How To Avoid The Root Cause of Customer Experience Meltdowns

Posted on February 20, 2018

In order for growing midsized companies to avoid a customer experience meltdown, their leadership must plan and build leadership infrastructure. Without leadership infrastructure, growing companies can be victimized by their own success.

Originally posted on Forbes online.

Anyone unlucky enough to have a front row company-side seat in a customer experience meltdown will feel a terrible sense of Déjà vu reading this post.  They will have flashbacks of angry customers, hour-long wait times in customer service, high rates of churn, negative publicity in social media and more. During such disastrous periods, there is often little time or appetite to reflect on how it all began.  Sometimes the leadership team who let it happen has time to reflect only after they are fired by the board.

Illustrating this post is the story of Limelight Networks LLNW (NASDAQ), a Tempe, AZ-based company that provides global content delivery network (CDN) services that enable organizations to securely deliver their digital content.  Over the past five years they’ve recovered from a low point in customer experience by making deep changes in how their company runs.  These are the same changes any company can make to avoid operational meltdown, the ailment my research found to be one of the most toxic growth killers of midsized companies detailed in my book, Mighty Midsized Companies; How Leaders Avoid 7 Silent Growth Killers.

Operational meltdown earned its growth killer status not because of the short-term pain caused when a midsized company is overwhelmed with demand, but from the reputational destruction the meltdown causes.  Customers, vendors, prospective employees, partners and competitors have long memories; the brand becomes tarnished.  Re-earning confidence is harder than earning it the first time.

The first symptoms of operational meltdown show themselves as “growing pains.”  Staff gets busy, new hires are needed, but are slow to come.  Many companies have the small business mindset of watching every nickel, staying lean, and working harder to make up the gap. But as businesses cross into midsized (defined as companies with revenues between $10M and $1B), working harder fails as a response to growth: Leaders hit their limits, new hires work inefficiently, burnout sets in and staff turnover soars.  Adding more employees isn’t the complete solution.  Midsized companies are too big for quick fixes.  With sizable teams and operations, effectively scaling up can take anywhere from six months to several years to complete, much longer than the patience of most customers.

Back in early 2013, Limelight Networks’ net promoter score (NPS)—a popular measure of customer loyalty—was 85 points lower than it is now.  To put that in perspective, the worst possible NPS is -100 (everybody is a detractor) and the best is +100 (everybody is a promoter). An NPS of +50 is excellent.  While most companies, Limelight among them, do not make their NPS score public, you can imagine that Limelight had nothing to brag about back in 2013.

In order for growing midsized companies to avoid operational meltdown (or recover from it), their leadership must plan and build leadership infrastructure, which is the sum total of all the management systems, processes, leadership teams, skill sets and disciplines that enable companies to grow from small operations into midsized or large firms. Without leadership infrastructure, growing companies can be victimized by their own success.  To grow from small to big, you must build leadership infrastructure.

How do you do that? Leadership infrastructure includes these four elements:

1. Quality leadership with deep experience

This includes the board of directors, the management team, subject matter experts and consultants.  In January 2013, the board at Limelight brought in Bob Lento as CEO.  During that year, Lento rebuilt his leadership team with people who would drive customer focus and discipline.

Companies that are serious about achieving high performance must have experienced, effective leaders at the helm.  There is no substitute for this.  If companies start early enough and diligently develop their current leaders, they may have less need to hire new leaders.  But those firms whose leaders aren’t constantly learning and striving (through self-development or leveraging outside experts like consultants) will be too far behind; the business will outgrow them.

2. Information gathering and analytics acumen

Information gathering acumen looks externally at markets, competition and the company’s reputation, and internally at the organization’s culture, teams and performance levels. After Limelight did their first NPS survey in early 2013 and saw the poor results, they knew they needed to know more.

Lento says, “In the first voice of customer surveys we took in the spring of 2013, we learned that they wanted us to be more customer service focused. They wanted our network to be more reliable and higher performing. They wanted featured functionality that they could get from our competition that they couldn’t get from us, especially things like self service.”

After looking at the information they’d gathered, they realized that to increase customer satisfaction they needed to make system modifications (to their product) and a cultural and management change to make customer satisfaction a top priority.  They began working on both, but the most immediate impact would come from management and culture changes oriented toward serving their customers better. Like I said, scaling up midsized companies isn’t an overnight process.

3. Communications rhythm

An effective communications rhythm delivers the right information and asks the right questions of the company’s leaders, between management and employees, and out to partners.  Lento says, “One thing that I’d give the management team a lot of credit for is being very consistent, very clear, and driving very frequent communication to people. This was essential and helped people change their daily behavior. The management team that I’ve assembled is world class. The people they have working for them have been doing a great job. Alongside the investments we’ve made and the changes in technology, at the end of the day, it’s all about our people stepping up to focus on our customers.”

4. Planning and plan governance

Small companies often execute as they plan.  That approach fails in midsized companies.  We must plan before we execute if we are to set out on the right course.  Plan governance is a process that ensures leaders of the company stay on track and execute a thoughtful strategy. This includes forecasting, budgeting and performance management systems.

In the case of Limelight Networks, Lento began a monthly executive operations meeting with himself and the next two layers of leaders present (in person or via video). Together, they reviewed KPIs and worked as a team to diagnose problems, look for root causes and decide what moves to make.  As they brought on new IT systems, their ability to identify problems grew stronger and more real time.  For example, after they improved their ticketing system for help requests to their Network Operations Center (NOC), they were able to code a self-serve option for the most common customer request and dramatically reduced response time and NOC workload simultaneously.  New IT tools to improve measurement paid off quickly, allowing Limelight to run timely analytics, in some cases shaving 25 days off their decision making.  New systems also improved quality, with billing errors dropping 90%.

Limelight knew that some changes would have faster impact than others.  For the quickest result, they invested heavily into putting dedicated managers and account managers in place, surrounding them with the right level of support on the technical side and changing their attitudes towards the customer.  Within a year, these changes improved Limelight’s NPS by 20 points.  The product and IT system changes had not yet been felt by the customer since they were still in development.  Flash forward to today, Limelight has scaled up their leadership infrastructure and embellished their product.  The results are recognized by their customers with an 85-point gain in NPS.

If your company is growing, don’t wait for an operational meltdown.  Assess your leadership infrastructure and move fast to upgrade it if needed.  Hire the leaders you need for the company you will become.  Be courageous enough to survey your customers, employees and competitors to understand their realities.  Develop clear plans to make the changes that will continue revenue growth and high service levels.  Be thoughtful about how to communicate between the people and teams who can keep your company strong.  Be a mighty midsized company.