EMC Builds a Model for Customer Loyalty

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Marketing
Marketing

The public knows
EMC for its products. The tech company blossomed in the 1990s as customers went online and needed information management software and systems. But the company is looking to change its focus to build loyalty, not just products.

"For a long time we were basically a product company," says Frank Hauck, executive vice president of global marketing and customer quality. "For the greater part of the 1990s, there were two pockets of influence: development and sales. It was everybody else's job to make those two functions successful."

But when the tech sector crashed in 2001, some longtime EMC users abandoned the company's premium products for less expensive ones. The company realized it may have misevaluated its customers' needs.

After extensive surveying, EMC learned that while customers were incredibly satisfied with the products, they weren't especially loyal to the company. So in 2002 EMC abandoned customer satisfaction as a metric and commenced a push that would eventually become known as the Total Customer Experience (TCE) program.

The goal was to create a roadmap that would take customers from "satisfied" to "loyal." "What we didn't have enough of were the people who said, 'I'm an EMC customer. I can't wait for that next product to come in the door,'" Hauck says. The model needed to change from product provider to strategic partner.

Everyone plays a part
The shift required substantial in-house philosophical changes at EMC. The engineers had been focused on new features and speed of performance, while the sales staff believed its job was done once it got customers to sign on the dotted line. The service-centric culture Hauck envisioned, however, would require every internal constituency to reorient its way of doing business: "They'd have to be strategic
advisers," he says. "They'd have to be more consultative."

EMC began a companywide training program for its 38,000 employees to change its corporate culture. Now, engineers and others in the technical and development units must make themselves available to the customer-facing sales reps and senior management to offer their expertise about
customer questions and issues.

On the sales side, "it's less about trying to close a transaction at the end of the quarter and more about having knowledge of what's going on with the customer," Hauck says. "We want everybody to be on top of what the customer might need." To this end, EMC has initiated quarterly account reviews, a nonselling event during which EMC reps and their customers evaluate the ongoing status of the relationship.

The company made it clear early on that it is serious about customer centricity. It altered its compensation structure, tying a quarterly bonus to a 10 percent increase in system availability from quarter to quarter. "System availability" is one of the metrics measured in lieu of customer satisfaction. It's the percentage of time that the systems are working properly for customers. EMC judges everyone on this one to spur anyone in the customer-service chain to address problems as soon as they happen. Since almost every employee has a role in keeping systems available, it made sense to measure that metric as part of the TCE program.

The first few quarters, the company met its goals. The fourth saw only a 9.7 percent increase, which EMC didn't round up, meaning that nobody got paid. From that moment onward, the few people who weren't taking TCE seriously started doing so.

Results

Feedback so far has been positive. Some customers now consider EMC a partner, and the company has returned to profitability after a turbulent few years. According to a speech Hauck gave at the Conference Board Customer Loyalty conference in June, EMC is slated to generate
$1.9 billion in profit on revenues of $15 billion in 2008.

"The relationship piece of what we do is a journey, as clich?s that sounds. It's not something we'll ever get 100 percent right," Hauck says. "At the same time, the days where customer service was just 'something breaks, we fix it' are long gone. People may get rid of their vendors for price, but you don't see them getting rid of strategic business partners. We think we're in the right place."


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