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Customer Centricity The “Secret Sauce” You Can Take to the Bank

Customer Centricity The “Secret Sauce” You Can Take to the Bank

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Customer Centricity The “Secret Sauce” You Can Take to the Bank

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  1. Customer CentricityThe “Secret Sauce” You Can Take to the Bank NGCOA Meeting – Monterey, California June 20, 2007

  2. Who Am I? = $

  3. No Shortage of Great Companies

  4. The Bellagio of Electronics • Style and service over price (“No Regret Pricing”) • Beta testing ground • 210 trucks; 220 salesmen • 40 install crews, 70 in customer svc.

  5. The Bellagio of Electronics • Opening $5M Design Center to sell closets, bathroom fixtures, countertops • < 1% revenue spent on ads • $1,500 PSF vs. $930 at Best Buy and $555 at CC

  6. Started in ‘48 by Harry & Esther Snyder • 212 units in 3 states • 10% more than McDonald’s, 16% more than Wendy’s;45% more than Burger King • Basic menu has remained unchangedsince 1948, with one exception in 1996

  7. SNYDER’S VALUE PROP • “Give customers the freshest, highest quality foods you can buy and provide them with friendly service in a sparkling clean environment.”

  8. Almost no advertising • Marketing consists of WOM recommendations • Little fanfare on Grand Openings; store opens and the lines form • Much slower service than most; average wait time is 6-12 minutes • Surprisingly clean and well-maintained stores

  9. Industry-leading low turnover rates • Average store manager stays 13 years • Managers can earn over $110k plus benefits and profit sharing • PTE’s make over $9.00/hr. and enjoy • paid vacations, 401k, free meals, flex schedules

  10. They treat employees very well and then expect (and receive) the moon from them • They have a culture of “We’re the best, so you’re the best!” • They believe “if you lose your workers,you lose your customers”

  11. The Secret Sauce • Do what you say you’re gonna do • Product better work, but it’s just “cost of entry” • Balance the “left” and “right” brain • Leaders “walk the talk” • Build the workforce right

  12. A Fortress that will Pass Muster with the CFO Companies that keep their customer’s happierdeliver better financial results - ACSI ACSI Stock Portfolio (1998-2004) outperformed DJIA by 93%, S&P 500 by 201% and Nasdaq by 335% $

  13. 1. Do what you say you’re gonna do • Advertising can only get a prospect to your door. • The more emotionally disconnected you are from your customer, the more you’ll need to spend on advertising. $2.1 billion (>3.5%) $155 million (<1%)

  14. Customers’ expectations are growing 2X faster than a brands ability to meet those expectations – • Why? • Marketers not connected to reality • Customer’s occasionally do have a good experience, and then expect one from you

  15. 1. Do what you say you’re gonna do

  16. NYSE:CBH • Founded 1973 • 450 + stores in 9 states • Adding 150 stores in Florida • $47 Billion in assets • 13,000 + Employees • By 2010, 800 stores and $100B in assets

  17. “America’s Most Convenient Bank” • Grow deposits by deliveringsurprisingly exceptionalcustomer experiences Vernon Hill, CEO

  18. “Every bank CEO claims they compete on customer service. Very few execute like we do.” • “Our culture is what makes Commerce unique. Customer service is our # 1 priority, and we deliver. People are at the heart of this culture. Vernon Hill, Chairman

  19. Retail model 7 day banking (7:30 to 8 PM) Open 6 AM on Black Friday Close only 4 days each year 10 minute rule Extra large parcels Clear deposits in 1 day

  20. Hire right and intensely train “Customer WOW” Service Initiative WOW Awards Mystery shop every store 1-2X aweek Kill a stupid rule – get $50 bucks Any bank in your trade area closes – get $5,000

  21. Taking it to the Bank! • Assets up 40% to $45 billion • Deposits up 42% to $21 billion • Comp store deposits up 17% • Revenues up 31% to $1.8 billion • Net income up 34% • Pay less for deposits than competition

  22. What happens when the promise is not kept

  23. Song was the "brand is who we say we are” rather than the "brand is what we really do"

  24. Swan Song • Lost $800 million, which helped contribute to Delta’s Chapter 11 filing • Put many employees out of work; impacted Delta’s market cap

  25. Swan Song • Delta launches “reinvigorated customer experience” and new logo April 30th • “Every element of the campaign is focused on changing the travel experience including industry leading in-flight entertainment, signature cocktails, and self-service technology.” Tim Mapes, VP Marketing

  26. Heavenly Bed® Heavenly Bath® Heavenly Dog Bed® 2. Product better work, but it’s just “cost of entry”

  27. Heavenly Bed® And,building the bedtook some doing! • 13 pieces in all: • Foundation • pillow-top mattress • down blanket, duvet • 3 sheets, 5 pillows • A King costs $3,235 • Sold 30,000 beds for $10M

  28. Now,everybody’sin the game Sleep Number Bed The Bed Hilton Suite Dreams Sweet Sleeper Bed The Revive Bed Pillow Top Crowne Plaza Sleep Advantage The Grand Bed

  29. This $38 Million G-550 is a commodity

  30. What happens when the product doesn’t work

  31. Guys that work to get it right • Appealing to “Gen Y” • Toyota buyer is 48 • Scion targets 18-30 year olds – “Urban Hipsters” • What’s a FICO score? • ’05 Recalls > 10% (advise quickly; and leeway to spend $3,000 post-warranty)

  32. Guys that work to get it right • In 2005, slow cycle time was impactingcustomer satisfaction • To add 20 hours of labor/week per store would cost $40 million, or slice 7¢ a share • Spent the money as “highly” satisfiedcustomer’s spend 9% more than thosethat are “simply” satisfied

  33. 2. Product better work, but it’s just “cost of entry” • Implications for Golf • Our research indicates that members/guests expect that course conditions, putting surfaces, practice facilities, clubhouse, architecture, and amenities will be first-rate.

  34. Implications for Golf – We all want “raving fans” • Our research indicates that Member Satisfaction and Dissatisfaction (the gatekeeper) for private clubs is driven by: • Club employees (40%) • Overall golf experience (22%) • Club services (16%) • Clubhouse and grounds (12%) • F&B (10%)

  35. Our research indicates that Guest Satisfaction and Dissatisfaction (the gatekeeper) for daily fee clubs is driven by: • 1. Golf course (63%) • Booking process (19%) • Club employees (13%) • Golf shop (negligible) • Clubhouse and grounds (negligible) • F&B (negligible)

  36. Moving from Satisfaction to Advocacy • 2006 Long Haul Airline Study • Cabin Features • Seat Comfort • Cabin Crew • F&B • In-Flight Entertainment • Plane Type

  37. 2. Product better work, but it’s just “cost of entry” • NGCOA questionnaire - What’s your member’s or guest’s favorite service that you offer? • “Putting smiles on the customer’s face is the most important beyond physical offerings.Welcoming them with open armsand thanking them for your club.”

  38. NGCOA questionnaire - What’s your member’s or guest’s favorite service that you offer? • “Our most appreciated service is the unmitigated friendliness, positive attitude and knowledge that our staff shares with them.” • “I think the most important thing is to train all of your staff so that they are incredibly friendly and service-oriented and that they learn the member’s names. A smile and a welcome by name.”

  39. Left Brain Analytical Logical Sequential Systematic Linear Factual Rational Right Brain Intuitive Emotional Random Casual Holistic Visual Sensory 3. Balance the Left and Right Brain

  40. Creating a Service Model Two dimensions of the relationship that forms bonds Heart Head • They know me • They value me • They listen to me • They care about me • Best features • Best service • Best price

  41. WOM – Best Way to Grow a Business • In service businesses, positive WOM results from great relationships between employees and customers • Great relationships are built on Trust = confidence in a person’s reliability and integrity • As trustincreases, WOM grows • Source: Gremler, Gwinner, Brown

  42. WOM – Best Way to Grow a Business • A customer’s trust will grow if: • Employees and customers are well known to each other (familiarity) • A personal connection is present in the relationship (a bond) • The employee has demonstrated genuine care and concern for the customer’s well-being (empathy) Source: Gremler, Gwinner, Brown

  43. Patient WOM 95% of patients say “good things” about Mayo following their visit, and 90% recommended Mayo Each patient, in turn, told 46others

  44. Impact of WOM Average # of patients/year 500,000 Speak positively about Mayo to others x 95% 475,000 Average number of people hearingsomething positive 46 Reach - Buzz21,850,000

  45. Where are the Home Builders?

  46. 3. Balance the Left and Right Brain • “Our chefs and managers cook and run restaurants as if the word of mouth spread by each and every guesttoday will determine how full or empty our restaurants will be tomorrow.” - Danny Meyer

  47. “Hospitalitarians” – Danny’s 51 Percenters • “We work hard to hire people whose emotional skills, even more than how they cook or serve wine, make them predisposed to deriving pleasure from the act of delivering pleasure.” • “Long after our guests have forgotten how much they did or did not like the food, they’ll remember how we made them feel.”

  48. People Remember: • 1/3 of what they read • 1/2 of what they hear • But 100% of what they feel

  49. 4. Leaders “walk the talk” • They work hard to connect employees to theirvalues and beliefs • They believe if their employees don’t feel emotionally connected to them, then how could one expect customers to feel that way? • They’re frugal (“do more with less” approach), which keeps the workforce smaller and costs low

  50. 4. Leaders “walk the talk” • They’re conservative - rigorously measure everything, and hold people accountable • They’re humble and highly visible in their shops • They’re good storytellers