Knowledge workers aren’t motivated by extrinsic rewards (salary, benefits etc) but managers overestimate their value. This leads to higher costs and lower productivity.
It is generally understood that intrinsic rewards (personal growth etc) motivate individuals to perform and that whilst extrinsic rewards lead to dissatisfaction, they have no real effect on motivation. But as humans, we struggle to recognise this in others, overvaluing the latter and underestimating the former.
For managers unaware of this bias, the consequences can be problematic.Waving money around to attract and keep talent can only ever go so far to minimise dissatisfaction but offer too much and it starts to negatively effect performance.
What employees want is for the extrinsic bases to be covered and a workplace where they indulge their intrinsic needs. Typically these involve the ability to develop skills, self-direct their work and finally, believe that their work satisfies a noble purpose.
Organisations whose managers understand this are more likely to have happier, more motivated staff which is better for them, better for customers and better for the business.
Organisations speak about customers in a militaristic way way that actually impedes their ability to understand how to serve them. Does yours?
Surprisingly, marketers are the worst at this. They talk about ‘target’ markets or ‘target’ customers and, as one canadian website recommends, ‘..zero in on your target’; we get involved in ‘guerrilla marketing’, talk about “impacts” and “impressions” and read Campaign magazine about advertising campaigns.
Now I confess that I too have used these expressions before (although I hope I never said ‘zero in’!). But today, I urge you to join me and say ‘no more’ to this ludicrous language. Apart from anything, from a psychological point of view, it’s really dumb to talk about customers in this way.
Repeated actions shape our attitudes. Talking about customers like this creates an ‘us and them’ mentality, positioning customers as the enemy, pictured through the sights of a marketing gun, putting distance between brand and customer. This distance reduces the capacity for empathy or understanding and reduces relationships to the basest of exchanges. Yet the role of a marketer is actually the reverse of this. Marketers should be looking at their organisation from the perspective of the customer and reporting back on where they stand in customers’ minds relative to the competition. And if they delved deep, they would see that often customers actually feel like a target, with many cocked weapons pointing at them and unsure as to which is the friendliest proposition.
So it’s down to you. Choose between the Rambo type approach to marketing or change your behaviour and work out how you can collaborate with customers not target them. A much better mindset for business and a better way to treat customers.
There are five reasons why customers don’t like market research. Organisations that understand the issues and change the way they think about research can transform the customers’ experience of them. Here’s how:
1. Customers expect you to know why they buy and have little interest in telling you when things are going well. Why should they?
If you want to know, watching, listening, and responding to them on an ongoing basis is what customer centric businesses do. Asking is perfectly legitimate but evaluate responses with all the other behavioural data not on its own.
2. Organisations which hire research agencies to ask on their behalf are in effect already admitting to customers that they aren’t listening. Which doesn’t put them in a good light at all.
Framing the conversation as a customer service call or on behalf of an individual they encountered or outlet for example (even if performed by an agency) brings the research closer to the customer. But making ‘understanding the customer’ part of your sales or customer services or operations process demonstrates a strategic commitment not a tactical decision.
3. The timing of the ‘asking’ invariably interrupts the customer (being stopped on the street, cold phone calls, even paper forms put in front of customers) forcing them to stop doing something in order to take part. Not only that but the interruption rarely happens at the same time as the customer was either thinking about or experiencing the service. So not only are they irritated but they’re also not in the right frame of mind.
The best time to evaluate a customer’s feelings is when they are thinking about the service or just before and after they experience it.
4. Quantitative questions get framed in research speak (“how satisfied ..”, “how likely..” etc) which forces customers to articulate responses which feel unnatural.They also rarely ask questions that the customer wants to answer.
Research needs to be more of a conversation, that allows the customer to speak about the things that are important to them in relation to the service you provide. Frame the purpose of the conversation and let them speak
5. And finally, because they have had prior experience of being researched in this way, they perceive no benefit to them for taking part.
Customers love being consulted if they feel they will be listened and if either they, or others in society, will benefit. Help them understand what’s in it for them and make sure they experience what you promise.
A companies balance sheet reports on the assets and liabilities of a business in hard, quantitative terms. But as any investor will tell you, this is only part of the story; what really matters is the relationship it has with customers and how well it manages them. And every business has assets and liabilities they don’t know about but the customer does.
Unfortunately, there are no easy ways to measure this. Goodwill calculations are more about balancing the balance sheet post acquisition whilst brand valuation methods don’t adequately reflect how people really feel. If they did, customer defections would be easier to predict. Apart from these imperfect methods, there is no reflection on the balance sheet of the health of the business, so most are flying blind.
Take supermarkets for instance. For years their customers have lauded the convenience and low prices they got but complained bitterly about all sorts of things like nutritional labelling, marketing unhealthy products to children and the effect of the big four on neighbourhoods and the environment. These were effectively long-term liabilities that the major players accumulated over many years with no penalty until the landscape was overturned by Aldi and Lidl. The 10% market share thye have accumulated, most on the past three years is testament to the unhappiness of customers with the incumbent propositions. What’s important to understand however is that customers do their own mental accounting about how companies they use and whilst they may seem loyal on paper, their feelings reveal a much more complex set of trade-offs.
I’m not advocating a wholesale change of accounting methods. But I do think management teams should spend as much (if not more) time thinking about how well they serve customers rather than just focus on the money. If they did they would discover emotional assets and liabilities they didn’t know about. Which would enable them to do better by everyone – customers, staff and investors. A happy exchange.
Every year, billions of pieces of direct mail are created and stuffed through our letter boxes and into our offices. But what the direct marketers fail to account for is the hidden cost the recipient incurs. This is a problem not just for individual companies but entire sectors which invest in direct marketing.
Take financial services. The expected response rate is typically 4% which means 96 items per hundred are wasted. But for those 96 recipients, an item of addressed mail from, say, a bank needs to be safely disposed of in order to avoid identity theft problems. This requires access to a shredder (at a cost) or allocation of time to manually tear it up or dispose in some other way. Any of these options require conscious thought + money or time, expenses for which there is no gain or benefit to the recipient whatsoever.
It’s no wonder that customers have such a low opinion of financial services. And as they receive direct mail on a daily basis, they have constant reminders of the waste of time and money, incurred by not just the marketer, but themselves as well. Which if you think about it is a pretty good way for an industry to annoy an entire population. No wonder they struggle to engage people!
Which comes first, moral purpose or business? The Guardian newspaper is a great illustration of how moral purpose can make your business stronger. This is their story.
The 1993 newspaper price war
In 1993 the Times reduced their cover price to 30p from 45p, a predatory act (many believed at the time) to shut down the Independent, a relatively new market entrant which had launched in 1986. The Independent tried to raise its prices that same year (it was in great financial difficulty) but when The Times dropped its price again to 20p in June 1994 and the Telegraph dropped theirs to 30p in August, it was forced to follow suit, having already lost 20% of its readers.
Once prices started to rise a year later, the Times had gained significant market share against the Independent and the Telegraph. But the Guardian, which had held firm its 45p price over the period, managed to hold on to nearly all its readership. Not only that but it has continued to innovate and lead the way in terms of news and journalism and remains to this day the most distinctive broadsheet brand in the UK.
The Guardian’s moral purpose and values
Founded in 1821 in Manchester in the wake of the Peterlee Massacre and the protests against the Corn laws, it stood out as a liberal, independent newspaper of the time and has occupied a liberal/left wing position ever since. CP Scott, the editor and owner, reflected on its purpose in his 1921 essay written to celebrate its100th anniversary as follows:
A newspaper has two sides to it. It is a business, like any other, and has to pay in the material sense in order to live. But it is much more than a business; it is an institution; it reflects and it influences the life of a whole community; it may affect even wider destinies. It is, in its way, an instrument of government. It plays on the minds and consciences of men. It may educate, stimulate, assist, or it may do the opposite. It has, therefore, a moral as well as a material existence, and its character and influence are in the main determined by the balance of these two forces. It may make profit or power its first object, or it may conceive itself as fulfilling a higher and more exacting function.
I think I may honestly say that, from the day of its foundation, there has not been much doubt as to which way the balance tipped as far as regards the conduct of the paper whose fine tradition I inherited and which I have had the honour to serve through all my working life. Had it not been so, personally, I could not have served it. Character is a subtle affair, and has many shades and sides to it. It is not a thing to be much talked about, but rather to be felt. It is the slow deposit of past actions and ideals. It is for each man his most precious possession, and so it is for that latest growth of time, the newspaper. Fundamentally it implies honesty, cleanness, courage, fairness, a sense of duty to the reader and the community. A newspaper is of necessity something of a monopoly, and its first duty is to shun the temptations of monopoly. Its primary office is the gathering of news. At the peril of its soul it must see that the supply is not tainted. Neither in what it gives, nor in what it does not give, nor in the mode of presentation must the unclouded face of truth suffer wrong. Comment is free, but facts are sacred. “Propaganda”, so called, by this means is hateful. The voice of opponents no less than that of friends has a right to be heard. Comment also is justly subject to a self-imposed restraint. It is well to be frank; it is even better to be fair.
Sustaining unique customer relationships
The Guardian didn’t engage in trying to shut down the Independent, arguably the single biggest threat to its circulation, nor did it adopt the short-term tactics of its competitors. Rather, it stuck to its guns, continued to invest in innovation and journalism that not only ket its readership but also boosted its commercial performance.
It turns out the Guardian’s readers wouldn’t be swayed by a 56% discount offered by the Times whilst other titles’ readers were. This was because their brand choice was driven not by price but by a real and deep motional connection that placed a high value on their personal experience of owning and reading the Guardian. The power of this connection was and still is today framed by what the newspaper stands for which, for the majority of its readers, is more important than price.
So long as their editors and business people understand this, ensure they remain true to these values and yet can adapt to their changing commercial landscape, they should continue to enjoy the commercial success that flows. I’m told CP SCott’s essay is the only briefing given to new editors. After all, its all they need to know. Read it in full here
What can we learn?
Not everyone is like CP SCott. After all, he gave away his shares in the newspaper, gifting them to the not for profit Scott Trust which controls it to this day. And some people are happily in business to make money. But if your business does have a moral purpose that’s more important than profit, put this at the heart of your strategy. You’ll build extraordinary relationship with customers and with your staff and sustain performance even under the most severe competitive pressure. That’s what a great brand is.
“Hi, my name is Francis, I’m ringing from whereyoustand about how you can get more customers but before I take up any more of your time, is now a convenient moment to talk?”
It amazes me that cold calls still do not start with this basic question. But most don’t seem to which automatically lowers their chance of ever engaging the prospect. What the caller is oblivious to, as they open up, is what people feel when they do. Something like this:
- Oh, an unknown number calling… Is it a client calling from an unknown location, my wife from a different office or my child from the ambulance on the way to hospital? So I answer it because the most common calls I receive are from these people.
“Hello is that Mr Francis Wyburd, how are you today? (pause, as if i know them)…
- They know my name but I don’t recognise theirs…Is this a call I’ve arranged but not put in my diary? Their ‘how are you’ is so familiar I do a double take – have I forgotten an appointment or this person? Do they really want to know about the splinter I got at the weekend? Luckily their pause for my reply is too short for me to answer.
“…I’m calling to talk about the (insert the product/service name here) which could save you thousands of pounds…”
- Oh oh, they’ve launched right into their proposition but I’m not really listening. That powerpoint I’m working on is in front of me and so I only half hear what they’re saying so it’s lost on me.
- They pause, ready with the ‘handling objections’ script their call centre manager thinks they need.
- I object: to being interrupted, to having my number, to not being asked for my time, for wasting my time, for worrying me about my family (I don’t actually say this, I’m English).
And then I ask them to remove my number from their system and never talk to me again before hanging up just as they crank up the “handling objection” routine. From cold call potential to disastrous outcome in seconds.
What’s the learning?
You can’t sell to someone who is busy. Asking the prospect to make time for this conversation is not just about politeness – it’s about making sure they are mentally ready. Not doing so is a waste of time for everyone concerned.
It’s the time of year for many businesses to draw up their budgets for next year. And if your business is like most, each department prepares this in relative isolation from each other. Which is pretty dumb if you think about it.
Customers don’t think in terms of departments. They evaluate your service in terms of the expectations you set and the experience they have. How well this all works out is determined by everything you say and do across the business. So if you carve up resources by department without a coherent strategy to manage their experineces, you’re unlikley to make much of an impression. Which leaves you vulnerable to competitors who do.
Luckily, not many firms are good at formulating strategy which leaves those that do, a gaping opportunity to grow at the expense of those that don’t. So how should you go about it?
- Understand how you can make a material difference to customers. Find out where your proposition stands relative to other alternates they have available
- Run a workshop to discuss the findings and work out where to focus and what you need to do. Draw up realistic goals and timeframes.
- Split into working groups to work out how to find customers and how to improve their experience. Draw up revenue projections, draft budgets and split by department
- Come together to discuss and agree the final plan and budgets required
- Repeat as often as required
The number 1 concern of CEO’s is how to get their people to work together. But if plans are formulated in silos, then its not surprising that they behave like that too. So if you want next year to be more fruitful, get rid of silo planning and start working on helping customers.
Why do marketing departments inside B2B organisations struggle to have a voice at the top table? Why don’t others inside their businesses treat the marketing discipline with more respect? Why do they get blamed for poor performance but rarely credited with success?
In B2B,m customers buy people not brands. That’s not to say the brand isn’t important, far from it. The name on the business card of the vendor is an essential part of the value proposition which, along with its communications, helps frame the customer’s expectations. But it’s the handshake that really matters as customers know it is the people they deal with that will determine their experience. This handshake is crucial to customers as most commercial contracts they enter into are “imperfect”; that is, there is an implicit understanding that the process may not go as planned so they expect reciprocity from providers in order to help extract the value they need. This can only come from the relationships they have with the people they deal with. As marketing departments rarely serve customers, their role gets sidelined into lead generation activities and provision of sales support materials.
However, customers relative satisfaction with their experience depends on how well this give and take is managed. And as sales/account managers product/service delivery teams and customer services all get involved, this can lead to problems. And when things don’t go to plan, customers can be extremely harsh. “Work with me to extract the value I need and I’ll be ok; don’t and I’ll punish you” is how reciprocity works in customers minds.
And it is here that long suffering marketers can make a material difference.
- Understand customers purchasing motivations and the job they are hiring you to perform is the most important piece of information everyone needs internally.Collect and analyse this data on an ongoing basis
- Collaborate with colleagues in other departments to understand what they should expect from customers. Help them understand different segments, how to spot them and what they need
- Innovate ways ways to set tighter expectations and better manage customer experiences
- Speak english: eliminate complex ‘brand’ speak and start talking the common sense language of customers
In short, marketing can be a powerhouse for growth if they use customer insights more strategically, not just for promotional activities, but for the good of everyone involved.
Today is Black Friday and for the past few days organisations like Thomas Cook, Sainsbury, Carphone Warehouse to name a few have been using it as a sales promotion hook. But should they?
Black Friday is an American concept built around the unique holiday pattern that is Thanksgiving. Everyone’s on holiday, it’s under a month until Christmas and so it’s become a traditional day to spend spend spend. So retailers of pretty well anything, understanding how many wallets loosen at this unique time, make unbelievable offers to draw in the masses.
But Black Friday in the US has become synonymous with unbridled consumerism, a concept that would have its founding fathers turning in their graves. But it has become such an occasion that some retailers have reacted against it. One retailer, REI, an employee owned outdoor and fitness retailer has shut its doors this year in order to encourage its staff and customer to spend more time outdoors, an idea that fits closely with its values. Values before profits, that’s a refreshing concept and an excellent way to build long-term brand value.
So what do UK consumers think about UK brands jumping on the US bandwagon? I think most see Black Friday as a day which promotes antisocial behaviour, fostering greed, irrationality and the pursuit of personal short-term gain. The near riots in Asda two years ago illustrates this perfectly, pitting consumer against consumer in the TV aisles, which made for uncomfortable viewing. After all, most people are uncomfortable with excess consumerism, knowing how it damages society and the environment, yet some can’t help responding to amazing offers, even if it means getting into a fight.
So if Black Friday s synonymous with these values, why do long standing well regarded brands like Sainsbury think they are doing getting involved? Even Asda, owned by US giant Walmart decided not to take part this year. Perhaps they realised that what works well in the US doesn’t necessarily work well here. I hope other UK brands realise this as well and leave these naive promotional strategies alone.