2016 May News

The yin and yang of managing customer relationships, Tellurian example

We might be good at building relationships, but that doesn't mean we are good at building customer relationships. Unlike personal relationships, customer relationships have to be anchored in a business model. If a company bends too much to a customer's demands, it will become unprofitable, unfocused, and unsustainable. 

In a recent interview, the productive tension of supporting customers while staying true to the company's purpose was displayed by the founders of the new LNG company Tellurian. Both the founding partners have decades of business success which show them how to navigate the currents of the marketplace. 

I love the final emphasis on patience: if we fulfill what we promised, customers will rely on us. 

Houston Business Journal: Meet LNG’s new dynamic duo: Charif Souki and Martin Houston, 2016-Apr-8 by Suzanne Edwards

What is the key to successful LNG marketing?

Houston: Credibility. It’s how you treat the customers. It’s a relationship business, and if there’s a routine that the customers have or process they want you to go through, you have to be mindful of that. One has to work it through with the customers and get them confident. They’re not paid to be risk-takers. They’re paid to bring consensus in their own organizations, and you have to help them do that. It can be a bit of a slow dance sometimes.

Souki: I have a different opinion than Martin on this one. Over the last six or seven years, I’ve come to realize something very important about our business. We provide what it takes to light up your homes and offices, heat up your homes, provide your fertilizer and do things that are absolutely essential for the growth of any one of our customers. So, ultimately, they don’t have a choice, which is why I always advise people to be patient. If you are sure you are the lowest-cost provider, they’ll have no choice. They will come to you.

Intertwined trees, photo by John Fowler (snowpeak) on Flickr

Loyalty is not quickly served, even at quick-serve restaurants

Comparing loyalty programs between McDonald's, Starbucks and Dunkin' Donuts is deceptive because they are driven by the customers who already exist. All the major chains quick-serve restaurants have to have a loyalty program because customers expect it. And they have to keep an eye on innovations the competitors are developing, especially if they can be easily copied. BUT they also have to provide a loyalty program that is tuned to their unique customer base. 

Brand preference for a quick-serve restaurant is not primarily driven by the loyalty program. Location, menu, and atmosphere are all probably more important. Loyalty programs are developed to strengthen customer activity, to make it easier for customers to advocate for the brand, and to limit shopping around. 

When designing a loyalty program, we have to segment our customers and decide which behaviors we want to influence. Starbucks recently changed their mind about which customers get the best rewards, and although some customers were hurt, we expect that Starbucks made the decision based on solid evidence about the long-term health of their business. 

The best loyalty programs are grown slowly, by paying attention to how customer behavior develops. 

Nation's Restaurant News: McDonald's building loyalty program, 2016-Mar-9 by Jonathan Maze

...Andres said that McDonald’s new loyalty program would be “more robust,” and would be linked to consumer purchases, based perhaps on the number of visits customers make to the chain’s restaurants every month. Customers would likely have a limited time to take advantage of whatever deals the company offers through the program....

Andres noted, for instance, that a loyalty program could entice customers to come in after they’ve been absent for a while. McDonald’s could use information it has on those customers’ buying habits to do the convincing. 

“If we see a thawing off, we can entice them with their favorite products to come to the restaurant,” he said. “That’s the future of customer relationship management. We think it can be a significant sales layer for us.”

Photo by Miroslav Vajdic on Flickr

What we can learn from the Amazon commitment to fulfilling the brand promise

Amazon's popularity is something of a mystery to me. To me it just seems like a high-tech version of Walmart, creating low prices by exploiting workers and suppliers. I don't deny that Walmart has made life better for millions, and I know that Amazon relieves stress for its customers. For those of us trying to consume less and more thoughtfully, Amazon and Walmart seem like companies to avoid. 

However, I have to respect Amazon since it ranks so highly in customer loyalty studies from Brand Keys and Temkin Group. A recent Harvard Business Review article does a good job of explaining why. It's not that the prices are so low and the convenience are so great; it's that the business operates with fearsome consistency and dependability. When everyone in the company understands and commits to provide what customers expect, we have a brand promise delivered, the most important step of our loyalty pledge

Harvard Business Review: Your Company Culture Can't Be Disconnected from Your Customers, 2016-Mar-18 by Dave Ulrich and Wayne Brockbank

To create a winning culture, it is not enough to have or recognize cultural artifacts... or to shape how people feel, think, and act based on internal criteria.... Rather, a winning culture ensures that people feel, think, and act consistently with promises made to customers and other key stakeholders.... [emphasis added]

Ulrich and Brockbank call this the "the outside-in approach to culture."

Step 1: Define the right culture. Leaders should begin to define the firm’s ideal culture by asking, “What is the shortlist of what we want to be known for by our best customers?”...

Step 2: Translate the ideal customer-centered identity into behaviors for employees. Employees think and behave so that the company’s brand is reinforced in the perceptions of customers and shareholders....

For Amazon, the focus on disciplined customer-centered innovation sends a clear message to potential and current employees. As their website puts it, “If you love to build, to invent, to pioneer on a high-performance team that’s passionate about operational excellence — you’ll love it here.” This agenda signals to employees what customers expect from Amazon. In a recent workshop, all 350 participants had purchased something from Amazon but none really cared about their emotional experience as much as the timely execution of their order. These customer expectations (brand promises) shape employee behavior around operational excellence.

Step 3: Design the right processes, practices, and structures for supporting and encouraging those behaviors. ... [Use] processes, practices, and structures include staffing, training, promotions, measurement, rewards, organization structure, work design, information management, physical arrangements, and leadership development [reinforcing the] employee actions that align with customer expectations....

Min Hsuan Lo photo by Sage Ross from Flickr