The customer experience blog

How different would your organization be if you perceived customers and employees as owners? Employees as owners may not at first glance appear radical. Organizations use share ownership to engage employees by giving them a sense of ownership. But, this is a different form of ownership we are talking about here.

It's ten years since the publication of The Service Profit Chain, the book that arose out of the Harvard Business School research of James Heskett, Earl Sasser and colleagues into the connection between employee satisfaction, customer satisfaction and profit.

Now known in its latest incarnation as The Value Profit Chain, the Harvard work essentially showed that happy employees lead to happy customers who come back repeatedly, becoming loyal and generating higher profits.

The US retailer Sears was one of the Harvard case studies that showed how an increase in employee satisfaction acts as a precursor to a measurable increase in customer satisfaction and then in profit. As we all know, the link between satisfaction and profit is a tenuous one, however, only becoming noticeable at highly satisfied levels.

We can translate the findings into customer experience terms: you need to create a compelling employee experience before your employees can create a compelling customer experience. Sir John Sainsbury, of the Sainsbury supermarket chain family, neatly summed up the learning point in five short words last century, decades before the Service Profit Chain work at Harvard gave us the academic backing to support his words:

"They serve like we lead", he said.

There's more on the ten year anniversary of the book over on the Harvard Business School website in a Q & A with Jim Heskett. In the interview, Heskett explains his latest ideas about customers and employees as owners. He also mentions our own Joe Wheeler, smith+co senior partner. Joe has great depth of knowledge and experience in how to put the Service Profit Chain to work, and we apply that to our customer experience work with client companies.

Posted by
Shaun Smith
On behalf of
Smith+co

Andy Milligan writes...

CEO tenure has increased on average in most parts of the world. But, the number of CEOs who lose their job because of poor performance has also increased.

Look at the CEOs who stay longest in the UK - Sir Terry Leahy, for example - and you find those who are most obsessively focussed on the customer. So, if you are having trouble convincing the CEO of the centrality of the customer experience to your organization's success, try focussing them on the centrality of the customer experience to their own job tenure.

In 1995, one in eight departing CEOs around the world was forced from office. In 2006, nearly one in three left involuntarily, according to Booz Allen Hamilton's annual surveys of CEO tenure (their figures for 2007 are due out later this year).

The reputation of the organization's brand or brands is the one thing that ties together the different stakeholders that the CEO has to please in order to stay in post - customers, employees, investors, the community, environmentalists and opinion formers. And the customer experience, which is where you deliver on your brand promise, is where that reputation stands or falls.

For many years, brands were the playthings of marketing departments and responsibility for them stopped there. However, intangible assets, including brands and reputation, now make up around 75% of the value of listed companies, clearly making them far too important to be left to the marketing department alone. The CEO needs to have his or her eyes on this particular prize; their own position depends on it.

As Sir Stuart Hampson, the former chairman of the John Lewis Partnership, one of the UK's great stakeholder businesses, said in our book Uncommon Practice:

"Focus on the sources of profits (customers), not on the profits themselves."

It's a message every CEO should take to heart. For their own good. The Customer Experience, then, should be at the top of the CEO's agenda.

Posted by
Andy Milligan
On behalf of
Smith+co

I contend that just being 'very good' is no longer enough to stand out in the customer's mind. In an age of over-supply, you have to be different, you have to stop playing it safe; in short, you have to be bold if you are to be memorable.

There is a great example of doing just this: the Six Senses group of resorts and their award winning property in the Maldives, called Soneva Fushi.

I visited the resort and interviewed the Chairman Sonu Shivdasani as well as the General Manager and front-line staff. The Six Senses proposition is 'Intelligent Luxury'. Sonu said that the concept came from asking the question "What can we give guests that they can't get at home?" as opposed to the more usual luxury hotel question "What do our guests expect or how do we exceed what they have at home?"

Click here to hear Sonu define 'Intelligent Luxury'- you can even hear the waves and wind in the background as I interviewed him in the beach side restaurant.

For example, you fly in by seaplane and your own 'Man Friday' meets you. The first thing he does after introducing himself is to offer a bag emblazoned with the words 'No news, no shoes' and he asks you to put your shoes in the bag.

You don't wear them again for the duration of your stay because you walk everywhere with sand between your toes-even the restaurants- rather than the usual marble floors favoured by up-market hotels. Other 'typical' elements of a luxury hotel stay are also not included. They do not provide CNN or newspapers delivered to your room, for example, unless you insist on it and arrange it beforehand.

At the core of the company's philosophy is their Six Senses cycle whereby they are explicit about giving priority to their 'hosts' (front-line employees) on the basis that they will then create a great experience for guests.



As you may imagine, Sonu and his colleagues are not your typical stuffy hoteliers as you can see from the photograph. In fact they refer to themselves as the 'core' rather than the Management or Executive team.

An example of their being bold? You pay $1500 a night and yet they ask you to take your empty plastic bottles and other rubbish home with you to minimize the environmental impact on the island. Another is that the tables they provide on the beach in front of your very expensive room are old wooden cable drums turned on their side and left to bleach in the sun.

So, just how bold is your business? Take part in my short online survey, which is part of the research for my new book with my co-author Andy Milligan. All participants receive a summary of the survey findings. Click here to take the Bold Business survey.

Shaun Smith
Smith+co