The Empty Whitecoat

The customer interaction is king part II

Firms are in danger of neglecting the value and knowledge contained in their customer interactions if they outsource their contact centre operations remotely. The latest Peppers and Rogers newsletter provides examples of companies that recognise the customer interaction is king:

The trend of moving outsourced operations back in-house is gaining momentum. Insurer Conseco recently made news by bringing call center jobs back to the U.S. from India, and companies including Capital One, Dell, Lehman Bros. and AXA have "repatriated" similar work, says David Butler, an assistant professor at the University of Southern Mississippi's College of Business and Economic Development in a recent USA Today article. Conseco cited "the need to exercise close control over the processes that most directly affect its relationships with current customers and distribution partners" as a main reason for bringing its call center back home.

The article goes onto descrbe the practices of North Fork Bancorp. a $26 billion multi-bank holding company.

Its chairman, John Kanas "keeps a close eye on the important call center touchpoint. He has a line in his office that allows him personally to audit telephone conversations between service reps and customers. "The call center is obviously one of the first lines of communication with the customer," he says. "It's much the same as a branch or somebody walking into one of the executive offices. We want to be aware at all times what people are happy with or having difficulties with, and we want to stay close to that stream of information."

Chris Selland, vice president of sell-side research for Aberdeen Group, says such attention to customers at the top-level is unique. "There are absolutely companies that appreciate the value of the customer service centers, their customers and running their operation to maximize the value of the customer relationship, but I still think that's a minority," he says.

"Everyone is all excited about 'call centers' and 'offshoring,'" Kanas says, "but this is just customers calling into a company with a problem or question...So we try to hold the call center as close to our heart as we can and monitor the results as close as we can, because it's one of the most important functions we do and contributes to our reputation -- our face-to-face communications -- every day."

Further, Kanas argues that the perceived benefits of sending jobs overseas -- many of them financial -- have been vastly overstated. "A couple of years ago when offshoring was becoming popular, there was lots of talk about a 50 to 60 percent savings," he says. "Everyone has a different number, but most people today think it's much closer to 15 to 20 percent, if it's even that high." For his company, the value of maintaining close customer relationships outweighs any short-term benefits of an overseas call center.

GuruMarks

And now, in a breakthrough for business thinkers everywhere, I can reveal a new technique which measures the twin drivers of what I term a "GuruMark".

A GuruMark measures the degrees of altruism (Unselfish concern for the welfare of others) and humility (freedom from pride and arrogance) held by our leading business thinkers.

Up to now, we have long measured business gurus in terms of paradigm-shifting, intellectual prowess and rigour (and creative execution of brilliant ideas, products and services) but few have thought to worry about assessing their levels of selflessness and modesty.

GuruMark does just that. How? By plotting the two key drivers of business Guru value on a 2x2 matrix: On the x-axis, Altruism. On the y-axis, Humility.

A true GuruMark can be said to have high altruism - a selfless interest in propogating new ideas for the good of the idea and the world; and high humility, a low or zero interest in propogating ideas about oneself and ones company.

View here for more about GuruMarks : http://www.tompeters.com/cool_friends/content.php?note=006459.php

New Perspectives in Customer Knowledge Co-Creation: new article

Advanced customer knowledge is an essential competitive requirement for most companies. Indeed, developing capabilities to create and act upon customer insight can make a vital contribution to successful CRM as well as product, service and even business concept innovation. Yet whilst customer information in the form of profile and spend data typically provide the decision-making foundation of most CRM and customer-centricity programmes, some progressive companies are beginning to pursue more radical and alternative strategies and methods for sourcing valuable customer knowledge.

The CKM perspective

In an article in the European Management Journal in 2002, University of St. Gallen academics Gibbert, Leibold and Probst identify and distinguish these new forms of customer knowledge management (or CKM as they call it – sorry, another acronym!) from the more dominant knowledge management (KM) and customer relationship management (CRM) perspectives across several dimensions.

These include managerial mindset, knowledge-creating rationale, the alternative purpose of customer communications and an extended view of the role of the customer in the company learning process. But perhaps the most significant defining variable of CKM as defined by the three authors is the type of customer knowledge sought by CKM-practising firms.

Specifically, customer knowledge managers seek to acquire knowledge from the customer as well as the more typical knowledge about the customer. In doing so, whilst incorporating principles of KM and CRM, CKM they write, “moves decisively beyond both to a higher level of mutual value creation and performance. More specifically, the notion of CKM values the customer as a knowledgeable agent in the (firm’s) knowledge creation process.”

Software Pioneers

The concept of pursuing the direct involvement of customers to boost a company’s knowledge assets is not new, although to date efforts have been limited mostly to product development and problem solving in the software industry. Here, pioneering CKM businesses (as reported in a 2000 HBR article by Prahalad and Ramaswamy) have shifted their approach from testing products in closed R&D labs to validating and developing them in open, shared customer environments, usually over the internet.

At Microsoft for example, more than 650,000 users tested a beta version of the Windows 2000 operating system. In doing so, they were able to contribute to the refinement and overhaul of some of the product’s key features. Cisco, the internetworking firm, went even further in its integration of customer knowledge; it still provides its customers with open access to its information, resources and systems through an on-line service that enables them to engage in dialogue.

In this way, Cisco customers solve the problems encountered by other customers and each has access to the Cisco knowledgebase and user community. Dell Computers has a similar service. It employs data mining techniques to identify areas of improvement, new services, and ultimately new innovative products based on the discussions among customers in its online forum.

Managerial implications

A shift in mindset towards looking at the customer as a knowledgeable entity has important implications. Significantly, firms developing a CKM capability are more likely to have an external perspective and outlook on knowledge creation and renewal and to exhibit higher levels of market experimentation or “probe and learn” behaviour. Also, to achieve an advanced CKM competency, customer knowledge managers seek opportunities for partnering with customers as equal co-creators of organisational and customer value.

They focus on generating growth for the organisation and value for the customer through motivating and incentivising individuals to share their knowledge and to engage in active dialogue with the firm and with each other. In other words, CKM firms are developing new ways to mobilise and then act upon customer knowledge using a variety of collaborative, community and interactive approaches.

Of course, many CKM companies use the internet as the primary mechanism for collaborating with customers in order to create new knowledge for product and service development, innovation, customisation and to achieve superior marketing performance Often, they set-up customer panels to solicit ideas, develop and monitor communities to create dialogue and interaction and implement toolkits to enable the co-design and introduction of valuable new products and services.

Challenges

Yet for many other firms, the opportunity to develop CKM strategies and tools is limited for three reasons. First, there is a cultural challenge in terms of the need to re-think the role of the customer and the implications this has for the mindset of managers and employees within the organisation. Second, there exists a competency challenge in respect of the skills and processes needed to take full advantage of participative customer knowledge sharing opportunities. Third, there is a customer access challenge in that companies may not be able to reach the right customers in their current or even new markets (particularly those who are opinion-formers).

For example, they may find it difficult to access people at a sufficiently early-stage in their decision-making process or they may not be capable of providing the right context or incentive for individuals to participate in broad conversations with little perceived value. Equally, customers might not always hold the vested knowledge or the desire necessary to be able to contribute successfully and willingly to a market innovation process.

The customer interaction is king

Whilst some businesses are struggling – despite their best intentions - to overcome the barriers to successful CKM implementation, others are missing out on the opportunity for entirely different reasons. Unfortunately, many firms view potentially knowledge-rich customer interactions as a cost to be reduced rather than as a potential investment in dialogue, learning and innovation.

For example, by automating customer interactions (as most CRM IT software systems tend to do) or outsourcing them overseas for example, I argue that many companies are at risk of severely limiting their most precious future assets, i.e. the opportunity to learn from and create value with their customers. In most cases such cost-focused or automated initiatives will fail to deliver lasting value. Why? Because organisations use them as quick-fixes instead of addressing a more deep-seated underlying problem - a lack of customer knowledge and a limited orientation to learning with and for their customers.

Limited external orientation

Perhaps the problem is that many companies have become so internally focused that they have gotten carried away with their own issues and have taken their eye off the customer and their needs. Until such organisations make a serious effort to understand their markets and their customers better, initiatives designed to take cost out of customer interactions will amount to expensive, time-consuming mistakes.

For example, many financial services businesses in the UK are spending too much of their valuable resources on internal operational efficiency at the expense of creating real and lasting value for their customers. But, by considering and then exploring new perspectives in customer knowledge creation and management, they might at least be able to start identifying opportunities to inject a significant boost to their future CRM, product and service innovation efforts.