The sadness of wanting to give everyone a five-star service.
by Tijs Besieux, PhD
I recently sat with a client, the CHRO of a B2B retail company, who shared a great insight. She said, “Our NPS and customer satisfaction scores in general are through the roof, yet our profit margin does not follow that pattern.” She then gave a few examples of how, at an industry event, clients would walk up to her just by seeing the company name on her name tag to thank her for all the great work the company had done for them. Even though their clients are raving, the profit margin remains razor-thin.
And so in our conversation, we explored customer-centricity as a two-part leadership capability: first, knowing who your valuable customers are; and second, leading your company so every action starts with the intent to address their needs and desires.
So I asked her where the company struggles: in figuring out who the valuable customers are, or in executing with discipline to keep a laser focus on these customers, and not others.
That’s when the dialogue tilted toward leadership behavior. As she shared with me, the company has a relatively good view of who its valuable customers are, but leadership lacked the courage and discipline to consistently keep all eyes on creating value for these customers.
And so, because the people who worked at the company were so passionate about their work, they would do their best to provide five-star service to anyone who walked in, regardless of whether that person was their ideal customer. As a result, the company suffered from major product personalization, to such a degree that more resources are spent on adding small tweaks and features just to make sure that every customer is 100% satisfied with a tailor-made solution, instead of focusing on the most valuable customers and making sure the company frees up resources to create breakthrough innovation on their behalf.
The sadness in this story is that the people who work there do it all out of love for the customers and the product. They are 100% committed and fully engaged in creating a better world by applying their extensive expertise. But there is a catastrophic pitfall to wanting to serve anyone who walks in: resources are stretched thin; perhaps people even burn out while going the extra mile; profit margins decline because of over-customization; and, in the end, the company loses its license to operate, bringing the passion of so many people to an abrupt halt.
This is very much a two-part leadership challenge: first, knowing who your valuable customers are; second, leading in a way that ensures everyone in the company focuses 100% on creating value for these customers, so that value becomes a two-way street and the much-cherished customer relationship can continue for many years to come.
Any leadership development program should start with one question: for this company, who are the valuable customers, and what does effective leadership look like in this context, so employees give their all in service of creating competitive customer value?