How brands are discovering their customers' worlds

Whether it's the way you define your business, the style in which you serve your customers, or where you look for new ideas and inspiration, the chances are that you are still on the inside looking out, rather than the outside looking in.

We are all human – we all have dreams and aspirations. Yet when we go to work, we put our blinkers on – we restrict our thinking to our defined sectors and functional roles, we limit our ambitions to the scope of our responsibilities and rewards. We stop being real people.

We commend ourselves to be customer focused, or even customer centred. We seek to deliver great service, or rather service experiences. And we hope to gain the loyalty of customers, by persuading them to have relationships with us. The problem is, we do all of this from the inside out. Our starting point is still, invariably, our business – our brands, products, and targets. We do it on our terms. This doesn't work anymore.

Customers now have the awareness, knowledge and power to demand better. Their trust is low and loyalty rare. They are more different and discerning, and their expectations are incredibly high. If they can buy any item from Amazon, and receive it in 24 hours, then they expect that as a minimum service level from you. They also want more – to be enabled, energised, and even surprised.

Doing business from the 'outside in' means doing it why, when, where and how customers want.

Similarly, we grow complacent with the same old benchmarks – the familiar case studies, the innovations that become the conventions, the same old stories of 'legendary' service. Southwest Airlines, and even Innocent Drinks, were great mould breakers, but the world keeps moving on.

Seeing things from the outside in is also about learning from other markets, learning from companies with similar challenges in completely different sectors. As I travel around the world – speaking to and advising companies large and small – I meet the most amazing people, and learn about truly inspiring brands, with ideas that really make you think.

In recent months I have been inspired by the Latvian heritage of Stenders Soap Factory, the digital entrepreneurs of Estonia, the funky Serbian water of Voda Voda, the designer Turkish bathrooms of Vitra, the ultimate luxury of Banyan Tree, Natura and the beauty secrets of Brazilian girls, Celpay's mobile payment systems in Africa, and the fusion designs of China's first luxury brand, Shanghai Tang.

Here are three examples of extraordinary service, delivered in truly innovative ways: Oregon's Umpqua Bank, the funky and fast-growing financial services business that rejects conventions, Net-a-Porter showing how to apply similar attitudes in the online world, while China's Li & Fung is doing likewise as a B2B business.

1. UMPQUA BANK

How Gap and Starbucks inspired 'the world's greatest bank' and a customer experience that is the envy of America The River Umpqua weaves a lazy path through the green and golden forests, deep and rugged canyons of Oregon State.

This is the land of lumberjacks, and in 1953 the South Umpqua State Bank was founded to serve the people of Canyonville, population 900.

It was a small, traditional bank, loved by locals and proud of its reputation for great service. It was also very conservative, and only started to grow by acquiring one or two other small local banks.

In 40 years it grew to six branches, with a market cap of $18 million. However with the logging business starting to decline, the bank looked to be heading in a similar direction. Most people thought it would be swallowed up by a national giant, but the Board were determined to maintain their independence. When the long-time president decided to retire, they thought about promoting from within, but something in their pioneering blood told them to look wider.

They took a big risk, hiring someone who was anything but your typical bank manager. He was energetic and dynamic, a mid-thirties banking consultant from Atlanta, who argued that his experience had allowed him to see many great ideas, and others not so good. He wanted to bring the best of the best to Canyonville. At interview he told them directly 'If you want things to stay the same, I am not your man. If you want wholesale change that will create shareholder value, I might be'.

Ray Davis set to work. First challenge was how to be different. Banks are notorious commodities – sterile, transactional, predictable and intimidating. Davies recognised that the opportunity to be different was in the 'how' rather than the banking products themselves.

He looked at the service experiences that customers responded most positively to, asking how Gap would create a bank, how Starbucks would deliver financial services. He went to ask them.

The 'store' concept was born. Employees spent full days out living in the customers' world, exploring great service from other brands, and comparing it to banks. He started to rethink the whole concept of a bank branch. Why do people go there, what for, what services it should offer, how it should look and feel, sound and smell.

The ambition of Umpqua Bank is 'to create a unique and memorable banking environment in which our customers perceive the bank as an indispensable partner in achieving their financial goals; our people may achieve unparalleled personal and professional success; our shareholders achieve the exceptional rewards of ownership; and our communities benefit from our involvement and investment in their future'.

Within a year, and with $4 million investment, the first 'store' in West Roseburg opened. 12 months later Umpqua was named one of the best companies to work for. Another year later Umpqua Holdings made its entry onto the stock market. With various acquisitions and mergers, the bank grew across the American West (See Figure 1). With the simplified name of Umpqua Bank, it built a reputation for its funky store-concept banks that delivered a distinctive service experience. By 2004 Umpqua had grown to 65 stores and a market cap of $600 million.

Today, the first clue that Umpqua is different is its huge fashion boutique-style windows. On entering you are greeted by a sign that says 'Welcome to the world's greatest bank'. How can this be?

Now curious, you walk past people browsing their wi-fi emails, or sipping coffee on the huge leather sofas. Newspapers and lifestyle magazines hang on the walls, and you can catch the latest news on huge plasma screen TVs. Soft lighting and chill-out music add to the relaxed feeling.

You might notice large colour coded wall displays of the latest financial services – 'your green account', 'in your prime', 'the business suite' (themed to the audience, not just standard products promoted on their % APRs). You might be inspired by the successful local restaurant owner, whose story is described this week on the Hero Wall. You can even pick up a T-shirt, baseball cap or coffee mug bearing the pine tree logo too.

But where are all the bank clerks, the desks, the cashier windows? The coffee is served at the 'Serious about Service' concierge desk, which is also where you ask for help with your money. In moments an associate joins you on the sofa, and takes you through your financial options as your sip your coffee. Sip. Surf. Read. Shop. Bank.

2. NET-A-PORTER

From London to New York, the upmarket retailer seeks to build the best online relationships with fashionable females 'Net-a-Porter gives you front-row seats at the shows without the hassle ... If you can't contemplate a season without a pair of Jimmy Choo flip flops or a Chloe envelope bag, you'll feel very at home here' proclaims the Good Web Guide. The brand is also loved by an increasing number of trend-setting celebrities, high-flying female managers, and clothes-conscious mums too.

Fashion stylist Natalie Massenet has created one of the best examples of exceptional service by an online retailer. Indeed, that description probably does the business a disservice. It is as much a magazine, a community, an adviser, a best friend.

Born in 2000 out of a gap Massenet saw between women reading the glossy magazines, and then searching in vain to actually find the desired items, Net-a-Porter is a fusion of services. It boasts the best designers, latest fashions, combined with sharp editorial and deep insight into the latest fashion trends, what to buy and what not. It is like a personal consultant and shopper at the click of your fingers, or mouse, and delivered to your door in luxurious packaging, within 24 hours.

Click on the site and it feels much more like a women's fashion magazine – it has authority and gossip, recommendation and edited ranges, videos and interactive graphics, alongside the simplicity of a catalogue. The pages showcase the latest lines with stunning photography, all available to buy, which is often not easy in the niche-distributed world of high fashion. Purchases are sent worldwide by express delivery from one of the global distribution centres, arriving in luxurious black packaging.

Commentary and opinion comes in the form of trend forecasters and fashion journalists straight from the likes of Vogue and W Magazine.

The editorial team takes the uncertainty out of telling what's hot, and what's not – a fashion or a fad, a smart choice, or a fashion faux pas.

There is also direct comment from real people – customer feedback, observations and suggestions. While the target audience is clearly affluent and female, men obviously have an important role to play too. Net-a-Porter's 'Santa' service sends an email to cheque-signing husbands saying that their wives or girlfriends have just identified a desired item, and telling them how they can quickly bring a smile to their faces.

The results are encouraging, with 100,000 active customers, and around 1 million unique visitors to the site, who browse the latest fashions on average two or three times a month. And with sales of $75 million, the business has been profitable for the last two years.

3. LI & FUNG

The Chinese business partner that works with the world's leading brands, so that they can focus all their attention on their customers.

Walk through a shopping mall in any of the world's great cities, and 30 to 40% of the retailers and brand names that you see are likely to rely upon Li & Fung for their business success.

Li & Fung is the world's leading virtual supply chain. In a world where ideas and relationships are all you need to succeed, why not let somebody else take care of the rest. Dream up your new fashion collection, and Li & Fung will sort out the sourcing, manufacturing, distribution, merchandising, and even your back office.

However Li & Fung is not some enormous Asian factory churning out the world's clothes before branding, it is a smart, contemporary, invisible business too. It manages your supply chain, sourcing the best materials, finding the right manufacturers, planning the production, assuring quality, finding the most efficient distributors, packaging the items in your own brand too.

It offers companies like Levi's a virtual, customised supply chain. This is much more than outsourcing your manufacturing, instead their team will identify the right place in the world to source any material or activity at any time. From clothing and furnishings, handicrafts and toys, gifts and promotional materials, it is your ultimate one stop shop.

Old supply chains were driven by what factories made, now they are designed to match demand, driven by what people want to buy. In the past it was transaction, now it is a partnership with shared information and people, risk and reward. Old supply chains delivered goods to warehouses, now they package and put tags on, and deliver them directly to the store ready for sale.

In a 'flat world' distance and borders, economies and regulation, no longer shape what you can make or do. Li & Fung takes much of the cost, distraction, and risks out of being a global business. The vertically integrated model (where you sought to own and control your supply chain), and the cluster model (like the car manufacturers of Detroit, where suppliers were encouraged to locate themselves nearby) are both redundant in this new global workplace.

Founded in 1906 in Guangzhou, Li & Fung now has 70 offices around the world, acting as the sourcing hubs for virtual networks of suppliers. Indeed the whole idea of 'made in' a country is increasingly meaningless. Imagine a new jacket, the shell made in Korea, the lining in Taiwan, filling in China, accessories in Hong Kong.

Since Li & Fung went public in 1992, the business has grown at an incredible rate, with revenues now at $7 billion, and market capitalisation over $12 billion. CEO Bruce Rockowitz describes his phenomenal growth record a result of 'active entrepreneurship' with his customers – or business partners as he prefers to call them – together imagining the future without frontier, then working together to innovate and deliver solutions, and share in the commercial success.

CONCLUSIONS

So what can we learn from these companies, and many other unconventional examples around the world? Three themes for delivering outstanding service emerge.

Firstly, throw off your blinkers, and see what you do from your customer's point of view. Don't sell a drink, sell a celebration. Don't sell a loan, sell a dream purchase. Or whatever it is that your customer is really interested in. The customer's world is much bigger than your product world, with more opportunities for you, and more engaging for customers.

Secondly, rethink your whole business from the outside in. Define your brand by the aspirations of customers, communicate and serve them on their terms – when, how, where they want – collaborate to develop better solutions, facilitate relationships between them not with them, and deliver an experience that is distinctive and personal – which, if done well, they will pay more for too.

And thirdly, go beyond the sale – consider about how your product or service can do much more for your customer – help them to use and apply it in more valuable ways – rationally by being their guide, coach or entertainer – emotionally by enabling them to do, be, become or belong to something more. Forget the language and formality of your workspace, start being a human being again.

Figure 1: Growth of Umpqua bank.

Figure 2: Net-a-Porter.com: digital fusion of luxury boutique and fashion magazine.