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In this podcast, Tom Stewart and Patricia O'Connell, authors of the book "Woo, Wow, and Win," share the concept behind service design and how you can use it to better your customer relationships. You'll learn the importance of, and science behind, designing your company around service.
They'll be sharing more on these topics during the BankOnPurpose Webinar Series and at BankOnPurpose 2018.
Woo, Wow, and Win
Tom Stewart LinkedIn & Twitter
Patricia O'Connell LinkedIn & Twitter
Jim Young: Hi and welcome to The Purposeful Banker, the podcast brought to you by Precision Lender where we discuss the big topics on the minds of today's best bankers. I'm your host Jim Young, Director of Communications at Precision Lender. Today, we're joined by Thomas Stewart and Patricia O'Connell authors of the book Woo, Wow, and Win, which divulges new strategies to help companies differentiate their businesses through serving their customers. Tom and Patricia will share more about their book today and at the 2018 Bank on Purpose Conference. Welcome to the podcast Tom and Patricia.
Thomas Stewart: Glad to be here.
Patricia O'Connell: Thanks very much.
Jim: To kick us off I want to get a little bit more information about both of your backgrounds. Tom, why don't you go first?
Thomas: Thanks Jim and thanks to all of you who are listening. I am the Executive Director of the National Center for the Middle Market, it's a research outfit at the Fisher College of Business at The Ohio State University. The National Center for the Middle Market, it is the nation's leading research organization focused on mid-sized companies in all industries including, of course, financial services. Prior to that, I spent five years as the Chief Marketing and Knowledge Officer of Booz & Company, the consulting firm. I was the Editor-in-Chief of Harvard Business Review for six years before that and spent years before that as a senior writer and one of the members of the board of editors of Fortune Magazine. I basically spent 25 years in business research .... nearly 30 years in business research and journals.
Jim: Great. Patricia?
Patricia: Like Tom, I also have a background in business journalism. Before I embarked on my own adventures, which include of course my interest in service design and customer experience, I was also a business journalist having spent almost 12 years at Businessweek where I was Management and Leadership Editor. During that time, I got to work with, and write about, and learn about a lot of companies and a lot of business leaders who were doing really interesting things and really had a different approach to how customer centricity was really core to their business. [inaudible 00:02:26] people who really understood what customer centricity was.
I also joined Businessweek just at the time that the Internet was starting to take off and that required a whole different approach to thinking about our readers as customers because we could no longer look at print, just take the print publication, and plop it onto the web, and say, "Okay, this is going to work." That was my first experience of my own in terms of taking a product and having to think about how it would have to be configured and changed a little bit, but still keep its core identity, if you will, for a different audience and it would pay my advocation fees as a discerning consumer.
So, these two things came together with the idea of service design. I had no idea up until about four years ago that there's an entire business practice much more developed in Europe than it is in this country about how to give customers that great experience and that there was a school of thought behind it, and not just somebody but there were people really responsible for looking at this process from start to finish and figuring out how to do it.
Jim: Would you say that basically ... I was just about to ask you, Patricia, to give your definition of service design. Did you basically just do that in the previous two sentences?
Patricia: A little bit. I think, a more succinct way of saying it is service design is everything a company does to make sure the customer or client has the experience that you want that customer or client to have. That's a very important distinction because too often companies are guided by rather the false and quaint shopkeeping etiquette that the customer is always right and that's not always true. The customer's always right if it's the right customer for you. You have to figure out who that right customer for you is, that's a strategy decision, and how you please that correct customer for you.
Thomas: Yeah. One of the things that we think, Jim, is that people are used to thinking of design in terms of material goods whether it's aircraft engines, or iPhones, or buildings, but services also can and should be designed. When you think about what design can do for services it's basically an architecture of the experience and the journey that a customer or a client has with you. When you think about service design it's not just customer service at the end it's how do you design, how do you present what you are to customers in such a way that you set the right expectations for the customers you want, and you then also create the conditions so that at every stage in the customer's journey with you, you are meeting those expectations and delivering what she or he wants?
Jim: That's a great definition and an important distinction. I wanted to delve into a little bit of ... it's a personal story about a customer experience, a service experience that I had but I would like for you guys to look at it from bigger than just the customer service aspect of it. It is a conversation I had last night, as a matter fact, with my local cable company in which I was having trouble with-
Patricia: One of my favorites.
Jim: I'm sure you never hear this. I was having trouble with our on-demand channel and it had been a recurring problem. My wife got on the phone and said, "This is a recurring problem, this service isn't working. If you can't get it to work can you at least knock some off of our bill because of this?" The response we got was, and we'll touch on this a little bit later too, very friendly, nice, empathetic person who said, "I get it. I'm sorry, but that's a free service so because it's free and even though it doesn't work we can't compensate you for it." To which I said, "This feels, to me, like saying I've sold you a car but the engine part was free so I don't have to compensate you if that goes wrong."
I wonder if you guys, and Patricia let's start with you, can take a look at that conversation from how did that go wrong? Where's the design flaw there? Or maybe it's me, maybe the customer is wrong in this situation.
Patricia: First of all, the fact that you say it's a recurring problem for all that they say your call is being recorded and that they say that they're going to put things in your file the first question that you have to ask from the service perspective, and of course you may not know the answer to this, but these are really important points for any company out there who's listening to bear in mind. Are they really taking notes about what the problems are? Chances are you and your wife are reasonably intelligent people who maybe don't have the good fortune to have teen aged children who can just be the tech wizards around the house, so chances are you're not the only people having this problem for starters.
The fact that you've had the problem before says that there is something going wrong and that somebody, at the very least, should be walking you through how to do this. If the person answering the phone is not qualified or knowledgeable enough to walk you through it in a really detailed way they should figure out how to get you to somebody who can because nobody wants this repeat problem. You're not so much of a captive to them as you once were, that is one of the mistakes that they make. Even if you are a captive customer they absolutely should not treat you that way. Treat your captive customers as if they had a choice because someday they will have a choice and the other thing is they always have a voice.
Secondly, that aspect of the service may be free, the whole thing isn't free. What you really want is a service that is easy to use and an experience that makes you not feel like an idiot, makes you not feel condescended to, and enables you to watch what you want to watch. It also goes to the issue of not just are they solving your problem, but are they paying attention to the frontline employees in this company?
The frontline employees, depending on the type of business it is, are often low paid employees, the hourly people in a case like this, but they're the ones who have the most contact with the customer. Is there a mechanism for these people who are being paid 10, 12, maybe 15 bucks an hour to say, "You know something, I've had six people just in the last two days call and say they're having a problem with x, y, z. Is there something going on with our technology? Did we change something?" Or even amongst their peers saying, the other people if they get a coffee break or whatever, "Anyone else getting these phone calls?" That's really where companies can learn so much, is from those frontline employees.
Thomas: I love what Patricia was saying about the recurring nature of the problem. In theory, they should be tracking, they should know your numbers, and in theory when you call up they say, "Jim, good to hear from you again. Oh, I hope you're not still having problems with that on-demand," because this is probably the third time you've called them, right? They should have that information, in a brilliantly designed service they would. USAA, the insurance company, is famous for back in the very early days of re-engineering you could call USAA and somebody at USAA, whoever answered the phone, could say after a second, "Yes, I've got your file right in front of me," because they did, because they could actually move it around digitally.
The other thing masked about is the bundling question, which is interesting. They've sold you a bundle and that bundle includes on-demand and now they're trying to ... They sold you the bundle. They didn't sell you an à la cart cafeteria in which you went and picked the mold of Jell-O, and the spaghetti, and that this, that, and the other. You didn't put the stuff on the tray, they did. Now, they're trying to say, "Well, because we sold you a bundle you can't get a ..." the value of the whole bundle has diminished and in effect, I think, we talk in the book about solutions providers as being one of the archetypes of a service provider. Somebody who we will be your one-stop shop, your single source, we will be the provider of the solution, and that's one service design.
Another service design is the aggregator and the aggregator is a little bit more that cafeteria tray. "We'll put all this stuff on the tray for you, we'll be the cafeteria but we will not actually orchestrate the solution." They actually were trying to be a solution seller but, to my mind, the whole bundle is now valueless because the whole thing fell apart. They're not really acting in accordance with the promise, which is that we will provide you a working solution and part of that solution is on-demand.
I think that they violated your expectation and the interesting thing is they were very nice. Very nice is great and empathy is critical for frontline employees, but empathy is one thing and you also want excellence. You want execution. It's one thing to say, "Oh, I'm so terribly sorry. Oh, my heart bleeds for you," but if your heart is bleeding for you but you're not stopping my bleeding the empathy only goes so far.
Patricia: What was the up shot Jim? This is what I want to know. Are you without on-demand?
Jim: Exactly and they're going to come out on, I don't know, later this week to fix it again. We'll be looking potentially ... if it happens again I think we'll be looking for other solutions at this point. It's interesting you mentioned ... I don't want to get too far off on bashing my local cable company but the empathy aspect of it, Tom, actually to me eventually backfires because it's like I don't want your sympathy. I want you to fix this for me.
Thomas: There's a very interesting article in the brand-new issue of Harvard Business Review that goes directly to that that says frontline employees yes, I'm sorry. Yes, identify with the customer, but then what really gets the customer back on your side is activity, and creativity, and getting into the solution area. You want to acknowledge the pain points, pain points are critical, and they're critical thing to start dealing with, but then you want to start trying to say, "All right, now that we've acknowledged this let's roll up our sleeves and see what we can do to get this thing fixed." Even if I can't get it fixed on the spot the fact that I'm in there trying to do that goes a long way toward getting the customer back on your side, which is where you want him or her to be.
Jim: Just a lot of really interesting lines you guys have in the book which, again, is Woo, Wow, and Win. I'm trying to remember which one of you guys mentioned this earlier but it's really stuck with me is the line the customer's always right provided the customer is right for you. Patricia, I believe you guys have a story about, and this will connect with our listeners, a bank that essentially told some of its customers, "You may not be our right customers." Can you relate that story and how that came about? It sounds, at least on its surface, like a risky thing to do.
Patricia: It's really not though because businesses change both the client business changes and the service providing business changes. For example, if you have a bank that's started out serving small local businesses and the bank grew, and grew, and grew. And it no longer really has the capacity to serve that initial customer who was the small local business customer in a way that they can do it reliably, repeatably, [scale-ably 00:16:08], and profitably, those are really the four pillars of service design that enable ... it should be a table on which you can fit your business, then it does make sense for you to move on. You have to accept when you and your customers are not evolving at the same pace.
It's very hard to say no to a customer especially a customer who you have had a relationship with, but there are times you do have to, if you will, breakup with a customer. They're no longer the right customer for you, you have outgrown them. The ideal thing to do, of course, if you do have a genuine kind of a relationship with them is try to help them find someone else who can meet their needs. Business referrals are the lifeblood of all industries. There's always somebody who is the right customer for your wrong for you. Your wrong customer is somebody else's right customer.
Thomas: One of the things that you need to do, I think, is to design your marketing and design your intake in such a way that you really are serving customers correctly. Adjacent to banking but to take a couple of really good examples in the brokerage business. You've got a company like Charles Schwab that goes for a middling wealthy investor and a company like Edward Jones goes for a middling wealthy investor. In a certain sense just in terms of the size of the account of their ideal client they may be fairly similar but Schwab is for the investor who wants to do all his or her own trading. It's hands-off, they even say, we believe the industry i.e., brokers get in the way of customers and we want to [dis-intermediate 00:18:01] that and let you operate the machinery directly."
Whereas Jones is the opposite and they want people who want to work with a broker and with a financial advisor. You cannot self trade on their accounts. They specifically say, we are for customers who may be next-door neighbors living in houses that cost the same amount of money, driving similar cars but they are temperamentally very different kinds of people and they are optimized to serve those kinds of people.
At one point, Schwab actually bought a wealth management bank and then they ended up selling it saying, "That kind of hands on stuff is just not us. We want to get out of that business." I think when you think about banking more broadly this becomes a pretty big deal because when you think about it a lot of banking is regulated, and the basic product bank offers is a dollar bill, it's a commodity product.
The differentiation in an industry with a lot of regulations where $100,000 is $100,000 regardless of who lends it to you or invests it in you the experience, and the relationship, and the way you actually interact with your clients that's what drives differentiation. How do you present information to the client? How quickly can you make decisions? How do you bring the whole bank to the client? How do you help the client navigate the bank? Those things are what separate one company from another and one winning relationship from a less successful relationship. Those things are about how you design systems so that the person talking to the customer can do those things, bring the bank to the customer and the customer to the bank in a highly effective and efficient way.
Jim: That's great stuff Tom. I would almost argue talking about empathy thing not being enough and sometimes backfires. A lot of times, I know when we've talked to our clients we talk really more about the importance of transparency. Patricia, I think this goes a little bit to this story of the bank saying essentially, "Hey look, I'm sorry this isn't profitable enough for us. If you can't make it more profitable for us we're going to have to part ways." That sounds blunt, it sounds mean. It's actually very open and transparent. I would think that that works.
Thomas: This is an Australian bank that I actually did some research with and worked with when I was back at Fortune. Basically, as one banker once said to me, a AA company cannot make money lending money to another AA company. You don't make your money in some ways you make your money in other things. This was an Australian bank where they actually sat down with their clients and said, "Look, this is the business we're doing with you and we are losing money on this, this, and this. And we'd love to continue to work with you, but maybe we could add some other services or do less of this, or more of this." They opened the book and some of the customers said, "Well, screw you. That's your problem," but others said, "Oh, we didn't realize that. We value our relationship. Let's bring you new business of other kinds so that everybody can be profitable," and it turned out to be a very constructive conversation that they had and, by the way, they got rid of some money losing customers who only wanted them because they were cheap.
Patricia: I think the customers who they got rid of are probably now getting the kind of service that the original bank just was not able to provide for them and that was probably a source of frustration for the client if not the service provider themselves.
Jim: Patricia, I would think you would need, again, in terms of the design you would need to set up in terms of incentives for your frontline people to make sure ... I think sometimes you end up with, the incentive is to bring in new business whether or not that business is the right customer becomes a secondary thing, but if you have your design set up so that people understand that they'll be incentivized for bringing in customers that you can actually serve the way that you're designed to serve. Does that make sense?
Patricia: That's why design is so critical and we say it really needs to be designed in through the fabric of the company into its core not plopped on at the end. It's not a pretty shiny coat of paint that you put on a car, it's built into the engine of the car, this service design model. That way it is throughout the whole company and people understand who that right customer is. If you say to people, "Just bring in as many customers as you can," without qualifying who those customers are [inaudible 00:23:15] the cable company, they may not want a lot of people who are just interested in only buying the basic free package or the package with as little as possible but to say, "Gosh, I brought in 25 new customers today well if all of those customers are [inaudible 00:23:40] well that's not very profitable."
On the other though, you also have to make sure that you're not incentivizing people to sell people things that they don't want. We know a very well known bank that got into trouble for doing that. It's about making sure you're meeting the customer's needs, and identifying what those needs are.
Jim: This is a fascinating conversation and I could keep you guys both on the line for a while talking about it, but I will let you go from the podcast for now, but secure in the knowledge that you guys will be also on our Bank on Purpose webinar series January 23rd and 24th and that you begin in Austin at our Bank on Purpose conference this spring. We've talked about this. Anything else you would want to share that you'll be covering in those conversations?
Patricia: There are five principles of service design that Tom and I identified in our research for the book and we'll give you a little teaser. The customer's always right provided it's the right customer for you is the first principle. I think we might reveal maybe the other four I think-
Thomas: Yeah, we might do that. The other thing, I think, we'll really try to do is pick up some of what we were talking about in this conversation Jim, which many thanks, which is that critical point in the relationship in commercial banking between the bank, the client, and the role that people and technology play, and that design plays in bringing people and technology so that that bank can deliver the best of itself to the client and the client can really understand how to use the bank better. I think that's a key service design opportunity and financial services are a place where that experience, where the customer experience is becoming really important. We think that you can design that to work better and that's what we're going to focus on.
Jim: Again, the book is called Woo, Wow, and Win and the authors are Tom Stewart and Patricia O'Connell. Tom and Patricia, thank you so much for coming on the podcast today.
Thomas: Jim, thank you.
Patricia: Thank you.
Jim: Either one of you guys, Patricia or Tom, can you tell our listeners if they want to learn more in the meantime, if they can't wait until the webinar, until Bank on Purpose if they want to learn more about you guys where can they find you?
Patricia: They can go to, a lot of W's here, www.woowowwin.com and, of course, the book is still being sold we're pleased to say at major retailers, online, or in bookstores so they can find out more about us in the book. I really think as fascinating as Tom and I are I think the book is even more interesting.
Thomas: I would think Patricia's more interesting even than the book, which is going some. Again, it's woowowwin.com and we'll see y'all in Austin.
Jim: This was definitely an interesting podcast for me. Thanks again to Tom and Patricia for coming on. If you'd like to learn more about this podcast you can visit our resource page at precisionlender.com. If you like what you've been hearing make sure to subscribe to the feed in iTunes, SoundCloud, Google Play, or Stitcher. We'd love to get ratings and feedback on any of those platforms. Until next time, this has been Jim Young, Tom Stewart, and Patricia O'Connell, and you've been listening to The Purposeful Banker.
Ashley: Hey everyone, Ashley here. We're so excited to announce that it's that time of year again, it's time to Think on Purpose. Think on Purpose is a conference based in the belief that the path to customer success is built on a customer centric foundation. It brings together the best and the brightest minds in banking, Austin, Texas on April 25th to the 27th. You can use the code podcast18 to get 10% off your registration and to show your pride for The Purposeful Banker podcast. It's time to stop reacting and get back to what makes banking great. It's time to Think on Purpose.
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