By name for NewVoiceMediaBy Amy Scott, Director of Sedulous for NewVoiceMedia

Why Silos Damage Customer Experience

Silos are not necessarily a bad thing; they can be beneficial when used properly and provide organizations with a structure that works. They often foster expertise in different areas and promote a sense of individuality, accountability and responsibility. Silos also act as a method for ensuring focus around specific business deliverables. These are all good things, so why are they the biggest hindrance to corporate growth?

Silos may be a great way to store grain, but can cause problems when silo mentality runs unchecked in a company. We have all seen silos at work in individual departments, regional offices, different channels and even in different management levels within an organization.

In an ideal world, silos would be:

Transparent:Allowing people to see inside the silo, enabling people to understand what that silo is working on and reassure them the work is in the best interest of the organization.

Permeable:Allowing information to flow in and out of the silo, enabling other groups to leverage the expertise and information best across the entire enterprise and also allowing the silos to better understand their impact on the organization.

But these types of silos rarely existUnfortunately on most occasions, silos encourage behaviors that are beneficial to the occupants of the silo, but are often not in the best interest of the overall business or its customers. It also plays into the hands of corporate politics, since silos help to keep things private. And we all know that in office politics information is power.

Silos restrict clarity of vision across the organization, and they breed mini fiefdoms where people are less likely to collaborate, share information and work together as a cohesive team. Not surprisingly this leads to poor decision-making as well as impacting on morale within a company, its efficiency and profitability. Since every manager is part of a silo, how often have you experienced frustration, when your priorities don’t align with someone else’s in another department? (Can you remember telling a colleague that whatever you needed was really important? Or telling another colleague that you were doing something that has a higher priority? We have all been on both sides of the equation.)

1 American Management Association (AMA), Survey on internal collaboration, 2012

A recent survey from the American Management Association showed that 83% of executives said that silos existed in their companies and that 97% think they have a negative effect1.

Often you find that silos are not aligned because of the company-centric or channel-centric nature of many organizations and this lack of alignment impacts upon the customer experience in a big way. And in some cases, the way they are measured and the KPIs of different silos actually conflict with each other. And remember that operational units will tend to deliver against what gets measured and their KPI targets, since their bonuses, especially management bonuses, are contingent on the achievement of KPIs. In order to deliver a great customer experience you need to change what is measured and align it to the customer and not the organization.

Some companies, rather than being a seamless entity and speaking to the customer in one voice, frequently present mixed messages. Each silo has its own view of the customer and the landscape they exist in, each from its own perspective.

This causes the customer to see the organization as disjointed and dysfunctional, leading to a lack of trust, irritation and creating a feeling that the company is simply incompetent.

2 Zhecho Dobrev, Beyond Philosophy, 15 April 2013

In 2012, Beyond Philosophy did some research amongst customer experience professionals and executives, which showed that “silo mentality” is the biggest organizational hurdle to improving the customer experience2. This is understandable as the end-to-end Customer Experience touches many parts of the organization.

Types of silos

Within a business, silos come in many shapes and colors – functional, channel and even hierarchical silos. And the impact these silos have on the way we deal with customers is huge. Silos illustrate a type of real inside out thinking, something that exists today in many organizations.

Operational silos – Functionally based�� Where customer support isn’t connected to marketing - a big ad campaign goes out leading to a rush of calls, but the call center hasn’t been briefed and as such is understaffed. So people have to wait long times or simply give up, resulting in angry frustrated customers and a waste of marketing spend.

�� Finance and marketing not interacting - a company makes a credit card offer to customers, only to have the customers apply and be turned down because the company didn’t credit score them prior to sending the offer out. This results in angry customers who have had their time wasted, damaging your brand.

�� Disjointed companies - not acting as one entity either nationally or globally - e.g. credit card company and bank – same company but actually not, Sony-one company globally but they won’t guarantee a camera bought in one country and claimed against in another country (where they sell the exact same camera) unless you took out an international warranty on when it was purchased.

�� Customers having to explain themselves over & over again about the same issue to different people within the same organization.

Channel silos – Interaction based

As new channels and touch points emerge, old ones don’t disappear. Technology has and will continue to create more channels that affect the customer.

Yet the majority of businesses have a separate approach to managing retail, telephone, web, social media, email and mobile channels, and they still expect customers to be able to hop between these channels in one seamless interaction.

Today, more than ever, organizations are engaging with their customers across an increasing proliferation of channels and are finding it is their customers who are now dictating the communication channels. So it is becoming more imperative for organizations to ditch their old “silo mentalities”. This means that they need to prioritize their energies on engaging their people to deliver great and consistent customer experiences across those channels.

So it is now more important to ensure that you act and speak in one voice - giving a consistent message & customer experience across all channels & touch points… but this rarely happens.

Customers share a great deal about themselves through their multichannel interactions. However, if it is all held in silos, companies can’t get a complete view on their customers and their history and therefore act on all this customer information without an overarching strategy in place; and the tools needed to gather, distribute, and analyze this data to allow them to design a better customer experience.

According to recent research conducted by eConsultancy3 with over 650 companies, most organizations are trying to integrate systems, but the majority still have a long way to go. In fact only about a quarter (26%) of companies have a well-developed strategy in place for improving customer experience.

But almost 70% are a long way from having integrated channels and a complete customer picture, yet alone speaking to them in one voice. So what are the barriers to improving multichannel customer experience?

41% of respondents state that organizational structure is a significant barrier – in other words operational silos.

38% of respondents state that one of the three biggest problems is the complexity of customer experience, given the growing number of touch points (mobile, phone, retail outlets, email, etc.).

34% state the difficulty of unifying different sources of customer data, which ties in with the previous two points about structure and complexity.

41%

of respondents state that organizational structure is a significant barrier – in other

words operational silos.

For example recent research shows that the same customer will “like” a company on Facebook while complaining about them on Twitter, therefore highlighting the need to have an integrated channel strategy.

3 Econsultancy, Multichannel Customer Experience Report, November 2011

Far too often junior level employees feel it’s better to play it safe than to risk calling unwanted attention to themselves and senior leaders may feel inhibited from engaging front-line workers. It is often found that communication patterns are extremely hierarchical: Executives, middle managers, and rank-and-file employees communicated extensively within their own levels, but there were far fewer cross-pay-grade interactions in many organizations.

Silos can also occur among organizational levels when team members are either inhibited or actively discouraged from engaging senior leaders without going through the correct protocols and channels.

Hierarchical silos – Organizational level based

One way around this is having organizations with a flatter structure - those with fewer levels of management. This type of structure encourages employees to take initiative without needing approval from multiple managers. Instead of “shifting the responsibility” up the management ladder, flat structures empower employees to take.

Another way to break down these silos is by getting your organization to undertake Corporate Social Responsibility (CSR) projects. It makes senior management more human and approachable and creates a future atmosphere where front line people feel able to talk to and share their experiences with senior management. It also has the spin off benefit of making employees feel they are working with a company that cares and we all want to work for these types of organizations.

Smashing your silos

The situations created by the above silos are costly, avoidable and all due to poor communication between different parts of the company. Ultimately this leads to loss of sales because the customer will go elsewhere, where it is easier to do business. So why does it keep happening and what can we do to stop it?

The first step is to break down the silos. Companies have begun to recognize the crucial importance of this, which is why in the last five years we have seen the rise of the Chief Customer Officer (CCO) – a single board level executive leading customer experience efforts across business units such as sales, marketing and service, or even over an entire company.

The first step is to break down the silos… Focus on the customer… freely sharing information across the enterprise… creating an atmosphere where collaboration, teamwork, trust and open communication are encouraged…

�� Focus on the customer, paramount to success is staying close to the customer of your product or service and learning how you are missing, meeting or exceeding their expectations. To do this, you must bring people together so they begin to understand the inter-dependencies between departments and the impact it has on customers. It is by bringing the outside in and sharing customer feedback throughout the entire organization that people begin to see the effect their behavior has played in the customer’s perception of their organization. But whatever you do, it must not be a blame game, but something proactive and positive which brings people together as one unit - not something that creates further divisions. You need to frame the changes into something that creates positive action.

�� Through freely sharing information across the enterprise and delivering it into the hands of those people who impact on the customer. This will discourage information hoarding and improve collaboration. If you frame the need to do this as a positive opportunity, that by eliminating the barriers between divisions or management levels you can create a better and stronger organization, one which will serve the customer better, then you will see more people actively getting involved to make it happen.

�� By creating an atmosphere where collaboration, teamwork, trust and open communication are encouraged. Developing cross-functional teams is a great way to make this happen. By bringing together people from all relevant points of view, levels, divisions and locations, who are committed to changing the way their organization operates and hold set regular meetings. And encourage group members to network and communicate outside of these meetings and, more importantly, filter messages about the group’s activities to others in their own divisions or offices.

More importantly, how do you begin to create an outside-in customer centric structure in your organization? There are a few core things you need to do:

Ensure you include key players on it, because if they are left out they can block change. Include skilled managers and leaders who can drive the change process and ensure you have backing from top management to give the decisions made by the group credibility and the remit to take the appropriate actions.

�� By getting people to see things from other perspectives. This can be done by rotating personnel in various jobs around the organization. Invite managers from other areas of the organization to visit your team meetings, even making them members of the group, as you work on mutually beneficial efforts.

At Tesco, senior management spend a week per year working on the shop floor to see what actually goes on and build direct relationships with customers and shop staff. And at Dyson, the first thing you do when you start working there is to build a vacuum cleaner.

A great way to get Senior Management to buy into this and support any customer experience initiatives is to get them to be the customer and experience what it is like and see things from a customer’s perspective, so ask them to:

�� Buy a product or use a service across different channels

�� Make an inquiry – especially a stupid one

�� Make a complaint

�� Ask for support

This will give you an added insight as to how customers are impacted by silos along their journey and provide a real impetus to improve things.

�� Connecting all your touch points and channels, to enable all the people who come into contact with customers to have accurate, timely and relevant information about the customers so that they can make the right decision, at the right time, in the right channel. It is only by having integrated channels that you get a complete customer picture and can communicate with them in one voice. John Lewis Partnership has shown how to create a seamless customer experience across in-store and online channels, using each to complement the other - omni-channel. They know that about 60% of their customers buy both online and in shops so they adopted an approach to make it absolutely seamless for customers to move from one to the other. This has helped them to grow sales by over 7.5% against a background of the UK’s longest retail recession in living memory4.

4 John Lewis Partnership Annual Report and Accounts 2014

�� Reward collaboration; if your reward system rewards individual achievement change it to reward collaborative performance as well. Recognize and reward people who work across organizational boundaries and share their stories to the whole organization.

�� Finally, to make this really stick, you need to change the way you measure success and align KPIs across the entire organization enabling you to drive the right behaviors. We all know that what gets measured matters, so if every employee and manager gets measured, rewarded and bonused on delivering successful customer outcomes, it will focus the mind. Again at Lego, everyone is bonused on the NPS scores the company receives from the CEO to customer service associates. And John Lewis ensures that employee satisfaction and customer satisfaction are inextricably linked. Last year all its 91,000 staff reaped an additional 15% bonus, worth eight weeks’ pay – from the CEO to the man who washes dishes in the café5.

The work that it will take to break down your existing silos isn’t going to be easy, but it is necessary in the long term if your organization wants to stay competitive and profitable.

5 The Guardian, 7 March 2014

About the AuthorSedulous is a service design and customer experience consultancy that has worked for a variety of blue-chip global British, Australian, European and American organizations on how to improve their service and deliver better experiences to their customers. The consultancy has grown rapidly by developing a reputation for creating highly effective customer initiatives that make a real impact on a company’s bottom-line.

Sedulous also undertakes numerous large, complex market research projects on behalf of clients helping them gain business knowledge and actionable intelligence.

Sedulous has vast experience in working with the customer service operations for a wide range of clients across a variety of sectors, such as telecoms, retail, IT, financial services, healthcare, public sector, publishing and luxury goods markets.

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