This post is a transcript of S2 E10 of the Voices of Customer Experience Podcast with Mary Drumond and James Conrad, featuring Colin Shaw, founder of Beyond Philosophy.
[00:06] Mary Drumond: You're listening to Voices of Customer Experience. I'm your host Mary Drumond and on this podcast we shine the spotlight on individuals who are making a difference in customer experience. We also proudly bring you the very best of customer experience, behavior economics, data analytics, and design. Make sure to subscribe or follow us on social for updates. Voices of Customer Experience is brought to you by Worthix. Discover your worth at worthix.com.
[00:35] MD: Colin Shaw is the founder of Beyond Philosophy, author of six books and hosted the Intuitive Customer Podcast. He has held a number of senior executive positions, is a member of the National Speakers Association, and has helped shape the customer experience industry as we know it today. He's also been featured as an expert on CNN, BBC TV, Sky News, and BBC radio. Welcome to the show, Colin.
[01:09] James Conrad: Hi Mary. Great to be here.
[01:11] MD: For the listeners who don't know about you, I know that you've got a very solid reputation in CX. You've been around for awhile. Most people know about you. I've heard your podcast, have read your book, your many books. How many books do you have Colin?
[01:24] CS: Oh 6 now, yeah.
[01:26] MD: So most people have heard of you, but for those who don't know about you yet, for our global listeners, can you tell them a little bit about your background, who you are, and your mission in customer experience?
[01:39] CS: Yeah, sure. So my background is actually corporate life. I spent most of my career in working for large corporates, and my boss said something to me maybe about 20 years ago now, which was he wanted me to improve the customer experience, but do it at least cost, which is always the challenge that is throw in at the end. They never say spend as much money as you want, and this is back in the just the turn of the century. That sounds very old, doesn't it? So I did a big program there and then decided that this was going to be a big thing for businesses. So 2002 I started Beyond Philosophy. We are a customer experience consultancy and training organization just focused on helping organizations improve their customer experience and that's our mission. And I've been working with corporates and other organizations ever since then basically, and have always been a sort of a leading edge of trying to understand how you should go about improving a customer's experience and all those things. So we've written six books as we've progressed in our thinking and understanding of what customer experience is about and how to go about doing it.
[03:02] MD: Well that's wonderful. You've done a great job at it for sure.
[03:05] CS: Good. Thank you.
[03:06] JC: You've written, as you said, several books and you talk about using behavioral economics to improve customer experience. I wonder if you could tell our listeners a little bit about what got you interested in behavioral economics and why this is now a critical part of your mission to connect with customer experience and if you have some examples and rules that use sort of sort of guidelines, we'd love to hear that as well.
[03:33] CS: Yeah, sure. So I think that I'm going to shock your listeners at the very beginning of this podcast, so I just hope they're not driving down the road or a standing up or anything else. So here's the shock. Customers, your customers, are people, and because they are people, customer experience is sort of simple in that respect of you have to understand therefore how a person ticks, you know, what makes them do what they do basically. So if I look back to 2002 when I first started in this field, I was talking about rational and the emotional. And what I mean by rational and emotional: rational is effectively the things that the people do, the things that customers do. Emotional is obviously how they feel. And that was all good and that, you know, actually I'm surprised still that the emotional side is just now taking off. People are starting to get to grips with it.
[04:46] CS: But what always surprised me and always interested me was if you think about a customer's emotion, then what is it that actually causes that emotion? So again, I'm working on the basis. If you want to understand what customers are doing, then by definition you need to think about how they're feeling. Because emotion actually comes from the Latin of motion. If you think about the second part, my emotion comes from motion. In other words, doing something. So the challenge for us and where we moved into behavioral economics a number of years ago now was going well, what causes a customer to feel something? And what we discovered was that there are therefore sort of two other things that you need to look at. One is what we would call the subconscious experience. So the subconscious experiences - the things that you see as a human being but are not conscious of. You've got your conscious of things that you're aware of and the things that you people are not necessarily aware of.
[06:03] CS: So let me give you an example of that. Think about the fact that you are breathing. And now I've said think about the fact that you're breathing. You're probably thinking, Oh yes, I just breathed in, and I just breathed out. Clearly you were breathing before I mentioned it, and you weren't aware of it. You weren't conscious of it, but you know, if suddenly smoke filled the room or the car or whatever it may be, you would then suddenly be conscious that you were struggling to breathe. So subconscious experience and then a customer experience. How does that manifest itself? Well, you go into a bank and they put pens on chains which subconsciously tells you that they don't trust you even though you're putting all your money there. The other aspect is then, what causes an emotion?
[06:58] CS: Well, the subconscious. And the other part then is this psychological aspect which comes under the three things, subconscious, psychological and emotions, comes under this heading of behavioral economics. So the psychological part is effectively "why do people do what they do?" and understanding that actually people are irrational. We do irrational things. We are not logical animals. Although we think that we are logical animals, we're not, and that's whether you're in business to business or business to consumer. We make decisions based upon many things that actually influence our choices. So that all comes under the heading of behavioral economics, which sounds a grand title, but effectively is how customers behave and the effects upon money. And this is what we wrote about in our book. And when I say our, I know you had them, my erstwhile colleagues on your podcast last season, which was Professor Ryan Hamilton. We wrote a book together a couple of years ago called The Intuitive Customer, which talks about all of this behavioral economics, emotional, subconscious, and we now do a podcast ourselves, where we talk about all this stuff and how it affects customer experience.
[08:31] CS: So this is a long answer, but let me just finish with one last point. And I think what that's doing is sort of showing a progression in understanding of what a customer experience is. But what happens is we meet lots of organizations who turn around and go, "we've implemented net promoter and we saw an uplift but now the numbers are plateauing" or you know, "no matter what we do, we can't seem to shift our numbers on customer experience and help" basically. And obviously we go in and help them. But what we discovered a lot with them is what's limiting them and why the numbers aren't moving is effectively because of the lack of understanding of emotions and this behavioral economics stuff.
[09:31] CS: They're not moving that thinking onto the next level of understanding. And therefore it's a classic example of the definition of madness - carrying on doing the same things and expecting a different result. You've actually got to look at life from a different perspective and in my book, to be able to move to that next level of thinking, to be able to improve your experience. Does that make sense? I'm sorry, that was a bit of a long answer to a simple question. But does that answer your question?
[10:08] JC: It did. That makes a lot of sense. Understanding why people do the things they do and the financial outcomes. I think that's a fantastic summary of behavioral economics and why it's important.
[10:18] MD: Not only that, but I think that's one of the main things that drove us to you and to Professor Ryan Hamilton for the first season was that you guys focus on the decision, which is really important. And it's part of the work that we try to do here at Worthix, which is having companies understand the weight and the importance of the decision and that it's maybe the most important part of the customer journey and the customer experience is what they decide. When it comes to making the decision, if they're choosing you, and if they are choosing you, then why? And if they chose your competition, then why did they choose the competition? And we feel, and I know that you feel this too, because I've heard you talk about it and I've heard Professor Ryan Hamilton talking about it as well. We feel that if you're able to understand the decision drivers and what's motivating your customer to buy and re-buy and stay loyal, then then you're unstoppable. And that's what will help you actually make a difference in your customer experience, and that's what will actually contribute to understanding the connection between customer experience and the ROI of your company, and the numbers and the bottom line, which is something that a lot of people in CX struggle with at the moment, right, is making that connection.
[11:34] CS: Yes, absolutely. And the irony is that sometimes what you're measuring is - in fact, I was with a client the other day who said they've got 10,000 stores and they were saying that all the numbers are flat and they can't do anything to improve it - and my answer was simple in the sense of it was clear to me that they were just measuring the wrong things.They were maybe measuring the things they should have been measuring 15 years ago, but things have moved on since then. So for us, the first sort of step is even an understanding of well actually some of the things that you should be measuring maybe seemed to be small insignificant things, but actually are the things that drive value for your organization. For example, Disney, now, when they ask their customers what they would like to eat at a Disney theme park, Disney knows that people say that they'd like to have the option of a salad.
[12:43] CS: Disney also knows that people don't eat salads when they go to theme parks. They eat hotdogs and hamburgers. So some of the irony of all this stuff is that what people say (and this is effectively the basis of behavioral economics) and what people do can be different things. So if you're measuring the salad uptake, well actually that's not the right thing to be measuring because it's not what customers are doing. So getting behind the skin of what you're measuring and then putting that in place becomes a key part of moving the experience forward.
[13:31] MD: If you want to understand more about the science behind customer decisions, follow our blog at blog.worthix.com, or find Worthix on your favorite social media. Getting your CX project off the ground? Start with the right foot by downloading our CX guides, e-books, and playbooks on worthix.com today.
[13:55] MD: Well let me ask you something. We spoke recently on this season as well to Ramsay Brown, and Ramsay is a neuroscientist that kind of works with advanced algorithms and artificial intelligence to help with human behavior. And he was talking about how companies can, maybe, depending on how they design their experience, lead customers to make different decisions. So do you think it's possible that Disney could now influence their consumers to want that salad instead of the hotdog and the hamburger?
[14:32] CS: Yeah, absolutely. Because then you're getting into the, again, the whole rich area of behavioral economics. So where you've got a subconscious message in the bank that is, you know, you're putting pens on chains. What are the experience you're trying to deliver and therefore what are they conscious messages that you should be putting out, but to your point, what are the subconscious messages that you're putting out and how can you point customers into doing things that they don't even realize that they're doing because your addressing some of those inner needs that often, and this is where I find it's an irony, oftentimes actually, I'm going to exaggerate to make a point.
[15:31] CS: But oftentimes you have to ignore what your customer is doing because they don't know themselves. Typically what happens is, so, you know, if you ask customers and you measured customers, whether they start going, well, what's the most important thing? Well guess what. Typically price comes up as one of the number one issues. But when you start doing other forms of research to get into understand what customers true behavior is, what you find is it's never price that's the issue. It's much more subconscious things of things like and emotional things like feeling cared for or feeling valued. Those are the things that truly, truly drive customer behavior.
[16:21] MD: Right. And ultimately at the end of the day there is that cost benefit aspect that's so important, right? So regardless of the price, if the price is high, then how are you making up for that high price tag with the experience? How are you delivering to make up for that high price tag and for companies to understand that that's so crucial, right? That's one thing that we hear Joe Pine talk about a lot, you know, in the experience economy. How are you making yourself the most worth it option regardless of your price tag? How come apple is so successful having the most expensive phone on the market consistently right?
[17:02] Yeah. So let me give you an example of something that might help your listeners. When you start thinking customers, so everybody wants loyal customers. So when you start thinking about really what is customer loyalty? Customer loyalty is an emotional attachment. If I was to ask you, who are the people you're loyal to? Well, let me ask you two. Who are the people you're really loyal to in your life?
[17:29] MD: My family.
[17:31] CS: Yeah. So typically you get it's family and friends. Those are the people that can do things to you that you don't like, that you stick with. And therefore what you're after is loyalty. Now when you start to think about it, loyalty a is a function of memory. So you can't be loyal to something if you don't remember the last interaction or you don't remember if you go to a store and you want to go back to that store by definition, you therefore have to remember about it. So the interesting question becomes that loyalty is a function of memory. So the issue becomes from a behavioral economics perspective, what forms of memory? There's a guy called Professor Daniel Kahneman, who's won the Nobel Prize for behavioral economics, that talks about the fact that what people remember an experience , they remember the peak emotion that they felt and they remember the end emotion that they felt, what he calls the peak-end rule. So by definition, you know, interesting questions become well, where is the peak of your current experience and what emotion are your customers feeling at that peak? And what emotions to your point, Mary, actually drive the most value for you?
[19:00] CS: And therefore where is the peak of your new experience? Where do you want that to be, and how can you evoke those emotions at that peak? So what is it that you therefore need to do? And obviously we know where the end is. It's at the end and therefore, you know, how do we, again, do we evoke the emotions that drive value at the end of your experience as well? So again, practically when you then start thinking about journey mapping and stuff like that, then if you're not thinking about those types of things and if you're not thinking of that level of detail, then you're not exhausting the richness that things like journey mapping can provide.
[19:47] MD: Yeah. Well all of these ideas, that customer journey, they all work really well in enterprise, right? Companies that have an enormous amount of customers going through, an enormous amount of experiences on a daily basis. And that's something that you've got a lot of experience with, right? Working with large companies?
[20:05] CS:Yep, absolutely.
[20:06] MD: So I know that a few of them, there's a British telecom, there's Xerox. Can you tell us a little bit about the work that you've done with these companies? Of course, I know you might not be able to mention everything, just give us an outline.
[20:17] CS: Yeah, sure. So as I mentioned, my personal background is working at B.T.: British Telecom. Corporate life has always been there, and we've worked with Fedex, American Express, Caterpillar. We've worked a lot with large corporates. The issue for me is to sort of a similar approach with all of them, and there are some key strategic questions that need to get answered for you to be able to improve your experience. So let me give your listeners some of those questions, and it'll be interesting to see if they can answer some of these. So first key question is, "what's the experience that you're trying to deliver?" Can you actually articulate at the end of that customer having an experience with you, what they would say about it, and critically "what emotions are you trying to evoke?"
[21:19] So I can tell you one of our case studies is Maersk line, they are the largest container shipping company in the world, and they improve their net promoter score by some 40 points over 30 months that led to a 10 percent rise in shipping volumes. And this is an independent case study that was done by Forester on them. They wanted their customers to feel cared for. They wanted them to feel trust, and they wanted them to feel pleased with what they were doing. So we worked with them to help them define those things, but what we could absolutely show as well, and this ties into the third question, so first question is what is the experience you're trying to deliver. Second question is what emotions you're trying to evoke. Third question is "what drives most value for you?" And when we say the word value again, you know that means spend, that means market share, that means improvement in net promoter, etc.
[22:20] And we worked out with them that it was trust cared for and pleased. Once you've got that strategy in place, you know what you're trying to deliver, you know that this is the experience that you know you're trying to deliver. You know that this drives value. Clearly. You come in then into designing the new experience to deliver that. And the next step is, and this is where you guys would come in, is the measurement of that. So the measurement of do we create trust, do we create cared for? And the derivatives that apply from that. So in other words, if you're trying to make a customer feel cared for, what is it that you need to do and again, that's where your good measurement systems come in place of how you go about measuring that for ongoing improvement and then finally into training and that as well because you can't just change all those things and expect everybody to know what they're doing. You have to train them on how to deliver those things. So that typically will be a program that we would put in place to answer those questions and then move from the strategy down to the measurement down to the training and the implementation and the journey map, etc. Does that make sense?
[23:38] MD: Yeah, absolutely.
[23:40] JC: I had one last question related to this and as we've been going through season two, Colin, one of the tensions that's come up that I've heard a lot about is the, we all know that CX is important and all senior executives will say, "yes, of course it's important and we feel that this is a battle ground now as value props get more commoditized", one of the tensions we're hearing is that it's hard to make short term changes to CX and this is a long game and it takes years to transform organizations to become focused on customer experience. At least that's what several of our speakers have talked about. And the challenges of getting an organization and leadership to buy into a CX strategy that's gonna pay off down the road. I wonder two things from your perspective. One, do you agree that this is really a long game? and two, if it is or it isn't, what could we do in the short term to show results and you know in marketing it's a lot easier to show the impact of a campaign or a promotion, but in CX, how do we get short term wins to sort of increase credibility and continue to get investment from leadership? I'd love to get your thoughts on that one.
[24:54] CS: Yeah, sure. So I think it's a long term and a short term gain. So I would disagree with it's only a long-term game because there are loads of things that you can do to improve your customer's experience. However, you do need to be putting in place a strategy for the longer term. So if I, just to give you a small example, if you see that your pens have got chains on them and that is sending out the wrong message, then guess what? Take the chains off. And that's not a long-term strategy, but if you see that your customers are waiting 30 minutes to for their call to be answered, that's not going to drive a good experience. So put more receptionists on and answer the calls quicker. So you're right, my personal background is operational line management, and one of the reasons we called the company Beyond Philosophy was to get over the fact that you need to have some clever thinking, a philosophy, a strategy of mission, but you've also got to do something.
[26:00] CS: So don't just talk to me about behavioral economics in theory. Tell me what I've got to do in my experience. And therefore, there are millions of things that you can do to improve your experience. The biggest thing that takes the longest amount of time, and I think what a number of your guests may have been referring to is in my view of doing this for the last 20 years, the biggest thing is a change of mindset. You've got to change the way that people think - turning them from being internally focused to being externally focused. And many people say they understand what the customer experience is about. Too many people say. At BT, one of the values was "we put customers first", but we didn't. So having a value, and actually believing in it and doing it are, again, different things.
[26:56] CS: It goes back to the salad. So for the longer term, you've got to get people doing things and changing that mindset over a period of time. And that can again tie back to measurement. In my view, that's one of the biggest ways that you can affect change by putting a decent measurement system in place that is targeting on the new experience and then paying people on whether they do that or not because that puts their feet to the fire and helps that change to come through. So I think the reality is there's loads of things that you can do to change in the short term, but you also need that strategy going of where we are going to go and where are we trying to head. And to our point of earlier is where we're going to head a place that's going to drive value for us? Because the danger is that you just improve things, but actually it doesn't change any of the numbers because you have focused on the wrong things. Does that make sense?
[27:57] JC: Yeah, absolutely. I'm glad to know there are things that can be done to move the needle in the short term, and I love some of the examples that you gave.
[28:06] MD: Yeah, very valuable. Colin, thank you so much for being with us today. For our listeners who want to follow you and stay in touch and listened to what you have to say, there's your podcast, The Intuitive Customer. There's a website that's got tons of valuable resources. What are some other ways that people can stay in touch with you?
[28:23] CS: So the podcast Intuitive Customer, I'm on LinkedIn, and also Twitter, which is colinshaw_cx. And our website is beyondphilosophy.com. So lots of different ways. I look forward to hearing from people.
[28:47] MD: Perfect. Thank you so much Colin for joining us today. James, thanks for being here as well. Look forward to talking to all of you again soon and to our listeners, come back next time.
[29:06] Thank you for listening to Voices of Customer Experience. If you'd like to hear more or get a full podcast summary, visit the episode details page or go to blog.worthix.com/podcasts. This episode of Voices of Customer Experience was hosted and produced by Mary Drumond, co-hosted by James Conrad, and edited by Nic Gomez. Blog copy and summary by Emma Waldron.