The chief listening officer

Customer needs have always changed, but they arenow changing more rapidly, fuelled by significantchanges in social and working patterns and shorterproduct life cycles. Globalization provides customerswith greater choice, and the growth of the Internet hasmade it much easier for customers to access thatchoice. Power is shifting from suppliers to customers.

People – consumers and employees – are alsochanging. Looking across just three generations, myfather worked for the same company, doing basicallythe same job throughout most of his life, using skills thatchanged relatively little over fifty years. For mostpeople, a job involved hard, physical work. He knewexactly when he would retire, and he did not worryabout his pension because politicians, financialinstitutions and employers could be trusted. For Dad,high technology was a telephone that plugged into thewall and a TV with four channels.

My children, on the other hand, may well live to be overa hundred and move in and out of work for seventy years.They will choose jobs that suit the lifestyle they want,which will change according to their situation. Retirementwill be when they want it to be, and will probably not be

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Focus

Take a look at the marketing department’s budget.How much is spent on the different activities ofresearch, advertising, direct mail, sponsorship, PR andevents? In most companies, the marketing functionand the associated spend is dominated bycommunications – getting the message out to theprospective customers.

Communicating your message is of course a vitalactivity: even the best product in the world is of littlevalue if people don’t know about it. It is also true thatreaching that elusive audience is increasingly difficult andexpensive. It is said that people are exposed every dayto 4,000 marketing messages from companies trying toinfluence their buying intentions. It is hard to make animpact, especially as these impressions are just a smallpart of the 50,000 thoughts we each have every day.

To stand out from the crowd in this deluge ofmarketing and mind games, companies resort to ever-more sophisticated and expensive campaigns – whichare less and less effective. Family and friends are muchmore influential than advertising in shaping consumer’sbuying activities (Figure 1). Their recommendations(good or bad) are much more likely to be based on first-hand experience than on the adverts they have seen.

This is not to say that advertising does not work; itdoes. But just how effective is it compared with otherapproaches? What would be the effect on salesrevenue of reducing advertising by 20% and investingthat saving into improving the customer experience?What if, instead of bombarding customers with moreadvertising, we listened to them more and used theirfeedback to improve the service provided? Is marketingtoo much of a monologue?

FIGURE 1: WHO INFLUENCES CONSUMERS?

Family Friends Advertising

100

90

80

70

60

50

40

30

20

10

00

■ 1997 ■ 2001

Source: BT/Future Foundation (2002)

God provided a great model forcommunication when he gave us twoears and one mouth. David Jacksonpreaches the lesson of better listening.

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www.thefsforum.co.uk Argent Volume 4 Issue 4 27

permanent. They may flit in and out of retirement andwork as money and their whims dictate. They know thatthey will have to look after their own future, and will trustpeople and institutions based on their performance, nottheir words. They will exploit the massive choice they willhave, remaining loyal only to those who demonstrate thatthey value their relationship.1

In this chaotic and complex life, trust will becomemore critical and companies that can earn and retain acustomer’s trust will be in a privileged position. Trustspans both the rational and emotional elements ofcustomer relationships. At its most basic, trust is aboutconfidence in the quality, availability and reliability of theproduct or service. But it goes beyond that. Itembraces mutual respect, openness, honesty andsimilar shared values. We prefer to do business withcompanies with which we have an affinity – companieswe like. In an uncertain world, those companies thatgain and retain our trust will have an edge (Figure 2).

As consumers select one supplier to be their trustedadvisor and invest time in communicating their personaldata and needs to that supplier, the barriers to entry forcompetitors increase significantly.

In a rapidly changing world, particularly one in whichthe power is shifting to the customer, understandingthem is even more vital to success. Listening is set tobecome crucial in the marketing mix.

Much current market research is about informing

strategic decisions – identifying customer needs andexpectations, sizing market opportunities, andunderstanding what shapes buying decisions. Thisinformation is vital in shaping product strategies androutes to market, and more will be required as needsand expectations continue to change rapidly.

If retaining customers and building relationshipsbased on trust matters, understanding how theyperceive the company and its products and services isvital. People remain loyal and recommend a companybecause they have had a good experience, and that isdown to operations – it is about products, processes,systems and, most importantly, people.

Research into customer experiences is oftensimplistic and ineffective, based on the annual “Do youlove us” survey. To be really useful, experience-basedresearch must gather feedback at all the key points at

which customers do business with companies, as wellas the overall relationship. Monitoring customerinteractions provides valuable and actionableinformation with which to drive continuousimprovement. This cycle of feedback and improvementunderpins the success that many companies have inbuilding a loyal customer base. Event-drivenexperience measurement also matches the approachthat the Financial Services Authority is taking inmonitoring how suppliers treat their customers fairly.2

Where trust is important in a relationship, customerfeedback has to go beyond the rational elements suchas speed of response, quality of product and ease ofdoing business. Understanding the emotionalconnection with the customer will help to strengthen therelationship. Whilst operational performance will affectcustomers’ views of a company’s efficiency, theiremotional view is what really shapes their buyingdecisions. Integrating experience and relationship datawith operational performance measures providesinsights into the changes that will drive retention andadvocacy. Customers will rarely recommend acompany with which they have had a bad experience,or that they do not trust, to family or friends; theirreputation and friendship is worth more than that.

To achieve a meaningful understanding of theircustomers, companies will have to increase significantlythe amount of listening they do. Marketing mustbecome much more of a dialogue, with the customer anactive player. The resulting richer understanding of thecustomer can then be used to improve operations andtailor the content and timing of marketing messagesdelivered to the customer. Providing actionable dataabout individual customers and segments is the key.

But customers are increasingly concerned aboutprivacy (Figure 3), and are likely to share personalinformation only with companies that they trust and thatenable them to make the best buying decisions.Companies that do not act in customers’ best interestswill be locked out of the opportunity to supply.

Concerns about privacy mean that more and morepeople now refuse to share information with suppliers.With the possible exception of healthcare, nowhere isprivacy more vital than in financial services. The datathat banks and insurers hold about our lives is highly

FIGURE 2: TRUST AS A COMPETITIVE ADVANTAGE

Have high impact

Likely to happen

0 10 20 30 40 50 60 70 80 90 100% Agreeing

Source: Global Future Forum Pulse Survey, March 2005

FIGURE 3: PRIVACY CONCERNS

Have high impact

Likely to happen

0 10 20 30 40 50 60 70 80 90 100% Agreeing

Source: Global Future Forum Pulse Survey, March 2005

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28 Volume 4 Issue 4 Argent www.thefsforum.co.uk

sensitive, and they often know more about our financesthan our life partners.3 Customer trust depends not onlyon this information being held securely – andcompanies must have not only good intentions buteffective systems – but also on confidence that it will notbe used unfairly to exploit us.4

So perhaps, in the not-too-distant future, the generally-misnamed customer relationship management5 will bereversed in a new paradigm, customer-managedinformation. The scenario set out in the box is, for themoment, hypothetical, but technologies to exploit thisnew world are here already.

Smart cards can store data about the holders and theirpurchase history, and commercial strategies are alreadybeing developed around this potential. But customerswill be able to choose with whom to share thisknowledge, so trust and empathy6 are key. On a small-scale, highly-motivated customers already boycottcompanies that do not share their world-view on “bigissues” such as fair trade, the environment and armssales; but technology will make it easier for them to acton their motivations, so that far more people will excludefar more companies for far more personal and subjectivereasons.

Two types of companies will benefit from this growthof customer power. Firstly, those that truly put thecustomer first and develop innovative ways of deliveringthe right mixture of product and service at a competitiveprice. Secondly, an emerging new breed of trustedintermediaries that offer a secure, independently-verified home for customer data and share this only withcompanies that fit each individual customer’s model of“acceptable suppliers”.

A brave new world? It is already here. Amazon andE-bay today rate suppliers on their track records andask customers to score their satisfaction andrecommend them to friends.7 Is it that big a leap toimagine getting the best deal for a savings product viaE-bay, with suppliers meeting your personal standardsbidding for your business? Or a price-comparison sitesuch as Kelkoo securing better deals for customersbased on their past purchases and potential futurevalue?

Could you see a company like John Lewis beingtrusted by customers in this way? Or Tesco? Or agenuinely client-focused independent financial adviser?But how do you think most people would react if thisnew service were offered by the big banks?

In this future, winning and retaining customers profitablyand better than the competition will require a much richerunderstanding of customers, as well as innovativepractices for delivering genuinely and meaningfullypersonalized products and services. Understanding thecustomer like never before will require a whole newapproach to listening to the customer – reflected by theemergence of the chief listening officer (CLO).

Customer-managed information, where customersare equal partners in the marketing dialogue, will requirea significant change in the culture of mostorganizations, and the CLO will be a leading player indriving that change. People and departmentsthroughout the whole company will have to rethink howand why they operate, and throw out many of thebeliefs that have shaped their actions in the past.

The jobs of CLOs will not be easy. They will face twosignificant barriers to success: fragmented marketingand feedback systems; and (by far the biggestchallenge) legacy attitudes.

Few marketers or chief executives will want to givepower of choice to their customers. Raised inorganizations used to paying only lip-service tocustomer needs, many will not be willing or able tomake the required intellectual or attitudinal leap. “New”companies such as First Direct and The One Accountlead in this world because they do not have themillstone of legacy cultures. Companies that have builttheir business model on service excellence, particularlyin a real time or on-line environment, have had to facesome of the issues discussed here from the start.

Legacy systems will also be a barrier. Customer-managed information requires the integration ofdisparate systems. Close links will be required betweenmarketing management, customer feedback,transaction management and management information.These systems will have to reach a much broaderaudience, presenting a holistic view of the customer ateach and every touch-point.

Integration of data is at the heart of the responsibilitiesof a CLO. The future for many companies will require a

AMAZON FINANCIAL SERVICES?

In the not-too-distant future, customers will hold their own buying records electronically

and use these to negotiate special deals with suppliers. Imagine shopping on-line for

an investment product. You insert your smart-card or send a message from your smart-

phone with your purchase request inquiry. Attached is your personal purchase history

for this type of product, with this and competitor companies. The supplier’s system

recognizes you as a regular buyer of this product, with a history of recommending

companies to friends and colleagues. Of course, this information is only shared with

companies with an exemplary record on trust.

From the information on your card, Amazon, as a trusted provider, knows your buying

record, which it uses to generate a special deal in recognition of your loyalty, lifetime value

and advocacy. The latest transaction, coupled with knowledge of your visits to Amazon’s

website, triggers a satisfaction survey, part of which asks you for information about

people that you have recommended Amazon to in the last three months.* With your

approval, these people are contacted, in your name, with information about special

offers. Once the transaction is complete (including experience/satisfaction feedback), the

smart card is updated, ready for the customer’s next inquiry.

* Perhaps the last couple of years for longer-term products such as pensions, or the last monthfor faster-moving products such as credit cards.

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much quicker and more sophisticated response toopportunities that customers present. Feworganizations today hold a comprehensive record oftheir customers, despite the vast investments in CRM

systems. The data required to build real insights spans:

• Transaction records.• Marketing campaigns (with responses).• Segmentation.• Intentions.• Buying preferences.• Satisfaction and advocacy feedback.

Only by integrating all this data will companies generatethe insights they need to serve the customer properly.This information will need to be shared much more widelyacross the organization, with anyone serving thecustomer having access to the same, complete customerrecord. Only then can informed customer interactions(through any channel) take place, increasingly influencedby decision-support tools that guide customers, and thepeople dealing with them, to the best deal.

Many companies will seek to exploit this integratedview of the customer. But in an environment in whichtrust is a vital component of relationships with customers,what better way of demonstrating that trust than byturning the power inherent in the information over to thecustomer? Listening is the new marketing.

David Jackson is Chief Executive of Clicktools

1 This scenario is based on research by the Global Future Forum.The author sits on its European advisory board.

2 For more information see the author’s paper “Treating CustomersFairly – the role of feedback”.

3 They certainly hold more data, but family members can often justsense when something is not right. It is the difference betweenawareness and understanding, and also shows that real knowledgeis based as much on sense, context and informal signals as on hardfacts. Ed

4 Financial institutions do not, of course, do not have an exemplaryrecord on the former (see, for example, Identifying the problem byTim Kitchin and Peter Massey in Argent 4.3, May 2005), and mostpeople probably feel that they are taken advantage of in respect ofthe latter. One key reason for the lack of customer enthusiasm foraccount aggregation (despite some impressive advocacy – see, forexample, The service now arriving ... by Holly Mackay in Argent 3.3,May 2004 is that most people’s perception – and it does not matterwhether this is valid or not – is that the value of the customer benefitsare far outweighed by the advantage that the aggregator might takefrom the information that the customer has to surrender. Ed

5 Most companies use CRM merely as a customer data-collectionsystem.

6 Empathy – the feeling, for example, that this company’s aims andideals are aligned with my own – is an increasingly-important factorin a world in which the core elements of product and serviceofferings are pretty indistinguishable. The Co-operative Bank, BodyShop, John Lewis and (at some stages of its rather chequeredrecord over the past thirty years) Marks & Spencer all offer strongevidence of the power and value of empathy. Ed

7 And, of course, in the world of old technology, this recommendationmodel was key to the success of companies such as USAA. Ed

CORE LISTENING BELIEFS

The listening organization will have at its heart a number of simple but vital beliefs:

• Respect: Financial service providers must recognize and respect the desires and

aspirations of customers and deal with them in an adult-to-adult relationship – not

talking down to them, as has been the case.

• Trust: Companies that cannot gain and retain their trust cannot hope to win and

retain customers. Given a choice, would you put your future in the hands of a

company you cannot trust?

• Mutuality: Whether member-based or not, only providers that seek to balance their

needs with those of customers can succeed when information has shifted the

power to the customer.

• Personalization: Whether it is the core product or the interactions across the

customer life-cycle, personalization must increase. In fact, contextualization is

probably a better description of what is required.

• Dynamism: Every interaction with the customer will be dynamic. Companies will

need to be significantly more agile if they are to respond quickly to customers

empowered by information and choice.

WHAT DOES THE CLO DO?

She is a key member of the marketing leadership team – increasingly often, the marketing

director – and the focus for all information about the customer, with responsibility for:

• Segmentation: Defining context-based segments on which the company will build

and tailor its value propositions. Individual customers will move in and out of

segments as their circumstances and needs change.

• Measuring the customer experience: As product life-cycles shrink and products

and services become more and more homogeneous, the broader customer

experience will be an increasingly-dominant differentiator. Instead of suppliers

selecting customers on the basis of profitability and attractiveness, customers will

set criteria by which they will choose providers. Listening carefully to reactions

along the customer journey will thus be crucial to winning and retaining a place on

each customer’s preferred list.

• Intentions management: As with investment, so with customer intentions – past

performance is no guarantee of future returns. The CLO must ensure that each

customer’s changing intentions are monitored and recognized, so that marketing

and face-to-face interactions focus on the issues and opportunities that are relevant

to that customer.

• Data integration and mining: The CLO will lead the way in mining understanding

from the different seams of information gathered about customers and the

operations that serve them, seeking in particular causal links.

• Early warning systems: From this information, the CLO will develop predictive

algorithms and track buying intentions and customers at risk of being lost. This

information will allow front-line staff to sell more effectively and to take appropriate

and focused action to retain a firm’s preferred customers.

• Campaign management: The information and insights gleaned by the CLO will be

used to personalize dynamically the content and timing of context-specific marketing

messages for each customer, based on the integration of data about intentions,

campaign responses, satisfaction, past activity and general demographics.