I recently introduced a series called “Customer First Startups”. You may have seen my interview with Nils Vinje. The intention was that I would write/ curate two series for CS Insider, the other being “DEI to Achieve Customer Success”. I’ve already interviewed and lined up a number of people to interview or write on either of these two subjects.
The trouble is: We aren’t just customer-centric. And we are not solely interested in diversity, equity, and inclusion (DEI) to the exclusion of other customer success cutting edge practices. In fact, when I started interviewing innovative Customer Success leaders, it turned out that DEI is an integral part of their Customer Success best practices.
So, when I zoomed Carlos Quezeda to discuss Aruba’s customer-centric Tech Touch program, how could we not also discuss his leadership of Juntos, Aruba’s and Hewlett Packard’s Hispanic Employee Resource Group (ERG) and the organization he founded, Unidos ERG, to provide collective resources for Hispanic ERGs across companies? And when I interviewed Jennifer Chiang about her book, “The Startups Guide to Customer Success”, is it really a surprise that we stumbled upon the impact of Covid, the high number of women who have been let go or resigned this past year, and her resulting Unconscious Bias training that she has been leading her company through? Or that Neal Walia, a Customer Success leader at Quorum founded an award-winning Inclusion & Diversity Council that has served as a beacon internally and for their customers, and established an internship program that was mindful of their Washington DC roots? Leaders who innovate customer-centric programs are also thinking about the people they lead and the companies that need to retain and inspire them.
This newly combined series, Inclusive Innovation, will not require us to put on one innovative hat instead of another. Rather, it will acknowledge that we embody all of these cutting-edge interrelated Customer Success practices and seek to learn from each other so that we can continue the evolution in our companies and organizations together.
We’ll hear from Nate Padgett who builds communities that allow companies to provide customer-centric products, crowdsource solutions, and develop relationships that bond them to each other and the company. Mike Lee will share what Belonging feels and looks like, what companies missed out on that didn’t have a thoughtful DEI program, and what he’s empowered to do now that he can focus on his work. Shari Srebnick will share the tangible steps she’s taking to impact inclusive hiring and how diversity improves her customer-centric Customer Success program. I’ll share what Gain Grow Retain is doing with their Voice of DEI committee to influence their entire board’s activities in membership, leadership, and events. There are also several startup founders whose customer-centric visions include employee-centric and DEI approaches to their business.
You may ask, “Why”?
Maybe you haven’t linked customer-centricity to employee-centricity to DEI yet. Maybe you’re wondering if they are even linked. Let’s walk through it.
Customer-Centric Practices in Business:
When On-Premise software and hardware solutions moved over to the cloud, everything transformed into “As-A-Service” subscription models. Businesses could no longer sell a product and return when it was time to re-up the contract. Customer Success was born to address Churn and the ease of customers switching to other products. Customer relationships, meeting customers’ needs, and expanding business with the customer became more critical to the bottom line than even the initial sale.
But it didn’t stop there. Between Customer Success developing as a profession and the growth of social media, customers got used to being treated like they mattered. Like their success impacted your success. And then, they started to expect that their experience was important, and their problems should be addressed by the solution or product your company offered.
Customer Success grew beyond SaaS to other industries: Consumer Goods, Finance, Real Estate, Media & Communication, and Wellness & Fitness to name a few. Increasingly, even VCs who traditionally have had a Sales and high growth focus and founders of Startups are becoming customer-centric in their approach. Customer Success is now one of the fastest-growing professions from 2015 to 1018, the number of people on LinkedIn with the title of Customer Success Manager grew 8X. Accredited certificates are now offered and universities are starting to incorporate Customer Success programs. Customer Success is here to stay, and the data confirms that customer-centric companies are more profitable and successful.
Ok. The value of Customer-Centric practices has been established. Now let’s move on to Employee Centric.
Employee Centric Practices in Business:
Retail businesses are renowned for high employee churn. Some have incorporated this churn into their business planning by creating seasonal, low-wage, low-skilled jobs. Notably, companies like Starbucks took another approach. Their culture called attention to the employee experience, and their practices constantly considered “How will this impact our barista?” They ask baristas to expect more from Starbucks, even providing education and health benefits for part-time roles that traditionally have not been entitled to those benefits. They listen to their baristas and put them at the center of the Starbucks Innovation Lab. To this end, Starbucks consistently has less than half the churn of similar retail chains, creating a better, more consistent customer experience, and saving Starbucks money that retailers traditionally spend on recruiting and training employees.
Challenges in recruitment and retention led to the development of Employee Experience practices. So, it’s not a surprise that Tech companies started chasing after company culture and Employee Experience when they had to compete for employees. Foosball, ping pong, unlimited or generous PTO, and catered lunches became the cultural trademarks of Tech companies. But this did not answer the question of how to incentivize employees to deliver high-quality customer experiences that would drive company profits.
A Harvard Business Review study found that “Financial Targets Don’t Motivate Employees” instead, it “creates a transactional relationship” leading them “to create transactional relationships with their colleagues and customers.” Notably, to create impactful customer relationships, companies need “to build belief in the organizational purpose, the intrinsic value of the employees’ work, and the impact the teams have on customers.”
Similarly, a 2018 study by IBM and WorkHuman, showed that organizations in the top quartile of Employee Experience Index returned nearly 3X on Assets and 2X on Sales over companies in the bottom quartile. Further, based upon a survey of more than 22,000 workers in 45 countries and an international survey of 247 HR practitioners, they provided insights on what has the greatest impact on Employee Experience:
1. Belonging: Feeling part of a team, group, or organization
2. Purpose: Understanding why one’s work matters
3. Achievement: A sense of accomplishment in the work that is done
4. Happiness: The pleasant feeling arising in and around work
5. Vigor: The presence of energy, enthusiasm, and excitement at work
There are other studies and examples out there, but you get my point. Employee-centric approaches and policies have been shown to positively impact company revenue AND Customer Experience. Customer-centric companies have higher rates of growth and revenue. There’s a link between customer-centric and employee-centric. Are you with me so far?
Now, let’s dig into the 5 dimensions of Employee Experience outlined by IBM and WorkHuman. Belonging, Purpose, Achievement, Happiness, and Vigor. There are many things that a company can intentionally do to create a culture that supports these Employee Experiences. But, given the diversity of our workforce, not everyone experiences these dimensions in the same way.
In this past year especially, Covid19 has exacerbated some of those differences, and the racial unrest of 2020-21 has highlighted our different experiences. Thus, building an employee-centric company is even more complex than acknowledged in the past, and requires a more meaningful response than a single marketing or financial pledge, or a simple ping pong table.
By 2045, the US will be ~50% White and ~50% Black, Indigenous, and People of Color. To achieve Belonging, Purpose, Achievement, Happiness, and Vigor, it requires a company to create a culture that acknowledges and includes the company’s Diverse employee and customer base, a sense of belonging for everyone in the workplace, and Equity for one’s work to complete Purpose and Achievement.
The Impact of Diversity on Business:
Harvard Business Review also published a study on “How Diversity Can Drive Innovation”. Their research included a survey of 1,800 professionals, 40 case studies, and numerous focus groups and interviews. From that, they measured two types of diversity: Inherent (such as gender, ethnicity, sexual orientation) and Acquired (such as immigrating, or working, or living in another country). Companies with leadership that have at least 3 Inherent and 3 Acquired diversity traits are defined as having two-dimensional diversity, or “2-D”.
2-D Companies are “45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market.” The correlation is based on a few things. “Inherently diverse contributors understand the unmet needs in under-leveraged markets….A team with a member who shares a client’s ethnicity is 152% likelier than another team to understand that client.” Moreover, it’s critical that a company has diverse leadership. “Without diverse leadership, women are 20% less likely than straight white men to win endorsement for their ideas; people of color are 24% less likely, and LGBT’s are 21% less likely.” To get the benefits and build an innovative company, it’s not enough to have diversity within the ranks if the leadership isn’t open to their ideas. It’s the 2-D companies with diverse leadership that benefit from diverse employees and deliver on innovation, growth, and revenues.
Again, there are many other studies and examples out there, but you get my point. Companies with diverse leadership that is open to diverse employees’ innovations are the disruptors to take note of—especially as our market places become increasingly diverse. Ignore this trend at your own peril.
Connecting the Dots: Employee & Customer-Centric Practices, DEI and Inclusive Innovation:
IF an employee-centric company is at the root of driving innovative customer-centric companies, and IF customer-centric companies have higher growth and revenues (which is what Founders, CEOs, and VCs want), THEN it is critical that companies orient around employee-centric and customer-centric principles. And IF a company practicing employee-centric principles wants to successfully implement the 5 dimensions of Employee Experience Belonging, Purpose, Achievement, Happiness, and Vigor, they will need to Include and acknowledge our increasingly Diverse employees and communities.
BUT the good news is, if a company incorporates these best practices, they are likelier to have higher growth and revenues, and likelier to have happier employees who feel purpose and belonging and contribute to the innovations that successful companies will produce in the 21st century.
So, let’s share our best practices and innovations. Let’s learn from each other and grow. If you are practicing Inclusive Innovation, I want to hear from you! Contact me on LinkedIn.