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Show Me Some Love!
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By Ziv Navoth
You're in a store, standing in line to pay for a new t-shirt. The guy in front of you approaches the cashier and puts a duffle bag on the counter. He takes out a pair of stained khakis. "I spilled some ink on these pants and wanted to see if I could replace them," he says apologetically. "I'm sorry to hear that," the cashier answers. "Would you like to replace them with a new pair in the same size?". The future of retail or a prescription for bankruptcy?

Last month, in an effort to improve your reading experience, I enrolled in a creative writing workshop at a local college here in London. After wasting the first 30 minutes complaining about how many forms she needs to fill, the teacher handed us a poem and asked that we read it silently. We then spent the next hour deconstructing the poem, line by line, in an attempt to discover what the poet "really" meant. I realized that my attitude toward deconstructing literature hasn't really changed since I was 15 and that this workshop wasn't for me.

The next day I called the college and asked to cancel my enrollment. "That's not possible," the woman on the other end of the line said. When I asked why, she replied with what appeared to her like a perfectly logical answer: "Because of all the cancellations we've had to process last year, this year we've decided not to accept any cancellations". No questions on why I wanted to cancel the course, no attempt to offer an alternate course (I would have accepted one, even at a higher fee) and no interest in how the college could do a better job of setting expectations for future courses.

Sounds familiar doesn't it? I bet you have plenty of stories just like this one. But hang on. We're in 2003. We all know about customer service. So why are so many companies so good at customer dis-service? Surely they know the cost of customer defections? Surely they know that it only takes a 5% increase in customer loyalty to boost profits by 25% to 85%?

 
"We all know about customer service. So why are so many companies so good at customer dis-service?"

Yet on average, U.S. corporations now lose half their customers in five years, half their employees in four, and half their investors in less than one.

So why do companies find it so hard to show us some love?

The answer lies in the fact that most companies are structured the wrong way. Two centuries ago, most goods were still sold by individual merchants. With the industrial revolution came mass production, which enabled companies to produce more, for less. To manage these production and distribution processes called for the development of managerial hierarchies, which in turn led managers to focus their attention on internal company processes, which in turn meant that the higher they climbed on the executive ladder, the more distance there was between them and their customers.

As Shoshana Zuboff, author of "The Support Economy", argues, instead of building themselves around what matters most (us), companies are still building themselves around, well, themselves.

And so we find "Product Development" teams instead of "Customer Development" teams. We find salespeople that are dying to tell you all about their products, yet never stop and ask you about your needs. We find corporate executives that, under the guise of "increasing shareholder value", create value only for themselves, leaving their customers (and employees and shareholders) hanging out to dry.

 
"Instead of building themselves around what matters most (us),
companies are still building themselves around, well, themselves. "

The solution? A complete change in the way companies are structured. A shift, if you may, from organizing companies around production and distribution to organizing companies around customers.

Sounds complex? It is. But here's one example of how one company is moving in the right direction. Remember the story I started out with? A customer comes into The Gap and asks to replace a product that he, self-admittedly, damaged. Why should The Gap replace his khakis?

To understand The Gap's logic, think about dishwashing. You enter the kitchen and find a pile of dishes that someone else left behind. You could leave the dishes there for whoever used them to wash up. That would make you right. But you could just as easily wash the dishes yourself. That would be doing right.

The Gap might have been right if it hadn't accepted the damaged khakis. But in accepting them anyway, it practiced the art of doing right (and earned at least two customers for life).

You could argue that this is simply a case of flexible return policies, or even a case of a bad return policies (after all, if everyone returned their clothes to The Gap after wearing them for a few years, the company would go out of business).

But in doing so, you are running the risk of missing out on the biggest business transformation since modern capitalism was created.

Because in the future, there will be two types of companies: Those that build themselves around us and our changing needs, and those that go out of business because they were built around themselves.

 
"In the future, there will be two types of companies: Those that build themselves around us and our changing needs, and those that go out ofbusiness because they were built around themselves."

--> For more on the future of capitalism, check out Shoshana Zuboff's excellent new book - THE SUPPORT ECONOMY: Why Corporations Are Failing Individuals And The Next Episode Of Capitalism.

 



About Ziv

Ziv Navoth helps organizations improve their performance by creating a unique and valuable position in the marketplace. He is the Managing Director of Verve! (www.verve.nu) and can be reached at ziv@verve.nu.

Copyright 2006, Ziv Navoth. Feel free to print, quote, or forward, so long as you credit me.

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