you as an organization. If you're happy, they'll feel satisfied. They might be willing to tell each other what a great job you've done. But also focus on the emotions, how you people want to feel because that's, you know, we recognize that if you look at this in the side, if you look at what's called justice theory,
Dr G (32:40.59)
This is developed around how we recover customers when there's been a problem. And they talk about three or four types of justice. They talk about the justice of getting the outcome you want as being one of the justices. They talk about the justice of having a process that's appropriate to getting the outcome you want. But they also talk about having the right information to make choices during that journey. They also talk about
interaction of this, the trust of being treated like a person with respect, back to the respect thing again. Often we find that if you don't treat me with respect, even though I think the person is okay, I've got all the information I need to make choices and I'm heading towards a good outcome, I'll still abandon because you don't treat me with respect. So that emotional element is actually quite strong, which this is seemingly goes through a lot of things, but this in this case drawn from justice theory and also
Rob Dwyer (33:28.634)
Yeah.
Dr G (33:37.39)
drawn from how we know about how we make decisions, about how the role that subconscious role plays in making many decisions, only that small minority things pop into your conscious mind when you actually think about making your choice. This is back then to Kahneman's system one, system two thinking. I said this was going to go all over the place, didn't it?
Rob Dwyer (33:56.634)
It strikes me that really what you're illustrating is the difference between a transactional purchase or a transactional use of a product or service and then the next level. And that it's that next level that includes that emotional piece that can
Dr G (34:17.678)
Yes. Yes.
Rob Dwyer (34:25.722)
Create loyalty and and I also think about when you're talking about these different jobs to be done that that's often forgotten and the piece that maybe marketing brings to a company when when they're marketing products and services, right? The people designing the product may be focused on the. Hey, the spade will will dig. It will dig great.
but it's the job of marketing to create something beyond just the fact that this spade will dig and that you'll look good doing it or it's gonna last a long time or be a crown jewel in your spade collection if that's something that you're at.
Dr G (34:55.022)
Yes.
Dr G (35:03.086)
Yes.
Dr G (35:07.022)
Yes.
Dr G (35:11.853)
Indeed. Those are like spades. But in this, your question is about personalization and the challenges. I think the challenge has been that most companies see personalization as being about the customer and not about the job they're trying to do. So, you know, if you have a million customers, you probably have a million, 100 ,000 different types of customer because we all have different identities, according to what we're trying to do. So.
If you focus on that customer, you have an enormously rich base and you need an equally rich set of solutions to be able to meet all the needs. It's called Ashby's Law of Requisite Variety. So, but most customers have similar things they want to get done. So a good example is a guarantee bank in Turkey, now part of BBVA, I think, had this card called FlexiCard and you could mix and match eight or 10 different features.
to make the card of your choice. You could have a picture of your grandchildren on it if you had grandchildren or your dog or yourself or whatever. You could trade off loyalty points against APR and all that sort of stuff. There were 9 ,000 different combinations. But most people took the same small number of combinations, the same small thing. So because those combinations help them get their jobs done fast, it's better than all the other combinations and the things they were using today. So rather than focus on customers and try to...
hyper -personalized content, which is what vendors try and do, because that's what they're selling. You don't need your old technology, you need the new technology with hyper -personalized content. I do with AI, add it on, spray paint it on top. So rather than focus on customers and hyper -personalized content, we should be focusing on the jobs they're trying to get done and trying to find a way to get those jobs in the farthest, easiest and better, enjoying the interaction in their journeys. And also...
make it an atmosphere. We come to our second hour, we talked about the third hour that I talked about, which is reinforcement. So once I bought your product or your service, then all the value for you is in selling it to me mostly, or the contract gives you the right to collect your monthly payments. All the value to me is in using it. So the more you can help me to use it to get started, to get it installed, to start to use it.
Dr G (37:36.142)
to find all those features that I didn't know about and to get those activated and used, and then to get really from using it to whatever to do whatever I wanted to buy it for in the first place. What people what I today would call engagement marketing. The more of what I'm going to get out of it and more powerful that marketing then becomes. And we were some some research a while ago. Professor Kuhn -Powells at Northeastern University in the USA, probably some research looking at, I think it was
a year's worth of data over a number of categories in a online seller, so millions of transactions, looking at which of those bundles of transactions are most effective at driving sales. The baseline was basically push communications, we've always done over the years, marketing communications with planned campaigns and what have you. But if you start to identify what the customers are trying to do, your customer -centric way of marketing, and you communicate to them out of the moment,
So retargeting is a good example. That was nine times better than your basic campaign communication, your campaign marketing. But if you could do that in the moment when customers are trying to get their jobs done, so that communication comes right at that point in time when I need a bit of help, probably engagement can be 44 times better than your bog standard plan campaigns. So.
Rob Dwyer (38:55.738)
Dr G (39:01.837)
And that comes from marketing mixed modeling. So the evidence is really quite clear that the more we can help customers to get their jobs done while they're doing them through engagement communications, so in -moment marketing rather than inbound or outbound, the more likely that communications work. And that's what customers really want. You want help getting their jobs done. They want to be respected. They want recommendations. But they really want help getting their jobs done. That's why they bought the damn products in the first place.
Rob Dwyer (39:30.746)
Ha!
Dr G (39:30.894)
But often what we find is companies sell you something, then, no, I've already got your money now, so you want to help that customer service. We don't spend any money on customer service. We know that. Look at the UK Institute for Customer Service, UK CSI scores. Down as low as they've been for 10 years. Look at the recent, there was a Forrester scoring recently in the US for CX.
lowest point in 10 years. Look at the UK KPMG Nunwood CEE, so customer experience score, lowest point for six or seven years. We've just stopped spending money on customer service because we've already got your money as a customer, so we don't want to spend any more. Although the relationship between great service and great profits is really, really clear. Starting back with the service profit chain work in the 1980s, 1990s.
Lots and lots of research, the UK CSI stuff is very clear. It's a mystery in some ways why companies don't spend more on servicing customers because the relationship with shareholder value growth, which is what drives my work and most of my clients, is really crystal clear. Yeah, they don't. I know why, but that's something that has to do with org politics and different things and budgeting and what have you, but still not an excuse.
Rob Dwyer (40:54.81)
Yeah, so. Let's talk more about the customer service part. Let's dig into mean you say the evidence is there, but. What can companies do better? Aside from just having people answer the the phones or the chats or the emails, what do they really need to do to provide great customer service? And then what will that provide them?
Dr G (40:55.118)
Why would you leave money in the sink?
Dr G (41:02.51)
Yes.
Dr G (41:25.006)
Yeah, it's a good question. I don't think you're right at science. So people like Alex Mead have been talking about this for a long time with his epic model and so forth. It's all relatively straightforward. So customers come to you for help. They've got a job to be done and they get having the struggling. So we can find out relatively easily what those things are they're struggling with because we capture those things often as part of post -service data collection or as part of it, discovering how can I help you, sir?
then people will tell you anyway. So understanding what people have problems with and finding solutions to those problems is the first part of that. And there's a great book by Miller and the other person called A Complaint is a Gift. And the idea is that if you complain or if you contact customer service, I can fix your problem. I can fix the problem for other customers as well.
So I used to work for Toyota and there's a concept called Pokey Yoke Toyota, and that's error proofing. So once I know what the problem is, and once it's going enough times, I can error proof it so it never occurs again. So then I can, you know, bit by bit remove all those little bits of friction that as you pointed out earlier on, make people more likely to jump to another provider because they're pushed away by a failure in customer service. The third thing you can do of course is,
There is something called the service paradox, which is if I'm dissatisfied and I complain and you over recover me as a customer by doing things that help me solve my problem, then I might actually be more satisfied with you if you didn't have a problem in the first place. The service paradox. You've got three reasons to deal with customers, but it all revolves around the idea that knowing what they're trying to get done, their jobs to be done are.
identifying solutions where you can beforehand or having good people who are well trained answering the phone or dealing with the email or answering the chat so they can find the solution quickly. Or then making sure that becomes part of your institutional way of work is always ratcheting up the quality, moving the problems at their source with lots of ways to tools to do that, finding ways to be adaptive and responsive, and then being willing, I think also.
Dr G (43:47.758)
You go the extra mile where it makes sense to do so to help customers who really have a problem because of your lack of foresight or lack of fixing a problem or what have you. But often I think that companies, customer service, I always used to joke when I used to do jobs to be done training that one of the chances you have is that what we usually do is in a standard language to capture jobs is because if you just ask me what they want or what they think is the right solution, you get a mishmash of...
requirements and needs and features and functions, a whole lot of other things. You go to marketing, they have one view. You go to customers, you go to the sales, you go, they have another view. You go to service because in other country, typically a cheap country. So making sure these people are organized. And of course today we have AI to help you. So not easy. Sometimes like clan have done a really great job of apparently of answering simple questions. But
We have new tools all the time to improve the luck of the customers, so use them. Then the relationship between satisfied customers with a problem and customer value and shareholder value is, I think, fairly well understood. It's not rocket science anymore.
Rob Dwyer (45:02.874)
Yeah, I love that. And this has just been a fascinating conversation. And I know that people can learn a lot from you, but they may be interested in doing more than reading your posts on LinkedIn. What's the best way for people to get in touch with you, Dr. G?
Dr G (45:21.966)
If you want, if people want to, I'm happy to talk to pretty much anybody about pretty much anything to do with customers and business and what have you and always have been. So if you want to get in contact with me, so either, follow me or, linking, connecting me on LinkedIn is the best way. And then reach out to DM and I have people all the time asking me questions and I'm happy to do my account. I was taking the view that a lot of people helped me when I was starting as a consultant many, many years ago. So I feel I have a.
moral duty to help people in return and I'm always happy to try and answer questions. I'm not going to do a project for free. I will try and answer questions and point me in the right direction. And I might have a bit of reading, a bit of talking to other people or having a bit of a conversation. So reach out to me via LinkedIn is probably the easiest way to do things.
Rob Dwyer (46:04.378)
Well, I know that you have helped me today and you've helped the audience. So thank you so much for taking the time to join us all on Next in Q.
Dr G (46:11.694)
It was my pleasure. Yes, we cook about these things for hours and all days on end. So I'm just pleased you were so patient as we walked around the house a little bit covering jobs and buyer and shops work and other things as well.
Rob Dwyer (46:28.09)
Thanks, Dr. G.
Dr G (46:30.062)
My pleasure Rob.