Developing a Rational Approach to Irrational Customers
You know your industry is broken when 52% of customers would rather go to the dentist than your store. You know you have to make a major change when the end result of your customer experience is when the customer leaves your store in handcuffs. That was the incident that drove John Coyle, Senior Director of Innovation and Strategy at U.S. Cellular, to develop a revolutionary strategy. He “opened the kimono” and took a long-hard look at the status quo in the cellular industry and then asked the question, “What rational strategy can we develop to deal with irrational customers?”
Coyle believed that addressing the issues of the most frustrated and angry customers would improve the experience for all customers. To develop their new strategy, he went through a six step process, all of which required brutal honesty and a willingness to look at what really happens not what you want to happen. At the IE Group’s Chief Strategy Officer Summit he explained the six step process.
Step 1: Understand the Competitive Realities of your Industry
Ask what is going on in your industry. Be honest and look at the good and the bad of the industry as it exists today. In the cellular industry Coyne looked at a variety of factors including the nature of the competitors in the market (large and getting larger or small and being bought), source of customers (too many from churn), and changes in pricing (plan pricing continues to drop).
Step 2: Understand the Macro-economic Realities of your Operating Environment
Ask what is going on in the larger environment outside of your industry, but in the markets in which you operate. What realities are your customer’s experiencing? Today, in the United States, we are experiencing little to no economic growth, unemployment is high, household income is down.
Step 3: Understand the Customer Realities of your Business
More important than what are your customers think about your product and company, is how they truly “feel”. Marketing focus groups often only get cerebral answers to questions – what customers “say” they will do. You need to figure out how to get at the underlying feelings that drive that behavior. Observation of actual customer actions is a better indicator of true customer behavior than answers to a customer satisfaction survey.
Step 4: Use Data to Create a Metaphor and a Strategy
Coyne started with a list of the top customer frustrations which had become the status quo in the industry, such as high cost replacements to cell phones and excessive overage costs. His strategy was to develop innovative solutions to those frustrations. From there he took the concepts and found a metaphor to describe the approach. They used the human body as his metaphor – on top of a backdrop of an illustration of a spine, each of the frustrations was a painful, hurting vertebra. The solutions were grouped and linked to an expanding heart.
Step 5: Create the Irrational Case for Irrational Behavior
Identify all the possible results of NOT changing. For U.S. Cellular, that meant going out of business, being purchased by one of the big providers, or having more customers throwing cell phones at their employees. None of these were desired outcomes.
Step 6: Create the Rational Case for Rational Behavior
What are the positive outcomes of making a change? What are the business benefits? Make the business case for making the desired changes. The savings from reducing customer churn and reducing the costs of marketing to acquire new customers was enough to convince the C-suite to adopt a new business model based around customer rewards.
U.S. Cellular has just rolled out their new strategy that involves breaking out of the cellular status quo with lower cost replacement phones, more frequent phone upgrades, capped minute overage charges, and no contract renewals. The rollout is too recent to know if it will be as profitable as they would like. But developing a process that embraces change and proactively improves the customer experience can only lead to continued success.
What have you done to break through the status quo in your industry and your business? How can you revolutionize the customer experience? Share your ideas and let’s see just how happy are customers can be!