Forbes.com

Is Your Operating Model Set Up to Delight Customers?

Providing the optimal customer experience requires more than understanding customers' needs and priorities.

Par Oliver Wright and Andrew Schwedel

First published on mars 10, 2015
min


This article originally appeared on Forbes.com. Virtually every large company says it is becoming more customer-focused. Yet many cannot truly delight customers because their operating model—how they organize and operate resources to execute the strategy—gets in the way. Some companies are struggling to adapt their operating model to recent changes in the customer landscape. Digital technologies have led to new channels, each of which must work seamlessly with the others. That’s made operations more complex. At the same time, these technologies allow for rapid, very public feedback from customers, which makes poor performance visible. Providing the optimal customer experience requires more than understanding customers’ needs and priorities. A company must also ensure that each element of its operating model—organizational structure, accountabilities, governance, ways of working and key capabilities—work together to meet those needs. Several years ago one multinational retail bank set ambitious customer-loyalty goals to counter the pressure from locally based competitors in a particular region. The competitors were gaining ground on a key measure of customer loyalty, the Net Promoter Score or NPS. The bank used NPS customer surveys and other data to analyze 11 customer episodes, such as onboarding and credit card loyalty programs, to understand precisely which interactions delighted or annoyed customers and why. It became clear that each country had its own approach for these interactions, which added cost and complexity. The senior executive team had not established where variation helps and where one approach works best. In response, the bank decided to standardize regional product development, marketing and branding for items such as welcome packs and the website. At the same time, to preserve local flexibility the bank empowered country-based teams to tailor the experience in the branches and call centers to local preferences. Country teams could refocus their attention and resources on delivering excellent service at the front line. This realignment of structure and roles, as well as a focus on building greater trust and collaboration among the groups, has put the bank on track to achieve its goals for customer loyalty. Centralizing some activities and decisions is not always the best route to fulfilling customers’ needs, though. In fact, the impulse to centralize should face a high hurdle because companies often underestimate how much frontline accountability they lose in doing so. An operating model that’s truly centered on customers goes all the way to defining accountabilities at the front lines so that employees can be highly responsive to customers. For many years, the Ritz-Carlton hotel chain has had a policy of giving front-desk staff $2,000 of discretionary funds to solve any customer complaint in the manner the employee feels appropriate. This local autonomy reminds employees of the company’s dedication to honoring a customer’s lifetime value and frees employees to do the right thing quickly without having to navigate time-consuming procedures. Building a truly customer-centered culture and organization involves people throughout the organization. Employees need to see the fundamental connection between their everyday work and its impact on customers. How a company designs its operating model can either prevent employees from making that connection or it can elicit their best energy, enthusiasm and creativity. Written by Oliver Wright a partner in Bain & Company’s Organization practice, and Andrew Schwedel, a partner in the Financial Services and Organization practices.

This article originally appeared on Forbes.com.

Virtually every large company says it is becoming more customer-focused. Yet many cannot truly delight customers because their operating model—how they organize and operate resources to execute the strategy—gets in the way.

Some companies are struggling to adapt their operating model to recent changes in the customer landscape. Digital technologies have led to new channels, each of which must work seamlessly with the others. That’s made operations more complex. At the same time, these technologies allow for rapid, very public feedback from customers, which makes poor performance visible.

Providing the optimal customer experience requires more than understanding customers’ needs and priorities. A company must also ensure that each element of its operating model—organizational structure, accountabilities, governance, ways of working and key capabilities—work together to meet those needs.

Several years ago one multinational retail bank set ambitious customer-loyalty goals to counter the pressure from locally based competitors in a particular region. The competitors were gaining ground on a key measure of customer loyalty, the Net Promoter Score or NPS. The bank used NPS customer surveys and other data to analyze 11 customer episodes, such as onboarding and credit card loyalty programs, to understand precisely which interactions delighted or annoyed customers and why. It became clear that each country had its own approach for these interactions, which added cost and complexity. The senior executive team had not established where variation helps and where one approach works best.

In response, the bank decided to standardize regional product development, marketing and branding for items such as welcome packs and the website. At the same time, to preserve local flexibility the bank empowered country-based teams to tailor the experience in the branches and call centers to local preferences. Country teams could refocus their attention and resources on delivering excellent service at the front line. This realignment of structure and roles, as well as a focus on building greater trust and collaboration among the groups, has put the bank on track to achieve its goals for customer loyalty.

Centralizing some activities and decisions is not always the best route to fulfilling customers’ needs, though. In fact, the impulse to centralize should face a high hurdle because companies often underestimate how much frontline accountability they lose in doing so.

An operating model that’s truly centered on customers goes all the way to defining accountabilities at the front lines so that employees can be highly responsive to customers. For many years, the Ritz-Carlton hotel chain has had a policy of giving front-desk staff $2,000 of discretionary funds to solve any customer complaint in the manner the employee feels appropriate. This local autonomy reminds employees of the company’s dedication to honoring a customer’s lifetime value and frees employees to do the right thing quickly without having to navigate time-consuming procedures.

Building a truly customer-centered culture and organization involves people throughout the organization. Employees need to see the fundamental connection between their everyday work and its impact on customers. How a company designs its operating model can either prevent employees from making that connection or it can elicit their best energy, enthusiasm and creativity.

Written by Oliver Wright a partner in Bain & Company’s Organization practice, and Andrew Schwedel, a partner in the Financial Services and Organization practices.