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S4E12: Don Peppers - How Extreme Trust is Changing the CX Game

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Don Peppers is a bestselling author, blogger, and widely acclaimed keynote speaker, and global CX authority. A marketing futurist and accomplished trendspotter, Peppers has educated and motivated audiences worldwide with presentations and workshops focused on how businesses can compete in a dynamic, technologically fast-moving world. 

His latest book, Customer Experience: What, How and Why Now, provides insights and how-to recommendations for building and maintaining a truly customer-centric business. Don claims to be the only rocket scientist in the advertising industry, with a BS in Astronomical Engineering. He also has a Masters in Public Affairs from Princeton University's Woodrow Wilson School.


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Follow Mary Drumond on LinkedIn: www.linkedin.com/in/marydrumond/
Follow Mary Drumond on Twitter: @drumondmary

Follow Don Peppers on LinkedIn: www.linkedin.com/
Follow Don Peppers on Twitter: @DonPeppers

Buy "Customer Experience: What, How and Why Now" here


Transcript:

Introduction: (00:05) Don peppers is a bestselling author, blogger and widely acclaimed keynote speaker and global CX authority, a marketing futurist, and accomplished trend spotter. Peppers has educated and motivated audiences worldwide with presentations and workshops focused on how businesses can compete in a dynamic technologically fast moving world. His latest book, Customer Experience: What, How and Why Now provides insights and how-to recommendations for building and maintaining a truly customer centric business. Don claims to be the only actual rocket scientist in the advertising industry with a BS in astronautical engineering. He also has a Master's in public affairs from Princeton university's Woodrow Wilson school.

Mary Drumond: (01:28) Welcome to one more episode of Voices of Customer Experience. We are in season four and today we're joined by Don peppers, who's a very prominent member of the customer experience community. He's been a speaker for a very long time, authored 10 books, right Don, is that it?

Don Peppers: (01:44) Well 11 or 12, depending on whether you count the extra editions of the textbook as separate books or not.

MD: (01:52) Well, look at that. So 12 books and you speak all over the world and you're referenced by several people, several thought leaders, bloggers, podcasters as well. So I'm really excited to have you on. Thanks so much for coming.

DP: (02:07) Well, thank you. Glad to be here.

MD: (02:08) Tell me about how on earth you ended up in customer experience.

DP: (02:14) Well, I kind of fell into it. I have a degree in engineering from the Air Force Academy, actually Astronautical engineering. So I'm technically a rocket scientist.

MD: (02:26) You are the only rocket scientist and customer experience. Come on.

DP: (02:30) Yeah, yeah, yeah. But when I was in astronautics, we used to sit around and worrying about a second order differential equation. Somebody would look up and say, come on guys, this is not advertising. Let's do this. Anyway. So I basically, I had a graduate degree in political science, really public affairs from Princeton. And when I left the air force and went on into business, I took a job at an oil company doing economic studies, and migrated into the treasury department and finance. And then I took a job at an airline and I found marketing to be really, really exciting. I'd never taken a course in marketing and actually I've still never taken a course in marketing, but you can learn all the marketing you need in about six or eight weeks. And if it takes you longer than that, you're not going to learn it in 20 years. It's almost an intuitive kind of thing. You're looking to create value in a mutually beneficial way. And you're looking for opportunities in that ups and downs of the economy and people's desires. And so once I really enjoyed marketing and I took a job as a business development guy at an ad agency. I was trying to win new clients for my agency. And in the mornings I would make calls using a directory. I'd call advertising directors and marketing vice presidents and so forth. And I want to talk to them about our agency. But what I really wanted them to do is tell me about what they were working on. And I would write that down in a three ring binder. And this was in the 1980s. Okay. I write it down in a three ring binder and six months later I'd call you back and I'd say, Hey Mary, it's Don Peppers. How'd that product launch go in South America? That go okay? Because I wanted to have a relationship with you because I wanted you to take my call. If I ever read that your account was up for review, I just want you to take my call.

MD: (04:19) This sounds suspiciously like CRM.

DP: (04:22) Exactly. So I was asked to give a speech on the impact of interactivity on marketing. And back in those days, in 1989 in the advertising world, people thought interactivity would happen when you'd see a TV commercial for a product you liked and you'd push a button and a coupon would print out on your set top box. That's what they thought interactivity was. I came at it a different way. I asked myself, you know, interactivity is going to be two way. If a child could talk back to Tony the tiger during a Frosted Flakes commercial, what would Kellogg do with what the child told them? Well, the answer to that is in the mass marketing model that Kellogg wouldn't do a thing with that because that's not representative data. That's anecdotal data. Unless the child can be shown to represent an audience or a segment or some body of customers. But it's exactly the kind of thing I was trying to do in my job. I wanted people to talk back to me so I could create a relationship. So my conclusion was when interactivity really becomes ubiquitous, every company will want to set up a relationship with every one of their customers, one customer at a time. Even if they have millions, they'll use computers and so forth to try to do that. And that was the beginning of the, I gave the speech, a woman in the audience said, Hey, you ought to write a book. I said, I'm real busy. She said, I'm a college professor. You want to work on it together? And that was Martha Rogers. So we had a book like three years later.

MD: (05:40) And then 12 books later, you guys are still working together?

DP: (05:43) Yeah. We're not working as closely as we did before. She's in New York. I'm in San Francisco. But we communicate all the time. And we have this LLC called CX Speakers. We sold our company, Peppers & Rogers Group Teletech, which now operates as T tech to big business process outsourcing in Denver. And Peppers & Rogers Group still operates under its same name. And occasionally we'll do a project for them under contract, but we both left TeleTech after a few years and went out on our own again to do the really exciting stuff.

MD: (06:16) So I feel like, and correct me if I'm wrong, Don but this really diverse background that you have in all different aspects. I think of corporate. So if you were an astronautical engineer, let's say, you've got your Masters in public affairs, you were an economist, you worked in accounting, you worked in advertising and you worked in marketing. This must give you some pretty deep experience of some of the pains of the market.

DP: (06:45) Well, it's it's interesting. It gives me a perspective. I think that maybe is unique, but I don't think what I do is something other people couldn't do. I think having diverse interests and diverse background, whether it's engineering and political science or environmental science and psychology, I think having diverse interests is good for you.

MD: (07:05) And when it comes to customer experience, was there some moment other than this whole need to interact with customers, whether they be hundreds or whether they be thousands or even millions. When did this start for you? When did it become a passion? When did it become something that you started dedicating your life and your career to?

DP: (07:26) Well, when we wrote our first book, the One-to-One Future: Building Relationships One Customer At a Time, we were imagining a world of business-- we called it business science fiction. We imagined what might be happening to a world when anybody could interact anytime, anywhere. But it turned out many of our predictions were right. And so we formed a company, we wrote more books. I've had a whole career based on what I say, we're trying to make the world safe for customers, is what we're trying to do. Fundamentally, mass marketing, the old kind of marketing was always outbound. It was interruption marketing. You know, there was kind of a bargain. If you want to watch this TV show, you're honor-bound to watch the advertisements and the commercials. Whereas interactive marketing is much more participatory. It's collaborative. Customers are collaborating with you. They're trying to help you shape the right service for them. You're co-creating whatever service or product that the interactive marketer's delivering. Does that make sense?

MD: (08:24) Yeah.

DP: (08:24) It's a totally a dimension of business, really.

MD: (08:27) When you wrote Extreme Trust, which is, is it your second to last book or most recent book? You wrote a book after it, right?

DP: (08:35) I wrote a book after that personally. I wrote a book called Customer Experience: What, How, Why Now, but Extreme Trust was the last book Martha and I worked on together. The thesis of extreme trust is that because we are more interactive, Moore's Law says that every 20 years, computers get a thousand times more powerful. It has a corollary and we call that Zuckerberg Law. Every years you interact a thousand times more with others and you interact way more today than you did 20 years ago. Just think about it. And your kids are going to interact way more than you do today. Many of those interactions will be by bot or auto interactions, but you're going to be really, really plugged into your environment, your things, not just your friends and relatives and colleagues. And the more you interact, the more valuable trust is. That's the thesis of Extreme Trust. People who interact a lot, they don't have time for untrustworthy interactions. Okay? You don't count your change at the supermarket before you leave just to be sure you aren't cheated, right? But people used to have to do that. And so the more we interact, more trust is demanded, and the higher consumer's standards are. And so what we argue is that extreme trust is what we call proactive trustworthiness, where in fact you're proactively watching out for your customer's interests, even if it costs you money to do so. In a classic, very simple example is I buy a lot of books from Amazon. It's easy. I see a book referenced online, I swing over to Amazon and click on the book, it comes to my house. No questions asked. They've got my credit card number, my address already, just one click ordering. And one time I went to order a book I thought I should have and I got a message from Amazon warning me, you already bought this book. Are you sure you want another copy? And the answer is no, I don't want another copy. Thank you very much. Now just think about this for a second. Because in the mass marketing world, your mistake would have been the profit of the mass marketer, they're happy to make a profit on your mistake. They even make it difficult to get refunds. Okay. The more cumbersome it is to get a refund from an airline, the fewer people claim refunds for instance. But in the new world, interactivity ubiquitous, 24/7 interactivity, customers don't have time for that. And so the fact is I expect other companies to do what Amazon does now. I expect other companies to proactively watch out for my interest. And if they don't, I try to do business with other companies. I have higher standards. And that's the thesis of Extreme Trust.

MD: (10:57) That reminds me of a guest that we had on the podcast last season, who is Matt Dixon and he wrote a book called Effortless Experience.

DP: (11:06) Yeah, I know it. And I think he wrote a terrific book and CEB. And I don't know him personally, but I read the book. I thought it was terrific. Yeah, I quote it all the time.

MD: (11:16) It's a really interesting idea because the whole idea that he gives is that the study proved that customers don't necessarily want to be delighted in every interaction. They just want to go along their business. And what they want is a consistently effortless experience where the more almost naturally and organically things happen the way they're supposed to go, then the better it is. So it's almost like the best possible experience you can offer someone is one where they don't realize they're going through an experience.

DP: (11:51) It's no experience at all. It's totally frictionless. Let me give you an example of the power of this. A friend of mine is a management consultant and he specializes in catering to retailers and companies that sell into retailing. And he was shopping for new running shoes over the Christmas holidays one year. And he went into a mall and he went into the athletic shoe store and it was really crowded with people. So he got in line to take his turn behind a salesman. But because it's his business retailing, he always is observant. And what he noticed was the salesman had a particular brand that he seemed to be pushing. A young woman wanted some Reebok cross trainers and the salesman said, yes ma'am, but have you have heard of this new brand, it's called New American? And I don't remember the name that my friend said. He told his story and I've forgotten the name of the brand it was, but it was some obscure brand and he hadn't heard of before. And the woman said, uh, no, who is that? Well, they make a great cross trainer, he said, let me bring them out. They're about half the price of the Reebok. So he brought 'em out, she tried them on and she bought them half the price. Next guy wanted some Nike basketball shoes and a salesman him made him the same kind of pitch. He said, you know, if you don't really need the swoosh on your shoe, New American makes a great basketball shoe and they're about half the price. And he tried them on and he bought them. So my friend is captivated. He's into business, right? And he wants to know, New American, this company, he's never heard it before. They've got some kind of something. They're doing something to get these salesmen to sell their shoes. When it's his turn. He said, well, I couldn't help but notice, you know, you just sold these two people on a totally off-brand shoe. And the salesman got nervous. And he said, I just want to know what their secret is. Is it like a special commission, is it a contes?. And a salesman looked around and said don't tell my manager. He said, I won't. I just, I just want to know what they're secret is. And he said, look around the store on a Christmas weekend, Saturday afternoon, it's jammed. See how many people there are? I don't have time to go to the bathroom on a Saturday afternoon. New American, when they ship their shoes to our store, their laces were already in the shoes. Now that's an example of a company that is removing friction, removing effort from its customer experience. And I ask my clients all the time, do you ship your shoes with the laces in them or do you make your customers lace up their own shoes because if you do, you're not getting with it. Your customers' standards are going up.

MD: (14:52) Yeah. But it does definitely promote loyalty and it promotes return of business or repurchase.

DP: (15:01) I think he said it differently, Mary. I think what he basically talked about was any effort you have to exert as a customer promotes disloyalty. Therefore, lack of effort is what you want. You don't get loyalty by being outstanding and delighting a customer, not necessarily. Generally customers see any effort that calls to their attention the difficulty of dealing with a product, it's an opportunity to reconsider and that's what generates disloyalty. That's the thesis of the book.

MD: (15:35) Yeah. I mean, anything that creates any sort of obstacle. I was thinking about this the other day because I talk to people about customer experience all the time. It's literally my job and there's this whole movement around creating experiences and the other day I was on the train and there was a big thing saying "going above and beyond to improve the customer experience." And I said, wow, this is really getting into like even mainstream media now, where a term that was only used internally before, which is customer experience, is now getting out there, and I heard it on the radio and everything. But there, there are certain products, there are certain things that there's no experience involved, like buying batteries.

DP: (16:14) I think it's a question of definitions because you know, Joe Pine, in his book, the Experience Economy and some others have written books about creating, and I call those capital E experiences. You know when you go to Disney, you do it for the experience, your buying an experience. But when you buy donuts at the store or Tide detergent, you're not doing it for the experience of buying. You're doing it to solve a problem or to meet some need. And if that problem or need were to go away without you doing a single thing, that'd be the best experience at all. No experience whatsoever. That's a small E experience. It depends on how you define experience. And so when I'm talking about customer experience, I'm talking about the small E experience. Everything the customer does with respect to interacting, the totality of a customer's interactions with the brand over time. That's my definition of customer experience.

MD: (17:05) Yeah, but going back to the batteries, I mean there's nothing that you can do that can make buying batteries into a, like you said, capital E experience, but you can definitely reduce the effort by making it easier to open the damn package. Which is something that like, Oh my God, how has nobody thought of that yet? So simply by removing that effort and you know, you'll see like peeling back the paper and then it's stuck and then you have to dig your fingernail and you have to grab a pen and like puncture holes in it.

DP: (17:36) You're going to have to take a razor blade to it, you know, one of those box cutters I keep around. We've got box gutters all over the house just to open these damn packages.

MD: (17:44) Well, you know what I started doing, I started buying my batteries on Amazon, just Amazon basics because they come in a box and it's like, boop, you're done. So it really did remove the effort.

DP: (17:57) I'll give you an example, Amazon is shipping its batteries with the laces already in them. Basically they're reducing the friction or the effort that you have to undertake in order to solve your problem or meet whatever need it is that had in mind?

MD: (18:10) Yeah, absolutely. Now, I heard you talking a lot about retail. We've brought up Amazon a couple of times here and Amazon really has become this kind of behemoth when it comes to retail where everyone is afraid of the big bad Amazon. And how do you compete with Amazon because you know they're so, you know, you can't beat their prices, you can't be anything about them. And that's where Joe Pine comes in, I think, at least for me, with that capital E experience, in how to make a difference and keep the brick and mortar alive. And we've seen this in the past, I would say, not even more than a year and a half. Where brick and mortar retail is reshaping into experience retail and eCommerce is becoming the frictionless retail. Is this something that you've seen as well? And do you have any thoughts on that?

DP: (18:59) I've urged brick and mortar retail and companies, if they want to compete with online vendors, you have to focus on the capital E experience. That's why target has a Starbucks and it's, you know, near the cashier and why bookstores have readings and signings and events. Brick and mortar retail really has a very, very significant advantage over online retailing and that is that they have real flesh and blood human beings manning the store. The problem is that most brick and mortar retailers today still look at those human beings more like their costs rather than their assets. They're big assets if you employ them the right way, but you have to trust your employees to do the right thing. That means they have to be motivated by a common sense of purpose as sort of a sense of ownership in the business that you probably have to pay them more, but there are tremendous potentials for brick and mortar, physical retailers with physical people in an age of interactivity. I think.

MD: (19:57) Do you agree with Joe Pine when he says that experiences are worth more? In other words, people are willing to fork over more cash to have an experience.

DP: (20:04) Oh, definitely. I agree with that. Yeah. 100%.

MD: (20:07) So in that case, brick and mortar might not even have to worry about matching prices with e-commerce as long as they're delivering that capital E experience.

DP: (20:16) Yes, and it's even more critical in sort of commodity-like, duplicatable products. When you have a commodity-like product that is the same in every store, let's say, you need a couple of shopping experience with sort of some sense of adventure or connection or empathy. You need an emotional connection with the customer. REI is a really good example of a company that's motivated by a purpose, but it makes genuine connections with customers who all have kind of a common feeling that they want to the outdoors-y, they want to go on hikes. You know what I mean?

MD: (20:52) Not only that, they make you a co owner, even though it's a tiny percentage, they share that ownership with you. They're like, you're one of us now. And that becomes something special.

DP: (21:05) Yeah. I think that that it's a really good a program like that. But I don't think it's the only way you can create emotional bonds with customers. In a more and more machine-driven world of artificial intelligence and algorithms and automation, human connection is still very, very critical to people's happiness.

MD: (21:26) Absolutely.

DP: (21:27) And I think it's a way for any competitor to generate more loyalty among its customers, by connecting with them emotionally.

MD: (21:36) Well, I'll tell you what, Don, I could be a person with too much faith and I really hope to God that I'm not disappointed and that I don't get burned for this, but I do strongly believe that this fourth industrial revolution where we've got machine learning and AI, it's coming to make our lives frictionless in a sense. So in a perfect world for me, where this all works out very well, all of these different technologies will work harmoniously to remove the friction. Whereas the human element will add the empathy, it will add the spark of creativity, it will add the artistic and beautiful aspect of the experience. So combining those two things, we'll have, I mean something amazing.

DP: (22:23) And I think you're beginning to see inklings of this in the way millennials approach their lives, their jobs and their consumption. They're much more oriented toward larger than themselves causes and purposes. And I think a purpose driven business, of some kind of where your customers become advocates and supporters, not just paying customers. I think that's really the future of really successful companies.

MD: (22:53) So going back to your book about trust and creating that trust, you were talking about how sometimes you have to invest initially in order to gain that trust, but you'll reap longterm benefits, right? I've recently had on this podcast, on this season of the podcast as well, Mark Schaefer, and he wrote a book called Marketing Rebellion and he was talking exactly about that. He was talking about how everybody hates ads. At this point in time, being a marketer is a bit tricky because people hate marketers, they hate marketing, they hate everything that it stands for because they feel like marketing is a lie, and he tries to encourage us all to go back to being authentic and go back to being real and promoting real experiences and real connections. And he gives the example of like local products where you like you're helping out the community somehow or brands and products that have strong storytelling behind it, but not invented storytelling, an actual story, actual people that are behind that brand. And I feel like your book somehow aligns with that idea as well. Is that right?

DP: (24:03) It does align with it and I think Mark's really onto something. I think authenticity is what people are looking for, whether they're consumers or just people. It's something that you don't get necessarily with an-- let me give you an example. Let me just give you a quick example. Okay. I sometimes cite this, there is a company in Australia that has a contact center, and when a person calls into the contact center and they have some kind of problem or complaint with the product, they didn't fit it right. Sometimes it's the customer's fault for not like reading the directions or for not following everything correctly or not putting it together this way, contact center agents are authorized to look at these problems and at some point they could say, well, I see miss drumond, there's a problem there. I'm really sorry about that. But you know, the truth is, if you had just done it the way the instruction said. So what would you think is fair? And then they shut up and they wait for the customer too offer something and they accept it, almost always, and the customers sometimes turned from potential complainer's into raving fans. Now the question is, could that solution ever come from a bot? I don't think so. I just don't think so. I just don't think a bot asking me, so Mr Peppers, what do you think is fairw Would have the same impact if it's a real life human being who I talk to. Yeah, they can imitate empathy but they can't demonstrate it. And if I knew it was a bot, I'd probably try to take advantage of it. Of course. It doesn't have any feelings. What the hell? Why not? Right. So I guess what I'm saying is this sort of human connection is critical and the subtitle of Mark's book is, 'the most human company wins.'.

MD: (25:48) Yes, yes, yes it is. But I do agree with you on that point. And that reminds me, I've got a friend who's a judge and he once had a really difficult case to try, where under the law, the person that he was judging was wrong. But there were reasons and motives that wouldn't justify it and wouldn't explain. But his idea when he was talking to me about it, he said, Mary, the reason there is a judge at all is because we need to apply empathy. We need to apply humanity to judgment, or else we could just have computers and algorithms condemning everyone all the time. Because if it was just forcefully applying the law without taking into context the situation and the circumstance, then there'd be no point of having a judge at all. But circumstances vary so very much and reality varies and culture varies. And there are so many elements that actually come into play. Again, this is not me poo-pooing technology because I think that technology plays a really important part. For example, this weekend I went to [inaudible] a really great restaurant in New York City that's really hard to get reservations too. And once I got the reservation I was really happy about it and I got a message asking me to confirm and that was definitely a bot. It was a bot, and the time was kind of weird and I needed to change it. So I was like, Oh my God, now I have to reply to a bot. Awkward. You know where you're in that awkward situation. Should I just use singular words or can I add an emoji? You know? And I replied and I was like, might want to change this schedule. The reply I got was a human for sure, because the response was, Hey Mary, sure, no problem whatsoever. And I'd be really surprised if it was a bot. I mean like it would be a really cool bot if it was, but that's the interesting thing. So for the everyday process, the tasks that don't require that human element, outsource it to technology. But once an issue comes in that wasn't planned or wasn't scripted, then you have a human takeover. Right? So it's that combination of the human with the effortless that will come from using technology in our favor.

DP: (28:01) I agree. And because it's the human connection that creates the emotion really.

MD: (28:07) Well, thanks so much for being on today, Don. If our listeners want to hear more from you, maybe keep track of your work and where you'll be speaking, how can they find you?

DP: (28:15) Well, our company is CX Speakers and you can get us at www.cxspeakers.com. You can follow me on LinkedIn. I have 330,000 followers on LinkedIn, something like that. I write regular blog posts on LinkedIn, put up my thoughts there.

MD: (28:34) Great. Awesome. Any Twitter, any Instagram?

DP: (28:37) Yeah, @donpeppers. I'm not very active on Twitter and I'm not active much at all on Instagram and I'm getting ready to quit my Facebook account altogether.

MD: (28:47) Aren't we all? Well, great. So LinkedIn is the best place to find you, right?

DP: (28:53) Yes, ma'am.

MD: (28:54) Awesome. Great. Thank you so much for coming on. Hopefully we'll have you on again soon.

DP: (28:58) Let's do it.

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