Joseph Michelli, the CEO of The Michelli Experience, is a renowned expert in customer retention. With a background in clinical psychology, Michelli shares his unique perspective on transforming customer journeys through personalisation. From his early experiences in healthcare to collaborating with iconic brands like Starbucks, Ritz, and Zappos, Michelli provides valuable insights into creating customer-obsessed cultures.
He also delves into the evolving landscape of customer behaviour across generations and offers practical advice for business leaders seeking to balance automation with human connection in customer interactions. This conversation is a treasure trove of wisdom for anyone looking to enhance their customer experiences in the 21st century.
Excerpts from the interview:
Tell us about your journey from clinical psychology to customer retention.
I had the good fortune of studying clinical psychology in a systems context, which allowed me to gain insight into how family and organisational systems function. After completing graduate school, I began my career as a clinical psychologist. During this time, I gradually advanced within the healthcare system and became involved in organisational development, assisting multiple hospital systems in collaborating for a more seamless patient experience.
This experience sparked my keen interest in enhancing patient service, as it was referred to at the time. I delved into standardisation techniques such as templates and similar approaches. Eventually, I transitioned out of healthcare due to other enticing opportunities. One notable experience was my involvement with the Pike Place Fish Market in Seattle, Washington, where the unique practice of fish tossing became a significant part of their customer engagement. This journey was chronicled in my book When Fish Fly.
Subsequently, I had the privilege of working closely with other renowned brands, including Starbucks, which led to the publication of my first book, The Starbucks Experience. From there, my professional journey has been characterised by numerous consulting engagements, resulting in the authorship of several books detailing the experiences and insights gained from working with various clients.
Can first-party data help build a psychographic profile for brands to understand their customers better?
First-party data is incredibly valuable. It encompasses the information your customers provide, effectively inviting you to understand them better to enhance their overall experience.
You can glean some insights from their behavioural patterns, while for others, it’s as simple as asking them directly. Currently, I’ve been actively engaged in various customer groups focused on journey mapping. After each session, we administer a questionnaire to delve into aspects such as their lifestyle, preferred sources of information, online activities, and the apps they use on their phones. These details are crucial for crafting comprehensive customer personas, ensuring you’re not solely reliant on demographic data but also generating your own.
While there are alternative methods to acquire this information, capturing what your customers do within their relationship with your brand and seeking their input is vital and empowering. It enables you to tailor distinct experiences based on these personas.
What is it that leading brands can do when it comes to creating a customer-obsessed culture that others can learn from?
We’re all striving to create a customer experience that encourages them to return and refer their friends. The brands I write about are typically known for a few key aspects. Firstly, they excel in providing a world-class customer experience and in how they treat their employees.
These are usually brands that have effectively engaged their team members, who engage their customers. One can learn from their customer-centric approach, understanding that people generally want to do right by customers. While the occasional difficult customer interaction may momentarily affect their attitude, businesspeople typically aspire to more than just making profits.
They want to reflect on their careers and say they made a meaningful impact on people’s lives. They see themselves as part of communities, striving to uplift those around them. Obsessed brands communicate a vision for how they can elevate their communities and make a positive difference that transcends simple transactions.
They believe there’s an opportunity for greatness in this place, and they’re steadfastly committed to it. Thus, they consistently emphasise the company’s purpose. Furthermore, it’s crucial to engage employees in conversations about what they want their lives to stand for. What lasting impact do they aim to leave? How does aligning with our journey connect with their mission?
While consistently championing the organisation’s mission, these exceptional brands also take the time to help individuals bridge the gap between their purpose and the organisation’s mission. This is the crux of the matter.
They also recognise that while customer experience is pivotal, it can’t be everything and nothing all at once. To avoid dilution, they work to create a manageable framework addressing people, processes, and technology. They establish a rational approach to understanding and leveraging customer information while ensuring it remains at the forefront of team members’ minds.
They actively seek input from customers and team members, maintaining a constant feedback loop. By keeping it as straightforward as possible and focusing on a few critical areas, they effectively distinguish themselves as customer-obsessed brands, as opposed to those that merely pay lip service to the concept but lose sight of it amidst other concerns.
How do you see customer behaviour changing across generations; what differentiates Gen Z’s worldview, and how does this impact buying decisions?
There are inevitably differences between generations, and it’s important to pay attention to them. However, sometimes, we tend to overestimate these differences and inadvertently create divisions among people.
What we need to do is study our customers, and generational factors are just one component of that. Within any generation, you’ll find individuals with very different motivations and value structures. When discussing gender differences, it’s crucial not to reinforce stereotypes.
I follow the research of a strong group out of Stanford that delves into generational disparities. From what we know, value-based issues are a significant part of the Gen Z worldview. They prefer engaging with companies that have a clear and active purpose.
I’ve noticed a more communal, practical, and collaborative mindset in this generation compared to those that came before. As a general rule, Gen Z seems to navigate the digital world more easily, being digital natives. They seek smart technologies that enhance their quality of life, viewing them as tools. They are open to transitioning from one platform to another if better options arise.
While they still value human service, it doesn’t necessarily have to be at the forefront. However, it’s worth noting that for every trend we observe, there are exceptions. I have kids who belong to Gen Z, and one of them is particularly invested in delivering exceptional human experiences.
The key takeaway is to truly understand your customers rather than merely categorising them based on demographics. There are diverse life experiences within any generation, so it’s crucial to approach each individual with this in mind.
What skills should professions in customer-focused roles build as we move towards generative AI taking over more cognitive labour?
The first skill you need to develop is a thorough understanding of the tool. AI is an incredible resource, and it’s crucial to comprehend its capabilities. It’s wise to harness the full potential of this tool for tasks it excels in, surpassing human capabilities. It’s equally vital to acknowledge that, in its current form, AI cannot entirely replace human input.
This tool is a potent force for personalisation rather than establishing a personal connection. It allows me to understand you based on the data it processes, a level of insight I couldn’t achieve. It empowers me to handle extensive datasets about your behaviour, which is impressive and invaluable. This enables me to discern your preferences.
I can also grasp how you responded to my service delivery and other occurrences in your life. This provides a significant advantage in tailoring and delivering service. It allows me to automate experiences that would otherwise be impractical. Moreover, it allows for removing human intervention in situations where its value is not fully recognised. However, it’s crucial to note that, as of now, this technology could be more intuitive. It requires human intuition.
It necessitates human creativity to develop fresh, innovative solutions based on behaviour patterns. It demands human warmth, smiles, genuine care, and the demonstration of real empathy and compassion. In my opinion, the critical factor is to excel in emotional intelligence and let artificial intelligence excel in what it does best—leveraging its capabilities in ways beyond our human capacity.
What advice would you give business leaders to balance automation with human connection regarding customer interactions?
I’ve been advocating for the concept of a 21st-century company long before the surge in AI technology. It’s about creating an organisation that leverages technology while valuing the power of human interaction. By doing so, we ensure we have the right technological infrastructure for those who prefer minimal human contact.
While we do observe buyer journeys, particularly among Gen Z, that lean towards a fully digital experience, there’s still a significant portion, including people of my generation, who appreciate reducing human interactions. Therefore, we must accommodate both preferences.
It’s essential to optimise the entire process for seamless technological integration. Individuals seeking convenience should find a technologically-driven journey readily available. Additionally, I advocate for a high-touch experience for those willing to pay more for a deeper human connection.
This dual approach should be the foundation of your customer journey. Recognise that most customers will fall somewhere in between, shifting between technological and human touchpoints. It’s crucial to identify the pivotal moments and offer both options for your customers.
While this advice may seem straightforward, it’s important to acknowledge that its implementation is a dynamic process. Adapting to evolving technologies and the changing needs of your customer base is a continuous effort that requires refinement.