Developing Loyality Requires a Culture Built on Feedback

Developing  Loyalty Requires a Culture Built on Continuous Feedback.

The world has changed and this statement rings true.

The question is, how do you Do a culture built on continuous feedback if you have never experienced this type of culture in the past?  Does this just sound like an out-of-control level of feedback that makes getting anything done impossible?  Or, can an organization use this type of culture as the edge to not only create greater Loyalty, but to also create an operating model that is faster to change, makes less operational mistakes, and responds to the current economic environment in a timely manner?

This transformation is happening. It is being accomplished for very little expense and, in most cases, over the long run it will reduce marketing/ communication costs, training costs, employee turnover, and create a working environment that responds effectively to all types of challenges without creating a crisis.

As if trying to create an internal culture built on continuous feedback was not important enough, with the rise of the social media and networking systems, you are now confronted with the fact that your business is already being discussed and judged on-line. As our environment becomes more and more connected – Google, Amazon, Craigslist, Yelp – everywhere you look, consumers are rating products and telling their experiences about buying and using your products.

Developing a Culture Built on Continuous Feedback

Changing Your Basic Approach

Step 1

DO BEHAVIORS FOLLOW ATTITUDES or DO ATTITUDES FOLLOW BEHAVIORS?

As Americans, we have developed the art of presentation – or Selling.  People get ideas and they learn to be successful by becoming great presenters, and becoming experts in using PowerPoint.  Just think of those two words:  Power, Point – not much listening or dialog in that concept.

For 4½ years, in the 80’s I was the Training Director for a Regional Department Store (The Bon Marche) and I had two major challenges:  First, to change the selling culture from a clerk environment to that of a professional customer service Selling culture, involving 40 stores and over 5,000 sales people.  Second, I was charged with creating a greater sense of teamwork in each of the 40 operating units. These two great projects were accomplished with 1980’s management concepts and no e-mail technology.

We will start with the Customer Service effort.  As in the 1970’s and 1980’s, there are six ways a retail store can differentiate or position itself – Price, Value, Quality, Selection, Service, and Cool.  It wasn’t until Nordstrom got a major amount of press on its return policy (the story of how Nordstrom took back car tires) that the nation started paying attention to Customer Service.  The book was called “The Nordstrom Way”.  It was with this new awareness about the Loyalty factor of Customer Service that the retailers and eventually all organizations became engaged in adding Customer Service to the management focus.

So, there I was, given the challenge to take the local department store (located across the street from Nordstrom) into the Customer Service world.

The Bon Marche had been the Value department store and our company tag line was “Where the Choices Are” – which meant the company focused on Value and Selection, and now we were going to add Service.  The Chairman of the company had an experience that put him on the path to change the company’s Service Culture.  He had gotten sick while traveling to New York City – and, not having anyone with him, there he was – sick and alone.  He went to the hotel store to purchase some aspirin, and the young employee noticed he was sick and then took it upon herself to check in on him several times a day for the next few days.  This became the Chairman’s favorite story and, during the 4 years of this Service effort, he told it whenever he could.  He called this “Customer Service from the Heart” and it was the passion that drove the decision to enter the new world of Customer Service.

“Customer Service from the Heart” is about an attitude, and asking 5,000 sales people to have this attitude was a great starting point – but, in the world of retail, company policies and managers’ behaviors and focus have the major impact on someone’s attitude.  So, the first thing that had to change was the company’s Return Policy.  You see, to return something to The Bon Marche’ in 1983, a sales associate would have to get a department manager to sign the return credit and then the customer would have to walk to the cash office to get their $$ back.  So much for customer service and good attitudes.  On top of this return policy, the company had a very strong “security” attitude – which means the inventory was closely checked at least 2 times per year and departments that had excess inventory shrinkage would be given extra management oversight.  Again – not good for customer service or service attitudes.  So, this “protect the merchandise” and “make it hard to return” mindset was a problem for SERVICE FROM THE HEART.  How could you compete with Nordstrom (who took back car tires) when our customers had to go to the cash office with two signatures to get their $$ back?

This became the birth of the “I Guarantee It” cultural change – first, every sales person now would have the power to take back the merchandise, and we changed our “clerk” title to “associate”.  So, all of a sudden, we told the organization it was “Customer Service from the Heart”, you are now an Associate, and each of you has the power to deal with your customers without a management signature.  Wow!  What a shift – and, for the first 9 months no one believed it was true.  There were still inventories and security and, while a few wanted to  believe, there was this wait-and-see approach – “I don’t want to be the first to screw up”.

As we messaged, trained and met with teams of employees, we also decided that we needed a Mystery Shopper Program which we called “The Hanger Report”.  It was an opportunity to design a survey and then pay a “professional” shopper to come into each of our stores and give a rating for that shopping experience.  Although mystery shoppers are still relevant in retail used today, this started as a total disaster.  Stores would get between 4 and 12 mystery shops per month and, although the shops were random, the ratings would always include the date, time of day and department shopped.  So, when the scores came out, it was obvious to store management which sales associates had received the bad scores – and then of course the department manager used this to tell those associates about the score.  Now the entire store looked at these shops as just another typical management hammer – we didn’t trust them – we just found another way to pressure and make the associate’s job more difficult.  So, here we were trying to drive “Customer Service from the Heart”, and our mystery shoppers were showing our associates that we had no heart, we just had mystery shoppers.

Well, one morning I got an idea that turned out to be one of the lessons that I still use today – and is the most important foundational element of any cultural change.  Management needs to transfer the ownership of the change to the employees – until they own it, it is just another “best practice” (or, as we used to say, a BOHICA – or “bend over, here it comes again”).

The idea was to have all 5,000 employees take our Mystery Shop Survey and go shop a store of their choice, and then rate that store’s service on our standard.  I had thought that the real problem with our effort was the fact that the associates really did not know our standards or expected behaviors.  Instead of more training classes, I wanted to have them experience the shop from the customer’s point of view.  You can imagine the reaction I got when I presented this idea to my boss (the Senior Vice President of Human Resources).  But, to my amazement, a week later he said it was approved.  We would give all employees one hour of time to go shop a competitor.  Everyone in all parts of the Company (from sales associates, to the distribution center, to the corporate offices) was given one hour to shop a competitor, then hold a meeting to discuss their experience and report to their boss – so on and so on, all the way to the Chairman.

The results of this all-company activity were incredible.  Not only did every employee gain an understanding of our service/behavior standards, almost like magic – the Company got PRIDE.  You see, they found out that we were better than most other retailers – and, in fact, if you went to Nordstrom and were not “dressed right”, you got ignored.  Nordstrom people are on commission, so “look right” and you get lots of attention, “look wrong” and you get ignored.  The attitude changed when the entire Company understood the “behaviors” of our customer service expectation, and decided to not only own those standards but believe we were better than the competitors.

There was also another lesson that now is even more important – as the front-line employees held the meetings to discuss their experience, the managers were put in a place to listen – and the associates, in many cases, were given their first opportunity to give input about how to improve the service.  What a concept – our management team listening to the employees and receiving quality input on how to make things better.

Four great LESSONS came from this experience:

1. Cultures don’t change until the people in the culture own the change;
2. It’s all about behaviors;
3. Pride is required to have passion;
4. If you want to get better, management needs to listen.

So, we spend a lot of time figuring out how to change cultures and improve attitudes.  How do we compete in this new world?  When it is all said and done, these four Learnings may say it all.

  Developing a Culture Built on Continuous Feedback

Changing Your Basic Approach

Step 2

IS IT ALL ABOUT THE LEADER or ALL ABOUT THE TEAM?

The Softer Side of Management Training

Throughout my entire career, I have always been interested in the role of management in creating and sustaining organizational cultures.  As is always stated, the culture of an organization begins at the top and its impact on the entire organization is substantial.  What the senior leader pays attention to, the questions they ask regularly, whether they are seen outside of their “power place”, do they seem to like people, who gets promoted, and do they seem to know what they are talking about – all have a huge impact on how the organizational culture develops.

At the time I was given the challenge to change the Customer Service Culture of The Bon Marche, I was also to improve our Management Training Program – and to especially focus on our stores’ organization.  Again, this was the middle 1980’s and the hot books were all about the softer side of management – people skills.  Management is always about getting/delivering numbers – top line sales, margins, efficiency, and all of these focused on delivering bottom line profit.

In the 1980’s, we were still in a period where, although quarterly reports were important, America’s  companies focused more on the Annual Performance.  So, there I was, looking at a 40-store department store chain with a highly developed “operations culture”, trying to bring on a Customer Service enhanced culture, with Store Managers who were not always the warmest/kindest people in the world.  The culture that got them promoted wanted quantitative results.  The Company would always do its planning by establishing the profit margin it wanted, projecting the top line sales, and then put all of the operating expenses into the middle.  In other words, since store labor was the largest expense category, the company’s business operating strategies always added up with the final decisions being made around the expense associated to people – the # of people, production per hour, full-time vs. part-time – all of those business decisions that create human resource issues.  Department stores were open in those days 7 days a week up to 12 hours per day, and this always meant lots of people with lots of personal issues.

There, in the middle of the 1980’s, we were changing cultures – adding Customer Service, improving attitudes, improving profits, and trying to change how management worked together.

The Effort of Team Building

The common leadership and management philosophy was: we need better teams and more management self esteem.  We all had distinct personalities and, based upon the work of  Carl Jung, everyone was learning their Meyers Briggs Personality profile, or their red/blue/green management profile, or the Quadrant Personality where you are a Controller, Persuader, Amiable, or Analyzer – what were your strengths, your weaknesses, could you learn to understand your impact on other people with different styles, could you as a manager understand that great teams had a diversity of personalities, and it was NOT a good thing to only hire and work with people like you.

And, of course because of the way the historical retail culture managed and rewarded, was the Store Manager was really the king?  You see, in the 60’s and 70’s, stores were very independent and, as long as they made their numbers, were left alone.  But starting in the late 70’s and throughout the early 80’s things had changed.  More corporate oversight came to be the norm.

Of all the Store Team Building Seminars I did, I will never forget Bellingham.  You see, Bellingham had always been a very independent branch store.  The Store Manager had just changed, replacing a man who had run the store for over 40 years.  And, of course the younger aggressive “I like my new power” new Store Manager had the store in a state of crisis.  And, if that wasn’t enough, a brand new mall had just opened 4 miles up the road and we now had 2 stores in the city – the old downtown store and the brand new mall.

I had developed a 2-day program that was designed to help bring 10-25 people together (the normal size of our store management teams) to learn some personal growth, stress coping, and team goal setting skills which, along with this new effort at enhancing our customer service effort, would work together to increase the company’s sales and profits.

Paul, the new Store Manager, had been counseled several times that he was being perceived as too forceful and judgmental, and did not give his managers any say in their work.  As usual, the first day was almost totally devoted to having people discuss their personality patterns – were they forceful and goal driven, were they very analytical requiring them to think before they acted, were they very amiable always hoping to help others just get along, or finally, were they persuaders – selling, selling, selling – having a good time.  The management group was similar to almost all of our stores – the Store Manager was a Controller, the financial person was an Analyzer, and the rest of the team were Persuaders or Amiable – all struggling to understand all of these changes.

After people did their profiles, the first day of the seminar was always the best.  In many cases, this information was very powerful.  Often, this was the first time in people’s lives they could understand how and why they felt the way they did, made decisions the way they did, and got frustrated at other team members the way they did.  As was the normal case, by the first afternoon I would have a room of people working in the same building, working for the same company, discussing the different ways their relationships were working, and – if it was going well – we would start to discuss how things might improve if they used this information.

It was in this situation that my most interesting discussion of all these efforts happened.  You see, Paul was an off-the-charts Controller and, although he could understand what was going on, he had no interest in changing.  In fact, he became more convinced that if there were just more people like him, things would be better.

As I have reflected on this experience, and view the total effort of those years using the best thoughts of the decade, I am struck with the idea that, in both my customer service and team building efforts – (the idea in those days was to try to change people’s attitudes, which would improve their behaviors, i.e. “customer service from the heart” –) the idea that if you had the right attitude, behaviors would follow – the same held true for team building: give people empathy, that we are all different and we need to understand ourselves, understand how our styles impact others, and with the right attitude, teams would get better.

Well, Paul didn’t even pay lip service to these concepts.  As I reflect back on the impact I had on all of these organizations, people did have personal breakthroughs, but I don’t believe they were sustained because the goal of the seminars was to focus on Attitudes not Behaviors.

As with my summary of my efforts with improving Customer Service, cultures do not change until:

1. People in the culture own the change
2. It’s all about behaviors
3. Pride is required to have passion
4. If you want to get better, management needs to value listening

The Customer Loyalty Experience System

The Customer Loyalty Experience System is a comprehensive approach based on aligning all behavioral aspects of the organization’s culture toward a consistent and engaged Customer Experience by effectively receiving, managing, and responding to continuous customer and employee feedback.  The quality of the customer experience is vastly improved, the level of employee ownership will be greatly enhanced, customers and employees will have a greater sense of pride in the organization, and the organization will be able to respond and change much faster – giving it a significant competitive advantage at surviving and thriving in our current business environment.

How does this System Work?

All great systems work because they are easy to understand, easy to execute, and it’s easy to determine how they are working or measure the results.

Recently I have had two experiences which, coupled with my work experience from the 1980’s (Customer Service from the Heart and Teambuilding), help to confirm the idea that BEHAVIORS DON’T FOLLOW ATTITUDES—ATTITUDES FOLLOW BEHAVIORS – and it’s just not that complicated.

Experience #1         Virginia Mason – Helping to Re-Do a Medical Clinic

I was asked by my personal physician if I would participate in a one-week brainstorm to help totally re-work a Virginia Mason Medical Clinic.  Because the Kirkland Clinic was moving to a new location, there was a chance to radically reorganize the way the Clinic worked.  Virginia Mason had a very large investment in looking at their business (a hospital and 12-15 clinics) through the eyes of Toyota Production Management method to re-engineer the way the Medical clinic operated: lean, efficient, and very user driven.

We started this 1-week brainstorm with an end in mind – greater efficiency for everyone, including the doctors, nurses, specialists, and last (but that is what I was there for), the customer.  In the end, it was an amazing week.  For 5 days, 25 people – doctors, nurses, clinic manager, architects, everyone in the business – went through this very formal process to:

• Cut the number of steps a doctor and nurse walk by 50%
• Manage the supply of all the medical things needed to do their work with a just-in-time approach
• Let the patients become a bigger part of the system

The basic tool to design the space was a concept they called the “Fish”, which really was just a process of engagement about thinking through a transaction and defining all of the stops that the patient needed to do and matching those transaction points with what the clinic employees had to do.

In this diagram, there are two sides – the patient (customer) and the organization.  The steps involved for each side are listed, to examine efficiencies.  For example:

• Patients have to park, so the Clinic had to think about what getting into the parking lot was like, and how big the stalls should be for their patients, and how do older people get out of their car, then get into clinic, etc.
• The next transaction interaction was checking in – what does the patient do and what could be done to ensure that when they showed up,  this step could be more efficient.  When the appointment reminder call was made, what could be done to ensure their visit went well – to be both efficient, and create an outstanding experience.

On and on – every process in the patient’s visit, every process in the clinic business operation went through a “fish” process.  Notes were kept, priorities were established, and policies, procedures and behaviors were defined.

The VM Kirkland Clinic opened in March of 2009, and it is starting to do most everything it set out to do with regard to improving efficiency.  As expected, some of the older patients are having some trouble – one of the efforts was to eliminate the clinic waiting rooms – efficiency means no waiting.  As the patient representative, I was not old enough – turns out that older patients often go to their medical clinics weekly – and they like to talk to other weekly visitors to the clinic.  Oh well, so much for efficiency.

Learning #1 – You can look at any operational transaction and create a “fish” approach to understanding what behaviors, policies and procedures must go right every time for the user to have an outstanding experience.

Learning #2 – You can have your employees and customers involved in defining “the fish” and add real insight and valuable consciousness to how things should work more efficiently, and how to create a dynamic and measurable experience for the user.

Learning #3 – This process transfers ownership to the employees – they become vested in not only how it should work, but also as the behaviors become the work standard, the organization has employees that champion the cultural change.   Management is listening to the employees and customers before they try to change the culture.  Attitude follows ownership of the behaviors.

Experience #2 Tully’s Coffee (Where I got to test my long-time belief)

I had been the head of Alumni Relations for the University of Washington for over 5 years and it was a wonderful experience.  During the last 1-1/2 years at the UW, I was asked to join the Tully’s Board because of my retail background. Ultimately, I left the University to become CEO of Tully’s.

Tully’s is a coffee company that roasts, wholesales, retails in (at the time) over 90 stores in 6 states, and does office coffee through distributors.  The company had about 900 employees, most working at the retail stores.

There are lots of learnings from Tully’s, but this story is about “clarity, alignment, and passion”:  How do you change a culture, grow the business, and create a store environment that creates loyal customers?  There were many things – almost everything needed to be re-done – the stores, the chairs, tables, refrigeration, the employee benefits, the management culture, the products (not the coffee), and most of all – the Customer Service Culture.

One of the major shifts we made in our hiring practices had to do with a long-time frustration of mine.  We hire people by first writing a job description and then we choose the people to do our job.  Once you are hired to do that job, you are then told that you will be reviewed – and in almost every case, the review covers different expectations than the job description.  So, we hired you for one thing and we review you for something else.  In the service business, it gets worse – we then have some form of customer/shopper review that, in most cases, is again different from the job description and the performance reviews.  So, as a management person,  the ramifications of this compartmentalized analysis of the job performance, is that the whole thing becomes political – one person’s opinion vs. another person’s opinion.

I decided that I wanted to try something I had always thought would work – write the job description so that a manager could review their team on what they were hired for.  And then I got lucky!

In walked Max Israel and his product Customerville.  Customerville is a 24/7 behavioral feedback system where the customer scores their view of behaviors that must go right every time for the customer experience to be great.  Customerville also allows the customer to give comments to the company and, if the comment is bad, it instantly texts messages a management person, and if the comment is very positive, management can print a customer-gram to give to the employee or team of employees.

So here was the perfect integrated system.  You write the job description based on behaviors, make those behaviors a central part of the review forms, and let the customers rate those behaviors as well.

What an amazing outcome:

• First – there was clarity.  These are the behaviors that must go right every time, and you get continuous feedback on how the team of employees is doing.
• Second – the company was asking for comments and, in today’s world, customers have comments.  If it was a bad experience, the manager got to go for an instant recovery, and if it was good, the employee or team received recognition.
• Third – Politics disappeared.  It no longer was just a bunch of discussions about what I thought vs. what you thought.  Now it was what the Customer thought.
• Fourth – Teamwork – no longer did the worst performing employee define what would management tolerate.  Now the employee team pulled the poor attitudes/performance up or forced them out.  It was the store team’s scores, not a manager’s opinion.  “Teamwork” comes from Team Members, it does not come from Management.

Now, a thought about receiving Customer Comments

I can easily tell if an organization really wants to hear from its customers.  I just look at how deep into a company’s website I have to go it is before I find out how to contact the company.  As soon as I find the “contact us”, I look at how I get to do this.  In most cases, it’s just an email address or they give you a list of all the senior executives.  Having access to the senior executives is much better than just an email, but again this means that now the senior executive is the one who gets to hold the power and, in almost all cases, these comments are about something bad.

Just think of the power of using “tell us what you think” or “we would love your feedback” as something that is at the top of the website.  It is promoted as a primary message in all of the company’s communication.  What if customers actually liked giving you ideas and ways to improve your business?  What if your business was driven by customers who “believed” they were part of the Team?

This is very powerful stuff.  “Word of mouth” is and always has been the best way to grow your business.  What better way to grow this, than to get customers involved.  The customers become your eyes and help find the best new products, better policies, and a more efficient operation.  And, in today’s world of social media and social networking, your company embraces this engaged culture, instead of ignoring it or hiding from it.

Developing  Loyalty Requires a Culture Built on Continuous Feedback

Conclusion

At the start of this, I asked the question – if you have never experienced this type of culture, can it be created or is this just an out-of-control level of feedback that makes getting anything done impossible?

Well, my answer is that building a continuous feedback culture is very straight forward, and will produce better results on both the top line (sales), as well as on the bottom line (expense control).  Here is a brief summary of the steps:

1. Make a conscious decision that you are going to develop a culture that is build on listening, not telling.
2. Take every transaction between customers and employees and do a “fish” that helps clarify those key behaviors that must go right every time.
3. Re-do your job descriptions and make sure all employees have defined behaviors that must go right to provide outstanding customer experiences.
4. Re-do your review system to include those critical behaviors as something that managers and employees talk about at least two times a year.
5. Develop the right questions that will provide a 24/7 feedback and customer comment system to make sure employees get direct behavioral feedback weekly on these critical behaviors.
6. Move “we want your feedback” to the top of the communication and marketing efforts.  Drive the customer to engage with your business.
7. Make sure the survey reports reports and customer comments are a weekly part of your key management meetings.
8. Make sure everyone knows that you are paying lots of attention to this program.
9. Continuously ask your employees if they have any ideas that would help improve the business.
10. Be liberal with your team praise – make sure doing well at the most things is rewarded.

My 4 great Learnings from my past experience are:

1. Cultures don’t change until the people own the change.
2. It is all about behaviors.
3. Pride is required to have passion.
4. If you want to get better, management needs to learn to listen.

Introducing the Customer Loyalty Experience System

A comprehensive approach based on aligning all behavioral aspects of an organization culture toward a consistent and engaged customer experience – by effectively receiving, managing, and responding to continuous customer and employee feedback, the quality of the customer experience is vastly improved.