Amazing Execs Episode 107

Elevate your Business with Customer Obsession

Host:           David A. Rosen
Guest:        Marbue Brown

SHOW SUMMARY

[00:00:46] START INTRO 1

[00:08:23] Critical tool for customer service: Andon Cord! 4

[00:12:03] How Does JP Morgan Move the Needle Applying Customer Obsession? 6

[00:13:48] All our businesses came together to apply the principles of Customer Obsession! 7

[00:27:05] Customer Obsessed Companies Treat Customer Service as a Marketing Expense 12

[00:38:14] B2B Must be Customer Obsessed! Not just B2C 16

[00:45:39] How Do you get Started? 18

[00:51:43] Product companies should ask… New Product or features? 20

[00:58:14] Role of the Board in Customer Obsession 23

[01:03:53] 3 Board Questions 25

[00:00:46] START INTRO

David: Hello, Marbue. Welcome to the Amazing Execs show, and how are you doing today?

Marbue: I am doing well and it’s a pleasure to be with you, David on your show today. I’m really looking forward to our conversation.

David: We’ve known each other for a while, but being customer obsessed and customer centric has always been at the heart of what I’ve done in my career and the passion behind what I do in terms of strategic planning to turning around a business to creating startups.

What inspired you to put your fingers to the keyboard, notice I said fingers to keyboard and not pen to paper

And write about customer obsession.

Marbue: Well, I have been associated with customer experience for a long time You know over the course of my career and I have seen all kinds of customer experience movements come and go But when it got to the point where people started talking about customer obsession and I actually got to live customer obsession in Amazon, where, you know, that phrase really originate, right?

I realized, look, there’s something different about this movement and there’s some things that really differentiated and separated from all the other things that people have been talking about relative to the customer experience but yet, even though a lot of people caught on to the idea that there was something different there, there wasn’t a great understanding of it and what it is.

And so I thought that it would be worthwhile to, show in very clear terms. What differentiates customer obsessed companies from those that might be customer centric, or customer focused, or something else, right? But this is really a class that is different than those others, and I wanted to make that plain.

Awesome.

David: Awesome. You’ve had an interesting background and diverse career in a variety of businesses with different customer sets and but you’ve been really focused. It looks like at your experiences with JP Morgan and Amazon and others. So tell us about that. and Dive into a little bit about the customer obsession versus being customer centric.

And what do you see that people do on a day to day basis that indicates that their organization and culture are obsessed versus just customer focused or client centric?

Marbue: Well, let me start off by saying that customer obsessed companies, They make decisions and they make investments that are in the customer’s favor, even when they’re not readily able to connect all the dots to their own financial benefit immediately.

They know that what’s good for the customer is good for business. So they know that when they make those investments and they make those decisions and take those actions, it’s going to pan out. It may not always pan out right away, but they know it’s going to pan out in the long run. And, the experience of those companies has been that it doesn’t just pan out, it pans out in a very big way.

Let me give you an illustration. Think about customer reviews, okay? When you think about customer reviews on Amazon, you can find customer reviews that say bad things about products that Amazon is selling. They don’t remove those reviews from the site. And when they first started putting customer reviews out there, some people thought like, why would you want to allow people to say negative things about a product that you’re trying to sell, right?

That kind of detracts from that that product being sold. And so they would say to Jeff Bezos, you don’t know your business. Jeff’s comeback was, Hey, We don’t just make money when we sell. We don’t make money when we sell. We make money when we help people make great purchase decisions. And here’s the bottom line.

Look, if you sell something that’s not going to deliver a good experience to the customer, it’s going to wind up coming back anyway. Right? Right. So, but that’s the kind of Action that you take in the customer’s favor that initially some people would say, well, that doesn’t necessarily connect all the dots so that your financial benefit is foremost, but in the end, people know that if they go, if they want to buy a product and they go and search on Amazon, right?

They’re going to get the goods on whether this is something to buy or something not to buy. They know that they can trust what’s out there. And so bottom line is it has helped to make Amazon a number one destination for products searches on the web. So, you can think of that as an example of, an action that was taken that initially folks didn’t necessarily say, okay, we can connect all these dots.

To how it’s gonna hit the bottom line, but it’s hitting the bottom line in a very big way because if you’re the number one destination for product search, you’re gonna sell more products.

David: Well, you also make a very good point, Marbue, in that one of the biggest mistakes that people have is that they’re measuring their outcomes and results by their financial.

And you and I both know that your financials are lagging indicators of the business health and the customer health and your success of your business. That you need to be looking at things like, your sales funnel. You need to be looking earlier on to see if you’re going to get the outcomes that you’ve been getting in the past based upon things that have changed today.

Or you need to be looking at things like the lifetime value of a customer and that if you… aren’t transparent and don’t show them that, Amazon does not manufacture a good portion of the products that it sells. But people go to Amazon, to your point, because they know that they’ll get an easy return process and that they’ll warrant the product or service and in many cases they don’t ask too many questions in returning and that it makes it a great customer purchase experience and that you’re going to continue to do that.

Well, absolutely.

Marbue: Yeah, absolutely. I mean, like, one of the ways that Amazon, customer service associates are coached is to reduce customer effort when they talk to a customer about a problem that that a customer is having right? Part of the idea is to reduce the customer effort in trying to solve that problem.

They don’t want to put extra burdens on the customer in terms of solving that problem. So, it’s all part of that whole notion of if you work backwards from the customer, okay, and you basically take the position that what’s good for the customer is good for business, those customers are gonna keep coming back to you.

[00:08:23] Critical tool for customer service: Andon Cord!

Marbue: (Leveraging Deming Manufacturing Tools and Applied to Amazon) Look, when I went to, to work at Amazon, I had the privilege of owning what was called the Customer Experience Andon Cord, right? Now, what’s an Andon Cord? It’s actually something that originally came out of Toyota, okay? And what Toyota did was, they made it possible for a single worker on the assembly line to stop the entire assembly line by, quote unquote, hauling the Andon Cord.

And what would be the reason that it, an assembly line worker would be allowed to do that is because they saw defects coming through and, they saw this systemic defect coming through and they said, okay, we can’t have cars with defects in it, right? So, Amazon put in the Andon Cord to say, Hey, we’re selling products.

And if we see these products are coming through with defects and they’re creating bad experiences for the customers. Initially it was. Let customer service agents pull that and down cord. Subsequently, we got very sophisticated and we were able to use machine learning and other kinds of tools to anticipate that before the customer service associates could ever even notice it.

But the bottom line was, you basically took something off the market. It wasn’t being sold anymore. I mean that’s very tangible in terms of the impact to the bottom line when you take something off the market. But when you think about it is how does that work for the customer? You’re saving all these customers bad experiences because you’re gonna take that offline.

You’re gonna figure out what’s wrong You figure out how to fix that and then you can sell it again. But otherwise you just be you know Multiplying these bad experiences for customers, which is not it’s not good for the business, right? So that’s an example where you’re taking these actions You’re making these investments.

You’re driving these policies that are kind of stacked in the customer’s favor. In the long run, it pays off because customers know they can come to you because you’ve given them that confidence.

David Rosen: So, are there examples in Amazon that someone could pull the Andor cord and say let’s stop buying this product and marketing it on Amazon?

What were some, are there some examples that you can, that you’re able to talk about?

Marbue: Well, I’ll talk about one more public, if you will. So the Andon Cord was pulled, for example, with, Hoverboard. I don’t know if you remember, but there was a time when hoverboards were super popular.

Catching on fire when hoverboards, we’re catching on fire right now, eventually Amazon pulled something that was even bigger than the Andon Cord and just, shut off all, hoverboard sales, but, a scenario like that is one where, you know with products, having that type of a problem, the Andon Cord was pulled, it stopped sales of those products.

At a certain point, it became one of those scenarios where it was big enough that the company decided we are just not gonna sell any of these for a while until we can fully troubleshoot this, right? Right. So, so that would be an example, where in Andon Cord have been pulled.

So,

David: I’m curious, how does a JP Morgan

move the needle with customer obsession?

[00:12:03] How Does JP Morgan Move the Needle Applying Customer Obsession?

Marbue: Well, first of all, let me start off by saying that JP Morgan Chase had in place, during the time I was there and still does a phenomenal management team, a very cohesive management team. And everybody was on the same page about, driving customer obsessed behaviors, right?

And so that really covered the spectrum in a lot of different ways. It covered the spectrum from how do we adjust policies, right? So that we can have a more, customer obsessed environment. How do we change behavior? How do we adjust behaviors and branches so that we have a more customer obsessed environment?

How do we listen to employees? But more importantly, how do we take action on the things that we listen to from employees in addition to what we’re doing with customers? Because, a lot of companies do really well with listening to customers, but they don’t necessarily listen to their employees.

And sometimes if you listen to your employees, you can do things even faster than you can. Because you don’t have the customer information. As readily available. So it covered the entire spectrum. How do we onboard people and, various things like that. So all of those things came into play in terms of moving the needle there.

David: Interesting. And so that included both the consumer side of Chase’s business to the, these retail stores all the way to into the commercial side as well?

Marbue: So the short answer to the question is yes. I was on the consumer side and so that’s where I spent my time.

[00:13:48] All our businesses came together to apply the principles of Customer Obsession!

Marbue: But look we’re talking about a very large company that has a bunch of different businesses, And one of the things that we had in place was a team of customer experience heads of all these different businesses that came together to look at how can we jointly work together to move the needle in all of our different businesses and just really help to apply the principles of customer obsession that would elevate across the board.

David: So, Marbue, a lot of our watchers, listeners, are middle market business owners or executives in divisions of the largest companies. What are the indicators that they see or that they will find in their business that tells them that there may be an issue with the level of customer intensity that they have and that something needs to be changed in their attitude?

Marbue: Well, let me start off by saying that there is a continuum, and I described it a little bit when I talked about customer centric and customer focused and customer obsessed, right? There is a continuum, and one of the things that I’ve done in my book is to lay out that continuum all the way from companies that are, like customer indifferent to customer aware, to customer focused, customer centric, and customer obsessed, right?

And I want to start off by saying that… There are companies that are in the customer centric category that are doing a lot of things well from the perspective of how they treat their customers and their focus on the customer experience. But one of the things that will help you to know whether you are at the customer obsessed level or not, has to do with policies, right?

And I would ask this question, do we have a single policy in place? That would make customers do a double take because they realize this is so in favor of our customer, right? Or that would make employees do a double take. So let’s take a company like Zappos, and these days Zappos is a wholly owned subsidiary of Amazon, but it still operates pretty much independently, right?

And for folks who are not familiar with Zappos, that’s Z A P O S. Top retailer of shoes on the internet, people who use Zappos, they have a Zappos fix, right? They know they know all about that. But look, Zappos operates its call centers where their customer service associates have no scripts and they have no time limit.

Okay? Now, most people would look at that who operate call centers and they would say, that’s insane, right? They would say that’s insane. How can you operate a call center and you don’t put time limits on the people who are on the phone? You don’t give them scripts. What they do is give them a few guidelines.

Wow the customer. Make the experience memorable for the company. Do what’s right for the customer and the company. They give them a few guidelines. But after that, they turn them loose and give them a lot of autonomy to make decisions. Now that’s one of those policies that folks would look at and they would say.

Okay, customers will do a double take and even the employees will do a double take, right? But that demonstrates a level of customer commitment that’s beyond the normal. And it’s paid off handsomely for Zappo, okay? Let’s take Costco. What about Costco? Costco’s return policy is legendary. It’s legendary. I was talking to someone who said they had some friends who were moving. And, as their friends were cleaning out their house, they found some frozen pizzas that, they had tucked away in the freezer that they had bought from Costco and they never used.

And they took it back, and Costco took it back. Okay? Most people would think of their return policy almost like an invitation for abuse. But again, it’s paid off handsomely for Costco because people shop at Costco with total confidence. They know that if they need to bring something back, they can bring it back to the store.

So, that’s one type of question that I think that companies could ask themselves and say, Hey, do we have any policies in place that are, so stacked in the customer’s favor that the customer would do a double take? Okay. Our employees would do a double take. So that’s one example, but let me give you the opposite example of that.

Okay. And the opposite example of that is, do you have any policies in place that your customers would actually find objectionable and that maybe even your employees find objectionable? I’ll give you an example that comes to mind. So I was on a trip. And we had rented a car on our way back to the airport.

We’re looking for it. A gas station to gas up the car, couldn’t find one near the airport, so we just went to turn the car in. And I remember the attendant, he gets in the car, he looks at the gas gauge, and he says, Mr. Brown, did you put any gas in this car? And I said, no. He says, man, they charge 9. 99 a gallon, like, to refill the car.

Now, the going rate in that area was less than three bucks. Okay. And I get it if there’s like a premium but not that much of a premium. In fact, the employee felt like, he had to distance himself from that policy. Not necessarily doing it consciously, but he starts talking like in the third person kind of thing.

Like these guys, like they they charge 999. That’s because he felt that policy was objectionable. It was right.

Ethically, it was a challenge.

Yeah. So if you have policies in place that your employees find objectionable, but customers find objectionable, then you should ask yourself, Am I customer obsessed?

So, because that would be an indicator that you’re not. So, and again, Folks put these policies in place with the idea of protecting their bottom line, of protecting their revenue streams, reducing their costs. Here’s what I would say. A couple of things. One of them is, if you do the right thing by the customer, okay, the additional customers that you get is going to erase those concerns.

But generally it also turns out to be the case that when you do the right thing by the customer It doesn’t wind up costing you in the negative way that people usually predict and anticipate

David: So you’ve worked for some very large public companies and those public companies are under Microscrutiny on a second by second basis for delivering to what the market expects them to deliver, which narrows their field of view and innovation and customer obsession in many cases.

Do you, have you seen examples where that, those rear their ugly head that the need for some trading algorithm to decide what decision you made in your business versus Taking care of customers, getting in the way of that short term thinking viewpoint driven by financial returns and outcomes and predictability versus the ability to see this is in the best interest of the customer’s long term.

Marbue: Well, let me say this that let me say this that I’m going to use a Public traded, publicly traded company that recently had a really bad situation, but for a long time has been known to be one of those companies you would easily put in the customer obsessory.

And that’s Southwest Airlines, okay? Now, think about Southwest Airlines. Southwest Airlines has typically done things that other airlines don’t do. Southwest Airlines policy on checked baggage, bags fly free, right? But when you think about other companies, they’re nickeling and diming their customers for bags, there’s a economy basic where, it’s like, you can’t even take a full size carry on the plane, right?

I mean, there but the big difference between Southwest Airlines and these companies is Southwest Airlines has always made money. They’ve always come up with a profit. And, A lot of the other airlines have just been struggling to make a profit, right? Okay. They have typically done the kinds of things for their customer that, set them apart, put them in that very special category.

Now, just be told when they had that meltdown, all right, in December around the holidays. All of the holidays, right? I mean, they had that meltdown. First of all, that was totally unexpected. It’s not what I would expect from Southwest Airlines. But, I also think about the response, right?

And there’s some things that they did in response that I think were really good. Like when they came out and they gave people, 25, 000 of things. Let me tell you, I probably would have taken it a step further. And here’s what I mean. Every one of those flights during the holidays had memories attached to them, right?

There were people who were going to destination weddings. There were people who were going to special celebrations with older relatives. There were, people who were going on a cruise or something like that. And, essentially, what happened was with the meltdown, they made a lot of negative memory.

And people are going to be repeating those memories over and over. Now, what I’m going to say would defy what people should do for the bottom line, if you’re focusing on the bottom line, because they already lost a bunch of money, okay? But here’s what the deal is. What you want customers to say every time they have one of those negative memories is, you know what, here’s what Southwest did that made it up to me.

And follow that with a better memory, right? So, I would catalog those memories. And then… I would work with those customers to find out what are the next big memories that are coming up on their calendar. That helped them to realize, right? Because what you want them to do is you want them to be in a position where they say, that was really bad.

But when I think about how Southwest Airlines made this up to me, it’s amazing. And, tell that story, leave that person with a positive story, as opposed to the negative memory, right? So… Really good point. Yeah, that’s the kind of thing where you’re basically saying, you know what, the immediate financial benefit, because that would be expensive.

There’s no doubt about it. The immediate financial benefit is not necessarily going to be there. You’re going to work that off, but what’s also going to happen is because you work that off, you’re going to have even more people flocking to your doors because they know that you make it right when things go wrong.

And you put a cherry on top too. When you put that cherry on top. That makes it special, right? So, Those are that’s how I would respond to that question. Yeah.

David: And to your point, communicating that to the people in your business and reminding them of those memories reinforces the behavior that you’re looking for in people to, to work with the customers and be customer obsessed and focused and thinking about their needs and empathy issues.

Marbue: Well, absolutely. Absolutely. One of the principles that I lay out in the book is how customer obsessed companies

[00:27:05] Customer Obsessed Companies Treat Customer Service as a Marketing Expense

Marbue: they treat customer service as actually part of their marketing, right? Their marketing expense. They count that towards the marketing expense. So, think about it this way.

Worldwide, 3 million people visit Costco in a day. All right? Now, think about television shows that actually have 3 million viewers, okay? I mean, you’re getting into the upper echelons when you start talking about television shows that have 3 million viewers in a night. And people pay really good money to run 30 second ads because they think they’re going to get access to those 3 million people.

If you got 3 million people walking into your store every day and those 3 million people are not spending 30 seconds in that store, okay, they’re spending a lot more time in that store. That visit is a commercial. Every employee that interacts with that customer is a commercial. And what you want those folks to do when they walk out of that store is you want them to go out and tell people about that experience, right?

You want them to go in. And come out and say, you know that designer handbag that I got at Costco today, I wasn’t even expecting to buy that, right? But the deal was so phenomenal. I couldn’t pass it up. So it’s that kind of thing where you treat every interaction like a commercial. And even small businesses should be thinking that way, that every interaction that we’re having with our customers.

So they’re not going to have the three million, but however many they have. Every one of them is a commercial, and you typically have that person longer than 30 seconds and you can make a bigger impression on them in the period of time you have than a commercial on TV can.

David: it’s really critical, you’ve got a good point about Costco or even a Chick-fil-A® because when I look at markets or businesses for companies, I’m always looking for patterns. There are certain patterns, when you look at restaurants that typically most restaurants are between 300, 000 and a million dollars of revenue in a single store and yet when you look at companies like Chick-fil-A®, they’re quadruple the average store revenue of any other restaurants or any other food service organizations around them and they created an exception.

When you go into Costco, you expect to spend more than when you’re going to Stop & Shop or Star Market or wherever you get your groceries and so an impulse buy of a Louis Vuitton bag Is something that could happen at a Costco?

Really good point. You and I can’t disagree more on customer obsession. So let’s take a scenario. I’m a division president at a large tech company. And the reason why I’m saying a division president and or a middle market business owner, middle market being 10 million to a billion dollars in size.

You believe that customer obsession is really important for you to get growth, value creation, better outcomes in your business. But you may not control the whole organization. What do you recommend that a division president who may or may not be able to shape the sales force that sells their products or services or the.

Service organization that installs and maintains customer products. So how do you get started in doing this if you’re not starting from the ultimate top of the organization?

Marbue: Well, let me, by the way, you made a comment and I think you meant to say we couldn’t agree more on customer obsession.

That’s what I meant. But in any case let me say this look. Even within businesses, there can be subcultures. And if a subculture is great enough, it will catch on, right? So, in every business, there’s a shadow of the leader. Okay, so if you’re a president of a division, or, you’re the owner of a P& L, right? You want to make your P& L the best it can possibly be. You may, you can begin to institute a culture of customer obsession within your ranks. You can model it for your people. You can put in place policies that will, Expose the principles that we’ve been talking about so far, right?

And as you do that, and your division becomes more successful, because the folks who do this always breed success. Then you can take that evidence and bring it back to the ultimate leader of the business. Or even whatever levels there are in between and say why don’t we try some of these things in this broader portion of the business?

But that’s the way that you would, you’d be able to do it. I don’t know if you’ve ever heard the expression, “In God we trust, all others bring data.” Well, that’s one way that you can bring the data. Right? Right. Go and put in place the principles that are going to demonstrate customer obsession.

David: Breed success, show that success, and have the other folks in the business emulate that success. It’s an interesting point. Some of the companies that I work with, they don’t always sell their product directly. They sell through channel partners.

How does someone who’s got good products is focusing around being customer obsessed, work with their channel partners and their sales channels, because I know Microsoft is probably a great example of a business that works well with its channel partners to ensure that they’re trained effectively, that they’re qualified at certain levels of training, so that they can distinguish, here’s the platinum reseller and value added reseller versus the gold, versus the silver.

And so, how do you convince your sales channels to be more customer obsessed?

Marbue: Well, look, the bottom line is, first of all, you’re always only as good as your weakest link. So, the, so you have to insist on it, right? Amazon basically brings out its customer obsession through principles, what they call leadership principles.

One of them is insist on highest standards, and those highest standards have to be not just for the people who are, within your own business, but even for the folks who are your channel partner. And if those folks, even if, and, right now we’re saying channel partners, but maybe there’s parts of your business that are outsourced to third parties or whatever, you have to insist on the same behaviors up and down the chain. Otherwise, your reputation will be affected by those folks who are in between you and the ultimate customer. And so, that has to be something where it’s how you qualify people to be channel partners. It has to be part of the equation.

David: I always remind people that one of my life’s principles has always been “You are who you work with, and you are who you work for.”

Yeah. And whoever is carrying the message and communicating the views and values and morals and ethics is going to shape how people perceive you. And they need to be consistent and hopefully on the right side of the line. Yeah, because I’ve never wanted to cross the line. I want to know where the line is, but I never want to cross the line.

Marbue: Let me give you a different example. Back when I was at Microsoft and this isn’t a one so much about customer obsession, there’s a customer obsession angle to it. But I think of a scenario where. The company was bidding on a, project and they were working with a certified partner.

And they looked at the numbers that the partner was bidding, and he said something’s wrong with this picture because that would be less than cost. Okay, and so eventually what they figured out was that partner was going to sell a certain number of legit licenses, and then they were going to pirate licenses, and it’s like, okay, you would never continue to do business with that partner! Because That’s just a total no. Well, think about it from the customer obsession perspective, right? If you have a partner in place that does not reflect your customer obsessed values, Well, it’s not gonna work well for the customer. It’s not gonna work well for you.

You wouldn’t continue to do business with them.

David: Right really good example. All right, I want to switch gears a little bit, Marbue. So, as we talked earlier, I work with mostly B2B companies or commercializing defense technologies. How does, we’ve been talking a lot that tends to be more consumer focused.

or has the perception of being consumer focused. But I think you and I would both agree, and I’m using hopefully the right word this time, that you and I would both agree that even in a B2B business, customer obsession is going, always going to be helping you create value. Absolutely.

Marbue: And

David: so what would you say to The B2B manufacturer of a machine in a machine shop or a product maker in the middle market who says, well, that’s nice.

It’s consumer business. I don’t need to be customer obsessed. I just need to have a quality product and good service.

[00:38:14] B2B Must be Customer Obsessed! Not just B2C

Marbue: ​So let’s go back to the example that I gave early on about Toyota and the Andon cord, right? So obviously when Toyota’s. Assembling cars. Some of those parts are coming from third party suppliers.

Now, if Toyota will stop the entire assembly line because there’s a defective part coming through, That, there’s a customer obsession angle there. Now imagine the company that is the supplier. That company should have the mindset that Toyota as their customer should never have to stop the assembly line.

So they should be thinking about it from that perspective, that how do I safeguard my business customer from having that embarrassing situation? Think of the companies that are supplying Amazon with the products that are going on their site. And, where Amazon may be pulling an Andon cord and stopping that product from being sold.

They have to have that same mindset that Amazon should never have to pull an Andon cord because of my product. And it could be anything from what kind of packaging is my product being shipped in? To what is the quality of the product that I’m putting out there? They have to have that same kind of mindset.

They have to have the same kind of mindset that if, something goes wrong with that product, they’re going to project the same way of making it right. What Amazon would project in terms of making it right.

David: Really good point, yeah, really good point. What other indications will a B2B business see?

Quality is an easy measurement. It’s either within spec or it’s not within spec. It’s either working or it stopped working well before it was expected to stop working. Or it arrived broken because the packaging was lousy. What B2B business owner or executive be thinking about? are looking at to understand if there’s a gap between what they should be doing for their customers and what they’re actually doing.

Marbue: Well, look, returns is a big area. Good point, yep. Returns is a big area. If the company that you’re supplying is returning stuff at a certain rate, that is a big red flag for you that, and you can look at the things that you’re sending out and just monitor. What your returns look like on anything that you’re manufacturing and your tolerance for returns should be very low from a customer’s perspective.

Now, you know what? It saves you all kinds of money too. Because you don’t have to return money that you’ve made essentially. So, returns is a is a big area that, that would start sending up red flags for companies, if things are being returned at a certain rate.

And here’s the other thing, there might be return rates that people consider to be acceptable, but then you should start saying what would be exceptional? Right, good point. Because if you do what everybody else does, then you’re not in that customer obsessed range. Look early on with cell phones, There used to be A lot of drop calls. Now, if you were in the business of just dropping calls less than the others, you might have been better than the others, but that’s not the standard that the customer was looking for. The customer is basically looking for no drop calls at all. Right. So that’s what you should be working backwards to.

So that’s another way that you should be thinking about this. You should be thinking about not just how good is what you’re delivering, but whether what you’re delivering is what the customer would want. Look I’ll tell you that sometimes customers essentially have a wish list, but they never ask for what’s on their wish list because they don’t necessarily think that they can get it.

David: That’s where you ought to be going. You ought to be going to that thing that customers want that they don’t think they can get. You find a way to deliver it. Interesting Marbue, I was with Tim Cabot, one of the, my other interviews on the Amazing Execs program. We were talking about, normally when you look for opportunities to improve your value creation and growth, you look at those customer segments that are highly value driven and contribute to the bottom line and also contribute to growth year over year. And then you look at those areas where they may require a lot more service than actually what they’re paying for and they may be value neutral or they may be negative value creators.

And so you have to decide, should you de emphasize this group? And in doing this, which is a traditional way to look at doing market segmentation of your customers and looking at customer profitability, but the one thing that happened was when he de emphasized a group of customers, He found out that there was a huge gap between the value that those customers had of the service he was providing and what those customers were actually paying and that they were willing to pay five times more than they were actually paying.

They were just never asked and his learning there was that this was not a group to de emphasize or at least a good portion of the group that he was de emphasizing when in fact it was a group that the business that he bought had not spent enough time with talking to and it was a matter of proving this so to your point customer obsession sometimes just means being customer engaged and really understanding what the value proposition is that your product or service has to that customer and is it beyond just what they’ve been paying for 10 years, which in this case it was. Highly specialized coatings of metal products that go into very clean room conditions that, are unique and have grown value in that business.

And so it was a great story. Okay, I’m a middle market owner. I want to be customer obsessed. What are the steps that I take to go start that? What

Marbue: do I do?

[00:45:39] How Do you get Started?

Marbue: Well, look I think one of the great places that people can start is to do a review of their policies, okay? And procedures, right?

And to start up, like I said earlier, understanding if there are policies that they have in place that actually get in the way of the customer. But also if they have policies in place that really stack things, stack odds in the customer’s favor, right? I think looking at your policies, looking at your procedures, great place to start.

Thinking about those things that you know don’t work for the customer, but that you always keep putting off. Fixing because, something else comes up on the prioritization list, right? It’s not working for customers, it’s not even working for your employees, it needs to be fixed, but it’s kind of in the pipeline and every year it gets pushed back or every quarter it gets pushed back.

It keeps getting pushed back. Well, when you’re doing, when you have those kinds of things in place, you need to be looking at how do you move the needle there. But let me tell you, you got to take a whole business approach. to customer obsession. How are you communicating with your employees?

If you’re at the very top of the business, or you’re at the top of a P& L or something like that, Not only how do you communicate, But how do your directs communicate? How do their directs communicate? Are you all, communicating a consistent message? And… In conjunction with that whole thing about policy review, is your message consistent with your policies, or are they conflicting with one another?

Is one voice saying, we want to be customer obsessed and that the investments and decisions are saying, well, customer obsession doesn’t really matter that much? Is there incongruence there? Because if you have that incongruence, right, so you got to take a whole business approach. When you hire people and you’re bringing people in the door, are you bringing people in the door who have that mindset about how they’re going to deal with customers. I can tell you all the businesses that, I’ve used as examples here or that are used as examples in the book, they are super selective in how they hire people, how they onboard them, how they immerse them in the culture.

So you have to think about those pieces too. How do I do that? And of course, if you’re moving in this direction and it hasn’t been one where you are, then you kind of got to. To re onboard your people, to re immerse your people because you’re taking them in a new direction than what they’ve been before, and you have to model these behaviors in a way that will make people know that, this is not just talk, you’re walking talk.

So these are some of the steps that people take. But I’ll tell you just in the book, and again, the book is Blueprint for Customer Obsession. In the book, one of the things we have is we essentially have like, almost like a quick reference guide that helps people to see what are some of the behaviors that customer obsessed companies do. But it also shows what customer-centric and customer focused and, customer aware companies do. And so you can look and say, Hey, where am I in this mix? Do a bit of a gap analysis and begin to say, and these are places where I’m gonna plug the gaps.

Right, So those are things that people can do to, Get on this journey and basically accelerate their journey.

David: So, really good points. And I’ve always been obsessed with Net Promoter Score as an example. And it’s one of the first things that I think people need to start looking at in terms of every experience or sampling every three or four weeks.

Fulfillments of orders, even on for B2B companies to keep checking to say how, how likely are you to recommend us to your colleagues or other people in your value chain or supply chain. And that get and tell us why you gave us that score is important feedback to know. Not only what the perception is, but what the reality becomes.

And so, if you’re not doing things like that today, you need to start, but you can’t just take it in context of okay, here’s a program I’m going to go do, and it’s going to solve all my customer obsession. So, I think it’s really good that you’ve scaled out, and I think it’s really important in the book to roll out the various forms of customer centricity that an organization can resolve.

But are there patterns that you see, Marbue? Between a company that is completely product focused versus a company that might have a product and service mix to it versus a company that’s service only. And again, I want to say I, if we can focus on the B2B side of this equation for this question.

Marbue: When you think about companies that are product focused, the typical scenario you have is a company came out with a product, that product was successful, and they’re basically trying to capitalize on that franchise, right? And so they think about product extensions, they think about, natural extensions to how they can focus on that product, but they’re not necessarily working backwards from the customer.

[00:51:43] Product companies should ask… New Product or features?

Marbue: Okay. And saying, if I was working back from the customer, would I do this product extension or would I do a completely different product? Let me, let me give you an illustration. And I don’t know, maybe this is not B2B but, the Apple Macintosh was a hugely popular machine.

Especially at that time, it was really much more of a niche machine when Apple introduced the iPhone. Now, when Apple first introduced the iPhone was not, iOS was not compatible with macOS. Okay? So, the idea was, working backwards from the customer, I’m going to build a great phone.

Okay? I’m not going to build… A phone that is competitive, that is compatible with the Mac. That was not the constraint. The constraint was worked backwards from the customer, built a great phone. Now, eventually the phone and the the Mac have seamless integration. Right? And that’s beautiful.

But in the beginning it was not. So now, if they had made that a requirement, The phone might want to being different. And it might not have wound up being as popular as it became. So, when a company has this product focus, they tend to kind of work backwards from the product as opposed to working back from the customer.

And when you work backwards from the customer, Then you do, things that are counterintuitive and, folks will look at that and say, but that’s not their area, or this doesn’t make sense, but later on, they take a step back and they look at it and then it all makes sense. Right?

So, that’s how I think about this whole notion Of, whether the company is product centric or it’s customer obsessed. I think of a scenario in one of the companies that, that I worked for. We were producing hardware, if you will, that typically we would sell it to people and they would configure themselves.

And then we brought out a new class of hardware. And your typical company could not configure it themselves. And so that necessitated a whole new approach to dealing with those companies because we had not been in the servicing business before, typically working with partners to do that servicing.

But in this scenario, we needed to change the model. We needed to change the model because to make that a complete solution for the customer, not only did we need the hardware, but we needed the servicing. When you brought those together… That would make a complete product, right? And so, that would be your scenario where you have the mix, right?

Once the company realized that, they jumped in with both feet to make that happen. And that, of course, again, would be the notion of working backwards from the customer. That would be the way that you would do it.

David: Yeah, you reminded me, I did some work on a turnaround of a company in the Laser Space.

They had a hundred thousand custom SKUs that were available through a catalog. Different, lenses and light benders and prisms and laser add ons and other devices and benches and all the other stuff needed to do medical research, telecom, laser research, and their sales were declining. I realized, when I was listening and watching the salespeople, they were just answering the phone

and talk about the part that the customer was asking about. And because I’m very customer centric and customer obsessed, I realized that we needed to change the script.

I’d ask the engineer to say, what are you using this for? What are you trying to accomplish with this part? And all of a sudden. We were able to turn around their inbound sales orders, went from an average contract value of under 400 dollars to over 2,000 Dollars just by changing the script around to have the engineer ask what they were trying to accomplish and what else was going on and maybe they didn’t need this lens, maybe they needed something else that was more appropriate.

it didn’t matter whether it was less expensive or more expensive, but it, Met the needs because they were actually engaging in conversation.

Marbue: And they were focused on the solution for the customer, not just selling a product. They went from inside out, outside in really working backwards from the customer’s perspective and creating a solution for the customer.

So.

Yeah, that’s right.

David: And it tracks Marbue especially when you look at the middle market I found 200 million dollar companies that, their level of maturity on the financial side is that they still have a bookkeeper running their books and when they, 25 years ago when they started their Great Plains software or Microsoft Dynamics or whatever they started with they checked the box that said I’m a manufacturer and they got their five magic General ledger accounts to manage inventory or whatever it was specific to their industry, and they’re still managing that to this day and they’re thinking like bookkeepers when in fact in a hundred or two hundred million dollar business, you know that they’ve got projects of a half a million dollars.

They’re spending money on and they’re not treating them like investments because they still think like a bookkeeper. And the same thing happens on their sales side. They get, they’re starting from a product focus as opposed to being customer obsessed or customer centric. And turning it around to talk about the solution that the customer is looking for or the problem they’re trying to solve.

[00:58:14] Role of the Board in Customer Obsession

David: And so it just exacerbates itself. I want to change topics and then we’ll summarize, we’ll sum it up. I do have one more topic that I’d like to discuss with you, Marbue, and get your feedback on. And that’s, I work with a lot of companies to understand the role of boards and board governance and strategic planning to kind of create transformative growth and growth value creation for their businesses.

And in doing so, in some cases, it’s helpful to have an advisory board or a board. And those boardshave to take a very careful role. They’re not consultants to the company, but in effective board governance, they are people with their “nose in and hands out.” And so they are there to ask the right questions.

What should a board… Be thinking about from a customer’s obsession viewpoint because we know some of the others today are things like diversity. They’re looking at issues of data and security. They’re looking at the issues of digital transformation. Can you automate? things in your business that enables you to avoid having to deal with labor shortages or inability to find experts in your business.

Talk about what you think a board should be considering and the CEO of the business and the leadership team of a company. regarding customer obsession.

Marbue: Well, let me say that I, there’s a real question of what do businesses want to become! I think there are some businesses that have reached a certain level and, this is great and I’m happy to just be here, right?

But, I, know the typical startup in Silicon Valley or in Silicon Alley they don’t have that kind of a mindset, right? They want to grow from being, a small business, to a mid sized business, to being a big business, and so on. That’s kind of the mindset. And I would say, look, one of the critical things for these businesses is whether or not people are seeing around corners. And that’s what it’s like. It’s a concept that’s easy to say, but it’s one of those things that is a discipline that is in customer obsessed companies.

Remember when we talked about the impulse buy of a Louis Vuitton bag in Costco? Well, every time you go to Costco, there’s a treasure hunt, right? Every time you go there’s a treasure hunt. And that’s because people are seeing around corners. Okay, when you go to Trader Joe’s, they are always seeing around corners.

They are so in Trader Joe’s, you will find, the new thing that people want to buy before other stores are going to have it. It’s a matter of seeing around corners. When you think about the Apple Watch. Being able to help people with family planning and all that sort of stuff. Like who would have thunk it, right?

It’s a matter of Seeing around corners. And so one of the things that I think is super important for these mid sized businesses You know small, mid sized, medium sized businesses What are they doing in terms of this whole notion of seeing around corners? Of giving customers what they want Before they know they need it.

Of continuous innovation, right? So there’s this whole thing where, you know, you mentioned about the folks who are still doing the bookkeeping the way that they did when they were a 1 million business and now they’re a 200 million business. Well, you can’t be customer obsessed if you don’t have continuous innovation.

So, Amazon Prime was two day delivery. Then, they brought out something called Prime Now. Now, Prime Now was not available for every market, but that was something where you could have, like, two hour delivery. And they’ve been working on this notion to go to one day delivery.

Well, you can’t have a company be customer obsessed if they’re, just milking their existing franchise for what it’s worth. And, don’t get me wrong, I mean, you can be hugely profitable by milking your current franchise for what it’s worth. Right. But, if you want to keep moving the needle, then you have to be thinking in terms of these things like seeing around corners.

Like. Innovating relentlessly on behalf of the customer. And I’m going to throw back to something you said earlier. You mentioned about Net Promoter. And, I, Net Promoter is one of those metrics out there that has norms around it and everything like that. Customer Effort Score is another one that, has norms around it.

And there’s a few of them out there that I think that are in a great category. But look, whatever the metric you’re using. If you have the trend data on it and you can set ,what we would call big, hairy, audacious goals, those goals that almost seem like they’re unattainable, but you’re able to stretch yourself to get there. These are the kinds of things that boards should be, looking at is the company setting those kinds of goals?

[01:03:53] 3 Board Questions

David: Is the company seeing around corners? Is the company connecting, engaging personally with customers? Delivering exceptional and connecting emotional. These are the kinds of questions that, should be asked. Really good points. And I think any board should be looking at whether they are creating that innovative thinking at the strategy level that will drive different behaviors and different ways. When you look, one of the things that always drives me crazy, Marbue, is that, I deal with a lot of startups.

When you look at all the people who are mentoring and supporting these startups, they have this beautiful soft curve that shows you how you go from startup to growth phase and then growth to scale and then scale to, unicorn. And it’s a nice, beautiful, smooth curve. Well, the reality is, in the experiences that I, that every company faces, one, it’s not a nice, smooth curve.

And two, it looks more like a sine wave and sometimes the sine wave is on a negative attitude and sometimes it’s on a positive attitude, but it, you get high about what you’re doing and all of a sudden somebody makes a comment and you realize that, holy shit, maybe it doesn’t have the value proposition that I thought, and you have to start back over again and you wind up again and you come back again and then all of a sudden you find that magic value proposition.

But then when you do, the reality is, Very few of those companies get unicorn status, and if you look at the middle market, which is one of the main drivers of the U. S. economy, the companies have an average tenure of 22 and a half years in the middle market. So they’re not, they’re not making it to unicorn status.

They’re sitting at 50 million, or 40 million, or 200 million, or a half a billion, and they don’t move the needle. And to your point, If you don’t think about what you’re doing, and the other thing that happens with these companies is that, we talked about this earlier, they may be creating a new product, or creating a new product extension, but they haven’t looked at the fact that what is the incremental lift going to be from that new product?

Is it just because you’re answering the need of one or two customers? But there may not be a market for that where you need to sell a thousand of them to really make money on it, but you’re still doing it because you’re trying to support those one or two customers, but you’ve lost a lot of money in doing so because you’ve made an investment.

They don’t treat it like investments, they treated them like projects. And so that, Back to the maturity thing. You need to understand your core business and what it is that you do to make money before you start thinking about new products or new markets that you can enter in with your current products, much less take that leap into new products and new markets and do things transformatively.

So really great discussion. So Thank you Marbue. This has been amazing and so just a couple of quick questions. You’re promoting your own book now

But what’s your favorite business book right now that you’ve been reading or do you have time to?

One really nice book. It’s short, it’s small, it’s called “The Fred Factor.” And I think that it’s a nice quick read. And in some ways that book inspired me to write my own. So, that’s awesome. That’s one I would certainly put out there. And I just think it’s a fun, book to read. We have to get your book. So how can people get in touch with you, Marbue, and where do they find your book?

Marbue: Well, people can find my book on Amazon and at other booksellers. I mean, it’s all out there. Easiest place. You can just go to Amazon and get a copy of Blueprint for Customer Obsession, that’s one place.

Hey, if folks want to follow me on LinkedIn, it’s Marbue, M A R B U E, Brown. There aren’t two Marbue Browns out there. So, easy to find me on LinkedIn. But look, folks can come to my website, which is https://customerobsession.net. And that’s net. CustomerObsession[dot]net. net and they can learn more about me and the different services that my company offers the Customer Obsession Advantage, different kinds of things that we’re pulling together over there and they can learn more about me and what I’m up to.

So, those are a few different ways to get in touch with me. LinkedIn customer obsession.net and definitely they can get a copy of the book on Amazon. Awesome.

David: Well, thank you Marbue. And this has just been amazingly confirming of the value of customer thinking and customer obsession.

thank you for being here and sharing. What you’ve learned. I think everyone should walk away with a better perspective on how they can incorporate customers into their thinking for their own growth, their own value, and their own success.

Marbue: Well, hey, I’ve had a blast being on the program with you.

I hope people got some nuggets that they can take and use right away. it’s my passion. I love to, to have conversations about this subject. And so thank you very much for having me.