Customer Focused Leadership

Many leaders state that they make the customer the centre of everything they do. Yet for all the passion and conviction of their words, genuine customer focus remains theory rather than practice in lots of organisations. So what can leaders do to make customer focus a reality?

First, they need to demonstrate a genuine commitment to customer focus; real change has to come from the top. The companies who exemplify great customer experience, like Zappos, don’t just pay lip service. There is a belief from top down that focusing on the customer is the right thing to do. The ‘customer’ means both internal and external customers. There is an understanding that great internal service directly impacts on employee engagement and service provision to external customers. Leaders also need to make everyone understand what’s at stake. Reichheld (NPS creator) estimates that a 5% increase in customer loyalty can produce profit increases from 25% to 85%. So customer service is not a soft issue, there is a clear link between great service and the bottom line. Companies that understand this correlation focus on the service profit chain and creating leaders who are truly customer focused.

Even Ryanair has woken up to the need to focus on customer service, their u- turn could cynically be attributed to a desire to make more profit, but it has worked. Ryanair's profits have soared by 66%! Chief executive Michael O'Leary, who himself underwent something of an image transformation as part of the process, said the initiative had “attracted millions of new customers to Ryanair”.

So what is the service profit chain? The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. “The links in the chain are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers” (Source HBR).

There is a direct link between leadership and great service. Leaders who understand the service-profit chain develop and maintain a culture centred on service to customers and fellow employees. They display a willingness and ability to listen. Successful CEOs like Herb Kelleher of Southwest spend a great deal of time with customers and employees, experiencing their companies’ service processes while listening to employees for suggestions for improvement. They care about their employees and spend a great deal of time getting to know what makes them tick, supporting, challenging, coaching and recognising them.

These leaders adopt a customer focused approach, but what do we mean by that? For us there are seven elements:

“Better leadership can generate a 3-4% improvement in customer satisfaction scores and a corresponding 1.5% increase in revenue growth” – Blanchard

The seven elements of Customer Focused Leadership

1. Meaning maker – People want to work in a place where they feel the work they do has meaning and is worthwhile. ‘Employees who did find meaning in their work also reported being 2.8 times more likely to stay with their organization, 2.2 times more satisfied with their jobs, and 93% more engaged’(HBR). Customer focused leaders recognise this and are fanatical about creating meaning for people. They do this regardless of the company they work for, you don’t have to be a doctor to find meaning in the work people do! In the great companies, leaders will build and cascade their compelling story. Not just the what and how, but the WHY. Connecting people to the customer and why the company exists, is something greater than just the task and this makes people feel the job they do is purposeful. Great leaders also recognise that not everyone is going to be waxing lyrical about customers and they are skilled in shifting and reframing cynicism. Meaning Makers dispel the myths and legends that arise and impact how connected people feel. They create a movement of followers who are truly connected to the work they do.

 2. Show up and proximity – Leaders who are close to the customer and also their people have a better chance of creating exceptional customer experiences. They know their people, they create a place where people want to show up and give discretionary effort. They reward and encourage customer focused behaviour.  Most leaders will say they are hugely service focused and customers are at the heart of everything you do. But we have one word that takes the intention to reality. Proximity. This is about being close to the customer. How close leaders are to the service experience in your business will influence many things:  

Closeness to reality – what leaders think happens and what actually happens are often very different, proximity to what’s really happening closes this gap

Leaders' ability to influence the customer experience – if leaders' heads are in cloud cuckoo land, it’s unlikely they’ll be making the right changes happen to make it easier for customers

Employee’s perception of how important the customer is – if they see leaders paying attention to what’s happening on the front line, leaders' intention becomes a reality

In the best for service companies, proximity to the customer is everything. In one company we know, ALL leaders and managers take four hours of customer calls every month, irrespective of what division they work for. Now, that’s proximity at its best! They take calls, talk to customers, they observe in the banks etc. They understand the challenges and use this insight to make improvements and also this is visible leadership that will inspire people.

3.  Permission granter – This is about giving permission to employees to do the right thing for the customer. Empowering employees improves performance by 11% (Harvard 2013). People feel safe to step outside of the process (within reason) to act on the customer's behalf. Continuous improvement is at the forefront of people’s minds, processes are questioned and ideas generated to improve the customer experience. People are encouraged to exercise their own judgement. Leaders coach judgement, so people make better decisions for both the customer and the business. They encourage and develop autonomy. Permission Granters break down the things that inhibit ‘permission’. They act as trust creators and understand that for a business to thrive, the only true currency is trust. They extend trust to their people, so they can act in the best interest of customers. Creating a culture of permission requires more than just requesting it from your people. Leaders need to:

1. Define a set of guiding principles so people know just how far they can go
2. A feedback loop that constantly feeds the guiding principles so ‘doing the right thing’ is a living breathing organism
3. Praise people when they get it completely right and coach when the boundaries were stretched too far
4. A story telling culture so the ‘doing the right thing’ examples get passed around virally every time someone does it

4. Walk the talk - Customer focused leaders realise their teams are continuously watching them, looking for the difference between what the leader says and what they do. A phrase you often hear from leaders or even parents is “do as I say, not as I do”. It is all very well talking about service principles and values, but unless leaders are living and breathing them they are very unlikely to get buy in from people. If leaders say to their teams “listening is important”, but continually interrupt them, how will this impact them? If they say “creating an open feedback culture is important” and then proceed to have a corridor conversation behind someone’s back, what does that say to their team about them as a leader? Employees will be looking for your words to match actions. Great leaders demonstrate the behaviours and skills required to deliver great service, both internally and externally. They also hold others to account, if they see behaviour that conflicts with what is expected, they address it.

5. Clear the path – If employees are to be empowered, do the right thing for customers, deliver an effortless and human service – it has to be easy for them to do that. If they are shackled by processes, silly rules or broken systems ….guess what?  Don’t expect engaged employees or happy customers. The role of a leaders is to create a robust continuous improvement platform, that really works. Most companies will have a CI process, but how many really make a difference to what the customer experiences? Frontline employees are the ones that talk to customers, they know the issues and in most cases have the answers to improving service. The CI process needs to clear the barriers that prevent people doing the right thing for customers. Leaders need to clear the path and act as collaboration drivers, who demonstrate a dedication to helping others collaborate towards a shared success.

6. Leader as Coach – Employees need to have the right skills, behaviour, mindset and confidence to deliver great customer experiences. It is the leader's role to engender a learning environment that enables people to be the best they can be. Coaching is a huge part of this. ‘Coaching explains a 17% performance difference between those coached and those not coached’ (CEB). Increasing competence, increases confidence. Customer focused leaders need to coach the skills required to have great customer conversations. They need to be able to skilfuly have behavioural coaching conversations that address peoples limiting beliefs or help them to reframe their thinking.

7. Performance Owners – In truly customer orientated cultures the customer really does come first. Profit is seen as an output of highly engaged customers and employees. Leaders recognise ‘bad profits’ don’t pay in the long term, think Ryanair! They balance the need for measuring efficiency with effectiveness. Performance is connected to the customer. The right measures are in place i.e. Customer Effort, NPS, Cost to resolution and Employee Engagement amongst a few. Leaders drive accountability and ownership. They understand you get the team you deserve. The team’s performance is a reflection of the leader.

Leaders naturally have individual traits and styles. But companies that are successfully using the service-profit chain possess all or most of a set of Customer Focused Leadership traits that separate them from their merely good competitors. Of course, different styles of leadership are appropriate for various stages in an organisation’s development. But the messages sent by the successful leaders we have observed stress the importance of careful attention to the needs of customers and employees. These leaders create a culture capable of adapting to the needs of both.

How customer focused are your leaders?

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