How service design was introduced to Australia
This week, Damian had the pleasure of speaking to Alan Kohler on his Podcast, 'Talking Business', about how Proto pioneered the introduction of Service Design to Australia, how the industry has changed over ten years (with CX & UX gaining popularity) and why too many organisations are suffering from 'Shiny iPad Syndrome'
Listen to the Podcast or read the full interview below.
Recording:
This is Talking Business.
Alan:
I'm joined now by Damian Kernahan, who's the founder and CEO of a business called Proto Partners. G'day Damian.
Damian:
Hi Alan, how are you?
Alan:
Proto Partners is a ... well, it's, I suppose, a customer-service consultancy. Is that a fair description?
Damian:
Yeah, we call it a service-design and experience-design consultancy, but I think a lot of people think of it as customer service. It's probably a little bit broader than that, but it certainly puts it in a bucket for people to get their heads around.
Alan:
You started in 2008, which, just before GFC, and according to the About page of your website, after the GFC or during it, nobody wanted to talk to you. So you had to change. Tell us a little of what happened there?
Damian:
Yeah absolutely. So yeah, timing-wise, we sort of started, opened up in May 2008. At the time, we actually opened up as a product innovation company. We had a business partner at the time, and we got Qantas on board and Schweppes. But then the GFC happened, and then, as you can imagine, six-month-old company, innovation, it was the last thing people wanted to talk to us about.
Damian:
So, I think it was probably about two or three months later, I came back after Christmas in January 2009, and had to have a rethink, I think, in today's term, everyone says, "They pivot." But basically we just changed direction. And what we realised is that most of the product innovation happened in the Northern Hemisphere and very little really happens of a significance in the Southern Hemisphere.
Alan:
But that's not good. We should be doing product innovation here, surely?
Damian:
Yes, absolutely. I think people will talk a lot about product innovation. But the reality is that over 70, 75% of our GDP is actually service-based. So that's why we changed direction. We realised that services, whether it be banking, insurance, telco, the majority of business now that the products, that people call products, they're actually services or experiences. So we decided to change direction and focused on that from then on.
Alan:
What about your own background? Before we get on to what happened after January 2009, what did you do before that? Before starting this business?
Damian:
Yeah, I did a business degree, so I did a Bachelor of Business. I worked for National Foods and started working on developing the Pura milk brand around the country, many years ago. So worked there for five years. I moved onto Fosters and worked at Carlton United Breweries which was phenomenal. And then I moved overseas with my wife and I worked for Diageo, which is a global drinks brand. I did that for five years. And then I came back and moved back to Australia and worked for Young and Rubicam Advertising, and worked in marketing services for three years.
Damian:
I'd always had an itch or a desire to open my own business, and the time and opportunity came, and I took it. Then that's when I launched Proto.
Alan:
So you're a customer or you design customer experience and so on, so I imagine you're run off your feet because all the companies now talk about customer focus.
Damian:
Everyone. Yeah, everyone
Alan:
Maybe that's rubbish, and they don't actually mean it.
The rise in popularity of customer experience and service design
Damian:
Listen, there's no doubt things are changing. When we opened up in 2008, 2009, everyone was talking about it, but there wasn't a lot of people espousing it. Nobody was really enacting or living it. It's very, very different now. Everyone is talking about customer experience, customer focus, customer centricity. And yeah, the phones ring much more regularly now.
Damian:
And I think people and organisations, CEOs, from top to bottom, they're actually starting to believe it. They believe that focusing on doing the right thing by their customers will ensure that their customers stay with them longer, spend more money, buy more products and services. And then it will be good for both parties. It'll be good for the organisation, because they'll have customers for a lot longer, they'll spend more money with them and it'll be good for customers because things will be easier, more useful, or more enjoyable to use.
Alan:
Let's stay with this for a bit. Why did it take so long?
Damian:
Well, I think, after we came out, by 2009, 2010, organisations, if you look at the profitability of lots of ... of Australian, larger organisations, banks, telcos, they're all making a lot of money. And as you would know, the desire for big consultancies to come in and actually extract every efficiency out of organisations was still running really hot. And so, cost-cutting and squeezing every last dollar they could out, took them a long, long way. And I think, over the last couple of years, they've squeezed out as much as they can. They've saved as much as they can. And they're looking for new growth paths.
Damian:
And focusing on customers, which sounds really strange, the only reason ... Peter Drucker has said for years, decades and decades ago, that, "Organisations exist is to focus on their customers." That's the only reason they are there. And it sounds really obvious, but I think our experience of organisations are only starting to truly understand that focusing on doing the right thing by your customers will yield greater profits and revenue for them over the medium-to-longer term.
Alan:
So apparently you've got a platform that, in some way, automates it. Can you explain how that works or is that not the case?
Damian:
I'm not sure it's a ... no, I don't think we're a platform. There are lots of organisations out there who have customer-experience-management platforms, which send out surveys like net promoter score or customer satisfaction. We don't so much do that. That's sort of, let's call it, big data, I suppose.
Damian:
We work in the small data end. And it's spending time with real people. So talking to customers, to real people, whether it be doing customer interviews, going out and watching them actually use the product. Sitting in their home and observing them as they actually try to sign onto a website, or pay for a payer bill. And work out why it isn't actually working.
Damian:
Most organisations have this sense that everything works perfectly for customers and that is so far from the truth, when you actually get out there and start watching them, observing and listening. It's so much harder for people to actually get things done. And that's where we come in.
Damian:
Organisations make these very big promises. You can do it faster, quicker, easier, cheaper. We say, "Brand is the promise you make. Customer experiences are the promise you keep." And I suppose our job is to actually work with organisations to shine a mirror to what's really happening for their customers. Show them the frustration or the friction that their customers are enduring, and help them fix that, and make it easier for customers to get whatever they want done.
Alan:
You sounded a bit dismissive of net promoter score. I mean, everyone swears by that now.
Damian:
No. We're big fans of net promoter score. And for us, no. I'm not. We're big fans. What we find fantastic about it, it's not so much the score, I think the score's useful. For us, we ask a ... if you're familiar with net promoter score, you'll ask three simple questions. The fourth we ask is, "Would you be open to a follow-up phone call?" Or, "Can we come and talk to you?" And for that, we can spend 20 to 45 minutes talking to customers. And from that, you move from what the problem is, which a net promoter score will give you, to why. Why is it a problem? Why does it concern you? Why does it cause you friction or frustration? Why is it for you?
Alan:
It might be worth ... if I can interrupt, it might be worth just explaining to the listener what net promoter score is and how it works?
Damian:
Yeah, sure. It's three simple questions. The first is, "Would you recommend service X to a friend or colleague?" And the reason they use refer to a friend or colleague, is you wouldn't refer something to a friend or colleague that you didn't like. And so, it's from zero ... to score, zero to ten is the score. And if you score a nine or ten, you're called a promoter. If you score at a seven or eight, you're called a fence sitter or passive. And if you score zero to six, you're called a detractor. I won't go into the mechanics of it, but you subtract the negatives from the positives, and you end up with a net promoter score.
Damian:
The second question is, "Why did you score this way?" So that gives you the diagnosis on why. What is the problem or what's working for you? And the third question generally is, "What could we do to improve this score?" So people give you ideas. And as I said, the fourth question we add is, "Can we have a follow-up phone call and really understand?"
Damian:
And I think that's where we truly add value. We speak to lots of organisations who are running net promoter score, and they're inundated with data and information. The challenge is they actually don't know what to do with it. They actually don't know how to prioritise it or what they need to focus on first. And so, just by simply talking to people and listening to them and understanding why it's a problem, we can then help them with that prioritisation and say, "Okay, what do we work on first?" And that's when you get into the quick wins, rather than you don't have to take weeks or months. It can take days or weeks.
Alan:
That would be laborious. You must be expensive.
Damian:
Not, certainly, compared to the big consultancy firms.
Alan:
You're going to tell me you're a bargain.
Damian:
I think we are. Yeah, we're a small firm, we're 10 to 15 people, and so it's less expensive than you actually think. When you actually do a few surveys, go out and talk to people, and then redesign it. These types of things can take between ... short project can be six or eight weeks, or a longer one can be 12 to 14 weeks. So within a quarter, organisations can have the answers to what isn't working for them, and tangible solutions on what they actually need to do next.
Alan:
And in general, what would you say Australia's companies' performance on dealing with their customers is? Would you give Australia's, I don't know, leading companies a net promoter score yourself? What would it be?
Damian:
There's a lot of companies doing the metrics on there. There's some benchmarks. The banks are around zero. The telcos are probably around, minus, can be, in the minus ten to zero, as well. You have other organisations who are ... there's quite often smaller start-ups, the more smaller, more nimble organisations, who start out as more customer-centric. Can be up in 50 and 60.
Damian:
Now there's not to say there might be pockets of those big banks, who might be scoring higher. But if you take it across the whole board, they've still got a way to go. Having said that, you've actually got to look at your NPS within the category you operate in. But you can see the banks have spent a lot of money, a lot of people working on this over a large amount of years. But they've still got a way to go, as do the telcos.
Alan:
Is it far to say that the bigger the bank, the lower the net promoter score?
Damian:
I don't have the data on it, but my experience on working with some of them with that is probably more than likely the case, yeah.
Alan:
Guys, as part of this month's programme on Qantas Talking Business, I interviewed the CEO of a little Tasmanian bank called MyState, and he says his net promoter score is 42, by memory. That's pretty good, isn't it?
Damian:
Yeah, listen, that's exceptional. And I'm sure if you went in and listened to what their customers are saying, they'd be far more responsive, far more relevant and it would be easier to do business with them. I think some of the big banks offer ... they suffer like telcos with bigger legacy systems. So I'm not excusing them, but they've got some difficulties to get over.
Alan:
Oh, perhaps they should talk to you.
Damian:
That's for sure.
Alan:
I've been talking to Damian Kernahan, who's the founder and CEO of a business called Proto Partners. Thanks very much, Damian.
Damian:
Thanks, Alan.
