Customerland

Harnessing Customer Satisfaction for Organic Growth

• Lynn Daniel • Season 2 • Episode 33

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Join us for an insightful conversation with Lynn Daniel, founder of the Daniel Group, as he shares his journey from the early days of marketing to becoming a leading consultant in B2B customer satisfaction. Lynn discusses the development of a feedback process that has benefited major clients like Caterpillar dealers and explains how technology has transformed CX measurement over the years.

We also explore the power of customer referrals in driving business growth, diving into Fred Reichelt's concept of the earned growth rate. Learn about the challenges companies face, such as the disconnect between marketing and CX departments, and gain practical advice on overcoming these obstacles.

Finally, we address the steps needed to foster a customer-centric culture within your organization, highlighting the role of executive support. Through real-world examples, discover how to stay ahead of evolving consumer expectations and maintain a competitive edge in today's market.

Mike Giambattista:

Today, on Customer Land, I'm with Lynn Daniel. Lynn is founder of the Daniel Group, where they provide strategic planning, research and customer satisfaction measurement and management services. Lynn's company advises firms including Navistar, agaco, okuma and about 80% of the Caterpillar dealers in North America. That's a pretty big client list. Lynn, thanks a million for joining me. I really appreciate it.

Lynn Daniel:

Mike, thanks a lot. I'm looking forward to it.

Mike Giambattista:

Should be a lot of fun here. We've got a lot of ground to cover. But first, just for context, can you tell us a little bit about yourself, what brought you to this point in your career in CX, and a little bit more, maybe, about what the Daniel Group is all about?

Lynn Daniel:

Sure, I have always had a fascination with marketing. When I went to business school that was a focus for me when the jobs I had after business school was around marketing and I did consulting work after working for some large corporations. And then in the mid to late 90s, I had a series of projects where, when I started looking at customer churn, customer turnover, I was surprised at how much there was. And then the other thing I was surprised at how little the clients I was working with knew about it. They knew the big customers that might have left, but there were all these middle-sized and smaller customers that just weren't very loyal to them. So I guess it was following a research project with a Caterpillar dealer in South Carolina in 2004,. We pitched the idea of just an ongoing feedback process for them and their customers and, without going into all the gory details, this led to a very successful relationship with this client, which we still have. It led to work with about 80% of the Caterpillar dealers in North America, as well as a variety of other B2B companies. We focus exclusively on B2B companies, companies like Caterpillar, like Agco, where they're selling complex products that are very expensive in most all cases and they have a long service and support tail. So if you buy a piece of Caterpillar equipment, you're going to spend money on that piece of equipment for service and parts over a multi-year period and we were really trying to help them understand what were the turn-ons and the turn-offs for their customer so that they could keep those customers more loyal, keep them coming back.

Lynn Daniel:

Since our beginnings with that effort in early 2000s, we've gone to a firm of almost 100 people. We have developed a very robust online platform. So, for example, in the new project with Navistar, we're not only doing work with Navistar for the OEM but for all their 150 dealers. So, for example, if a dealer in Chicago, illinois or California wants to see how they're performing, they can go online and get immediate feedback. They can get notifications if a customer has an issue, they can measure what they're doing with their customers. We still do much of our work by phone, believe it or not, and we can talk about that a little bit more, about why that continues to be a strong mode of communication with clients. We're working, but most all of it is done by phone. We do have digital options which we're using and we'll probably use more in the future in some areas, but it's still largely a phone-based process.

Mike Giambattista:

You know, it occurs to me, as you're telling us the story of how you started this whole thing, that in 2004, the mechanisms available to you for collecting customer feedback were nothing like what they are today. No, you know, you almost had to devise this whole thing from scratch. So you know, back then what did it look like? And then maybe let's jump ahead. Where are we? We're 20 years in the future now. You know what do the mechanisms look like now and of course, there's going to be sophistication differences, but also, maybe even more importantly than the how is what you can derive from it now versus what you could derive from that effort then?

Lynn Daniel:

Way back then, when we first got started, we didn't have a platform. We looked at other platforms that were out there at this time, but none of them would satisfy the needs that we had. So we had to build our own platform. So the first platform we built for those of your audience who remember Lotus Notes, it was built around Lotus Notes and it was a very rudimentary, extremely rudimentary platform. It gave the basic information and we have grown now where we've got all kinds of analytics in our platform which was not available back then. We've got all kind of analytics in our platform which was not available back then.

Lynn Daniel:

I think another thing to highlight is the change in the Internet. Well, development of the Internet and the development of VOIP phone services really enabled us to do the work that we're doing now. The work that we're doing now because without a distributed phone system that we can have an interviewer located most anywhere, then we would not be able to do what we do. Without the platform where the researcher can go there, start working, everything's there that they need and we can move forward. Those are really big enablers for us. So we've gone from really a rudimentary beginning to now we're sending notifications about issues, we're allowing them to run reports online. We've got a whole separate analytics offering so that they can really dig into the information and understand what are some of the issues that most affect the customers.

Mike Giambattista:

Yeah, I'm thinking back even to say four or five years ago. The language of CX has changed so much just in that period of time, because it's there's so much technology you can apply now to the same basic concepts of understanding what your customers are thinking and feeling. But now we have we have much better tools. You know, before we hit the record button on this conversation, you and I were talking about how marketing and customer experience either work together or they don't. There's a lot of instances where they really don't and what those disconnects end up producing. And, on the other hand, when marketing and CX decide that they're one in the same or at least closely aligned, the results can be pretty dramatic. Do you want to talk about that a little bit?

Lynn Daniel:

Yes, um, we've been interested in. Well, let me back up and say the net promoter score is one of the metrics that we use, as most of your audience already knows. It's likelihood to recommend. But we wanted to know okay, if it says likelihood to recommend, are they actually recommending? Are they suggesting that one of their friends or colleagues needs to go talk to this provider because they had such a great, this person had such a great experience, or the product is fantastic? Whatever the case may be, what we found in the research we did when we started asking the question of well, have you actually referred someone in the last six months? The question of well, have you actually referred someone in the last six months? We found that between 30 and 40 percent of the customers we were talking to said yes, I have done that. I have referred that customer to that provider, to someone else. I know Now, what's interesting, mike, is the referrals.

Lynn Daniel:

Nearly all of them, over 90%, come from those who gave a nine or a 10 on the net promoter question. So you've got to have that satisfied customer, highly satisfied customer, before they're going to give a referral. How does that play into marketing? Well, we all know that referrals are the gold for a business development person. They look for the referrals because you're I won't say you've got it sold completely, but if you get a good referral odds, are you getting that business or very, very high? And yet I don't see a lot of connection now between the marketing and using this information and CX. It's like they're almost in two separate paths.

Lynn Daniel:

One of the interesting things is a concept that Fred Reichelt has come up with, which is he outlines it in his book Winning on Purpose and he talks about earned growth rate, and I think this is one way to sort of capture people's attention on just what how much of your business is what Reichelt calls earn growth versus growth that you pay for Marketing campaigns, direct mail, all kinds of other things which it's not necessarily bad, but you need to be looking at well how much of my business is coming from, as he uses the term growth that I earned as a business. I caused other people to say good things about the company and caused others to come in and do business with us, do business with us. So if you've got that many people potentially recommending, that's an untapped resource for a lot of marketing people. Now there are some system issues. I think that get in the way of many companies.

Lynn Daniel:

For example, a really simple one Many times companies don't track where a referral came from or where a new customer came from. So they may new customer comes in, signs up for an account, but they fail to ask well, what brought you here? It's not true for all companies, but true for some, and I think this is one of the major opportunities for marketing is to start to sharpen up that source, sourcing information, to really start to figure out how they, how can they use that to to further expand your, your growth, further expand your growth.

Mike Giambattista:

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Mike Giambattista:

We've seen we've seen a lot of data. Frankly, that points to companies gathering an awful lot of insight on their customers from all these different sources and channels, but not doing a whole lot with it. You know there's limited resources. Gathering data nowadays is really easy. Figuring out what to do with it is. You know there's limited resources.

Mike Giambattista:

Gathering data nowadays is really easy. Figuring out what to do with it is its own challenge, and then implementing that takes resources, and there are just example after example after example and this is coming, you know, very candidly, from some of the people who run these companies who have said that, yeah, we see the opportunity, but we're not capable of leveraging it, of harnessing it. It's just not there because there are either people issues or technology issues, as you've said, that our marketing folks are driving as hard as they can to bring leads in the door. And yet it seems to me very practically, as a recovering marketer myself, that you, you know that's, that's a rich data feed right there to understand what your customers are thinking and feeling and if somebody's feeling good about you in any way there. There has to be some smart ways to capitalize on that, and I just don't hear a lot of marketers talking about that.

Lynn Daniel:

No, I don't either. We have a few clients where I think they're starting to talk a bit more with the marketing department. The CX people are talking a bit more with the marketing department, try to come up with some ways to harness this very valuable resource of a customer's giving referral. But I don't see a lot of it yet, and I think part of it is. As marketers, we all sort of have a blinder on about how we do things. We've got to use social media, we've got to use direct mail, we've got to use social media, we've got to use direct mail, we've got to use whatever trade shows, and yet this whole thing of referrals is one of those things. It's almost free money but we don't pick it up. We don't look at the free money that's there on the table and we don't do much with it.

Mike Giambattista:

So, in your work with the Daniel group, how, how are you advising companies to change the way they think? And I'll just say it occurs to me that you know you've got cultured culture silos within companies because they've been built up to be, you know, here's my, here's my marketing effort, with my marketing data and my marketing technology and personnel, and now we've got a cx kind of group doing similar sort of related things, but they have they have different goals and they have different incentives to achieve those goals. So, you know, considering that there are all those kind of built-in hurdles to the cross-pollinating that needs to happen, how do you and your team advise a company to start thinking about that?

Lynn Daniel:

You're absolutely correct to start thinking about that. You're absolutely correct. These silos are very much present in a lot of companies, probably most all companies that we work with. The first thing they've got to do is, among the senior management team, they've got to have a clear plan in place for how they're going to approach CX and what that means. And it's not just about surveying customers and getting feedback, because sometimes that feedback is not just about the service technician that came out and worked on the equipment, the part they bought, or the new piece of equipment. A lot of it has to do with hey, I didn't get my bill on time, or I got billed twice, or I don't understand the bills. So you to make CX work and this is where it starts with the plan. So there's a communication from the very senior levels of a company that we're going to focus on that customer and that means that if you're, I call it the back office operation, that applies to you too. It's not just the front end of the business where the ones that are touching the customers all the time, but it's also accounting, it's also payables, it's also a variety of other HR has got to, has got to be involved in. So I think one, it starts with the plan, two, it starts with a second are saying and clearly focusing on those things, without regard to trying to get somebody in trouble or trying to create more issues. The focus has got to be out there toward that customer, not on what I'm doing in marketing, what I'm doing in operations, what I'm doing in payables, what I'm doing in receivables. It's got to be on the customer.

Lynn Daniel:

And we've got several clients right now over the last few years have really made a major change in doing this. They've really said, okay, we're going to. They really said okay, we're going to change the way we focus on the customer. A simple example In one client they decided they needed a new telephone system. Well, in a larger company, telephone systems can be the bane of one's existence. So they decided that rather than leaving the telephone system management with typically it might be part of IT, part of that group they moved it to customer experience and they were the ones that are now. They're the ones that are now responsible for that. Because why? The phone is a major way that they reach out to customers and customers reach to them. So that's a critical part of that whole customer experience.

Mike Giambattista:

Well, what was the trigger, what was the catalyst to get the company to think about that change which, I'm sure, produced all kinds of unexpected results?

Lynn Daniel:

But somebody had to change their thinking, and what did it take to get them to do that? Well, first of all, they've got an extremely good CX director. He's exceptional, and I think, the more they, as they started to look at this new phone system, they realized that they needed to approach just the way they set it up, the way they handled it, a lot differently, and they realized that the people that knew best how to set it up I'm not talking about technically setting it up. I'm talking about how you structure the thing so people can reach someone quickly. For example, someone calls into a parts desk and everybody's busy what should be the fallback position, so that that customer is not left hanging? Or they leave a voicemail and three days later nobody's responded to it. So what can you do from a technical standpoint to make sure somebody reacts to that voicemail? They're also doing really doing, using the analytics that are part of this phone system to help them understand, really on an ongoing basis, where their improvement opportunities are.

Mike Giambattista:

As you're telling me the story, I'm thinking about some of the hurdles that we've become familiar with. But you know and I actually have a couple of close friends who are CX practitioners One in particular was working for I won't say the name of the company, but a large, well-known apparel brand who had never had a CX effort before of any real size. So they hired this person, who's who's very competent to very competent, to oversee the CX effort and he was very excited to come in and start doing what he does and he lasted there less than a year. And that was one reason is because another, much bigger company said hey, we like what you're doing, come on over here, we'll pay you an absolute ton of money.

Mike Giambattista:

But along with that was a frustration that it was so difficult to get this company, who's known as a progressive company in a lot of other ways, to start thinking about CX in a way that was something other than I guess, in my words, that he couldn't pin a direct ROI on the effort, because that can be difficult in CX. It's not always a direct route to, you know, it's not a straight line all the time to profitability, it's a very indirect line, but it is measurable. So, anyway, I kind of wanted to just open that up to you a little bit and get your thoughts on how does a company start thinking about CX from scratch if they're not really doing it right now? Because, let's face it, a lot of companies give lip service to the fact they're customer centric. But you know, if you really want to get real about it, what do they need to start thinking about?

Lynn Daniel:

It's interesting I'm beginning to write a book on that very topic because I find a lot of companies are thinking about it. They may not have pulled the trigger, or even some have pulled the trigger and are sort of floundering. I think the first thing that has to happen is I go back to that senior level plan. Why are we doing this? What do we hope to get out of it? And I think that's one of the critical things is define the outcomes that you want to have for the plan is define the outcomes that you want to have for the plan Before you start thinking about how do we survey people?

Lynn Daniel:

How do we get feedback any of that? What kind of platform we want to use? What are the outcomes? We find that that's probably the major shortcoming of a lot of clients. When we get involved, maybe they're doing some of their own collecting feedback and it wasn't working for all kinds of reasons. I won't go into all of that, but the fundamental problem was the senior management team had not defined what are the outcomes. Why are we doing this? Because one of the things I think companies need to understand if you're going to implement CX, it is a culture change, and if you're not prepared to do that, you probably shouldn't even try even try.

Mike Giambattista:

I spoke with one another CX consultant who said that he put a finer point on it than that. Even he said that if he didn't get executive sponsorship meaning from the CEO in a very enthusiastic way that he would just advise them to abandon the project. And I said, well, that's a little harsh. And have you ever done that? Challenging him, he goes, yep, I have, and and he's. I said, well, that's, that's a little harsh. And have you ever done that? Challenging him he goes, yep, I have. And he named off the company, which I can't say but, um, you know, at what point does it just does it become an effort that the company is not ready to undertake because they don't understand the value of it? And he said it has to come from the CEO, it just has to.

Lynn Daniel:

It's got to stop, it's got to start there. We have a client that we've been working with them now for several years and they are frustrating and at some point several points along the way I've thought about just saying maybe we need to park company Because nothing was happening and it goes back to the then senior management team was paying lip service to CX. Now last fall a whole new management team came in and one of the first things the CEO did said to the organization we are going to make CX one of our top three focus points for the next few years. It's beginning to work. I mean, this is a quite large company, it's a dealer, but it's a very large dealer and over the years they bought four or five other dealers. So you've got all these different cultures, mike, and he's starting to think about how do we use CX to weave those cultures together a little better.

Lynn Daniel:

And I think we've seen now two months of improved scores, except for one area, and I think I understand what's going on there. But these are encouraging improvements. Obviously, two months does not make a trend, but actually I visited yesterday and first time I met him and he was encouraged because he said, hey, we're seeing the numbers move for at least a couple of months. And he said I think we're getting the message out to the organization that, yes, the customer needs to be central to what we're trying to do.

Mike Giambattista:

I'm reminded that that same individual I was telling you about a minute ago, who described his efforts like the game of golf, which we've both acknowledged we're no good at, but he said and he wasn't either. His efforts like the game of golf, which we've both acknowledged we're no good at, but he said, and he wasn't either he said it's like it is like golf to him because it's just it's 95% intense frustration, and then you make one good shot and it feels like we've got this, we can keep doing this, and then it's back to 95% frustration. So yeah, I think he feels your pain there, but you know, know, the fact that in that case those improvements are happening with some consistency, even though it's early in the game, is pretty encouraging.

Lynn Daniel:

Yeah, I think it's very encouraging because, as I said earlier, this is about culture change and in this particular case it's an organization that's sort of hardcore. They've done things the way they've done them for these many years and in the minds of the people they're successful and they do have a decent financial track record. I think it could be a lot better, but getting people to change, especially it's harder in companies where the brands have been established for a long time, because they think, well, this is going to just go on in that benitem and you know. Those kinds of those kinds of things don't happen in in in the real world.

Mike Giambattista:

No, I mean no, you're right, you're 100% right. I think it's. You know if if you take your eye off the ball. That's one of the issues. But the other issue is you know consumer expectations are changing and they're increasing. We all have higher expectations of what my experience is going to be like with any brand, company, service we deal with than they were just last year. It's almost every sector, vertical industry. You talk about. What I wanted or expected out of that interaction a couple of years ago is far greater now. And if you don't track that, if you don't understand those increased expectations, that gap just gets wider and wider and wider and pretty soon you find yourself in trouble.

Lynn Daniel:

Yes, and I read something I guess it was yesterday the annual RAGE survey. It's how upset customers get. Now it's more of a B2C kind of survey that I do, but it's interesting because I think what it showed to me is, even though companies are spending a lot of resources on trying to improve CX, we're not yet moving collectively in the right direction.

Mike Giambattista:

Yeah, well, there's a lot of room for improvement. There's a lot of room for companies like your own, which is why I'm so excited that we have these kinds of conversations, but I think that there's just so much more to talk about. I think the practical implications of what you do, and why and how, are important, certainly to my audience, and I would love to get back on your calendar at some point and continue the conversation and, um, maybe at that point too, we can, we can discuss some of the efforts that you have ongoing right now and the effects that those have produced in the in the interim there. Well, let's, let's have our people get with your people, as it were. Well, lynn, lynn, daniel, thank you so much for your time today, really appreciate this conversation and, uh, looking forward to the next few of them.

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