I was going through my normal browsing routine of the Financial Times today and found an interesting article in the management section entitled “The psychiatrist of finance” which was a small story on a man named Peter Solomon. The piece talked about how Mr. Solomon’s career evolved during his career and how he has preferred a way of doing business that involves close relationships and empathy with potential and current customers. I actually felt that the piece was extremely good for any MBA student to read because it reminds us that even in today’s environment of ever more automated relationships that a human connection can be the difference between success and failure as well as necessary to ensure a long relationship with clients.
As I sat here pondering the deeper meaning of the moral of this story, I realized that the subject of the article has a point that should be heard. In fact, it can even be seen as a strong strategy that provides a competitive edge. More and more services such as investment banking are becoming a commodity. This causes firms to essentially race each other to the bottom of the profitability ladder. Firms continue to find ways to cut expenses which usually means cutting out the human factor in exchange for higher levels of automation. But the question to ask is, why? Why do firms automatically start assuming that these short term moves will help in the long term? As a product becomes a commodity, it no longer brings about a sense of product loyalty to it. A perfect example of this is how investment banking is becoming cheaper and cheaper for firms and no longer draws the same loyalty that it once did. The relationships that Mr. Solomon has built over the ages are essentially what cause consumers to stay with a company in the long term. Just look at how when a financial advisor moves to another firm, many of this clients will go with him or her.
In the article, Peter Solomon recalls an incident when one of the employees of his firm was so involved on her smartphone that she walked directly between the President and Chairman of her firm without even realizing it. After getting her attention, he says to her “You just walked between the chairman and the president of your company. Are you going to observe the world around you, or ignore it?” This small story really gets to the heart of a disease of mass automation within the entire business community. Firms are so involved in automating out the human capital that they are losing their edge in being able to find hidden gems of opportunity that a computer cannot discover. This really goes beyond the usage of customer loyalty programs that attempt to entice consumers with financial rewards, this goes to the heart of the interaction between two people, regardless of their social positions or status. While CRM systems can only attempt to use algorithms to attempt to discover patterns leading towards better sales and client management, the ultimate tool to that better relationship is the salesperson or service rep themselves and their ability to empathize with clients and their concerns.
Just looking in my industry, I can easily pick out a perfect example of this. If say an asset manager is offering service to their client but they simply are offering a commodity, they may continue to retain that line of business but no growth will be established. If that same asset manager ensured they kept a working relationship with that same firm, they might find other opportunities such as asset based lending, underwriting, etc. All of these further deepen the client’s loyalty to the firm and almost build a feeling of guilt to go elsewhere. Going even closer to home, I easily recall how my Father will go to the same mechanic faithfully for years and years because of the relationship that was established of trust. Loyalty like that is simply unquantifiable to any firm and can be the savior in the worst economic times.
What do you think? Can you name a few examples in your own industries of how such loyalty and relationship building are either being forgotten or used to build stronger ties to the client?
Sources:
Financial Times: The psychiatrist of finance by David Gelles
http://www.ft.com/intl/cms/s/0/c003d782-447d-11e2-8fd7-00144feabdc0.html#axzz2FLyAGX4q
Entrepreneur.com: 5 Ways to Take Customer Loyalty to the Next Level by Jonanna Lord
http://www.entrepreneur.com/article/224117
Richard,
As an individual in the Hospitality industry, this sparks great interest. It’s very unique that humans are beginning to think that they do not need other human employees to succeed in their line of work. Anything from an automated phone call to a warm welcoming voice can make or break a business deal. I am currently working in the marketing department of The Standard Club. We give personalized tours on the daily, yet we still have to fall back on automated email and timed Facebook posts to reach out as actively as possible. I’ve noticed, that the greatest response is always the personalized tour of the club, hands down. I feel that this is a topic that needs to be dealt with before humans become extinct in the workplace! Great entry.
I completely agree with your thoughts on how creating human relationships will grow future business relationships. Relating this to the automated customer service machines that take customers through a list of questions, that then direct the customers to more lists of questions, makes people feel very frustrated and hesitant to use that form of communication in the future. The best customer service experiences that I have had over the phone are when I hear someone else’s voice on the other end. When I can actually interact with another person, my calls are generally shorter, getting the information I’m looking for faster, instead of going through numerous directories. Occasionally I will get someone very cheerful, which encourages me to use their service again.
I think this is an awesome article and dont know why it was not commented on as much. This is the perception of us as humans, and understanding how valuable key relationships are in business is crucial. I own a tech startup in Chicago called ThreadMeUp and our goal is to provide a seamless platform to customize, print and deliver apparel across the united states all with the click of a few buttons. We have the option to completely eliminate human interaction but at the end of the day, people (including myself) are more comfortable speaking to someone over the phone who can assure them that they will get whatever it is they need. Our technology will be sophisticated enough to automate customer service but we realized we have to have a customer service manager to take care of those who do like speaking to people before or after placing an order. AWESOME ARTICLE!
This is something that I wish to do when I start my career. When someone decides to keep a relationship, it makes the businesses feel good and the customers. Not only do customers refer the business to their friends and family, but they are inclined to stay with the business. I see this happen all the time with my dad. My dad is a realtor and he treats all of his clients in such a personal manner, that his clients see him as one of their closest friends. Even after years, he still manages to keep relationships with his first clients. It amazes me how he is able to do that but he values those relationships. He’s told me that when you’re in the business field, the main thing to do is keep relationships and network. So now he has so many clients from his previous clients’ references. Never cut off relationships. That is a powerful lesson indeed.
Automation definitely takes away the personal touch that human interaction gives to the people involved. Yes it reduces costs, but its in our human nature that we are social beings. The relationship and interaction between an automated phone call or even just a computer can never compete with that of two people. A conversation takes place, where thoughts and feelings are expressed and a relationship is established. This is something that a computer is not able to do, nor do I think it will any time soon. I don’t know about anyone else, but its that feeling of being understood that I like and is the reason why I choose to speak with an actual person and skip automated phone messages, and this is why customer service with people on both ends of the phone still exists. Automation takes away entirely the human component in doing business. Businesses started through relationships that involved personal human interaction, and I don’t think its going to change.