• by Kerry Bodine , Harley Manning , September 28, 2012

Two Forrester researchers explain the power of putting customers at the center of your world

Over our past 14 years of research on customer experience, we’ve asked hundreds of executives at some of the world’s top companies about their organizational barriers and how best to overcome them. They assert that culture has the single biggest potential to drive customer-experience transformations.

Companies need to socialize the importance of customer-centricity through storytelling, rituals, and training.

Some Best Buy stores give [job] applicants a New York Times crossword puzzle, an Internet connection, and an hour to see how far they can get. The goal is to test applicants’ curiosity and facility to learn, key traits in helping customers.

On a typical day, you might see 24-year-old Carlos Gonzalez sporting large white-rimmed sunglasses, a plaid scarf, a lip ring, and a Mohawk. His appearance is important to him, but it doesn’t matter to the U.S. Cellular customers who Carlos talks to every day on the phone. As a customer relations associate in the company’s retention department, it’s his job to retain customers who want to cancel their mobile service.

“It started out pretty normal,” says Carlos, referring to the day in October 2011 when he got a call from Florence, a woman in her forties. She had called to cancel her service, just as thousands of customers had over his past four years on the job. But this call was different. A few minutes into the conversation, Florence explained that she was undergoing chemotherapy treatments and that her medical bills were piling up. She just couldn’t afford her mobile phone anymore.

“She was crying, and she told me that she had never smoked a cigarette in her life and that this had come out of nowhere,” recalls Carlos. “She was brave enough to tell me that she was losing her hair.” Carlos, who lost his grandfather to cancer a few years earlier, could relate to her pain. “It bent my heart.”

Carlos told Florence that he could help her out with U.S. Cellular’s bill relief program, which gives customers in need a 30 percent bill reduction for six months. “She really did need the phone for calling her doctors and setting up appointments,” he says. Florence was incredibly thankful for the assistance. Upon learning that she could keep her mobile phone, the tears flowed faster. Carlos started tearing up, too.

Then he did something that we’re willing to bet no other customer service rep has ever done. Carlos offered to shave his head. “I didn’t want her to feel alone,” he explains. “I told her that I’d do it in her honor and send her before and after pictures. She said that she was grateful and that it would mean a lot.”

It would have been easy for Carlos to renege on his promise after he hung up the phone. After all, he’d spoken to Florence for 15 minutes, tops. But he shaved off his Mohawk the very next morning. “I took the photo and sent it to Florence. It felt so good. It felt like something I needed to do for her.”

Carlos’s story is almost unbelievable. How, in the span of 15 minutes, could he possibly have created a connection with a customer — a complete stranger — so powerful that he would shave off his impressive mane for her? Certainly, you can point to Carlos’s personal character and kindheartedness. But he’s quick to shift the focus to u.s. Cellular: “The culture here is very customer-focused. I’ve gotten a lot of encouragement over the years to do good for our customers.”

“U.S. Cellular is truly unlike any other client I’ve worked with,” says Jeff Lewandowski, a partner at Andrew Reise, a customer-experience transformation firm that’s been working with the mobile carrier since 2004. “I’ve been through a lot of places where people put up signs that talk about taking care of customers. But the signs are just words on plastic. They don’t really reflect how the companies operate. Carlos’s story is a demonstration that these guys live it and breathe it every single day.”

You Need to Build a Customer-Centric Corporate Culture

We’re not suggesting that head-shaving become the norm at your company. We’re talking culture here, not cult. And Carlos’s date with his razor is obviously an extreme example of customer empathy. But it’s indicative of a set of values that U.S. Cellular has tightly woven into its standard operating procedures. Because those values have been institutionalized and continually reinforced, Carlos’s supervisors trust that he’ll do the right thing for customers — and, clearly, he does. Not because he’s told to, but because he really wouldn’t consider doing anything else. You can’t clone Carlos. But you can help your own employees to think and act in customer-centric ways by actively working to shift your corporate culture.

How important is this? Over our past 14 years of research on customer experience, we’ve asked hundreds of executives at some of the world’s top companies about their organizational barriers and how to overcome them. Year after year, they’ve dismissed the idea that organizational structure and reporting relationships can solve customer-experience problems. Instead, they assert that culture has the single biggest potential to drive customer-experience transformations. “Culture is one of those squishy topics that people have a hard time getting their heads around in a business context,” says Paul Hagen, Forrester’s expert on customer-centric cultures. To make this discipline more concrete, think of creating a system of shared values and behaviors. Customer-centric values are the building blocks for reprogramming your corporate DNA. And behaviors are how you turn all of the practices from the other five disciplines — strategy, customer understanding, design, measurement, and governance — into habits that your company just can’t kick.

So how exactly do you instill new corporate values and change employee behavior? First you need to overhaul your hiring practices so that you get customer-obsessed people (like Carlos) in the door.

Second, you need to socialize the importance of customer-centricity through storytelling, rituals, and training. Third, you’ve got to reinforce new values and behaviors through informal and formal rewards. Tie it all together with a steady cadence of communication that never lets employees forget why they’re doing all of this in the first place.

Hire for Customer Passion and Cultural Fit

As companies get serious about customer experience, some have started by either redeploying frontline employees that aren’t committed to customers, or easing them out the door. But many firms still aren’t prepared to take that kind of action. No matter your approach, screening candidates for customer-centric values as part of the hiring and selection process is one of the most effective ways to shift the overall makeup of your workforce. Why? Because finding people whose values and personalities match your target culture is often easier than changing the underlying beliefs of current employees.

In addition to probing for customer-centricity, you also need to screen potential candidates for the specific skills they’ll need to deliver on the organization’s customer-experience strategy. For example, some Best Buy stores give applicants a New York Times crossword puzzle, an Internet connection, and an hour to see how far they can get. The goal is to test applicants’ curiosity and facility to learn, key traits in helping customers who have a broad range of ever-changing questions. And trendy W Hotels Worldwide encourages employees to recruit staff from hip local bars and restaurants and to look for people who naturally exhibit actions in line with the hotel’s Whatever/Whenever service obsession, which promises to provide guests with “whatever you want, whenever you want it.”

Socialize the Key Behaviors Required to Deliver a Great Experience

While the hiring process focuses on finding people with the right personality traits and values, socialization establishes new habits. Office Depot’s North America president Kevin Peters says, “You can’t just wave a magic wand and change behaviors.” That’s true. But over time, you can embed new standards for employee behavior through a combination of storytelling, rituals, and training.

Storytelling

Scientific research shows that human brains are wired to tell stories. Stories have been the primary vehicle for transmitting culture and community values for thousands of years. They are a key building block in reshaping your corporate culture, too. Storytelling highlights real instances of customer-centric behavior and gives employees tangible examples of thinking from the customer’s perspective. Zappos, the online retailer that’s become famous for its customer-centric culture and service, has a “Wow Library” of praiseworthy recorded calls that its customer service reps can tap into at any time for inspiration on how to better open a conversation or explain a company policy. And Sage North America, a developer of accounting and human resources software for small- and mid-sized businesses, invites customers to company meetings to share their experiences dealing with Sage.

Because storytelling gives the highlighted employees public kudos, it also encourages top performers to keep doing what they’re doing. As Carlos told us the details of his head-shaving incident, it quickly became clear that he never expected to get any recognition for his actions. In fact, it wasn’t until coworkers started inquiring about his missing locks that Carlos confessed. But after that, it didn’t take long for his story to spread across U.S. Cellular. His supervisor shared it with the call center’s director, who posted it on the company’s intranet site. “At first I didn’t know. Then someone said, ‘Hey, you’re on the Web site!’ They showed me the pictures and it was exciting. It was a good feeling.”

Rituals

Rituals are activities that you integrate into employees’ regular routines to guarantee great performance. For example, the Ritz-Carlton Hotel Company has a daily 15-minute lineup used globally across all of its properties. This ritual includes a storytelling session, during which its employees, who are referred to as “Ladies and Gentlemen,” share the great things they did for guests the day before. And Disney encourages its employees to take five minutes from their normal daily duties to do something special for guests. When an employee at one property heard that a guest wasn’t feeling well, she brought chicken soup up to her room.

Rituals aren’t just for frontline employees, and they don’t have to happen every day. At online discount fashion retailer Gilt Groupe, customer-centric rituals extend to the behind-the-scenes teams responsible for developing Gilt’s Web site and mobile and tablet apps. Michael Bryzek, Gilt’s co-founder and chief technology officer, explains, “We celebrate technology that improves the customer experience, and we kill technologies that are no longer relevant.” And when he says “kill,” he means it. The company holds funerals for dead software applications.

Gilt’s original content management system (CMS) — a complex program that helped the company cope with the onslaught of traffic it gets every day from 12 to 1 p.m. EST — was the first to go.

When the engineering team rewrote a new cms that made the site much faster for customers and deleted the old one from its code base, they celebrated. Gilt employees wrote poems and eulogies, erected tombstones, and deejayed a festive party in honor of the first CMS’s demise.

When asked how the funerals help to build a customer-centric culture, Michael replies, “When things are useful for customers we invest in them, and when they’re not, we invest to get them out of here.” This sends a strong signal to Gilt’s employees that they’re expected to take ownership for projects and technologies that deliver a great experience. “It also strips away the ego,” he says. “Just because you’ve created one great thing doesn’t mean that you’ll be better at creating the next. We want every single employee to express their creativity and feel empowered to create something that’s great for customers.”

Training

Training programs are an effective way to communicate your customer experience strategy and share customer insights. Training also helps employees develop the specific skills they need to participate in human-centered design projects, interpret customer-experience metrics, or simply do their regular jobs in a more customer-centric way. Many companies think about training primarily as an activity for new employees — and certainly, onboarding is a fantastic time to introduce employees to your customer-centric culture. But it’s never too late to teach current employees new tricks.

Training programs often start at a grassroots level. However, to make a material impact on your corporate culture, you ultimately need to formalize your training initiatives. For decades, American Express had held formal customer-service training sessions that focused primarily on industry- and company-specific technical skills and policies. But several years ago, a strategic shift ushered in by Jim Bush, executive vice president of world service, dramatically changed the nature of Amex’s training programs. Jim explains: “We started asking ourselves, do we want to be a transaction-based company where customers call in, we handle calls with scripted responses, and wish them well? Or do we want to be a relationship-based company that drives engagement with customers?” The company’s leaders chose the latter, and the resulting training programs helped its Customer Care Professionals (what Amex now calls its phone agents) forge deeper emotional connections — not only with customers, but with the company as well.

In the first phase of the training program, senior leaders talk about the company’s history, milestones, transitions, market opportunities, and public perceptions. Rick Bottner, vice president of global telephone servicing, explains, “We create an initial feeling for our employees that this is a high-quality company. We discuss our values: how we work, how we treat each other, and how we live in our communities. We make the connection that it’s more than ‘you come to work.’ It’s about living a role in your life and how this company can enrich that as well.”

The second phase focuses on customer relationships, and starts with heart-warming stories of how Amex reps have helped its card members over the years. Care Professionals then learn skills such as actively listening to what the caller is saying and assessing the caller’s mood, not just relying on the demographic information that’s in the caller’s customer profile. They also learn how to help customers understand the value of their relationship with American Express by explaining relevant card benefits. Since implementing this new training program as part of its broader service reinvention, Amex has watched metrics like average card spend and willingness to recommend increase significantly.

Reward Employees to Reinforce Customer-Centric Behaviors

Unfortunately, many companies make huge investments in hiring and training only to inadvertently encourage employees to focus on the wrong things. How? They create operational targets for frontline employees instead of basing their incentives on the quality of the service they provide. And they reward behind-the-scenes employees for plowing through lists of internal tasks and projects while providing zero recognition for work that improves the customer experience.

To keep employees focused on what’s important, you need to back up your hiring and socialization practices with the right types of incentives. These include informal rewards that recognize personal achievement and formal rewards that compensate employees based on customer-centric metrics.

Informal Rewards

Informal rewards programs — like certificates, prizes, and perks — celebrate customer-centric behavior and don’t typically take a lot of time or money to plan or execute. For example, the Starbucks Green Apron awards program encourages employees “to create a positive environment by aspiring to be welcoming, genuine, knowledgeable, considerate, and involved.” There’s no nomination process for these awards — employees simply present them to each other at formal and informal plant, department, store, district, and regional meetings.

Circles, a concierge service for corporate employees, has an array of programs that reinforce the importance of going the extra mile for customers. For example, its Top Dog Award recognizes employees who help out with extreme requests. Recent winners include an agent who sent a caller night-vision goggles to help locate her lost cat, and another who helped a family find a place to stay after their home was destroyed by a natural disaster. In addition to awards, Circles agents can accumulate points based on customer satisfaction surveys and redeem them for prizes, including additional time off.

Informal rewards can also come in the simplest of forms: titles that convey to employees their true importance to the organization. In addition to Ritz-Carlton’s “Ladies and Gentlemen” and American Express’s “Customer Care Professionals,” firms with this approach include Starbucks, which calls its employees partners, and Disney, which refers to its employees as cast members. American Express also provides each agent with personalized business cards. Why do these things matter? They focus employees on their primary role — creating amazing customer experiences — and provide daily reinforcement of their value to the company.

Formal Rewards

Formal rewards programs structure raises, bonuses, and promotions around customer-focused metrics. Because they put hard cash in employees’ pockets and can significantly boost their career paths, these initiatives take more rigor to implement.

At Enterprise Rent-A-Car, no one with below-average scores on the Enterprise Service Quality index can move up to senior management. On the flip side, Zappos realized that many of its call-center agents were happiest in frontline jobs that provide direct customer contact. To ensure that these agents also have continued career-development opportunities, Zappos created optional three-month to six-month rotations in areas such as online chat, email, and Twitter that let high performers learn new skills and earn a bump in pay.

On the financial front, companies ranging from Philips Electronics to Maersk Line, one of the world’s largest container shipping companies, tie employee bonuses to Net Promoter Score targets. And insurance company Allstate ties its 401(k) match to a customer loyalty index for 80 percent of company staff, including all of its customer-facing employees.

While formal incentives can be incredibly powerful, you need to deploy them carefully. The processes, policies and technologies that make it possible for employees to deliver a great experience should be in place before you tie compensation to customer-focused metrics. Dangling the carrot of additional pay and promotions prematurely just isn’t fair and can lead to employee frustration.

Formal rewards are meant to reinforce customer-centric behavior, not be an end in themselves. Companies that jump straight to instituting formal rewards risk having employees focus on doing the bare minimum to get their payouts instead of working to develop customer-centric behaviors. Rick Bottner from American Express put it this way: “Incentives should be the cherry on top for providing superior service.”

Solidify Your Customer Experience Efforts with a Customer-Centric Culture

No matter how solid your strategy is or how carefully you design your customer experience, it’s simply impossible to plan for every single customer interaction at every last touch point. At some point, you need to put your trust in your company’s most valuable resource, its employees, to do the right thing for customers. Similarly, sharing customer insights, measuring the results of your work, and introducing governance programs will only get you so far if your company’s workforce — from your top execs down to entry-level staff members — isn’t ready to embrace new ways of working.

That’s why building a customer-centric culture is critical to your success.

An excerpt from Outside In: The Power of Putting Customers at the Center of Your Business. Published by Amazon Publishing/New Harvest, August, 2012.