RTM: Vice president, customer advocacy…that is a fascinating title - what does it mean?

AS: Lew Platt, the then chief executive of HP wanted to make the company more customer-centric as HP was a very technology driven company with a strong engineering culture. So he solicited my help to try to instigate change.

For example, there wasn’t really any system in place  to solicit feedback from customers and partners and to provide a closed loop system. 

RTM: So what did you do?

AS: Well, what I didn’t do was to create a big team of people at headquarters level.  If you do that, you only scare people and anyway headquarters are generally not very highly regarded at decentralized companies to begin with. Instead, we spent a considerable amount of time interviewing customers, as well as our own key managers, to see if we could find some potential breakthrough areas.

RTM: So it was quite opportunistic.

AS:  In a sense, yes. But what we discovered was that the best way to measure customer satisfaction was around "experiences" which is a lot more than just buying the product. Also there was a lifecycle of experiences on which we based our methodology, whether you are speaking about a consumer or a commercial customer.

RTM: How do you mean?

AS: Well, a customer will have a whole series of different experiences as he goes through the cycle ranging from specifying the product, disposal and the purchase of a new machine. We were interested in mapping out their experience at HP at key moments in this process.

RTM: So how did you do this?

AS: We looked  at our call centres first. We had some 50 around the world (another result of over-decentralization) with overlapping responsibilities. So we started a rationalization process which looked at focusing call centers around customer needs, rather than products. 

“The best way to measure customer satisfaction is around experiences.”

By creating unified software and databases, we were able to gather pertinent information on our customers with deeper and more focused feedback.  My personal experience comes from the so-called "CEO customer line", which  was set up to handle direct calls to Platt, and later Carly Fiorina. Typically, these would be from people who had been given the run-around by our call centres and were steaming mad. We intercepted and handled the calls by setting up a team of forty people, most of whom were senior people who had recently retired from HP.

RTM: Why use retired people?

AS: Typically, they have a deep understanding of the company and its heritage, they are very loyal and they have no axes to grind. In addition, they were very motivated – they really wanted to find out where we were going wrong.  Often their enthusiasm for HP would be transferred to the caller!   So I would say they are ideal.

I’d also say that most callers can tell pretty fast what calibre of person they are dealing with. Most customers had a legitimate case, but sometimes somebody was trying to take advantage of a company with deep pockets. Our people became pretty skilled at separating the legitimate caller from the terrorist.

RTM: So could you start to map out what problems people have with different products?

AS: Absolutely. With a large enough sample, you can really calculate what percentage of purchasers will have a problem with a particular aspect of a product.  You can map the faults and then you can design that out.  Often they were very minor things,  We were, for example able to improve the so-called "out of the box" experience. This significantly decreased the number of calls at all levels.

Sometimes solutions were suggested by customers.  And often we found that referring people to very clearly laid out websites with "tips-to-solve-your problem" databases was very popular and reduced people costs significantly, whilst increasing satisfaction. However, access to a live person is still needed for certain situations.

RTM: Did you take these calls yourself?

AS: Sometimes I got the tough ones. And at the end I would suggest that I would drop by to see the customer. They loved this. People would say: "We haven’t had an HP vice president visit us in twenty years." I still get Christmas cards from some of them…I am not kidding!

RTM: What other lessons did you learn?

AS: We learnt that we should empower and trust our own people more, give them the freedom to make fast decisions to satisfy a customer - engineers tend to want to analyze each situation to death before making a decision. However, we are in a different, faster world today.

When we gave our middle managers more leeway to make decisions on the spot, for example to ship a new product or to reimburse a customer or in the case of an enterprise customer to provide a free service, this led not only to dramatically improved customer satisfaction, but also to more motivated employees.  And….. if you want to have happy customers you need to have happy employees!!!

But I guess the real battle was internal. We really tried hard to get divisional and group managers to understand that they needed to construct real-time information backbones to listen to customers and to use that information to build better products.

RTM: Alex, you have been around a long time in channels. Have things become much more sophisticated? I ask because I still hear all the time about how sales people try and stuff channels at the end of a quarter.  It still seems to be endemic, at least in the IT and telecoms industries. And that means that all the best practice stuff just goes out of the window at the end of the quarter.

AS: You are right. At the end of the quarter everything still changes. It is endemic and systemic. Savvy customers know that at the end of the quarter they can get an extra couple of percentage points off almost any big order.  Even your own salespeople will save up orders to the end of the quarter when they know that the pressure will really be on and there will be extra rewards for them.

At HP we battled with this for decades. And I still don’t think there is an answer to it. The only answer is perhaps that we built a base business which is less influenced by the cycles. For example, consumer purchases or an annuity revenue stream from maintenance, so that you are less vulnerable to the quarterly peaks and pressures. This is easier said than done! But companies who are fortunate to have such a base are typically less affected by the "end-of-quarter syndrome".

RTM: I know that one of your many jobs now is as chairman of the European Wholesaler Group – a coalition of five regional IT wholesalers in Europe. I know some of the members and they really are the survivors, the ones with the business savvy to compete successfully with the international wholesalers like TechData and Ingram Micro.  How does EWG work?

AS: We decided right from the beginning that it would only work if it delivered clear benefits to the individual members. If they saw real benefits from membership then they would carry on supporting it and it would gain momentum. So a lot of the time it is about the exchange of good practice. All of our members are really good at one or two things and it is a case of comparing their internal processes, and identifying the best and motivating everyone to implement and execute.

“They really wanted to find out where we were going wrong.”

RTM: So is it a bit like International Computer Group – the federation of large PC resellers?

AS: (Laughs) No, it is the exact opposite.  ICG had a central office and employed staff and tended to formulate top-down strategies which were handed down as edicts to the national members. They did not respond well to these, as they had their own profitability goals to meet. So there was a lot of conflict. Thomas Weissman, the head of Swiss distributor ALSO - was in both ICG and EWG and, whenever we are discussing what to do, we tease him and say: "Thomas, tell us how not to do it!"

RTM: So what are you doing?

AS: To succeed, every wholesaler has to do two things right. It has to have the best-in-class supply chain plus back office structure and, secondly, it has to have a superb  customer interface and beyond that, a clear understanding of the end-users’ requirements. 

RTM: But how can you get to know the end-users?  I mean these distributors are selling to tens of thousands of resellers who, in turn, are selling to hundreds of thousands of end-users.

AS: You start by listening to your resellers and certainly to the top 20% who most likely give you 80 % of your business.  I argue that the wholesaler who has a deep understanding of the end-user experience, no matter what methodology it uses, will be a far more effective competitor. We can talk a lot more about how to get to this level of understanding.

RTM: So you can start to classify the resellers and the services and needs they have by the type of customers they work with?

AS: Precisely…

RTM: Which I guess takes us back rather neatly to your work as a VP of customer advocacy at HP!

AS:  I could not have asked for a better position at HP. I have a passion for customers and always felt that the customer is rewarding us for a job well done by keeping us employed, promoting and rewarding us.

Carly Fiorina shared this passion and I had a strong admiration for her. That’s why I supported the merger as much as I did, and actually got deeply involved in the proxy battle during the last 5 months up to the point where the battle was won. My job was to solicit support from our largest and most loyal customers.

The most memorable achievement in the advocacy role was to be able to tie customer satisfaction to HP’s compensation scheme. Every quarter, customer satisfaction was measured against a standard or benchmark and people’s variable pay would depend on the results.

I understand from speaking with Carly recently that this program is rolled out across more HP employees with variable pay factors and the percentage significantly increased. This will help HP to become more customer centric. Employees will behave the way they are being measured, recognized and rewarded.