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Raising customer experience key to success

Published on Friday, 03 Sep 2010
Joseph Michelli says it takes commitment and constant focus to develop a customer-centric business during a speech in Hong Kong.
Photo: May Tse

As if by rote, companies these days tend to list their core values. Those that feature prominently are a passion to perform and focus on customer needs. But, as Joseph Michelli explained in his recent Hong Kong workshop on The Starbucks Experience, it takes a lot more than a bland mission statement or a few oft-repeated articles of faith to really put the customer at the centre of everything a company does.

The benefits of making that commitment and making it happen are impossible to ignore. All manner of reputable surveys and reliable measures show that when an organisation orientates its business around the customer - rather than the product, system, operation or whatever else may otherwise predominate - there are tangible and lasting gains. These are seen in everything from better sales and improved profits, to higher levels of staff engagement and a more positive public image.

As Michelli emphasised, elevating the customer experience can be viewed as the key to success in a marketplace where clients continue to demand more. It is the secret to becoming a "beloved" brand, one admired not merely for efficiency, low costs or logistics, but for its values, innovation and responsiveness.

"You have to elevate product delivery from the service space into the experiential space," he said. "Companies talk about service when they are really product-centric and focusing on commoditisation. Service is reduced to being robotic and predictable and, although speed and efficiency are factored in, it is anything but excellent."

Combining personal anecdotes with case studies and solid business data, Michelli showed how companies such as Starbucks and Ritz-Carlton have outpaced the competition with an approach that is relentlessly customer-centric.

This starts with a stated corporate philosophy - in the above instances being a "third place" between home and office for people in the community, and creating a hotel environment that feels like "the home of a loving parent". That basic objective informs every activity and decision from recruitment and training to operations, communications, initiatives and strategy.

Michelli's main point is that every company could - and, indeed, should - be considering this path. There is abundant evidence to show that the ability to put customers first will increasingly determine success. Some businesses - Walmart - will still choose to compete on price and volume, even though economic factors mean that market space will always be crowded. Others, such as iPhone applications, can continue to do well with a model that is able to generate initial purchases and millions of new users.

However, in most sectors, brand differentiation and profitability will be all about connecting with the customer more effectively. Since operational efficiency is presumed, companies have to look at what they do every day to determine how and where they are creating "touch points" with the consumer.

"When you engage in that conversation, you frequently see a big difference between the desired and the actual strategy," Michelli said. "Companies may not have the core competencies to meet their desired strategy or to be considerate of the panoply of needs the customer could have."

His recommendations include creating a draft of what you want your customer's experience to be. This has an impact on staff behaviour and attitudes, and allows people to improvise, not simply follow rules, in order to make it happen.

"To develop a customer-centric business, you have to define what you want to sustain," Michelli said. "As managers, you have to do a lot of high-end problem-solving and accept that there will be times when you don't control all the variables. It takes commitment and comes down to believing that you have to make a real connection with your customer." 

The Starbucks Experience event was co-organised by Classified Post and Speakers Connect.


A great and profitable lesson for businesses

In showing how a business can be completely transformed by elevating the customer experience, one of Joseph Michelli's most striking examples is the Pike Place Fish Market in Seattle.

When he first encountered owner Johnny Yokoyama, all the signs pointed in one direction: the business was going nowhere fast. Sales were static at best, staff were uninterested and unmotivated, the product - dead fish - was pretty basic, and no one seemed to have any ideas about how to stop the rot. Michelli arrived on the scene as an unpaid graduate student in organisational development and just about managed to resist the sense of hopelessness that clearly afflicted the rest of the team.

There was, though, no miracle cure or immediate turnaround. Management science and textbook marketing cut no ice, while employee meetings about "the way forward" were more likely to descend into silence or bickering than to spark great ideas or enthusiasm.

But the breakthrough came with a suggestion that was to turn the business on its head. It came from an employee who one day simply said: "Let's be world-famous."

Almost ridiculous in the circumstances, the idea nevertheless took hold and led to a completely new philosophy. It was to focus on making each customer feel world-famous - welcomed and treated like a celebrity - and to give everyone an experience to remember.

The market was still selling fish, and the same distributor was supplying all the other retailers in the area. But with the customer experience put ahead of everything else, Pike Place's sales started to soar. As a business success, it has led to books, lecture tours, an essential stop on every tourist itinerary and quite a few very comfortable retirements.

It also proved an early inspiration for the very first Starbucks store, located a block away in Seattle, on the importance of making the customer king.

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