Chapter 5

Input Is Vital—But Involvement Multiplies the Value

  • Move from points of parity, to differentiation, to unique value propositions
  • Level II Teaming—turning touch points into sources of value
  • Customer engagement techniques that work

Many companies stay at Level I for several years, and others never progress. That fact itself isn’t necessarily bad. If a supplier company has a solid mechanism in place to reveal, effectively resolve, and recover from customer complaints and concerns, that may be sufficient for them. This is especially true if they are not experiencing problematic turnover, losing an unacceptable number of new customer bids or proposals, and are happy with the customer’s share of wallet they have. We realize that a Level II customer focus isn’t for everyone. You may not feel you need it. Here are some of the more common symptoms that tell a company they could benefit from taking their focus to this next level:

  • The same or similar types of customer problems, issues, or complaints tend to recur.
  • You have a hard time building cost increases into your pricing structure.
  • Certain customer needs can’t be clearly identified or consistently met.
  • Your company isn’t happy with the number, size, or type of customers who are defecting.
  • Problems get resolved with one customer only to surface with some other customer.
  • You’re losing more bids, proposals, or tenders than you want to lose.
  • Your customer focus results are good in one part of the business but not in another.
  • You want to increase your share of your customer’s wallet.
  • Your customer economics are good in some segments but not in others.
  • You need to improve the market uptake of new products or services.
  • Too many of your customers seem to make decisions based solely on price.
  • You want to accelerate your penetration of accounts with additional products or services.
  • You can’t convincingly differentiate your products or services from those of your competitors.
  • You want to create more barriers to entry with your key customers.

If one or more of the above factors apply to your company, then you could benefit from a deeper or more comprehensive focus on your customers. Please note that oftentimes the rigor and opportunities associated with Level II efforts result in the need for fundamental changes in processes, organizational structures or roles, or people (capabilities and skills). That level of change can represent formidable challenges for some companies. But Level II can significantly help a company make more than the incremental gains or short-term improvements typical of Level I, and it can move them much further along the profit curve of the Customer Focus Maturity Model (CFMM).

Differentiation—One Touch Point at a Time

The key to the activities and objectives of a Level II customer focus is to know what it takes to consistently differentiate your company, and the customer’s experience with your company, from that of your competitors. As we’ve already mentioned, that differentiation must come in the form of value that you provide that your competitors cannot provide. Let’s begin by generally understanding three concepts from the customer’s perspective (see Figure 5.1) that are a core part of the differentiated value suppliers must identify and provide.

Figure 5.1 Customer Focus Maturity Model®

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A. Points of parity (POPs) are attributes or benefits your company provides that usually are not unique to you and are shared by any number of your competitors. POPs are the minimum requirements to be in the game, and most suppliers strive to at least match their competitor’s claimed attributes or benefits—just to play in a particular market. Since most competitors have or claim to have these attributes, they usually are not the reason a customer will choose one brand (supplier) over another. A supplier that lacks certain POP will likely not be considered a credible player in that market and will usually not be invited to compete (bid) by the customer.
B. Points of differentiation (PODs) are attributes or benefits customers consistently associate with a particular brand or supplier, and view as favorable attributes they could not find to the same degree at most, if not all, of your competitors. PODs are attributes with which a company claims superiority over their competitors, or exclusiveness over similar products or services offered by competitors. In our experience, most companies are overly confident about the number of PODs they realistically have, and they are generally uninformed about the PODs their competitors have or claim to have.
C. Unique value proposition (UVP) is the supplier’s promise or commitment to deliver, for a price (i.e., the proposition aspect), a specific value that other competing suppliers cannot or do not provide (POD). The product or service provided is uniquely valuable to that particular customer in that it fulfills their need for a specific gain, benefit, or advantage. The UVP is the promise a supplier describes in such a way that lets the customer know: Here’s the important benefit or value your company gets from us that you specifically need or want, and that only we can give to you.
POP—minimum value required by this market—all suppliers can provide it and so can we.
POD—unique value that only our company can provide—it’s our differentiation.
UVP—unique value that only we provide and here’s how that benefits you, our customer.

With this basic understanding, remember that “value” is in the eyes of the beholder and it can differ from segment to segment, customer to customer, and person to person within a customer company. So the objective at Level II is to explore, define, test, improve, and leverage the unique value proposition the supplier can deliver at each touch point in the customer–supplier relationship. You might not be able to identify a clear unique value proposition for every touch point. For some you might only be able to identify a differentiator. The key is to never settle for a touch point that represents parity for your company, because that touch point can become an entry point for a competitor.

(See the sidebar, Experience the Touch Points of Tech Box Company, which describes a typical customer scenario.)

Each touch point represents an “anticipate moment.” And every moment or point of interaction is an opportunity to block the competition . . . or let it in.

By now, you might realize this is not an overnight process. It can take a supplier some time to discover or define a unique way to serve, support, or engage a particular touch point. But the fact is that while you’re working at it, you’re learning more and more about the customer at that touch point, and they’re becoming more and more convinced of your genuine interest in them. Underneath all of that effort, a solid working relationship and a deeper connection is developing. There’s nothing wrong with that—right? Remember, we call this a journey, not an event. It’s a marathon, not a sprint. If you think you’re going to try a couple of quick techniques, chalk up a couple touch-point wins, and expect to have a competitive advantage—think again.

To recap, the overarching objective of Level II is to:

  • Develop a deep understanding of how customers define value at the various touch points in their company
  • Add value throughout your customers’ entire experience with your company
  • Do that in such a unique way or with such unique value that customers are increasingly loyal to you and that loyalty translates into barriers to entry and mutual profitability
Experience the Touch Points of Tech Box Company
Here’s a scenario that most of us have undoubtedly experienced as either a homeowner or renter. Walk in the shoes of this customer, Mr. Jones, and see how Tech Box Company managed and leveraged the various touch points of his customer experience.
Background
This scenario involves a regional company that markets, distributes, installs, and services high-end electrical home appliances for a five-state area. We’ll refer to them as the supplier in this illustration and call them Tech Box Company (TBC). They aren’t the only supplier in the region that markets, distributes, and installs these particular products. But they are one of the few, and the largest one, in the area that provides in-home service. Let’s assume you are the customer, Mr. Jones, and you bought one of their appliances two months ago (in June). The appliance needs to be serviced. So you call their 24/7 toll-free number to schedule an in-home service call. The process that call goes through has three primary touch points:
1. The initial customer inquiry on the 800 line
2. The scheduling of the service visit
3. The actual in-home service visit
The Initial Service Call
Your initial inquiry call goes in to a customer care associate who promptly and very professionally answers the phone, is very quick but polite in getting to the heart of your need, and graciously offers to connect you to a field service coordinator. The customer care associate makes the phone line connection, refers to the field service coordinator by his or her first name (and to you by your formal name), and makes a first-class introduction. “Hello, Keith, this is Mary in customer care and I have on the line with me Mr. Jones (that’s you, the customer), who would like to schedule an in-home service call. Do you have a moment to help Mr. Jones?” Keith promptly responds, “Absolutely, Mary, I’d be delighted to. Good morning, Mr. Jones. I see Mary has already keyed in your information, so I think I have everything I need. Is this service call for the same address where we installed the appliance in June?” A bit surprised by their efficient and responsive process, you answer, “Yes it is.”
Then you hear Keith striking his computer keys while he explains he’s looking for the next available technical service advisor who can visit your home. After just a few seconds, he says, “We at TBC really appreciate your business, Mr. Jones, and I personally really appreciate your patience here this morning. It looks like we can get that visit scheduled for you on Thursday the 12th. Would morning or afternoon be better for you?” You unhappily realize that’s three days away, but they are just about the only credible service provider in town, and they have given you a first-rate customer experience on this call. You pause, and finally say, “Afternoon,” with a hint of disappointment in your voice. Keith, obviously picking up on your disappointment, says, “I know that’s a couple days away, Mr. Jones, so do you have a preference for the time? Our technical service advisor can be there between noon and 2:00, between 2:00 and 4:00, or between 4:00 and 6:00 that afternoon—whichever one works better for you.”
You’re a little bit, though not very, impressed that they’re acting like you have a choice, and you admit that it does provide you with some flexibility—assuming they actually show up during the window you choose. So you say, “2:00 to 4:00.” He replies, “Perfect. I have you down for 2:00 this Thursday. Your technical service advisor will be Josh. If Josh can get there earlier, he’ll call you first to see if that works for you. If Josh does not arrive in time to complete your service by 4:00, the service call will be free. Let me quickly confirm that address once more, and the number Josh can call you on that day.” You confirm the information for him, and he closes with, “Thank you once again for your business, Mr. Jones. We appreciate the chance to serve you. Again, my name is Keith, and I hope you won’t hesitate to call on us if you need anything else. And please enjoy the rest of your Monday, sir.”
The Service Visit
Thursday comes around, and not a minute too soon in your view. At 1:45, you get a call from Josh, your technical service advisor, who says he’s finishing up a job on the other side of town, and will be to your house by 3:30. He arrives at 3:25. Dressed in a TBC uniform, well groomed and personable, Josh greets you and confirms that it’s still a convenient time to service your appliance. You lead him to the room where the appliance is located, and he speedily gets to work. As he begins taking off the cover panel, he asks you a couple of questions. He wants you to describe what the problem was, when you first experienced it, did it happen every time or intermittently, and how long did it last each time. He continues working quickly and diligently as you answer his questions. You describe the problem and explain that it started a week ago, was intermittent at first, but for the past three days has been doing it every time. It starts as soon as you turn the unit on, and it lasts until you turn the unit off. You have not been able to get the unit to operate at all for the past three days, despite numerous attempts each day.
After about 15 minutes, Josh excuses himself to go to his truck for a moment. You decide to make a quick phone call while he’s away. He returns after two or three minutes, and seeing you are on the phone, without pause goes directly back to working on your appliance. He finishes his repair, reassembles the disconnected parts, and turns the unit back on. Success! Giving you a thumbs-up sign, he whispers, “That should do it. I doubt you’ll be having any more problems with it, but just call if you do.” He leaves it running for a few minutes while he completes some paperwork. You are still on the phone, but with a sense of relief you interrupt your call to ask him if he needs a check, or will TBC send you a bill. He whispers, “No charge for the visit, Mr. Jones. It’s our pleasure. I’ll leave a copy of the completed service slip with you for your records. Will there be anything else before I leave?” You whisper back, “Nothing else right now, and thank you for handling this for me. I do appreciate it.” It was now 4:00. And since you were still wrapping up your phone call, Josh smiled and politely let himself out. The unit ran fine for the rest of the day and has been running fine ever since.
The Analysis
By most standards, and in most customers’ views, this was a positive customer experience. Mr. Jones would probably give good ratings on any post-service call survey, and would probably respond positively to any other type of customer survey from TBC. More likely than not, he would also have favorable things to say about TBC to other people looking to buy such an appliance or in need of service. TBC clearly detected and met his unmet needs—an effective Level I focus.
However, TBC missed numerous opportunities to reap the gains of a Level II customer focus. As prompt, polite, and efficient as the customer care associate was, she was more focused on getting the customer connected to the next link in the process than she was optimizing her time with the customer. She could have briefly probed in any number of other areas that would have aided TBC in serving this customer even better, while deepening her personal connection with the customer. Questions such as:
Can you describe the problem or symptoms for me?
When was the first time you experienced it?
Does it happen all the time or only sporadically?
Have you tried anything to fix it or have you had anyone else look at it yet?
Have you had problems with this unit before now?
Other questions that might indicate the need for special parts, equipment, tools, or service advisor skills
The field service coordinator was mostly focused on determining when the next service technician could or would be in Mr. Jones’s neighborhood or vicinity. Other considerations the coordinator could have focused on or asked about include:
For how long had the customer already been without service?
Had other service visits been scheduled but not performed?
Had other service visits been performed that weren’t successful?
What could be learned from the previous service advisor who called on this customer?
Was there anything about the customer’s home or location that would impact the truck being sent, or the need for more than one service person (for lifting or moving the appliance, for instance)?
Josh, the technical service advisor, was understandably focused on getting the repair done as quickly and correctly as possible. But, as TBC’s only face-to-face touch point in this example, and actually being at the location where their appliance was in use, he had a unique opportunity, which he missed. Unfortunately, any dialogue he had with Mr. Jones was to get answers to questions that could have been asked earlier in the process—before he arrived. What if the fix wasn’t as straightforward as it was in this case? What steps were taken to ensure Josh arrived with the right tools, the right parts, or the right knowledge about that particular product or model? What would have happened at 4:01 if Josh didn’t have the unit fixed? Stay late? Leave, as he had another visit to make, and reschedule you for another day? Refer you back to the 800 number to get rescheduled? But even more importantly, Josh didn’t take, or wasn’t permitted to take, the time to advance TBC’s reputation or deepen his relationship with Mr. Jones. He could have taken such steps as:
Explaining to Mr. Jones what he suspected the problem to be, or what the problem and solution ultimately were.
Educating Mr. Jones on any self-diagnosis or preventative maintenance.
Understand how the appliance was being used and who in the house used it.
See if there were any other TBC products, or competitor products, in the house.
Make recommendations on other TBC products or services Mr. Jones might like.
Reinforce how well the appliance performed other than this “isolated” problem.
Verify and reinforce the fact that Mr. Jones was happy with the service call and visit.
Josh did just as he was expected to do at Level I. But he also had significant opportunity to identify additional revenue possibilities with Mr. Jones, gain competitive insights, promote brand loyalty, and possibly start building some barrier to competitive entry or repeat competitor business.
The entire service call process at TBC was efficient, effective, and professional—from beginning to end. It was a typical Level I transaction around a stated but unmet need. It was also a missed opportunity for gaining a Level II understanding of the customer’s unstated needs, identifying ways to further differentiate TBC, and adding revenue opportunities. In essence, TBC missed the chance to convert their touch points into anticipate moments.

Teaming Turns Feedback into Dialogue

The processes and techniques we use to turn feedback into dialogue make up the core of the Level II customer focus. Teaming is the umbrella under which we group all of those processes and techniques.

Teaming requires deploying several more elements from the 10-Point Customer Focus Framework we introduced back in Chapter 1. So let’s turn to some additional elements.

10-Point Customer Focus Framework
#3. Customer Engagement

The most common and natural step many companies take to progress to the insights of Level II is to first multiply the number of “listening posts” they use to solicit, gather, and respond to the voice of the customer (VOC). VOC is still a useful step in Level II, but only if it taps into more than the typical one or two customer touch points. Buyers and decision makers are only a part of the picture. Technical influencers, end-users, quality assurance (QA) and maintenance personnel, logistics, information technology (IT) and accounting staff, and myriad other customer representatives are all potential key touch points for which Level II suppliers want avenues to solicit, synthesize, and incorporate their input.

The other important step is to turn or extend your listening tools into dialogue vehicles. This entails using the VOC tools to probe more deeply into the perspectives, expectations, and needs of the customer representative at each touch point. To do that requires customizing these tools to the particular function or department involved in that touch point. This is difficult to do in survey tools without making them unduly cumbersome and time consuming for the customer respondent. The key is to use traditional VOC surveys to efficiently surface the key issues and general needs of the customer company, and set the stage for more in-depth, touch point–specific, follow-up dialogues to come later. That more in-depth, follow-up dialogue can be in the form of phone or face-to-face interviews, functional or departmental focus groups, or on-site assessments. We described on-site assessments back in Chapter 4, but we’ll take a closer look now at interviews and focus groups—two effective dialogue techniques that help suppliers gain the deeper customer involvement we seek at Level II.

Touch point surveys and interviews are a key step for one particular organization with whom we work. They use a biannual survey tool that goes to several different members of each customer organization and addresses the same structured satisfaction and loyalty measures that the supplier uses for all customers being surveyed that year. Based on the issues or ideas generated in that biannual survey, several different functional or department-specific surveys (i.e., touch point surveys) are then sent to department representatives in each responding customer company. Those surveys are tailored to the specific activities, processes, or tasks unique to a given department, functional area, or touch point. They are designed to surface the issues and needs at each touch point that require more dialogue (i.e., an interview) to fully explain and understand. The intent is to get in front of the person representing that touch point for the customer and begin a dialogue that digs deeper into the individual’s own personal views of what’s working well and not so well; what’s most important to him or her and what’s not important. More specifically, that touch point interview is intended to begin flushing out what that individual views as examples of parity (POP), differentiation (POD), and unique value (UVP) in his or her respective role.

Another organization uses an annual satisfaction survey process with follow-up functional or departmental focus groups (i.e., touch point focus groups) to dig more deeply into the survey results for, and establish dialogues with, a targeted function, department, or process. For example, based on the annual survey results, the supplier company might see a cluster of issues or unmet needs that pertain to the supplier’s order entry system. The supplier company will then organize a focus group consisting of functional or department-specific representatives from various customer companies who have to use the supplier’s order entry system. The touch point focus group is used to probe further into the participants’ personal views of what’s working well and not so well; what’s most important to them and what’s not important—when it comes to placing and tracking orders with the supplier. More specifically, the supplier is looking for what the focus group participants view as points of parity, differentiation, or unique value in their respective roles, in their respective companies.

As noted earlier, because of the diverse companies, personalities, and possible issues represented in a focus group like this, care must be taken in the design and facilitation of these group discussions. They can be very effective at digging deeper and beginning the dialogue that turns into a longer lasting relationship, a source of value-creating insights, and a barrier to the competition.

As you can imagine, when suppliers multiply the number of their VOC listening posts beyond the initial sale, and use selected dialogue techniques to drill more deeply into the relationships at various touch points, they can reap several benefits:

  • The chance to probe, ask, and answer questions that aren’t possible with surveys.
  • Invaluable insights into the customers’ unmet (POP) and unstated (POD) needs.
  • Understanding what’s important to each individual customer that might be unique to them or to the suppliers’ capabilities.
  • The opportunity to establish a personal connection or relationship that goes beyond the sales transaction.
  • The chance to maintain and gradually leverage that relationship into further competitive advantage over time.

And since each of the above benefits can be generated for multiple touch points, suppliers gain the advantage of developing a uniquely comprehensive view of their customers’ value needs and opportunities. And the more they meet those needs and capitalize on those opportunities, the stronger the relationships become across the entire spectrum of customer–supplier connections, and the harder it will be for a competitor to break those various relationships or connections.

In addition to the above-mentioned VOC tools, there are several other dialogue techniques that can have a similar impact on establishing additional and deeper touch points—the kind that establish and leverage unique customer–supplier relationships. (See Figure 5.2.) These include customer advisory boards, joint project teams, job rotations and customer–supplier workouts (to be discussed in Chapter 7), among others.

Figure 5.2 Transitioning from Techniques in Level I to Level II

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Customer advisory boards (CABs) provide an excellent example. A CAB is typically a group of customer representatives who are invited to serve as an advisory board to the supplier company. The CAB is made up of anywhere from 6 to 10 members (sometimes more, and sometimes less) who serve for a specified period of time (1–3 years seems to be the norm in our experience), and who convene two or three times a year. The role played by the CAB can vary widely but generally includes discussing industry or business trends affecting the supplier or the customers’ business with the supplier, current and projected uses of the supplier’s products or services, market feasibility or uptake of new product ideas or innovations, emerging or changing markets, and the like.

One example of a CAB is the Lexus Owner’s Advisory Forum. On a periodic basis, 15 to 20 Lexus engineers meet face to face with 15 to 20 loyal Lexus customers to discuss how the customers use their vehicles.1 The commute to and from work, recreational uses, family considerations, vehicle performance conditions, and patterns, as well as various creature features and accessories, are all discussed openly to anticipate the next generation of vehicles and features. The Lexus Forum co-exists with a more virtual Lexus Customer Advisory Board. The Lexus CAB uses social media, online surveys, virtual and dealership-based events to stay connected to and leverage the insights of loyal Lexus owners. Customer ideas and reactions to vehicle design, customer service experiences, marketing, and customer communications are a frequent part of their customer–supplier dialogues. The Lexus CAB recently featured a “virtual lunch” with Lexus Group VP and General Manager Mark Templin, including a posting of the various Q&A from that lunch dialogue on the CAB website.

Other effective examples of deeper customer–supplier connections are joint project teams and job rotations. Joint project teams are typically teams of experts from each side of the relationship that get together, in a formal or informal fashion, to jointly work out technical or product designs, tests, problems, or ideas. Oftentimes, the teams working on these projects come together for the express purpose of the project at hand and dismantle once the project is completed. Other times, these projects, if managed appropriately, can result in ongoing joint project teams, or at least ongoing relationships between the members. As we’ve stated several times, any relationship between a customer and supplier representative that does not focus solely on the sales transaction can be a mutually beneficial and lasting relationship.

Job rotations are another vehicle for establishing unique and sometimes lasting relationships across the customer–supplier seam. While we don’t think it happens nearly enough, we have seen examples where a member of the supplier company actually spends a period of time working with the customer company (but still on the supplier’s payroll) either in an advisory capacity or shadowing their customer counterpart as he or she does their normal job. Similarly, a member of the customer company might do the same with the supplier company. Even if the exposure to the other side of the seam is only for a few weeks a year, it can be invaluable.

We’ve seen many supplier employees, especially technical or customer support staff, come back from such rotations with a new found appreciation for and understanding of how the supplier’s products are used by or impact the customer. Conversely, we’ve seen many customer employees come back with a sensitivity to and appreciation for what the suppliers go through to create a good experience for the customer. Clearly, rotations can go a long way to developing valuable insights about, and stronger connections between, the various touch points of the relationship.

1 Lucy McCauley, “How May I Help You?” Fast Company 32 (March 2000): 93.

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