Here’s Question 2 in our series:
Q: I work in a large and complex life insurance and investment business and we have been changing huge areas of our business using the Systems Thinking method for over 18 months now.
My question is really about how a Systems Thinking approach fits with other perceived business drivers; particularly our declared objective to cross sell more of our products to existing customers, up sell more of the same and crucially retain more of our existing customers for longer.
I hope it is not an over simplification but the Systems Thinking argument I think goes something like this - Our purpose is to design our work to fulfil the “nominal” demand of our customers (eg provide a retirement income). If we do this well we will deliver a level of service that our customers expect, we won’t make mistakes, we will keep our promises and waste and failure will have as little impact as possible on both us (in terms of costs) and our customers (in terms of frustration and disappointment).
Customer satisfaction is a by-product of the way the work works. Like staff engagement it comes for free as we redesign our system against the value demands of our customers.
Because we are delivering what we promise (within our control) it is a natural consequence that customers stay with us and buy more from us. Our brand promise and the actual real experiences of our customers are aligned. There is no need to “Push” additional products or up sell at every contact opportunity - fundamentally this is not responding to customer demand (e.g. please change my address) but is part of our own agenda and will cost us money, might not work and could undermine our newly designed business.
If this argument is correct we would be far better redesigning our service and getting the basics right before embarking on a major up-sell / retention / cross-sell programme across our operational business. Especially when over 1/2 the work we do is waste / failure.
As you might guess the logic above does not resonate with some key players in our business. In fact I’m not even sure that I have captured what an experienced “Systems Thinker” would propose.
What do you think - does pro active multi-channel CRM type retention and cross-selling have a place in a Systems Thinking service organisation?
Stuart’s A: Many thanks for your question. This is a really important subject because I don’t think that there’s an obvious enough link between Systems Thinking and growing your business. But I will do my best to give you my philosophy on the subject.
As you say it’s a given that in order to enable people to buy from you, they have to have a good experience and it has to be easy to buy. Additionally when they make a service request it should be fulfilled quickly, with high quality and in such a way that it’s efficient for the organisation. So the customer has a great experience, they tell others and you most likely get some organic growth.
Additionally because the customer has had a good experience I think it’s logical to suggest that they are more open to hearing from you, but that doesn’t necessarily mean that they will buy more. This is when you have to think about Systems Thinking from a slightly different perspective. Let me try to lay it out as a series of principles.
- Pull not push
- Having done what matters to the customer (or met their nominal value), you have won their trust. Now you have to ask permission to talk them on a regular basis. So once you have done what they asked, you ask a question “Can we talk to you once per week/month/year with highly relevant information to your circumstances. Also you need to make sure that the offer is designed from the customer’s point of view. It talks in terms of what they want to hear, not what you want to tell them.
- But you must make sure they have a good experience first! I tried to get a quote during a famous insurance company’s ‘quote me happy campaign’, it was a terrible experience.
- Create even more value for the customer
- Assuming that you know what matters to the group of customers with which you want to converse, you have to now add value. You do this by providing content that is associated with your product, even though it will not necessarily lead to a short term sale for you. For example let’s say you provide annuities for retirement. And you know what matters to your customers is income maximisation, tax avoidance and providing for a spouse after death. You put together information booklets/CDs/DVDs etc that are easy to understand and have useful content that can help customers meet their goals. In other words you become a reliable source of expert information, a trusted adviser.
- Then every so often you put an offer in communication that a client may want to buy.
- But there’s no point doing this if when they’ve asked you for something and you messed up.
- You also need to plan the whole process so that it’s slick and easy for the customer to get something if you offer it.
- Reduce waste to free up capacity
- It need not be the case that designing and administering the whole sales funnel should cost money, because if you have freed up staff from the improvement of flow then you can use them in the new marketing processes.
- Also you should gather data on the lifetime value of a client so that you know how much you can afford to spend on each client.
- But yes before you go working on outbound processes make sure that you’re making the most of the inbound stuff.
- Gather capability data, then test rigorously and maximise
- Before you go designing new outbound processes first gather data on what works now, then start to tweak these to optimise their performance. For example change headlines, pictures, copy, offers, testimonials, check the frequency of mailings, check your database and see how much failure demand a campaign attracts.
- Make sure that everyone who wants to spend money with you actually does spend money with you. Last week I saw a car I liked on a website, I filled in the details and then waited, I thought my phone would ring within minutes. Four days later they called and it was too late.
- Dump the processes that perform poorly and put more money behind those that perform well.
- Make sure you know exactly how each process drives traffic and converts.
- Keep learning
- Once maximised, look at others to see how they have leveraged their operational capability. The most obvious thing to do (but UK businesses don’t) is to use your improved capability to make a guarantee. Can you think of how you can leverage your new and improved service to give clients more confidence so that they try you out?
I think that a company that has previously worked on push CAN move to a different model, especially as it’s cheaper and much more aligned to growth and profitability. The challenge is that it takes time and patience to improve the operational capability such that you win over the confidence of a client. And that depends on whether management are willing to do the work to build relationships with clients before they ask them to buy more.
Finally, I’m thankful that you took the time to write, as using Systems Thinking as a means to an end is a subject close to my heart. Too often I’ve looked at how well I’ve done Systems Thinking rather than asking how I can leverage the operational and measurement capability to create more demand in the market.
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