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Joseph's Blog

Abundantly Moving Beyond Business Fear

Business Fear: Afraid of Being a Loving Business?

Long ago I embraced an idea that has had a profound positive effect on my business and, in turn, has helped me be more effective in the way I guide customer experience and leadership efforts on behalf my clients. It is a simple distinction found in a variety of faith traditions including Buddhism, Christianity, and even secular spirituality (e.g., A Course in Miracles).

The idea is that there are two diametrically opposed forces continually at play in our personal and business lives. Those forces are love and fear.

What’s Love Got to Do With Business

Before you question what love has to do with business and more specifically what it has to do with customer centricity and customer experience. Let me defer to a definition of love provided by an esteemed business academician, Peter Senge (author of the landmark book The Fifth Discipline – The  Art and Practice of the Learning Organization and a professor of business at MIT). From Senge’s perspective, love is demonstrated “concern for the growth and development” of those you serve. In essence, customer love equals an abiding commitment (shown through action) to helping customers meet their wants, needs, and desires. I abbreviate this further to:

Customer Love Means Helping Customers Achieve Success

The beauty of this definition is that it applies equally to companies that serve other businesses (B2B) as well as those that serve consumers (B2C).

Abundance or Shortage

Loving businesses operate from the perspective of abundance. Leaders in these companies assume fundamental good in others and promote the idea that “value creation begets reciprocal if not greater value.” Contrast this to fear-based businesses which assume that people typically can’t be trusted and that “inputs and outputs must be vigilantly monitored to assure profits are not lost.”

Like all distinctions, extremes on the continuum are typically ill-advised. Being loving toward customers who overtly and repeatedly abuse your efforts is unwise. Fortunately, in my experience, those types of customers are relatively few in comparison to those who appreciate efforts to help them meet and exceed their needs.

Over the years, I’ve watched the transformative power of loving on customers as opposed to fearing them.

In my book Leading the Starbucks Way, I gave an example of what happens when you love customers through actions taken to assure their success. You are likely aware Starbucks has come to guarantee happiness every time a drink is prepared. That guarantee is referred to as the barista (coffee preparer in Starbucks parlance) promise. The barista promise goes like this:

“We want you to be completely satisfied. If for any reason you are not satisfied with your purchase, you may return it for a replacement or refund of the purchase price.”

If you are a fear-based business, you wouldn’t dare offer such a promise because invariably it will be abused by customers and result in unnecessary losses. If you are love-driven, you care about customer success. In this case, you want to make sure the beverage delivered to the customer is exactly what they hoped for when they decided to steer their car toward your business.

In my book, I share a story of how the barista promise was “abused.” Then again was it?

John Hargrave, founder of the humor site zug.com and author of Sir John Hargrave’s Mischief Maker’s Manual, decided to put the Starbucks promise to the test. John writes, “But would Starbucks really replace anything? To find out, I decided to buy the most perishable item on the menu, keep it in my garage for several weeks, then attempt to exchange it.”

While I will spare you the details concerning the condition of the cup at the point when John elected to return it, suffice it to say that John had to place the residual components of the cup in a plastic container. John adds, “I entered the Starbucks, feeling faint from the smell, and handed the Tupperware container to the barista. ‘Could I get a replacement?’ I asked, ‘I think this one has turned.’”

According to John, after the barista got past his confusion as to what he had been handed, the barista said, “‘All right, man. No problem.’ He tossed the drink in the trash, then added, ‘But . . . aaaahhhhhhhh!!’ He moaned, his eyes watering, as the Starbucks filled with the stink of the drink. Another barista quickly ran over to bag the trash, then carried it outside, retching…But I have to say: they didn’t even ask to see the receipt. They made me up a new Steamy Creamy, and served it with a smile.

I suspect the way you view the outcome of the John Hargrave story depends largely on your love/abundance vs. fear/shortage perspective. On the one hand, the story proves exactly why someone should distrust customers. On the other hand, it demonstrates the amazing publicity one gets when businesses do the right thing even in unexpected situations. Getting back to not adhering to extremism, I assume that if John Hargrave made a habit of returning drinks to Starbucks in similar conditions, a less loving response would ultimately need to be taken.

It’s Your Choice

Whether it is generous return policies crafted at companies I’ve worked with and written about like Zappos (The Zappos Experience) or extra mile service at The Ritz-Carlton Hotel Company (the source for my book The New Gold Standard), I believe in abundance and customer love! For me, it’s better to assume the best in customers and manage for the exceptions than to run a business that operates inversely – how about for you?

If you would like to take some time to talk about developing opportunities like the barista promise to demonstrate your concern for the growth and development of your customers, please contact jessica@josephmichelli.com and she will set-up a time for us to chat.

_________________________________________________________________

Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

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Howard Schultz: A Leader, A Teacher, and An Inspiration {Infographic}

 

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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

++ Want to receive exclusive content on how you can deliver extraordinary, memorable, and profitable experiences? Sign up for The Michelli Experience newsletter.

Howard Schultz: A Leader, A Teacher, and An Inspiration

inspiration

As best I can remember I first met Howard Schultz in 2005 during work with Starbucks that led to the publication of my first of two books about the company, The Starbucks Experience. I was on one of the many maze-like floors at Starbucks world headquarters in Seattle (formerly the Sears fulfillment center back in the days when the Sears catalog was a centerpiece for retail shopping).

On that day, I saw Howard stroll up to the cubicle next to where I was standing and greet the Starbucks partner who worked at that desk. Howard personally thanked the partner for a recent accomplishment, chatted with her for a bit, and closed the encounter by saying, “Thanks again for living our mission.”

I remember thinking to myself: That’s the legendary Howard Schultz, he seems so normal.

Living Up to the Legend

Through the years, I experienced the genius of Howard’s leadership firsthand as well as his amazing communication effectiveness, and passion for a commitment he shared with me, which is, “To change lives one cup at a time.” I, like so many others, became a student of Howard and his ability to see, inspire, and drive operational and customer experience excellence.

In fact, the most brutal literary criticism I’ve ever received came from a reader of The Starbucks Experience who viewed it to be a “love letter to Howard Schultz.”

While I am convinced the criticism was over the top, I did and still do have deep respect for how Howard elevated himself from poverty and along the way fueled the meteoric growth of the coffee giant.

I share all of this with you as Howard announced his retirement as Starbucks’ chairman of the board on June 5th.  Howard previously turned over the CEO position to Kevin Johnson in April 2017.

From my perspective, there are a myriad of lessons we can learn from Howard (many of which are covered in my books as well as in Howard’s books: Pour Your Heart Into It and Onward.

Here are Three Key Howard Schultz Lessons:

1. Lead from the Heart

Howard talks a lot about emotions. He anchors much of his leadership to passion and trust and believes that leaders must “make investments in the reservoir of trust” for all they serve. His writings, speeches, and emails frequently reference love, passion, and romance. Specifically, he has suggested that we have opportunities to do more than become profitable if we demonstrate a passion for people, products, and community.

When it comes to products, Howard views retail as an opportunity to “romance what you serve” elevating it through contact with you and bringing it alive in the customer experience. For example, in my book Leading the Starbucks Way, I quote Howard as saying, “Espresso, coffee, and cappuccino creation are not a job, they are a passion.”

2. Admit and Learn from Mistakes

Certainly, leaders at Starbucks have made their share of mistakes, and Howard has repeatedly acknowledged them. One classic example dates back to 2007 in an email from Howard to then Starbucks CEO Jim Donald, in which Howard concluded that the company made a series of business decisions that unintentionally compromised the Starbucks Experience. Howard noted:

Now that I have provided you with a list of some of the underlying issues that I believe we need to solve let me say at the outset that we have all been part of these decisions. I take full responsibility myself, but we desperately need to look into the mirror and realize it’s time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience.

3. Give Back

Howard purportedly received a $1 million dollar advance for his first book (and likely earned substantial royalties beyond that amount). At the time of the book’s publication, Howard acknowledged, “I’m not writing this book to make money. All my earnings from it will go to the newly formed Starbucks Foundation, which will allocate the proceeds to philanthropic work on behalf of Starbucks and its partners.”

Those types of giving back actions have been amplified by Howard’s family trust, the Schultz Family Foundation. That foundation focuses on the needs of youth, veterans, and giving in response to disasters. A small sense of the impact of that foundation (just in the area of homelessness) can be found in a paragraph from the organizations 2017/18 snapshot:

Subsequently, 615 homeless youth and young adults were moved into safe and stable housing. We also joined the business and philanthropic community to ensure that No Child Sleeps Outside. This campaign has raised more than $6.6 million over the past two years and enabled Mary’s Place to open three new shelters for homeless families and serve an additional 500 families. The Schultz Family Foundation’s investment focused on both diverting families from homelessness and developing housing solutions for those families prepared to take their next steps toward self-sufficiency after emergency housing. As a result, 326 families served by Mary’s Place moved into stable housing in 2017, including 112 families who transitioned from unsheltered situations directly into housing.

Inspiration

So by now, there is no hiding it. I am an avowed Howard Schultz fan who is honored to have personally experienced his leadership excellence. Thanks for indulging me and hopefully indulging yourself in opportunities for leadership and customer experience growth.

I would love to hear about leaders who have inspired you and have a conversation about areas where you are seeking to lead your organization, your people, and your customer experience. Please reach out to Kelly@josephmichelli.com and she will set-up a time for us to talk.

_________________________________________________________________

Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

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The Heart of the Experience Professional {Infographic}

otherness

 

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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

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The Heart of the Experience Professional

For an Experience Professional Practicing Otherness in a Selfish World is Essential

One of the core values at our company The Michelli Experience is otherness.

Our team knows that otherness is a seldom used word but we like the sound of it and moreover we like the concept behind it.

For us, otherness is:

  • the antidote to selfishness
  • a virtue that is in short supply
  • the right way to do business
  • a brand differentiator
  • a characteristic that is much needed in a polarized world

If you think we are enamored with otherness, you are absolutely right. Why else would you and your company ascribe to a value,  if you don’t deeply value that concept or believe that the concept has value worthy of pursuit?

Otherness by our definition is not equivalent to selflessness. We don’t want to lose ourselves in the service of others. Instead, we want to bring our best self to work and serve from self-efficacy and esteem.

Enough about us, a blog about otherness should be all about you. In fact, conceptually otherness emerged from a business principle in my book about The Ritz-Carlton Hotel Company titled The New Gold Standard. I labeled that specific business principle, It’s Not About You, and went on to explore how leadership at the Ritz-Carlton benchmarked other world class customer providers, learned from the Malcolm Baldrige Quality Excellence process and listened to the voice of their customers in personal and systematic ways.

I was reminded of the importance of keeping a positive perspective on customers when I recently ran across a presentation deck from Neil Cooper for a Customer Marketing Summit titled, Customers are irrational, emotional, biased and selfish. In it, Neil depicts something akin to Maslow’s Hierarchy of Needs, which he calls the Hierarchy of Me wherein customer escalate their selfishness up a pyramid like the one depicted below:experience professional

In the balance of the presentation, Neil looked at the ramification of these customer qualities through the lens of a marketer, and he asked, “Does our brand, product or service make people feel cooler, sexier, more influential?”

While I won’t debate the science or wisdom of looking at customers as biased and selfish, I will acknowledge that all of us have the capacity to focus on ourselves or others.

My experience suggests that people who authentically focus on the needs of others in business achieve sustainable success when compared to those who make their own business needs primary and customer success secondary.

Business professionals that perform most poorly create the illusion that they care about customers – an illusion that customers see right through.

At a very practical level, practicing otherness requires a willingness to consciously shift perspective away from short-term self-focused business objectives and toward the wants and needs of customers.

We’ve found a number of statements and questions help us stay the course on our otherness as does celebrating examples of otherness demonstrated by team members toward peers and customers.

Here are a few of my favorite otherness prompts:

  • It’s not about us; it’s about our customer.
  • If your customer were sitting here right now, what would they be saying?
  • The people who pay our salary should have a voice, what’s best for our customers?
  • If we were to forget about ourselves and do only the right thing for our customer, what would that be?
  • What would mom tell us to do in this situation? (This a great segue to encourage you to read Jeanne Bliss’ new book titled Would You Do that To Your Mother – a brilliant work on mom’s wisdom and customer-centricity.)
  • Let’s bring this back to the customer.

Sorry if this blog sounded a bit sermon-like but we are passionate about finding ways to combat self-absorption and keep customer’s front and center. We’re also convinced that otherness is a virtue that transcends business success to positively impact all relationships including parenting, intimate relationships, and community involvement.

We spend a lot of time helping companies train employees, managers, and leaders on otherness as well as primary skills that affect it – including active listening and empathy. By helping others help others, we selfishly are fulfilled.

I would love to hear about your journey to otherness. Simply reach out to Kelly and she will set-up a time for us to talk all about you.

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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

++ Want to receive exclusive content on how you can deliver extraordinary, memorable, and profitable experiences? Sign up for The Michelli Experience newsletter.

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A Loyalty Program Doesn’t Loyalty Make {Infographic}

loyalty program, customer loyalty

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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

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Customer Loyalty is Not the Same as Repeat Business

customer retention, repeat business

A Loyalty Program Doesn’t Loyalty Make – Repeat Business Is NOT The Grand Prize

For clients with whom I have helped create loyalty programs, I am quick to make a somewhat unpopular set of distinctions between repeat business and customer loyalty.

Given the confusion that abounds between loyalty and repeat business, I thought I would share a couple of nuances that I hope will prove conceptually helpful.

It Starts With Understanding Customer Value

One of my favorite business metrics – one that is too often overlooked or underutilized is customer lifetime value (abbreviated at least four ways CLV, CLTV, LVC or LTV).

However you abbreviate it, customer lifetime value is a calculation with varying levels of rigor (some businesses roughly guess the number others use specific customer inputs to project it).

While I often work with complex models to determine customer lifetime value, at a macro level the most basic calculation looks at average monthly customer spend multiplied by gross margin divided by monthly churn.

For example, if average monthly customer spend is $60, your gross margin is 30%, and your customer churn is 5% – your overall customer lifetime value is $360. Kissmetrics has a solid infographic demonstrating the calculation of lifetime value in the context of Starbucks.

In future blogs, I intend to talk more in-depth about customer churn because customer defection is multifactorial with different business implications. For example, voluntary and involuntary churn need to be handled differently, and there is a very positive side to negative churn – but I digress.

Insights from Calculating Customer Lifetime Value

From my perspective, some of the most important benefits of calculating customer lifetime value are the insights gained concerning the impact of churn rates (percentage of customers who leave your business over a given time frame) and retention costs (money spent to keep customers). Therein, come lessons for distinguishing between what I view as differentiated retention and loyalty strategies.

To make this maximally clear, let me provide several examples of retention strategies that are only posing as loyalty strategies.

When it comes to airlines, I have no loyalty. I fly mostly based on who flies where I need to travel when I need to go there. That said, some of the retention strategies used by the airline industry (which they call loyalty programs) do influence my decision-making.

In essence, if all things are equal, I will choose an airline on which I have earned or seek to earn status benefits. Those benefits are retention costs the airlines use to induce increased customer value from me.

Beyond overtly incentivizing repeat purchase behavior, some brands attempt to bundle products and services in a way that makes it difficult for you to extract yourself from your relationship with them.

Recently, Wells Fargo Bank’s sales and cross-selling incentives resulted in lawsuits, fines, and consumer distrust. Despite those scandals, Wells Fargo is seeking to retain customers in part by communicating a commitment to lapsed trustworthiness dating back to a time when the company carried gold across the United States by stagecoach.

Assuredly, most of Wells Fargo’s customers are staying with the bank, not because of a trust emphasizing marketing campaign or out of a deep sense of loyalty to Wells Fargo. I suspect most will stay out of habit, complacency or due to a high barrier to switch banks.

Specifically, banks like many other businesses, understand that the more services or products (checking accounts, investment accounts, safety deposit boxes, etc.) you receive from them, the harder it will be for you to take your business elsewhere.

Retention Plus Loyalty

The big takeaway from this blog is that most programs or strategies referred to as loyalty programs are simply efforts to entice customer retention or reduce likelihood customers will churn.

These programs are often a collection of tactics designed to appeal to the logical side of humans and to get customers to calculate tradeoffs like:

Are the retention benefits worth my next purchase?

Is it more painful to stay with this provider or to leave them?

Don’t get me wrong, well-structured retention programs can and do produce remarkable profits. In fact, when one of my clients figured out how to nudge customers to a second purchase, they gained easy and almost automatic future purchases.

In my opinion, however, retention strategies should not be confused with genuine customer loyalty. Loyalty might be rewarded with perks or benefits, but it is a deep emotional connection that can’t be purchased or lured.

Customer loyalty is a genuine bond that has to be nurtured by businesses to be received from customers. It emerges from trust NOT from coercion or from making it hard for customers to leave.

Being Easy to Fire

I look at a brand like Netflix and see the evolution from a retention strategy to a deeper commitment to customer loyalty.

Once upon a time, Netflix made it difficult to terminate their service agreement. The notion being that the more difficult they made it to leave for customers, the more likely Netflix would profit simply because people neglected to take action to stop paying their monthly subscription. Today, Netflix gains loyalty by being one of the easiest companies to “fire.” Conversely, they are one of the easiest to “rehire.”

If you go to the Netflix landing page, you will see the words “cancel online anytime 24 hours a day” prominently displayed in multiple locations. Should you wish to pause or stop your service, Netflix retains your past viewing history and wish list for ten months, so your relationship with the brand is retained until you wish to hire them again.

Don’t Settle For Just Retention

My goal is to help my clients craft strong retention strategies while also focusing on actions that build emotional connections connected to trust and feelings of personal care. Working in tandem this dual approach cements retention drives true customer loyalty, and even increases referrals from those engaged customers.

What are you doing both on the retention and the loyalty front?

Please know I am here for you as you explore both elements of your strategy. Simply reach out to kelly@josephmichelli.com to schedule a time for you and me to chat.

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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

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5 Things You Must Do to Be Customer-Centric [Infographic]

 

customer experience, customer centricity

 

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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

5 Things You Absolutely Must Do To be Customer-Centric

 

customer experience

This is the second in a two-part blog series.  If you missed my perspective on 5 Things You Should Not Do in the Name of Customer Experience please check that out here

This week we are flipping our conversation to discuss five things you absolutely must do to be customer-centric. Let’s get straight to it:

Embrace Customer Centricity as a Way of Being

Before I go too far with this point, I will refer back to a distinction I discussed in a prior blog concerning customer centricity and customer experience. While I positioned customer centricity as strategic and customer experience elevation as tactical in that post, I truly believe that customer centricity goes beyond strategy.

For me customer centricity is a way of thinking, differentiating, and being. At its core, being customer-centric means that any profit made at the expense of a customer is bad profit. Further, customer centricity is a business philosophy that suggests we are in business to create customer value. It is only through that value that all other stakeholders stand to profit.

Prove Your Customer Centricity in Your Customer Experience

In 1710, philosopher George Berkeley posed a metaphysical question that was the forerunner to, “If a tree falls in a forest and no one hears it, does it make a sound?” I will paraphrase that question and pose it in the affirmative. If you proclaim a commitment to be customer-centric and you don’t hear your customers acknowledging that commitment in the way they experience your brand, then you never were customer-centric.

Fulfill, Make It Easy, and Connect

Forrester has shown sustained revenue growth for companies that drive three things in the customer experience:

a.) Customer Need Fulfillment

b.) Reduced Customer Effort

c.) Positive Emotional Connection with Customers

Define Your Desired Connection

Over the years, I’ve developed a tool (Way We Serve Statement) to help my clients define the specific emotional connection or feeling state they want to provide for every customer, every time, everywhere their customers experience the brand. This statement defines the true north connection across every contact opportunity with a customer.

Overcommunicate and Change Manage the Journey

I once had a leader share that he had told staff “at a meeting a couple of years ago” what he wanted his customer experience to be but that his staff members “weren’t making it happen.” Alas, a desired or optimized customer experience is not a top-down telling activity. It is a collaborative, co-created, enterprise-wide pursuit that can’t be microwaved into existence!

The evolution of customer centricity requires the same level of planning (and is fraught with all the same pitfalls) as any other major change or enterprise-wide transformation process. The difference between customer experience and many other change efforts is that customer centricity and customer experience elevation cut across all elements of an organization.

When you read this blog in conjunction with the first blog in this two-part series, I realize customer-centric transformation can sound easy. That is the downside of do’s and don’ts lists. In truth, this undertaking is one of most complex, everchanging, and worthwhile adventures a leader can engage.

Fortunately, no leader has to go this daunting journey alone! There are ample resources available to help you steward success.

In fact, I am ready to schedule a time to talk about the opportunities that are in front of you. Simply send an email to kelly@josephmichelli.com and let’s chat.

_________________________________________________________________

Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli

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5 Things You Should NOT Do in the Name of Customer Experience [Infographic]

customer experience, infographic

 

_________________________________________________________________

Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies. Follow on Twitter: @josephmichelli