Now Is the Right Time for Silo Busting
Few would argue against the importance of word of mouth as companies try to appeal to the widest number of customers without having to spend mountains of cash to do so. After all, it is a well-documented fact that it takes far more to gain new customers than it does to keep existing ones.
Several studies on the subject have been conducted over the past few years, and they have concluded that the costs for acquiring new customers are anywhere from five times to 25 times higher than they are for retaining existing ones. Increasing customer retention rates by as little as 5 percent, on the other hand, can increase profits anywhere from 25 percent to 95 percent.
So exactly how do you ensure that level of commitment from customers that keeps them coming back time and time again?
“You need a clear, 360-degree vision of your customers and their experiences that everyone in your organization who relates to the customer sees and acts on,” says Vala Afshar, chief digital strategist at Salesforce.com.
But getting to 360-degree customer visibility across the entire organization is not always such an easy undertaking. It requires continuous interaction and collaboration between the sales, marketing, and customer service departments, which often operate independently of one another.
If you don’t have active collaboration and communication between these three distinct departments, it is likely to be difficult, for example, for you as a sales rep to know that your most loyal customer was recently disappointed with the quality of his last order, which could make him less receptive to a new proposal the next time you call.
If that is a problem at your company, it’s time to tear down the silos. It’s a tall order, to be sure, but it’s definitely not an unsurmountable challenge.
“A customer-centric culture should be the North Star and guiding principle for tearing down the silos [between marketing, sales, and customer service],” Afshar says. “Before joining Salesforce, I spent 12 years running global engineering and also serving as a [chief marketing officer]. Silo busting was how I spent most of my time. I realized that I had to try to align different areas of the business, and the only way to do that was to silo-bust.”
Afshar points out that in a recent Harvard Business Review study, 50 percent of marketing departments passed leads to sales without qualifying them. That’s not only a common scenario, but it’s an example of a silo that is hurting not only the overall customer experience but the bottom line.
If you’re the CEO of a company where that is happening, and you must answer to a board of directors and other stakeholders, you’re probably finding it increasingly hard to defend the siloing of departments, particularly when it affects revenue.
“The siloing of departments has a significant negative impact on customer satisfaction and retention,” says Johann Wrede, global vice president of strategic marketing at SAP Hybris. “Customers don’t really care and are often unaware of which department they are dealing with; they do not see experiences with these departments in isolation, but rather as elements of one continuous journey. They expect that journey to have a consistent experience, but siloed departments by their very nature cannot deliver a sufficient level of consistency to match the expectation. That results in fractured experiences, damaged brand perceptions, and a decrease in satisfaction and loyalty, which ultimately hurts revenue.”
SILOS IN THE FIELD
There are myriad stories all over the Internet, social media, and other venues involving mistakes companies have made when dealing with customers. “United Breaks Guitars,” following a musician’s experience with the airline in 2008, is one of the most viral, having become an instant hit on YouTube and iTunes and a public relationship nightmare for United.
On the opposite end of the spectrum is fashion retailer Nordstrom, “widely regarded as one of the premier organizations in customer service,” according to Rob Consoli, chief revenue officer at Liaison Technologies, a cloud applications integrator. “Early on, they recognized the importance of service, because if you don’t do service well, you could lose a customer. They’ve spent time understanding the buying habits and preferences of customers, which links sales, service, and marketing together.”
Tom DiScipio, chief strategy officer and partner at marketing firm Impact Branding & Design and author of the book Building Your In-Bound Sales Process, calls this “smarketing,” a “strategy that aligns marketing and sales goals. Having this makes it easier for sales reps to deliver the best customer service, while also using marketing to deliver more value to leads before they interact with sales reps.”
Adding customer service participation to this formula creates a real opportunity for companies to obtain that 360-degree view of their customers’ journeys with them and, ultimately, to fully understand customers better.
THE STAYING POWER OF SILOS
So if a 360-degree view of the customer is valued, and if companies understand that silos and disconnects between sales, marketing, and customer service are bad, why do so many companies continue to accept departmental silos?
“They tolerate it because fixing this issue requires some very fundamental changes, and that feels risky and difficult,” Wrede says. “Companies in some industries have recognized the organizational dysfunction at the root of these experiences and have responded by creating roles that cut across departments (such as the newly minted chief digital officer). The issue is that this now slices the expense by channel rather than by department, trading one set of siloes for another.”
As a real-world example, I look back on my experience with this firsthand during a recent interaction with a car rental agency. I had booked my reservation online, but the employee at the airport was on a completely different system, rendering her unable to give me the discount I had been promised. It took weeks to straighten the situation out, and in the end, I determined that it would be too painful and time-consuming for me to rent from that company again.
“Breakdowns between departments occur because modern organizations are operating under the traditional organizational structure: Marketing does the marketing, sales does the selling, customer service does the fixing, and so on, and their business processes and systems are not fully integrated,” Wrede laments. “This creates a fractured experience for both customers and employees alike, yielding gaps and inconsistencies that often place the onus on the customers to figure out which department they should be dealing with.”
APPROACHES TO SILO BUSTING
Some companies try to solve the silo disconnect problem by implementing systems that can integrate information that flows in from different departments into a single database that everyone can use and update, no matter where in the organization they work. It’s a flawed approach, according to many experts.
“The problem with this approach is that systems don’t create the communication breakdowns—they amplify them,” Wrede says. “Siloed business processes, incomplete customer data, misinterpreted insights, and a variety of other breakpoints become more visible as independent systems are implemented around them. As the volume of customer interaction scales, these breakpoints become more pronounced, and situations that could previously be overcome by manual processing and direct human communication now become unmanageable.”
A more effective approach to silo busting comes not from taking a wrecking ball to systems and structures; silo busting has to begin on the human side of organizations.
If marketing, sales, and customer service are working independently of each other, with separate budgets and individual sets of key performance indicators (KPIs) that don’t include collaboration between colleagues from other departments within the company, they won’t be able to come together holistically to address the customer’s full set of needs.
“While it might seem attractive because being able to define your own set of KPIs independently feels easier, in the long run it creates rifts between groups, wasted effort and budget, and, ultimately, poor experiences for customers,” Wrede says.
Salesforce’s Afshar agrees. He advocates for a system where KPIs are shared and co-defined between marketing, sales, and customer service.
“From the board and the CEO, through the executive team, and down to the single contributors, the organization has to believe that the customer experience and the customer journey are the most important elements for the company,” Afshar says. “The best way to assure this collective buy-in is by designing shared KPIs that collaborating departments must all work together to meet. The chief revenue officer, customer service, and marketing officers should collectively design the KPIs that are going to matter to the organization and determine how each will contribute to them.”
Busting silos also demands strong salesmanship. There will be personnel in the company, like “super salespeople,” who are earning more in commissions and base salary than some C-level executives and who have been highly successful in getting accounts and sales. The company does not want to lose these people and will be willing to do whatever it takes to keep them.
These super salespeople are also likely to insist on adhering to the tried-and-true sales methodologies and practices that have made them and the company successful in the past. Companies, after all, can hardly argue with results.
But there are ways to persuade such individuals to consider breaking down silos if you can give them reasons that directly contribute to revenue and their paychecks.
“Imagine a chief customer officer walking into a super salesperson’s office where the salesperson has a 90 percent commit from a customer,” Afshar conjectures. “Then the customer officer tells the salesperson that she has just completed research on sentiment and that the last Net Promoter Score for that customer was pretty low. The recommendation from service might be that the salesperson put in a call to that customer, which could save the sale. This kind of assistance will catch the attention of the super salesperson and demonstrate the effective alignment of different departments in the business.”
Afshar also supports “golden nugget” insights as a way to gain the attention of sales reps. As an example, he cites Italian motorcycle manufacturer Ducati’s use of connected sensors that transmit the mileage, service history, and more related to each individual motorcycle on the road and then store the information in the customer service system. “This information gets to dealers and repair shops, and it gets to sales and engineering. By using the [Internet of Things], all departments are tied together, and they’re getting the same information.
“So let’s say that service collects the information and, by analyzing post-sales customer information, predictively determines the ongoing needs of the customer. This enables the company to proactively respond to the customer and to modify what might be standard service-level agreements so they can more directly address customer needs with the appropriate escalation, acceleration, and people involvement for that customer. The effort is service, but it gains the respect of sales and marketing because customers are happy, and these customers bring more business to the company.”
If companies have learned anything, it is that changing corporate culture and realigning departments so they work more effectively, efficiently, and productively with each other is a journey, too—and it is likely to endure longer than any single customer journey.
“There is still a customer experience gap that companies are grappling with, but increasingly companies are focusing on improving customer experience because they are beginning to see customer experience as a battleground where they must compete against other companies,” Afshar says.
SAP’s Wrede delivers a similar message. He recommends appointing a brand experience “czar” who is responsible for the end-to-end customer journey and is charged to work with an executive council that coordinates the analysis and improvement of experiences across the entire customer journey.
“Also, bolder, less risk-averse executive boards can consider re-restructuring budgets to centralize all spending on customer experience initiatives and mandate that no department can access those funds in isolation,” Wrede suggests. “In this way, every customer experience project, whether it’s a website overhaul or a revamp of the way orders are captured, only gets funded once a cross-departmental team has evaluated the project and understands their role in it, because every department has a role in every stage of the customer journey.”
Mary Shacklett is a freelance writer and president of Transworld Data, a technology analytics, market research, and consulting firm. She can be reached at firstname.lastname@example.org.
SILO-BUSTING BEST PRACTICES
Though there are no universal ways to break down silos—every company culture and structure is different, after all—experts can agree on a number of principles that can be applied across the board.
1. Set a goal of aligning business units with business purpose.
The key to aligning departments so they work together more effectively is first to define a common business goal toward which everyone strives. If, for example, the goal is to increase customer satisfaction, the shared goals and key performance indicators between departments should reflect specific objectives for sales, marketing, and customer service to attain these KPIs.
2. Find a CRM system that can scale to your customer-centric needs.
Not all CRM systems are created equally. If you are shopping for a new CRM system or looking to upgrade an existing one, be sure to include centralized customer data that is cleaned for consistency by the system and that can present a single-source-of-truth data repository for all customer-facing departments—sales, marketing, or customer service.
3. Invest in analytics, artificial intelligence, and machine leaning technologies.
These technologies can assist you in learning more about your customers and prospects, in understanding how they feel about your company and its products, and in identifying when it is time for them to buy again.
4. Change the company view of customer service.
Too many companies still think of customer service as a “necessary evil” that just adds costs to the corporate balance sheet. This should never be the case. Instead, customer service can tip off sales if a particular customer was recently disappointed with an order. It can tell manufacturing and marketing which parts are getting returned because of product defects, which can lead to customer dissatisfaction. Customer service also “lives” with the customer once the product is sold, so it is in the best position to prolong the customer’s journey with the company on an ongoing basis.
5. Invest in employee training.
Moving to a customer-centric culture, if you don’t already have one, isn’t easy when you have employees who are set in their ways and used to a standard set of business processes. If you are expecting them to use analytics and other new technologies, they might not have the training for that. The more you can actively support and encourage employees during a cultural or work process transition, the faster they will develop confidence with the new business processes.
6. Remember: Silo busting is a journey.
It took years to develop departmental silos in your company, and it will take time to break them down as well. Take simple, well-calculated steps as you transition to a customer-centric culture. Clearly demonstrate the results that are expected and make them realistic enough so that employees feel that they are able to achieve them. —M.S.