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The loyalty power of 'customer first' teams

The loyalty power of 'customer first' teams

In the late 1960's and early 1970's, Xerox Corporation's Palo Alto research and development labs in California created embryonic versions of what would become the personal computer. They even developed a working model of the Internet.

However, Xerox didn't capitalize on the opportunity this represented. Their executives only saw Xerox as the leading copier company, and no amount of effort by the Palo Alto engineers and researchers could change their minds. Instead, young entrepreneurs like Steven Jobs and Bill Gates, who were exposed to what was going in Palo Alto, incorporated Xerox's leading-edge ideas into their own work. Today, Xerox is in a catch-up position within the computer industry, rather than leading it.

What are the key lessons here? We believe it's that the voice of the customer wasn't a focus within Xerox, and that the combined strength of staff beliefs and customer interest weren't sufficient to move executives to support and encourage the development activity. Companies succeed in their markets – and succeed in keeping the customers they want – by using mechanisms which enable them, at all times, to be as close to their customers as possible. Perhaps the best ways to do this are through flatter organizational structures and formation of 'customer first' teams throughout the company.

It's safe to say that most companies give little or no thought to creating a team-based culture that optimizes employees' efforts to create customer loyalty, and at the same time, building in team mechanisms to keep customers from defecting..

Creating a team-based customer culture requires an understanding of the customer, and then reflecting that understanding in the structure and systems that are designed. Two key questions should be asked:

1. How well and how often is teamwork directed at the goal of customer loyalty in the company?
2. What approaches can be taken to move from a traditional hierarchical structure to become a customer-focused organization?

Although somewhat rare, there are companies that have been able to effectively create teams, and demonstrate teamwork, where the customer is intimately involved. Examples of this are Southwest Airlines, where customers are included in teams making personnel hiring decisions and Chrysler Corporation, where their Design Center has customers participate with teams of technical company specialists in developing new vehicle concepts. In the car rental industry, one company created a cross-functional team which included customers to address a major customer headache – transaction time involved in the rental itself. One result of their work was the upgraded service which enabled customers to be taken directly to their vehicles without having to stand in line or fill out paperwork.

The Value of Customer-First Teams
IBM has refocused its business. The guiding vision of CEO Louis Gerstner is to make IBM the information technology company for America's corporations. As he's said, "I came here with the view that you start the day with customers, that you start thinking about a company around its customers, and you organize around customers." Much of IBM's new focus, commitment, and service orientation has been achieved through a more team-based architecture.

When Gerstner arrived at IBM in 1993, he saw through the company's problems to its strengths and opportunities. IBM was able to provide clients an array of data management and manipulation solutions, and what tied everything together could be summed up in one word - services. The company has been transformed over the past few years into a standout technology services company, becoming significantly more customer-oriented along the way.

David Gee is an example of how IBM is gradually turning itself inside out to get closer to customers. In the basement of IBM's Almaden Research Center in San Jose, Gee heads up a team of twelve staffers whose mission has been to reinvent how the company does business. Their program, alphaWorks, is IBM's 'online laboratory' which was created to change how the company commercializes products and communicates with customers. As Gee says, "And part of our job is to shake up the status quo. We want to get in trouble. We bend the rules."

AlphaWorks has not only introduced five new Internet-based products, but it has achieved success in a manner which would have been a much greater challenge within the structure of the 'old' IBM. Gee's team has assembled a network of over 60,000 users who get to demo and experiment with alphaWorks new ideas. In other words, they've found a way to incorporate customers directly into the development, and follow-up operational support aspects, of their programs. That has made a significant impact on the rest of the company. As Gee has concluded, "I'm not going to tell you that we've changed the world. But, we are making a difference. And in a company this size, even a small win is a huge victory." If a large company like IBM can see the advantages of customer-first teams, any company can.

Tom Peters has said that, in the future: "Most work will be done by project teams. The 'average' team will consist of various people from various 'organizations' with various skills. Networks of bits and pieces of companies will come together to exploit a market opportunity." Such can certainly be the case with customer loyalty and customer recovery programs. There are several advantages to networked, team-based structures as opposed to traditional hierarchies as they strive to create value for customers. They include better, more quickly shared information, greater decision agility, aster response time, and greater customer contact, as well as:

- Flattened, matrix-based organizational structures for greater efficiency
- Minimizing non-value added functional activities, better use of staff time and talent
- Assigning ownership of performance
- Greater opportunity for self-management and a wider scope of work in each job
- Linking performance objectives, and individual and team performance to customer loyalty
- More targeted employee training and skill development

The Math Works in Natick, Massachusetts, is a matrix-run company where everyone in the entire organization is on multiple cross-functional teams. A leading developer of high-level math software, The Math Works has several hundred staff and over 100,000 customers. They have succeeded in weaving cross-functional teams and customers not only into their structure, but into their culture and company values as well. Ellizabeth Haight, The Math Works' Vice President of Operations, spearheaded the structural move to teams several years ago. Here's how she describes what they've accomplished:

"We pretty much have a matrix-run organization. Title doesn't mean much here. Everything we do is through cross-functional teams, at every level. So, the goal here is to get the right people with the right knowledge in the room, not to get the people with the right title in the room."

People come in to our company expecting to work cross-functionally. Another thing that has helped make us successful is that we've rolled out values that people live by. We went through a process of discovering what our values were, and we invited people throughout the organization in defining what they were. We've now folded values into everything we do, whether it's management training, people's vocabulary, how they act, and even what they're rated against.

I think we've been successful with it mostly because it's from the President on down. The President lives these values, and I think that's where a lot of companies go wrong. They discover what they are, they roll the values out, and then the Executive Group goes off and behaves in any manner they want."

Teams Put Patient Service On The Road To Recovery

A fitting final example of how customer-first teams can impact customer loyalty, customer win-back – and staff loyalty as well – comes from Baptist Hospital in Pensacola, Florida. Several years ago, Baptist Hospital had patient service performance which ranked them close to the bottom of all hospitals in national surveys. This situation also contributed to both declining patient populations and low staff morale.

Hospital executives were determined to turn this around. Quint Studer, then the hospital's president, said, "We had to create the type of environment where people drive by two other hospitals to get here." Baptist Hospital formed ten cross-functional employee teams to examine every aspect of value delivery to patients and their families. More than 150 hospital employees now participate as team members. Each team has membership as diverse as corporate vice presidents and cafeteria workers.

The product of the teams' work has been literally hundreds of recommended and applied which, viewed collectively, have significantly upgraded patient care. Among the changes they made were:

- Development of a series of scripts for staff to use when interacting with patients. For example, after cleaning a room, janitors are trained to offer their help to patients, such as closing a window shade, changing the volume on their television set, or opening or closing doors. Calls to nurses for such chores have declined by 40%.
- Empowering employees to spend up to $250 to replace lost patient property or purchase flowers in response to patient complaints.
- Encouraging employees to be more proactive with patients. Accomplishments are featured in hospital newsletters and local newspapers. One example is a hospital cashier who voluntarily washes laundry for patients' out-of-town visitors.

Patients and their families have seen the tangible differences in patient service. As a family member of a Baptist Hospital patient remarked, "We got lost when my mother was a patient here, and a cleaning lady, instead of pointing, took us where we needed to go."

Today, Baptist Hospital's service performance ranks among the very best in national customer surveys, its market share has significantly improved, staff morale is higher, and staff loss – and the money previously spent for recruiting as a result of turnover – has declined. Hospital executives do their part to sustain the culture of commitment. They regularly e-mail patient comments to department heads and key team members. One recent e-mail described praise from a parent of a patient on the outstanding performance of Baptist's ER department and Heart Center, and it speaks directly to the positive impact of teams on customer recovery:

"Her son was a patient here recently, and she said the kindness, care and compassion exhibited by these people was incredible. In fact, she said she didn't like Baptist before this encounter, but that she would seek her future healthcare here."

Baptist Hospital is now using their superior performance in patient care and services as a springboard for moving to an even higher plateau. As described by Pam Bilbrey, Baptist Hospital's Vice President of Marketing: "We're pushing ourselves to move past the passion of service excellence to the next stage: customer loyalty."

What Kinds of Teams Will Enhance Customer Loyalty – Or Bring Back Lost Customers?

As demonstrated by Baptist Hospital, companies have lots of options with the kinds of loyalty-enhancing project teams they can form or the tasks they can accomplish. There could be a team that examines products and services. Elements of the company's array of products and service offerings could be analyzed for potential negative impact on customer loyalty. Team members would evaluate trends in usage of the product or service by product group, setting up or drawing from a database of customer information on their usage, and perhaps conducting original qualitative or quantitative research or getting direct input from current or former customers during team meetings.

Another team might look at communication methods and contact processes. For instance, are there elements of the company's customer service techniques, such as the words or the tone representatives use with customers, that can be improved? Are hiring and training practices optimal? Is it easy or difficult to reach the supplier to place an order, or ask a question? Finding out where staff require training, or processes need to be improved, can greatly increase the value created for customers, as can bringing in the most customer-oriented new staff. Do methods of communication convey value to customers? Do they strategically differentiate your company in a positive way? Does the company have listening posts for regularly hearing the customer's voice, and understanding how customers feel about the company and its competitors? These can certainly be a team focus.

One company which has a customer relationship management team is Vistakon, the Johnson & Johnson company which produces and distributes disposable contact lenses. Vistakon is an organization which actively believes in using multi-level, cross-functional teams for addressing key decisions. This team was formed to survey their customers' needs and expectations, measure the company's effectiveness in meeting these needs and expectations, and deliver useful, actionable information to their internal business partners.

Does the company take advantage of new technologies, such as online customer personalization and targeted messaging? Is the company's information system set up to aid in decision-making regarding customer loyalty? Is the computer set up to use all of cross-functional teams could evaluate the company's Web site for areas of greater potential customer value. A team could be assembled to analyze customer complaint data, both those that the customer communicates directly and the complaints that the company uncovers through proactive means, such as loyalty research. Some complaints, obviously those most closely related to perceived customer value, have the power to cause defection. Team evaluation of complaint root causes could yield significant process or communication method improvement recommendations.

With regard to customer loyalty programs themselves, teams could be established to look at frequency marketing or customer reward programs, perhaps conducting original research. There is such an array of points based approaches, added services, and volume purchase incentive techniques in use that this could even be addressed by more than one team.

The array of cross-functional customer-first team possibilities is limited only by an organization's willingness to embrace the concept. Bottom-line: customer-first teams enhance loyalty.

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