Monday, June 13, 2011

Do You Think Your Customers Are Stupid?

Paying close attention to customer complaints is a leadership "best practice." Here's a better practice: Pay even closer attention to people's complaints about customers. Few things say more about organizational culture and character than how employees complain about the customers and clients they serve.

Put aside hypocritical tropes and truisms that "The Customer is King" and "The Customer is Always Right." When frustrated and on deadline, your people rarely talk about their most challenging and/or most important customers that way. What employees say — and how they say it — when the going gets tough speaks volumes. So listen up.

Respectful criticism and critique should always be welcome. But all too frequently there's condescension and contempt. The "smartest" and ablest experts in knowledge-intensive industries sometimes appear quickest to mock their customers' perceived ignorance and incompetence. This behavior isn't cathartic; it's corrosive.

Tone at the top is crucial. Arguably the most notorious example of CEO customer contempt was Gerald Ratner's ill-conceived attempt at humor in a speech to Britain's Institute of Directors 20 years ago. He famously described his company's products as "total crap." The tabloid press and the investment community alike tore into him, dramatically slashing the value of his eponymous firm and ultimately leading to his ouster.

More recently, according to The Economist, Frederic Rouzaud, the then-newly appointed head of Louis Roederer, the French champagne producer that makes Cristal, dissed the embrace by America's rap community of his company's premier product: "We can't forbid people from buying it. I'm sure Dom Perignon or Krug would be delighted to have the business."

Mais, oui. But Msr. Rouzaud's remarks led directly to Jay-Z and other hip-hop celebrities to publicly boycott Cristal and endorse competitors.

The larger question, however, remains: Why would leaderships in any organization say or do things that disrespect their customers? If maltreatment or contempt for customers is part of the "brand experience"— yes, Ryanair's Michael O'Leary, I'm talking to you — then such dismissiveness makes business sense. But if these comments authentically represent organizational perspectives, then no one should be surprised when customers and clients choose to return the favor. In my experience, the overwhelming majority of business people are simply not good enough actors to consistently conceal the disdain they feel for their difficult or troublesome customers.

When software developers wonder aloud "will the dogs eat the dog food" when they upgrade a new release or when brokers joke among themselves about how they got a client (institutional or individual) to overpay, the organization is allowing a dangerous discourse to harden into a cultural norm. Making fun of customers isn't funny; it's dysfunctional and self-destructive.

While firing employees who mock or badmouth their clients would send an unambiguous signal about what should be a core corporate value, this merely ducks the real leadership challenge. What does healthy criticism and constructive efforts to rehabilitate difficult clients look like? How are you facilitating client critiques that don't simply allow frustrations to vent but encourage proactive solutions to emerge?

My favorite example comes from a software company that bitched, moaned, and whined about a major customer that inadequately trained its people on how to use its system. The customer (of course) complained incessantly, asked for fixes and withheld payments. Procurement blamed IT and IT blamed HR. No one on the client side took responsibility for their perennial dysfunction.

Needless to say, the developers and account team passionately hated this customer. This passion not only undermined their own morale but legitimized complaints by other account teams and developers about their clients. One horrendous client was having a toxic impact on the entire firm. Top management finally stepped up. They asked the sales and service people to design a fair approach to the problem client. Within 10 days, the team came up with a concept that won top management support. The software vendor would give a "special deal" on the next upgrade if and only if the client agreed to send a critical number of employees to the firm for dedicated training. In other words, the vendor — not the client — would own user training for key functionality.

The punch line to this story? The client refused the offer. The client wanted the special deal without the training commitment. A quick back-of-the-envelope confirmed what everybody now knew: The firm would never make money on this client. Even worse, the opportunity cost of this client was undermining the company's ability to attract better customers. The software vendor cut its worst customer loose.

Some customers and clients really are too stupid and self-destructive for words. But they shouldn't be allowed to become cesspools of complaints. They should be fired. Are your people's complaints about their customers a source of innovation and inspiration? Or do they signal something disturbing and unhealthy about your organization's culture? I'd like to see your complaints.

Thanks to Michael Schrage / Harvard Business Review
http://blogs.hbr.org/schrage/2011/06/do-you-think-your-customers-ar.html

 

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