I pledge allegiance to this company - includes interview with Ferrari North America Pres. and CEO Gian Luigi Longinotti-Buitoni - ways of developing consumer allegiance

Chief Executive, The, Sept, 1999 by Michael C. Ruettgers

From Customer Satisfaction to Allegiance

All companies believe the customer is king, don't they? Sure. But some companies go beyond the rhetoric - transforming satisfied customers into loyal allies.

Not long ago, I flew on British Airways with my brother and our families from the U.S. to Scotland for a vacation. We had traveled together to the airport and each joined different lines leading to the ticket counter. With an abundance of frequent flyer miles, I expected an upgrade to first class, vet I didn't want to be separated from my traveling companions.

My brother reached a ticket agent before I did. But by the time I was waited on. our entire traveling party, had been moved up to business class automatically. The airline's IT system saw the upgrade possibilities, calculated the amount of unused space in business class, and came up with a solution for seating us together.

Think of the good British Airways accomplished in a matter of seconds. Its local airline staff didn't have to get involved in the time-consuming effort of seat rationing. And I wasn't pulled into an explanation of why I didn't need a first class seat this time, or where I wanted everyone in my party to sit. A small matter, you may say. But customer loyalty is built on doing hundreds of small things right - over and over again. Just as important, customer loyalty is built on investing in the exact product and service attributes that customers value most.

As a consumer, I wish more of the world of commerce worked this efficiently. As the CEO of EMC Corp., a Fortune 500 company that develops intelligent enterprise storage systems and software. I am relentless in ensuring that EMC maintains its deeply informed and continually validated understanding of what our customers want and value. This constancy of purpose is vital. As Harvard Business School Professor Rosabeth Moss Kanter says, "The best hedge against uncertainty is to be close to the customer."

But how to do this consistently and methodically? And how to turn customer outreach into collaborative innovation?

I'm very aware that there are no prepackaged approaches to customer relationship management. But there are valid operating principles that can guide all of us. Here are four principles that have helped EMC not only look outward to our customers, but also bring customers into the heart of our product development process.

CUSTOMER CLOSENESS SHOULD START IN THE BOARDROOM

I think it was Deming who said that "quality is made in the boardroom." The same could be said for customer obsession. When I want to know what a company really stands for, I look first to the actions of its senior management. For example, I take note when Jeff Bezos, founder and CEO of Amazon.com, sends customers a letter, highlights his e-mail address, and encourages them to write with their thoughts. I take note when Richard Branson of Virgin Atlantic shows up at Gatwick Airport to apologize to passengers for a late flight - and at times offers them a free trip. Or when the president of Babson College, Lee Higdon Jr., joins students in the classroom, the cafeteria, at campus events, and even at local restaurants to learn firsthand what their needs are. All of these senior executives are setting the tone for people throughout their organizations.

At EMC, our employees know that Dick Egan, our chairman, founder, and self-styled "senior account representative," spends more than half of his time with customers. Although he retired from day-today management a few years ago, Dick met with several hundred customers last year in one-on-one settings and "chairman's dinners." He believes in living with customers, delving into their business, and getting them to confide in him - and not just the easy-to-please customers, but our most demanding customers as well.

EMC's been in business for 20 years, and Dick Egan's behavior has rubbed off on the entire senior management team. For example, I will meet with about 500 customers this year. It's on these visits that I'm able to plug directly into the emotions of customers - their frustrations, their most pressing problems, their long-term objectives, as well as their insights into new ways to apply our technology. These discussions often force me to question and revalidate my assumptions about where the world of IT is going and where it should go. Of course, simply spending time with customers is no substitute for having a system in place for finding out what they want.

CREATING THE CUSTOMER TRUST LOOP

Creating the customer trust loop involves listening, responding, validating, refining, revalidating, delivering, fine-tuning - and repeating the process. Every company with a pulse asks itself the question, "What is value to our customers?" The challenge lies in knowing whether our perspective on what matters to customers is in fact their perspective. And whether our products or services are really satisfying their needs - needs that are in near-constant flux.

PC maker Gateway has taken a novel approach with its "Your Ware" program. Customers can trade in their systems after two years toward the purchase of a new PC, and thereby keep pace with constantly improving technology. Gateway understands the value of enabling consumers to redesign their systems on a regular basis.