Innovation – Deep-Insight

Quality is Free (so Invest in Service Excellence)

Posted on May 17, 2021 at 4:39 pm.

Customer centricity is all about doing the right thing for the customer. Doing the right thing also means doing things right. That means service needs to be excellent. All of the time.

Sounds expensive?

Actually, it’s not. The main message in my last blog about the Service Recovery Paradox was that quality is free so make sure to build quality in from the start so you do things right first time.

The Service Recovery Paradox

By the way, the Service Recovery Paradox is a well-known management concept. It states that a service failure followed by a good service recovery can lead to more loyal customers.

The only problem is that there is no compelling evidence to show that the paradox is true. In fact, the opposite is the case.

Loyalty and Repurchase Intentions do not return to a higher level after recovering well from a service failure. There is evidence to show that Satisfaction levels can end up higher than ever before if the service recovery is managed well, but customers are less likely to repurchase.

Our own experience is that this is particularly true where there are repeated service failures. Quite often, repeated failures are symptomatic of underlying issues that have never been adequately addressed. That’s why the service fails, and fails again and again.

The implications are profound. If you want to retain clients and increase revenues and profitability, you simply cannot afford repeated service failures. The good news is that service excellence is achievable for all companies. The even better news is it doesn’t cost anything but it does mean that you need to have a good quality system in place to identify, eliminate and prevent further service failures.

Quality is Really Free?

‘Quality is Free’ and ‘Right First Time’ are references to a 1979 book by Philip Crosby. Crosby was one of the founding fathers of the Total Quality Management (TQM) movement in the 1960s and 1970s. He had previously been a senior executive and Quality Director with the US manufacturing company ITT. In the early chapters of Quality Is Free he outlines the impact of the quality programme at ITT which at the time employed 350,000 people across the globe.

Crosby’s philosophy was a simple one. Rework is very expensive. It is less expensive to do it right the first time than it is to pay for rework and repairs. So focus on doing it right first time.

Much of Crosby’s work was for manufacturing companies but the principles are exactly the same for services firms. And probably more relevant. Crosby believed that manufacturing companies wasted about 20% of revenues fixing things that had been done wrong in the first place. According to Crosby, this figure could be as high as 35% in services firms.

Crosby’s Fourteen Steps

Crosby summarised his approach to quality in 14 steps. Even though they are over 40 years old, the steps are worth repeating here. They are as critical today to retaining customers as they were in 1979 when Crosby wrote ‘Quality is Free’:

#	STEP	COMMENTS
1	Management Commitment	Get senior management buy-in from the beginning. Leaders – particularly the CEO – must be personally committed to the quality programme. Without this, nothing will happen.
2	Quality Improvement Team	It’s senior management’s job to assemble a team and equip them with the right tools to make the programme work.
3	Quality Measurement	What gets measured gets managed. The corollary is also true. If you don’t have a measurement system, little is achieved.
4	Cost of Quality Evaluation	Calculate the cost of poor quality. That provides the business case for investing in quality. Remember that quality is free if the investment is lower that the cost of rework.
5	Quality Awareness	It’s all very well for senior management to know the cost of quality. Everybody in the company must understand it as well. Make sure they do.
6	Corrective Action	This is where we start identifying and fixing problems – with products, processes, service levels.
7	Zero Defects Programme	Set ambitious targets for 100% quality. They may not always be achievable, but the ambition must be visible.
8	Supervisor Training	The concept of supervisors may be old but investment in training for management is not. And it’s critical.
9	Zero Defects Day	This is related to Point 7 and makes a statement that one day each year must be dedicated to ensuring that a Zero Defects ethos pervades the company.
10	Goal Setting	Crosby recommends 30-day, 60-day and 90-day goals. The emphasis is on teamwork to achieve those goals.
11	Error Cause Removal	Ask individuals to describe any problem that prevents them from performing error-free work. Fix those problems.
12	Recognition	Recognise and reward excellent performance. Crosby recommends that rewards for outstanding work should NOT be financial.
13	Quality Councils	The purpose of these councils is to bring professionals together on a regular basis so that can share stories and best practices.
14	Do it Over Again	Most programmes last about 18 months before they need to be refreshed. Senior management must sustain the focus on quality so that it becomes part of the company’s DNA.

Customer Centricity = Service Excellence

At Deep-Insight, we help B2B companies become more customer-centric. By doing so, they will improve retention rates, revenues and profitability. Customer centricity is all about doing the right thing for the customer. A lot of Deep-Insight’s clients think that a core part of being customer-centric is being able to bring Innovation to the table for their customers. Service excellence is far more important.

Don’t get me wrong, I’m not saying that innovation should be ignored. It’s a hot topic in boardrooms these days. Even so, all of our experience suggests that if companies are failing to deliver the basics well, their customers have little interest in discussions about innovation.

You need to earn the right to talk about innovation. That’s why Service Excellence is critical. Consistently good service eliminates the day-to-day ‘noise’ that gets in the way of working with clients on exciting new and innovative ideas. Service excellence also helps improve customer retention rates. That’s the core message from the Service Delivery Paradox blog.

Invest in Service Excellence

Remember: service excellence first, innovation second. So do the right things, do them right and get them right first time.

Remember also that quality is free so there is no reason NOT to invest in a Service Excellence programme for your organisation. You know it makes sense.

Do contact us today if this blog sparks any ideas and you want to have a chat about improving retention rates, revenues, and profitability.

What Do I do with my Ambassadors?

Posted on July 3, 2020 at 3:08 pm.

Written by Alexandra Calugarici

Some time ago, we posted a blog called Help! What do I do with my Stalkers and Opponents? It was about the actions that account teams need to take with clients where there are very poor relationships. This blog is about the accounts with the best, strongest and deepest relationships. We call these clients Ambassadors.

Let’s start with a quick recap of the five B2B client categories that we use at Deep-Insight:

Customer Relationship Quality – the Strongest Relationships

The most loyal clients are Ambassadors. They are your most valuable customers. Ambassadors have a unique relationship with you and will recommend you to others. They are also prepared to pay a premium for your products or services. Price is not an important consideration for them because of the quality of the relationship. Typically, a third of most company’s B2B clients are Ambassadors.

The next segment of clients are known as Rationals. They rate you positively but do not see anything unique in the relationship. Rationals will assess alternative sources of supply and the relationship can become unstable if good alternative offers exist. Typically, half of your B2B accounts fit into this category. Generally they are good clients albeit not as loyal as Ambassadors.

The Weakest Relationships

But wait! That doesn’t add up to 100%. What’s the story with the others? Well, the answer is that in all B2B client portfolios, there are accounts and individuals that don’t love you. We typically find that 10-20% of accounts have poorer relationships with you and fit into one of the following three categories:

Ambivalents often have a “love/hate” relationship with you. In some instances, they love the way you solve their problems but hate the way you treat them. More often, you are killing them with kindness but failing to solve their business issues.

Stalkers are often only interested in price. Sometimes they can be large corporate accounts looking for discounts. Other times, they are smaller accounts with high service requirements and view your offering as poor value for money.

Opponents have the poorest relationships with you. They are deeply dissatisfied and often highly frustrated by what they see as consistently poor service.

Are ‘Ambassadors’ the same thing as ‘Promoters’?

If you use Net Promoter Score (NPS) as a performance metric, you’ll recognise the terms Promoters, Passives and Detractors.

Promoters are people who score you 9/10 or 10/10 when asked the question “Would you recommend [Company X] to a friend or colleague?” Passives score you 7 or 8. Detractors score you anywhere between 0 and 6.

Ambassadors are similar but here are the two crucial differences: First, an Ambassador is a company rather than an individual. Second, to become an Ambassador you have to get a good Net Promoter Score AND a good Customer Relationship Quality (CRQ) score. CRQ is our methodology for assessing the quality of B2B relationships and it is based on Trust and Commitment as well as some other factors, rather than Advocacy which is what the NPS metric is based on.

Think of it this way. Suppose you ask 20 people in a Key Account what they think of their relationship with you and would they be prepared to recommend you and your product or service. If the client is an Ambassador, 12 of the 20 individuals might be Promoters, six might be Passives and two might be Detractors. The overall relationship is great but there are still a couple of individuals who will not recommend you.

What do I do with my Ambassadors

For starters, sales and account teams should remember the following three things when they have an Ambassador client:

1. Recognise their importance and don’t take them for granted

The very first thing is to recognise that Ambassadors are generally your most profitable clients, for a number of reasons:

– They are typically less price-sensitive because they see what you offer as being unique.
– Ambassadors are generally willing to pay a premium for such uniqueness.
– Sales costs are lower. Less effort is required to extend existing contracts or negotiate new ones.
– There is less firefighting. Putting out fires can be expensive. Even when things go wrong, it’s generally easier to resolve operational issues with Ambassadors.

Don’t rest on your laurels. Don’t treat Ambassadors as cash cows. Invest time into the relationship to keep it fresh and exciting. It’s easy to get diverted to more problematic accounts where the shouting is the loudest. In our previous blog we talked about poor client relationships that are unprofitable. Unless there is a clear path to recovery, it is often better to re-allocate those resources to Ambassador clients where there is greater potential.

2. Ask them to recommend you

Remember that a high proportion of individuals in an Ambassador client are Promoters so they have already told you that they will recommend you. So take them up on the offer. Ask them for referrals. Those referrals could be the MDs of other divisions in the same company. This is important – it’s easier to expand your footprint in an existing client than to gain ‘new logo’ clients. Referrals could also be senior executives in other companies. Ask for testimonials or for case studies.

Trustmary is a Finnish company that helps clients do exactly that, by using Net Promoter Score as the key metric for identifying Ambassadors for their clients. Once the Ambassadors have been identified, Trustmary acquires testimonials in written or video format from those individuals.

Don’t be afraid to ask Ambassadors to talk at your next industry event or to be a guest speaker at your next conference. They want to help you. So just do it.

3. Start innovating and co-creating

As the account manager for an Ambassador client, you are probably in the enviable position of being a Trusted Advisor. You have the ear of the key decision makers in that account and the opportunity to bring new ideas and propositions to the table. Use that opportunity. Think of possible joint developments that you can do in partnership with the client. As well as adding more value and revenues, your next product line or service could result from such innovation or co-creation.

How many Ambassadors do you have?

The starting point for these decisions is an accurate and objective view of which category each of your major accounts fits into. Once you know that, you can start asking the right questions and taking the appropriate action.

Contact us if you want to find out how many Ambassadors you have!

What is Innovation?

Posted on September 2, 2019 at 4:57 pm.

Written by Rose Murphy

As a Customer Relationship Advisor at Deep-Insight, a lot of clients ask me about innovation. How do I make it happen? What prevents it from happening? How do you create an innovation culture? Very often people ask me: “What exactly is innovation?”

Now that’s a very good question.

To find out, our CEO John O’Connor recently spent some time with a man who knows all about innovation – Rob Baldock, Managing Director of Clustre, the Innovation Brokers.

I hope you enjoy the interview, and if it sparks any questions, please do get in touch with us.

Craig Johnson
Customer Relationship Advisor, Deep-Insight

“Innovation is about looking for a cracking problem and then trying to solve it”

John O’Connor: Rob, your biography says that you are the MD of Clustre, the Innovation Brokers and that you’re celebrating your 50th year as an innovator this year. Can you tell me more about your 50 years of innovating?

Rob Baldock: Sure. It all started in 1969 when I watched the most extraordinary thing on TV. Two men set foot on the moon. That was something that struck me as being incredibly significant at the time. That was real innovation, particularly when you consider that they were sent to the moon using a computer that wasn’t remotely as powerful as a modern smartphone. Another influence at that time was my maths teacher at school who got us involved with programming at the local polytechnic. While some of my friends were very interested in using this opportunity to play computer games, my mind was moved towards using their computer to solve problems. Even at the early age of 14, I was starting to zone in on one of the essential principles of innovation – look for a cracking problem and then try to solve it.

Innovation = Sales

Rob: I remember at the time, our school was compiling statistics for the local council. The person doing this work was moaning about how tedious and time consuming this task was. I thought this is a cracking problem waiting to be solved. So back in 1969, at the age of 14, I convinced the local council that I could write a computer program that could do this and even persuaded them to pay me to do this for them! So I quickly learnt another principle of innovation – you need to be a good salesperson too.

Rob: By the way, the other interesting thing about the moon landing is that John F Kennedy didn’t know if it was even possible in 1961 when he challenged NASA in to send a man to the moon by the end of the decade. It may have been ‘Mission Impossible’ but there’s nothing like a seemingly impossible task to concentrate the mind.

Time Pressure as Enabler

Rob: Another situation which influenced me was the problem encountered on board Apollo 13 which should have been the third moon landing but turned out to be literally a life and death problem for three astronauts. With no more than some slide rulers, a basic simulator, some pens and paper, a lot of brainpower and some real time pressure, a small team of people innovated a solution to save the three astronauts. Innovation starts with a cracking problem and is actually helped by applying time pressure to it.

Rob: One of the firms we represent sets itself the challenge of coming up with a solution to a problem within a month or so. Problem to prototyping in a 4 week time-frame. That may or may not always be possible but the time pressure imposed by that 4-week timeframe is important. I have found that creative minds work based when placed under time pressure!

John: That’s a nice segue into the definition of what invention is. You talk about ‘Invention versus Innovation.’ What do you mean by that?

Rob: Innovation is about finding ways to do something differently or better. That’s the essence of innovation. Innovation is not always synonymous with the with game-changing ideas. In fact, new inventions are few and far between. For example, look at Uber. Uber is an example of Innovation rather than Invention. All of the components were there already: cars, drivers, sat nav, smartphones… but Uber has managed to pull it all together into an app and deliver a truly disruptive service via a smartphone.

“Innovation is as much about speed as it is about creativity”

John: It’s a great example but Uber is a modern tech company. What about traditional companies? How should they approach innovation?

Rob: Innovation is a hot topic in traditional companies too and it’s about asking the question “what does it require us to do differently?” Remember we are in the era of mass disruption. What is different today is the speed with which you can create something from nothing. You can disrupt or be disrupted in a very short timeframe which means you need to do things at speed. In fact, it’s as much about speed as it is about creativity.

John: But traditional companies are not usually known for speed…

Rob: If it’s too hard to do internally, then companies need to recreate themselves outside the confines of the current organisation. Look at the banks in the UK. Many have come to the conclusion that it’s easier to create a new standalone business bank than trying to re-engineer their existing operations.

Rob: Another example is Rightmove which was created in 2000 by the top four corporate estate agencies in the UK. It was a standalone entity that competed against its founders. Now Rightmove has a valuation which is greater than the combined value of the estate agents that got together to build it. Another example is the mobile operator Giffgaff which was set up by O2’s owners Telefonica in 2009 and is ranked as one of the most innovative companies in the industry.

John: Are there other ways of being innovative which don’t require you to recreate yourself or implement such radical solutions?

Rob: Yes, of course. You need to establish a culture of customer-led experimentation.

John: Can you explain…

“Just by involving the customer, the success rate increased to 9 out of 10”

Rob: Let me give you an example. Another firm in our network worked with a major international publishing company to look at the way they created new products. At the time, this company had a 3 in 10 success rate with new product launches. That wasn’t sustainable. They needed to improve their hit rate. We showed them a different way of approaching the problem by working with their target customer groups from the beginning. Just by involving the customer, the success rate increased to 9 out of 10. We know that the very act of involving customers in the innovation process will dramatically increase the likely success rate.

John: What are the main roadblocks to Innovation, and do you need to throw money at the problem?

Rob: Roadblocks? It’s lots of things – bureaucracy, structural barriers, culture, and so on. But remember that Innovation must also be thought of as a process, and one of the key things in innovation is to have a hypothesis and to be able to test it. That’s a key technique. And it doesn’t need to involve huge cost.

“Poverty is the mother of invention”

Rob: Let me give you an example. We were talking to an operator of some leisure centres where they faced a problem of members sharing their membership cards with friends and allowing them to use the leisure centre’s services without paying. One of the potential solutions with the use of facial recognition to identify if the card holder was actually the real owner of the membership card. The hypothesis was that the introduction of facial recognition software would deter this behaviour so they went ahead and bought some of this tech to try out . But they didn’t need to actually buy the tech to test this hypothesis out. They could have simply put up a sign saying “We are trialling facial recognition in this leisure centre.” That alone would have been enough to test the hypothesis! Remember: poverty is the mother of invention.

John: Thank you Rob, that was fascinating. Where can we find out more about Clustre’s work on innovation?

Rob: Easy. Just go to our website or drop me an email at robert.baldock@clustre.net.