Welcome back to the Friendly DELTA Skies (whoever said that)?

August 20th update:

Delta did it again! Today, they asked for 11 “volumteers”! Do I smell a pattern?…

August 13th original entry:

I’m flying back to Detroit from Chicago Midway friday late afternoon. First the incoming flight is delayed by 20 minutes. Then the gate agent announces that due to weight restrictions, she needs 14 (fourteen!!!) people to volunteer to get off this flight and take their chances (good luck finding another flight to Detroit on a Friday night!) That’s 14 passengers out of a total of 50 – the number of seats on this Canadair! How can that be? Did Delta get a deal for carrying cargo that it  could not refuse? Unbelievably so, 14 people do accept to take another flight.

Now we’re on board – about 1.5 hour late already. Guess what? We still need to get rid of 1 passenger! Takes 20 minutes for someone to agree to it. Then we’re told the fire extinguisher in the cargo area is not working and all luggage needs to get off the plane (there’s basically no room for carry-ons on this small plane). So here’s my choice: Stay on the plane knowing my luggage won’t come with me, or rejoin my luggage but find a different flight! At that point, it is 7 PM in Chicago: I’m not leaving this plane!

We arrive 3.5 hours late in Detroit. I go straight to the Luggage Service desk where I wait for 40 minutes in sweltering conditions; I’m finally told my luggage is on Carousel #6 – can that be? Well, of course, it’s not there; I check all the other carousels – nothing in sight. I go back (reluctantly) to the Luggage Service desk, where the line is even longer than it was earlier. I try to signal the guy who gave me the wrong information, while everyone in line is giving me the mean eye because they think I’m trying to cut in front of them. Then I see another passenger who was on the same flight I was – she’s being told our luggage is still in Chicago! At that point (10 PM), I decide to go home, assuming Delta will send my luggage to our home on Saturday. I mean, why wouldn’t they, right?

Wrong! After three calls to Delta on Saturday, I am told I need to go to the airport and collect my luggage because I did not stop by the Luggage Service desk and get a claim ticket. No claim ticket, no delivery! I’m told I did not “fulfill my obligations by not going back (for a second time) to the Luggage Service desk”, even though I had already gone there once (I figure that takes care of MY obligation). I argue that Delta did not fulfill ITS obligations when they gave me the wrong information, but to no avail. Maybe I should have pulled a Steven Slater moment…

So guess how I spent my Saturday night? Driving to and from the airport, thanks to Delta Airlines.

Now, let me ask you  this: Do you think Delta Airlines care about its customers’ experience with the airline? If I ever needed a reason to consider other airlines when I fly from Detroit, they sure gave me one!

A Twitter Overflow?

Oh no – what’s going on with Twitter??? No tweets today?

And who’s to blame? The World Cup? BP? Harrison Ford wedding Calista Flockhart?

How Can Similarly Devastating Fiascos Have Such Different Impact On Customer Loyalty For BP, Toyota?

Two articles were published on the same day last week, which offered an amazing contrast between two companies that have been in the news over the last three months for the wrong kind of reason: Bad press. And in both cases, you know I’m talking about really bad press.

The contrast was not so much about what these companies have done or failed to do, but rather in the outcome of their debacles.

The Tale Of Two Brands

Check out these two headlines:

-        “Toyota maintaining customer loyalty despite recalls” – http://tinyurl.com/2wlrmkk

-        “Why the BP oil spill surpasses the limits of loyalty” – http://tinyurl.com/27afhgd

In short, these articles (completely unrelated to one another) go on to say how Toyota has managed to maintain its leadership position in Customer Loyalty[1] in Q1/10, while BP has dropped from first to – gulp! – last, also in Customer Loyalty[2].

To be truthful, both companies shared bad news in terms of market performance, with Toyota reporting a significant decrease in market share (from 13.9% last year, to 12.8% in Q1 2010), while BP’s stock market value had reportedly plunged by a “paltry” $25 billion since the oil rig began its own descent toward the bottom…of the Gulf of Mexico.

Why The Contrast?

Each article provides valuable insights as to what is going on. For instance, Toyota has managed to maintain repeat purchases from its customers by offering incentives such as zero-percent financing and special lease deals – essentially, “buying” loyalty, something very unusual for the #1 automaker.

On the other hand, the oil spill is in a direct blow to BP’s positioning as the greenest among all oil companies. Clearly, the company had stayed away from any advertising that would protect or even pretend to restore its image (unlike Toyota, reminding its customers that it was dedicated to fixing the issues with its vehicles) – probably a good thing, given oil companies’ previous mishandling of similar catastrophes.

Not The Same “Loyalty”

As is often the case, headlines fail to tell the full story. Certainly they can grab readers’ attention – after all, that’s what they’re made for. But these simplistic summaries can also leave the reader confused and, in this case, wondering how two similar disasters can lead to such different outcomes.

In this instance, the explanation lies mostly in that the word “Loyalty” represents two “outcomes” of the customer experience that are very distinct. In the case of Toyota, “loyalty” is defined as the percent of vehicle buyers who traded in a Toyota to purchase another Toyota. In other words, this is an objective and factual measure of customers’ actual behavior, which itself is the outcome of emotional and rational elements (experiences) – including never-seen-before attractive rebates. 

For BP, the “Loyalty Index” is a combination of measures (survey questions) focusing on the brand – a mixture of emotions and beliefs about the brand’s various attributes. In my mind, the term “loyalty” is misused in this instance; something like “Brand Perception” or “Brand Value” would be more accurate.

Customer Loyalty, Brand Loyalty, Customer Satisfaction, Customer Engagement Loyalty Index, Word Of Mouth… Which One Is Right For You?

Semantics aside, it is clear that one cannot gauge the impact of the public relations nightmare encountered by BP and Toyota on their sales and overall financial performance, including stock price, by simply reading the headlines of these two articles.

What those articles clearly demonstrate is the need for organizations to properly identify and track the metrics that are relevant to their objectives and market conditions. When you think about it, how “engaged” are you when it comes to filling up your car? Certainly, in such a commoditized market, adopting a clear and distinct positioning (in part through a strong and unique brand) is one way to get it done. But does the key to success for BP, Shell, Amoco, Marathon, and others really lie in the concept of Customer Engagement?

The Difference Between What Sounds Good And What Makes (Business) Sense

In my dealing with clients, I have found too many times that senior management tended to focus on what “sounded good” (usually because it was easy to understand, cheap to implement, and simple to report) rather than on what was relevant – the latter typically requiring additional resources and brain power. But who said that success comes easily?

So the next time you analyze the customer metrics you track for your organization, particularly if they don’t align with other performance measures, ask yourself: Why did we choose this metric, and how long ago? How do I know it’s the “right” metric? Does it measure something different than what we’re calling it? You might be surprised.

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[1] According to Edmunds.com

[2] As measured by Brand Keys’ Customer Engagement Loyalty Index

Telling It Straight To Your Customers

Let’s imagine for a moment that your company is facing a huge problem prohibiting the delivery of its service, and while the problem itself is not something of your company’s doing, your customers are holding you responsible, flooding your call centers and demanding an immediate answer – if not a solution. What do you tell your customers?

The (Friendly?) Skies Are Failing

Sounds familiar? If you don’t know what I mean, look no further than last week’s major disruption in air travel caused by the eruption of Iceland’s Eyjafjjoell volcano: Not only did it create a logistical and financial nightmare for the airlines, it also put considerable pressure on agents within their contact centers as well as those responsible for website contents. Mostly, it presented the airlines with the formidable challenge to quickly develop and adopt a communications strategy where they needed to show the upmost empathy and understanding, while being kept totally powerless by a combination of outside forces comprising airport authorities, air space administrations, governmental transportation agencies, a multitude of oh-so-ever-excited volcanologists, and… the untamed (and untamable) volcano gods who had decided to unleash their fury in the otherwise blue skies of Western and Northern Europe.

When Instant Communications Are Not All That Useful

In today’s era of instantaneous updates and immediate access to information, which typically deliver a definite sense of certainty and relief, the level of powerlessness and helplessness was astounding – and a formidable reminder of how vulnerable we (the humankind) remain when Mother Nature decides to take things in her own hands.

To a great extent, the situation was made worse by the constant inflow of contradicting news; depending on the time of day and the source of the information, hopeful passengers would hear encouraging or disheartening news – sometimes both, within minutes. Indeed, most of the parties involved had very different agendas, even while all claiming that passenger safety was their number one priority. But airlines wanted to fly their planes and stop the (financial) bleeding; government were trying to avoid being held accountable for potential human disasters; volcanologists were having the time of their life and didn’t want it to stop; and some airports were facing huge crowds growing tired and weary, which is never a good thing.

Who Can I Turn To?

So when so many parties involved, and you’re the customer, where do you get your information? And if you’re the ultimate provider (the one with which the customer has a contractual relationship) but have no control over the situation, what do you say?

As a customer, I was in that situation last week; my wife had gone to England to visit her family, and she was scheduled to return to the US from Heathrow on Wednesday. On Saturday, we started joking that she might need to stay in the UK a little longer than expected. But as the weekend went on and news on Monday was not particularly encouraging, our joking turned into worrying, and we started gathering any information we could put our hands (and ears) on. We began calling – calls to Delta in the US, to Delta in the UK, and to Heathrow airport; we also visited any website that might contain reliable and up-to-date information, and started monitoring news channels, which were all over THE big story.

How Too Much Information Can Turn Into No Information

Yes, information was abundant – but at the same time, completely useless! In a nutshell, no one knew anything – or if they did provide what seemed to be a relevant piece of news, it was quickly contradicted by the next source of information. For instance, on Monday the British Minister of Transportation announced all signs were that the airports would soon be reopening, while pretty much at the same time, volcanologists were predicting that Eyjafjjoell was about to release a second and potentially more potent ash cloud. What was I to make with these two pieces of information?

Who Said “We Know What We Know And We Know What We Don’t Know, But We Also Don’t Know What We Don’t Know”?

The most “helpful” piece of information I received was also the most “basic” – as in “let’s stop pretending we know anything and admit that we don’t know what’s going on”. It happened when I called the Delta Airlines customer service number on Monday night and the Delta agent told me “I honestly don’t know what’s going on and you probably know as much as I do. I’m sorry, but I’d be misleading you if I said otherwise”. Now, I’m not sure if this was a corporate line or the result of an individual’s initiative, but at least, it felt “refreshing”. No, this wasn’t going to help much, but at least, I wasn’t given information for the sake of giving me information that would later prove to be erroneous.

Customers To Providers: “Just Tell It To Me Like It Is”

The recent Toyota debacle provides the best example of what happens when you don’t give it straight to your customers. Ignore the problem or pretend it doesn’t exist, and it will come back with a vengeance. Tell them you’re on top of it and it’s all been fixed when, really, you still don’t know what the problem is, and the world will quickly find out how much you can be trusted. At least, with the most recent recall of the Lexus GX 460, Toyota showed it had learned its lesson by halting the sale of that vehicle pretty much the minute the Consumer Reports “don’t buy” notice came out.

“Houston, We’ve Had A Problem”

The last thing Jim Lovell and Jack Swigert wanted to do was tell Houston “we’ve had a problem” and thereby cancel the mission that otherwise would have taken them to the moon. They did not know what nor how serious the problem was at that time but chose to tell it straight and stick to what they knew – nothing more, nothing less. It happened 40 years ago this month – an anniversary that should serve as a reminder that, in some instances, telling it like it is to your customers (even if it means that – gulp! – you can’t help them in the short term) usually provides the best outcome in the long-term.

Club Med Provides Best Illustration of How To Deliver Seamless Customer Experience

Over the school break, a couple of weeks ago, my family went to Club Med (in Port Saint-Lucie, Florida) to escape the not-so-snowy but very cold winter that has settled upon our area for the past few months. It was a first for all of us, but for our kids, who had never heard about Club Med, it truly was a vastly new experience.

Not Your Middle Of The Road All-Inclusive

“What? No hot tub? No all-you-can-eat buffet 24/7? What’s that 26” box hanging from the ceiling in the very far corner of the room? And now you’re asking me to be part of the show?” When I told the kids we were going to an all-inclusive resort, they were thinking “Cancun all-over-again” – or a typical all-inclusive destination, where farniente, food (including drinks), and late-night socializing are the main activities. And while Club Med was the first company to introduce the all-inclusive concept in the early 1960’s (bet you didn’t know that – I didn’t!), the experience it delivers to its GMs (Gentils Membres) centers around the one ingredient most other resorts often cannot deliver: genuine and authentic fun.

Being Part of the Experience, As Opposed to Simply Living It

It was quite a surprise to our kids when they found out that they would be part of some of the evening activities – not as spectators, but as “actors”. Similarly they did not expect to be actively recruited for participating in circus activities, archery, “Olympic games” Club Med style, dodge ball game, and scavenger hunt – and would have the best time doing so. Or that we would regularly share our lunch or dinner table with one of the GOs (Gentils Organisateurs – meaning, the staff), as well as shake hands and talk with the CDV (Chef De Village – the resort’s manager). In the end, we all felt like we were part of “one big family” and that we too had a role to play in making this a positive experience – as opposed to passively be on the receiving end of it. And that made it all the more fun!

Meddling With The GOs

Interaction between GMs (customers) and GOs (service providers) is actually at the very heart of the Club Med experience – probably the best illustration of the Service-Profit Chain in action. In fact, in the early days of Club Med, the line between social interaction and, say, promiscuity was probably more blurry than it is today – and often was a “trademark” and the topic of many jokes about the Club Med Experience (best depicted in “Les Bronzés”, a movie which turned out to be a launching pad for many of its actors). While an extreme rendering of the Service-Profit Chain concept, it makes a very strong case (if ever it was needed) that taking care of your employees will result in a more pleasant and fulfilling customer experience.

So What Motivates GOs?

Several of the GOs I spoke with told me the pay (reportedly $2 an hour, plus free food and lodging) was not why you decided to work at Club Med (where the minimal commitment is six months), nor was it what kept you motivated to do a good job. (Contrary to common belief, the fact that compensation is NOT what drives Employee Satisfaction [motivation] is actually quite consistent with the findings of many studies on the topic.)  Rather, the critical elements were, in no particular order: Getting a great experience that will significantly enhance one’s resume; Having fun; Acquiring solid people (customer service) skills; Getting along with co-workers; and the personality of the CDV. If you operate in a service-oriented industry, such as retail, how high do you think those five elements rate in the mind of your staff?

An All-Encompassing, Seamless Customer Experience

What I found most comforting from our vacation with Club Med is that from Day one (and by Day one, I mean when I spoke with an agent about our reservation), I felt that I was going through one continuous and consistent experience – one where the dots were actually connected and where the various actors understood that the interaction they had with me was part of a larger “engagement”. Contrast that with the automotive industry, where the dealer where you buy your car will be quick to point out that he/she doesn’t work for GM or Ford, and therefore couldn’t care less about your problem. Or the wireless network that emphatically promotes a phone that’s made by another company to get you as a customer, but promptly dismisses your concerns when the phone is not working properly. “Hey, we didn’t make that gizmo, we only sell it!”

Thankfully, an increasing number of companies are implementing a Customer Experience function – realizing that it’s time to provide consistency across the various touch points and to deliver a seamless experience to their customers. How, the question is: Does your company do that?

Customer Satisfaction and Customer Value Are Complimentary Concepts, Not Adversarial

A press release regarding a survey among cellular phone customers in the UK, France, and Germany states that “Telecoms Consumers Want Love, Not Discounts” (http://www.marketwatch.com/story/pan-european-survey-reveals-telecoms-consumers-want-love-not-discounts-2010-03-03?reflink=MW_news_stmp)  Should anyone be surprised? I’m not. For years, it has been shown that when it comes to satisfying and retaining customers, you’re better off delivering what you promised as opposed to reducing your price. The first strategy is about earning customers’ loyalty; the second is called buying loyalty. Do you want to take a guess at which one leads to profitable growth and which one hurts the bottom line?

A Point In Case: The Toyota Debacle

Talk about not delivering what you promised! Imagine owning a car that has a mind of its own and decides to take off when you expect it the least – and not knowing how to stop it: Not exactly what you signed up for, is it? If you owned a Camry or Prius today, and Toyota came to you and said “We can either fix your car and tell you how much we love you, or we can give you $2,000 off your next car”, how likely would you be to take the money? Hey, if you take the money, you may not even be around when it will time to buy a new car…

Customer Satisfaction Is What Keeps Customers Around…

That example is a bit extreme, but you get the point. Once a shopper has made his/her purchase decision, he/she has expectations regarding the product or service in terms of its performance, reliability, dependability, customer service, and interaction with the provider’s staff. This is where things can go wrong – where performance can deviate from expectations. But price? Price is a known entity – you generally know up-front how much the product or service is going to cost you. For a car, it’s easy: It shows right there on the back left window – well, at least until your salesperson talks to his/her manager. But in the end, you agree on a price and the deal is done. So price is not what’s going to keep your customers happy. In the case of a car, it’s much more likely going to be about performance, reliability, and your experience at the dealership.

…While Customer Value Is What Attracted Them

Price, on the other hand, is typically quite relevant when prospective customers are weighing the quality versus price ratio – what is often referred to as “Customer Value”. It’s also referred to as the “utility function”, where the shopper assesses the benefits (rewards) he/she will get to enjoy from the product or service in relation to what it’s going to cost. “Is this car worth what I’m about to pay for it? Can I even afford it?” These indeed are questions directly related to cost, and depending on how price sensitive the buyer is (and let’s face it, 95% of shoppers are somewhat price sensitive – only the very rich are not), the cost element will play a significant role in the final decision.

Customer Value and Customer Satisfaction Are Both Needed to Gain Market Share

Proponents of the Customer Value concept have long argued that Customer Value is what drives market share, but they are wrong. Certainly, Customer Value has a lot do with adding new customers – a vital element of the market share battle. But what good is it to attract customers if you can’t keep them? Your company will only increase market share to the extent that it is able to attract and retain customers; and for the latter, you need to deliver on performance and Satisfaction.

Focusing On Acquisition As Opposed to Retention Is A Losing Proposition

It is also a well-known fact that acquiring and churning customers in droves is not a financially-viable proposition, since it is a generally-accepted fact that the cost of acquiring a new customer is five times that of retaining one. Besides, no market is limitless, and companies who lose a large percentage of customers will eventually run out of new preys. So applying the principle stated in the press release – in essence, earn rather than buy your customers’ loyalty – remains the best road to long-term success.

What Tiger Woods, John Edwards, and Toyota Have In Common (And Wish They Didn’t!)

It feels like not a day has gone by over the last couple of weeks without hearing or reading more disturbing and incriminating news about Toyota. Just yesterday, it was Transportation Secretary Ray LaHood making (controversial) news by telling Toyota customers not to drive their vehicle, then later correcting himself by specifying that he was talking only about the vehicles being recalled, and that he was advising vehicle owners to be cautious and take their car to a Toyota dealership when they could. Duh! And then today concerns emerged about the Prius’ brake system.

Just Like Tiger And John

This series of announcement reminds me of the Tiger Woods and John Edwards sagas, where both “celebs” failed to come out proactively and openly about their respective problems, and rather let speculations become rampant and more outrageous as time went on. At least the Tiger Woods story was relatively short-lived (3 months) compared to the one-and-a-half-year-John-Edwards-mistress-and-out-of-wedlock-child saga. But the resemblance between the three events is nothing short of eerie:

1. None of the parties were forthcoming and tried to hold back information as long as they could;
2. Instead, the media played a huge role in getting the news out, demanding/forcing a comment or reaction;
3. All have had to engage into reactive damage control, as opposed to proactively manage the process (let’s face it, the outcome is going to be negative no matter what you do, but wouldn’t you want to minimize the downside?)
4. All have had to endure the succession of negative news and dire announcements (Edwards months apart, Tiger Woods weeks apart, and Toyota days apart, if not hours); this means that rather than take one big blow and start climbing back up the hill in one long, arduous effort, they go down twice the distance they had gained back since the last announcement each time an “update” is provided – digging an ever deeper hole for themselves;
5. Finally, they are all left contemplating huge loses in their “customer” base – be they sponsors (Tiger), voters (John Edwards can kiss his political career goodbye), and car buyers (Toyota).

Tragic But Also Comical

It is tragic, but also somewhat comical to see companies, politicians, and celebrities of all venues time and again commit the same mistake – deny their “customers” the right to “the simple truth”.

It is tragic, because no one wins from such denials, semi-truths, and convoluted press releases. The “perpetrator” ends up in a much worse position because of the repeated and contradicting news, resulting in a total loss of credibility; and the customer, who is denied the correct information (so vital to the well-being of a market economy, based on the access to objective and unbiased data), can no longer make an informed “purchase” decision.

It is comical too, because you would think that at some point, people would learn from the mistakes made by others before them. And yet, one after the other they fall into the same trap – regardless of their intellect (which is usually pretty high, even though celebrity status does not correlate with IQ anymore than the record of the Detroit Lions correlates with their ranking in the NFL draft).

The Gist Of It? Don’t Treat Your Customers As If They’re Stupid!

Customer Satisfaction research abounds, that shows that when you are experiencing a problem and you need to inform your customers, two things must happen for your company to come out of it “unharmed”: (1) You must communicate with them quickly (and truthfully), and (2), you must fix the problem as quickly as possible (before it negatively impacts your customers). At the other end of the scale, the worst thing a company can do is take forever to inform its customers AND not fix the problem – which is exactly what Tiger, John, and Toyota have done.

Resolving the issue right away (say, within a day) is often unlikely. So what’s the next best approach? Research shows that customers are not stupid and have reasonable expectations. This means first and foremost that they are willing to forgive your lack of performance (to some extent) if you inform them regularly (say, once or twice a week) AND truthfully, rather than communicate twice a day but with the wrong or contradicting information. In other words, don’t take your customers for a ride and promise something that you cannot deliver. Rather tell it like it is: It’s that simple!

Will Customer Loyalty Provide Sufficient Buffer For Toyota To Survive Safety Nightmare?

It’s THE news of the day: Not just a recall of over 2 millions of vehicles, but a halt to selling eight of Toyota’s most popular models, including the Camry, the top-selling car in the U.S., which accounted for 58% of Toyota’s U.S. sales last year.

The Wall Street Journal calls it a “Total Recall”, the Detroit Free Press “Toyota’s Shocker”. No matter how you look at it, it is a real stunner – the first real big blow in Toyota’s quest not only to reach but to keep its #1 position in the automotive world. And yet, in the first real test of its character since taking over General Motors and Ford in market share, Toyota is showing the automotive world (and beyond) what it takes to be a leader by doing the unthinkable: Halting sales in what is expecting to be a rebounding market.

Who Will Benefit?

There’s no doubt that the next weeks or months (depending on how long Toyota needs to suspend sales) may have a deep effect on its sales volume. While it’s possible that some of the potential Camry buyers will turn to one of the more luxurious models offered under the Lexus brand, many may decide to give other brands a try – particularly Ford and GM, who have been spending many advertising dollars on reestablishing themselves as high quality and even higher value brands. Hyundai will be on the lookout as well – not to mention Honda and Nissan. In fact, at this time, any auto manufacturer known for quality and reliability, particularly in the midsize segment, is looking at a one-time opportunity to lure customers away from Toyoda.

Testing The Power Of Customer Loyalty

However, one should not underestimate the power of Customer Loyalty. It’s a well-known fact that Toyota enjoys one of the highest retention rates in the industry – if not the highest – and has built an incredible amount of goodwill among its customers. This alone should buy some time for the #1 brand, at least among its current customer base – many of which are on their third or fourth Toyota model. Plus, I would not be surprised if Toyota offered some type of deals to its existing customers (such as lease extensions to current lessees) while they sort out their issues and are again able to fill up the showrooms.  

Toyota has also generally worked hard (and successfully) at establishing itself as an important part of the communities where it has built plants and offices. If the same issue had happened 20 years ago, when Toyota was in the midst of building its brand and reputation, the auto maker would have been at much greater risk than it is today.

Will Competitors Know How To Make The Most Of This Opportunity?

Still, this represents a great opportunity for Toyota’s competitors to attract unexpected prospects into their showrooms. But will they know how to make the most of it? Some of the sales staff will probably have a hard time resisting the temptation of bashing Toyota; yet they should realize that in most cases, it will be counter-productive, as people visiting showrooms need and want to hear about the positive experience resulting from their next car purchase – rather than “what can go wrong”. So unless the shopper brings it up, salespeople will need to stay away from the safety issue affecting Toyota, and instead focus on the innovative features, design improvements, and (let’s not forget) incredible mileage of the vehicle standing in front of them.

Accepting Short-Term Losses To Ensure Long-Term Success

However “shocking” today’s announcement might appear to some, it is clear there is little else that Toyota could have done to preserve its long-term performance and success. Certainly, it takes a certain amount of guts to halt sales of your most popular and profitable products – not only losing sales in the process, but giving your competitors the opportunity to steal customers. But it is the right price to pay for a company that is focusing on long-term success rather than meeting quarterly financial goals. In fact, I wouldn’t be surprised if a few years from now, this “crisis” was taught as a case study in Business Schools – just like Johnson & Johnson’s handling of the 1982 Tylenol “murders”.

Time For Good PR Management

Tracking new car sales and market share over the next couple of months will be one of the best real-life “tests” of Customer and Brand Loyalty. Chances are that the impact for Toyota will be fairly minimal, but for that to be the case, two things needs to happen: 1) Obviously, they will need resolve the sudden acceleration problem within a reasonable time frame, and 2), the Toyota PR team will need to provide timely, accurate, and realistic updates and communications, rather than let the media (and competitors) do it for them. Hopefully, someone in the Toyota PR department has learned from the Tiger debacle…

Convenience Of Paperless Option Should Come At No Cost To Consumers

Last week I decided to do “the right thing” by going green and paying more bills online – particularly for those providers (in this case, a utility company) that promoted that option on the invoice they had sent me. After all, it’s not just “the right thing to do”; it’s easy and quick, saves the cost of a stamp, and prevents the payment from being lost. What’s not to like about it?

An Ugly Trap…

So I went online – typed a pretty lengthy url, went through a series of four or five screens and provided all kind of information (address, customer number, etc.) to register – only to realize I was dealing with a third-party (not a huge surprise in itself) and that on the very last screen, I was informed that I would be charged a $5.25 “convenience fee” for the transaction. Yikes! Looks like someone has studied Ticketmaster’s practices up close and found an easy way to make money on the back of its customers!

…And A Bad Calculation

Needless to say, I backtracked as fast as I could, cancelled everything, and wrote a check that I will mail as late as I can (as opposed to make the payment two weeks early and be done with it). So what did the utility company gain in the end? Obviously, nothing. I’m mad at them for not revealing up front that there would be a cost associated with my online payment; and now they will have to incur the cost of having someone manually open my envelope and enter the payment. Not a huge cost, I’m sure – unless you multiply that by the number of households in my city (say, 100,000!) And my last-minute payment via the US Postal Service will also have a  negative impact on the company’s cash flow.

The Good, The Bad, And The Web!

Broad access to the web has certainly made life easier for the consumer, and opened the door for opportunities that the average Joe could hardly have thought of even just five years ago. Overall it means more choices, and more choices is good – it means that the consumer is more likely to find something that he/she likes, as opposed to go for the one option that’s available. That’s good. 

Unfortunately there’s also a lot of “bad” too: Things like retailers taking advantage of their online customers and signing them up for so-called “Loyalty” or “Preferred Customers” programs for a monthly fee that they’re typically unaware of (http://www.ripoffreport.com/credit-card-fraud/lillian-vernon-lilli/lillian-vernon-lillian-vernon-d4788.htm). Or how about coffee shops, airports, and hotels charging up to $25 a day to customers who want to surf the web while on their premises?

Thankfully it is becoming common practice for such venues to offer free web access (thank you Panera!); and if the market economy works like it should, those who don’t provide free internet access will either be forced to change their ways or lose so many customers that they’ll have to reinvent themselves. Yes, that’s how powerful the web has become!

New Decade Presents Opportunity for Automakers to Take Customer Metrics Into 21st Century

On the eve of the 2010 North American International Auto Show (better known as the Detroit Auto Show), much is being said about a potential rebound for the auto industry, with many manufacturers announcing higher production and reinstating third shifts to provide for what they believe will be significantly higher sales over the next months.

A New Landscape

The automotive landscape in 2010 will be much different than what it was only five years ago. General Motors will soon have shed half of its brands; Chrysler has traded a German owner for an Italian; Toyota is now accepted as the #1 manufacturer worldwide; Kia/Hyundai is gaining market share as quickly at the Arizona Cardinals and Green Bay Packers were trading touchdowns in their wild card game this weekend; and well-known brands such as Saab and Pontiac are about to disappear for good. The US market is now all about higher gas mileage (although for how long?) and hybrid vehicles, smaller cars, and a trimmed-down dealer network that may require potential buyers to drive for than 10 miles to get to the nearest dealership. So with so many changes taking place, why not make the most of this opportunity and adopt 21st century customer feedback methods?

Here’s a suggestion to all automakers – domestic, Europeans, and Asians: STOP IRRITATING YOUR CUSTOMERS WITH BOGUS SURVEYS AND GET SERIOUS ABOUT CUSTOMER SATISFACTION!!!

Honestly, how willing are you to fill out another survey that will directly and irremediably affect the salesman/saleswoman’s ability to feed his/her children next week or send them to college? How many more times are you willing to be told “Let me show you how to give me the best score possible on all the questions, while we give your car a free wash” and oblige to the request? And how often have you sat at a dinner table where one of your friends was recounting that ridiculous exchange with the dealer staff?

Garbage In, Garbage Out 

Everyone knows these “surveys” are a joke – and a bad one, at that; they are a disgrace to the concept of Customer Satisfaction (let’s call them what they are!), and often end up negatively impacting the consumer’s experience. And they yield data (and therefore results) that are flawed, unreliable, and useless – providing the best illustration for the “garbage in, garbage out” adage. In other words, they provide no value whatsoever – but you can bet they cost a bundle to administer and “analyze”.

Time for Change…

The way I see it, there’s never been a better time for carmakers to do away with the old and start afresh with their Customer Satisfaction (or Ownership Experience) measurement programs. Consumers are sick and tired of the pressure put on them while at the store; dealers should be receptive to a positive change, as a more reliable and accurate measurement would truly separate good ones from bad ones; and automotive manufacturers have (finally!) come to realize that rebates, employee-pricing, and seasonal discounts are far from providing a viable long-term solution.

…EARN, Don’t Buy Customer Satisfaction and Brand Loyalty!

The alternative? Implement customer metrics programs that will deliver valid, pertinent, and objective consumer insights which, in turn, will allow manufacturers to improve the Ownership Experience, Customer Satisfaction, and Brand Loyalty. After all, can you think of a better way to get customers to come back (without the use of rebates), gain market share, and remain profitable? Unless you think another government bailout is in the works – but you’d probably be the only one to think so!

Are you listening?

Listening to what customers are saying about their experience with their grocery store, wireless provider, newspaper, lawn service, airline, hotel, municipality, government agency, sports club, movie theater, restaurant, public shool, etc. should be of the highest priority to any organization. Why? Well, common sense, if nothing else. With the choices available today in most sectors of the industry, can a company expect its customers to remain loyal if they have a bad experience or hear of others who were poorly treated? In today’s ultra-competitive environment, if your organization is failing its customers, can you afford not to know or hear about it?

Yet, while some are doing a good job at it, many are not – often relying on anecdotal information (the CEO’s spouse’s most recent visit to a store), comment cards, or the infamous (but still very common) “please fill out this survey and rate me “excellent” on all 10 questions, or else I’ll lose my job and my kids will end up living in my sub-compact car for the rest of their lives” request that is thrown at you when (you think) you’re done buying a car or the repair man is about to (finally) leave your house.

Why? Reasons abound; many leaders think they have superior products that will make up for any failings in customer service. Take GM for instance: How many times over the last 20 years have we been told by the likes of Roger Smith and Rick Wagoner that GM had the best cars in the market and customers will keep going? Or look at Blockbuster, which failed to realize that while they were the present, others (such as Netflix) were the future. Others simply don’t see the value of gathering pertinent customer feedback, or are simply scared of what might come out. Believe me, I have seen this happen more than once!

Whatever the reason, not listening to your customers can cost you a lot. On the other hand, spending a little bit of money and gathering objective, relevant, and actionable information will prove to be the best investment your company can make if it plans to be in business past the next quarterly earnings statement.

So what are some of the “do’s and don’ts” when it comes to gathering customer feedback and choosing the right metrics? Is it about Customer Satisfaction, Recommendation (NPS), Retention, Churn, Engagement, Value, Delight, or some yet unknown metric-du-jour? And what is the measure of success for a customer feedback program? So many questions… What do you think?

Black Friday Retail Sales Show That Offline Retailers Must Battle For Consumer Spending

The results are in, and by all accounts, consumers visited shopping malls in droves over the Thanksgiving weekend. The key word though is “visited”; yes, store traffic was significantly up, but spending rose by a meager 0.5% compared to last year, which was 8% lower than 2007. Of course, adding to the confusion is the increase in online purchases, which obviously take away from offline spending. And unlike traditional holiday shoppers, online users have the flexibility to visit and purchase at any time – an observation that makes year-to-date (YTD) comparisons much more relevant than same-day comparisons.

For traditional retailers, the message is clear: While aggressive promotions and “unbeatable deals” will most certainly attract shoppers into their stores, more needs to happen to get consumers to take out the plastic and make the big (and not-so-big) purchases. Price aside, the most important element for triggering a purchase is quite often the presence and availability of a sales associate that can “reassure” the consumer that “yes, this is a great buy and you’ll be really happy with it” or that “you can’t go wrong with it, your five-year old will love you forever!”

But what have most retailers done this season? By all accounts, offline retailers’ use of seasonal workers is down compared to 2005 and 2006, except for a few companies (such as Best Buy). This means less assistance in the stores – something older shoppers, who typically have more discretionary income, often welcome.

I think this is quite short-sighted; yes, retailers need to watch their costs. But it doesn’t take a genius to realize that the incremental sales resulting from adding staff will far outweigh the expense – particularly if the staff is well-trained in dealing with indecisive and skittish consumers, and know how to turn a tentative browser into a profitable customer.

The Insight? You have the merchandise your customers want and they’ve come to your store. That’s the first (and harder) step. So close the deal by nurturing them, rather than leaving them on their own – before they move on to the next store. Customer Service will pay off during this Holiday season!

Don’t Be Misled By NPS’ Simplistic Approach

I came across yet another article today (“Customer Advocacy and Net Promoter Score”, http://www.familyandhomelife.com/2009/12/02/customer-advocacy-and-net-promoter-score/) promoting the benefits and superiority of NPS over other customer metrics – this time, Customer “Loyalty”. In this article, the author describes “Loyalty” as “Retention”, the first of many – shall I call them “mistakes”? – appearing in the article.

Interestingly enough, the Webster Dictionary definition of “Loyalty” reads as follows: “The quality or state or an instance of being loyal”. So what’s the definition of Loyal? Again, according to Webster, it is about being “unswerving in allegiance: as a : faithful in allegiance to one’s lawful sovereign or government b : faithful to a private person to whom fidelity is due c : faithful to a cause, ideal, custom, institution, or product”.

Hmmm… that last declination is interesting, isn’t it? “Faithful to a cause, ideal, custom, institution, or product”. Doesn’t that read like what you would want your customers to do for you? And if your customers are faithful to your product or service, doesn’t it imply that they would be “advocates” when the time is right?

The consensus in customer research is that there are a number of customer “behaviors” that can be beneficial to companies. Depending the nature of your industry (level of competition, maturity of the market, type of product/service, continuous vs. discrete purchase cycle, etc.), those behaviors will vary. Yes, sometimes, Advocacy might well be what your company first and foremost needs to focus on – particularly if your market/industry is relatively new and/or growing. But how much good will it do to a company that is losing customers in droves in a saturated market? And if you work in a B2B environment, maybe the best way to grow your business is to get your customers to spend a higher percentage of their budget with your company – the famous “share of wallet” metric.

Another huge flaw of NPS, recognized even by its “inventor”, is that it doesn’t tell you what to do to improve your NPS score. NPS is just that – a “score”; and because of the way it is calculated, it tends to be unstable (unreliable would be another way to describe it). So now you’re chasing an unstable metric, and you don’t even know what to do to make it go up! How much (business) sense does that make?

The truth about NPS is that many CEOs like its simplicity and deceptive common sense (would doesn’t want to hear that your customers want to recommend your company’s products and services?)  But practitioners (market researchers and statisticians) understand its conceptual and statistical flaws, and it is their responsibility to remind senior managers that the “one number” concept, as attractive as it may sound, can easily translate into the “wrong outcome”.

Implementation More Than Measurement Key To Success For Customer Satisfaction Programs

For the past few years, I have had the opportunity to lecture to MBA students at the University of Michigan’s Ross School of Business about how companies use Customer Satisfaction measurement programs – and what distinguishes those who get a high return on their investment in Customer Satisfaction from those who don’t.

Much has been said, written, discussed, and debated over the last 10 years regarding what are the best measurement techniques, theories, concepts, approaches, methodologies, scales, and questions for measuring customers’ experiences, attitudes, and most relevant behaviors towards the companies they buy from. Is it about Customer Satisfaction or Customer Delight? Customer Loyalty or Customer Advocacy? Is it one question or an index? Should it be a percentage or a score? And so on…

I’d be tempted to say it’s whatever will resonate best within your organization and what will get the most buy-in. Obviously that’s not all there is to it. But if there’s one thing I have learned while consulting with tens of organizations over the last 15 years, it is that much time (generally, too much) is devoted to debating methodologies and wordsmithing the surveys, while very little effort is geared toward acting upon the powerful information delivered by the measurement program in place.

The title of one of the slides in my lecture is “Methodology is only (at best) 50% of success” – and I truly mean it. Certainly you want to get the most accurate, relevant, and actionable information your money can buy. That’s Step 1. But what good will it do to your organization if you don’t act on it and fail to share it with the relevant stakeholders?

Indeed there are a number of steps your organization must take once the data is in, if it wants to be successful implementing its “customer feedback”/”voice of the customer” program; and most of these steps need to be identified, discussed, and agreed to BEFORE the results are available – otherwise the data will quickly become stale, outdated, and irrelevant.

So if you get the feeling that your customer feedback program is stalling, maybe it’s time you ask yourself if your company is mostly “checking the box” (collecting and reporting data) as opposed to making it part of the “life and blood” of its continuous improvement efforts and processes – regardless of which metrics you use.

Top 5 Reactions You Don’t Want To Hear In Response To Research Findings

Goethe said it better than anyone, more than 200 years ago: “Knowing is not enough; we must apply!”  Seems like he must have known some of the organizations I’ve come across over the past few years! As I mentioned in my previous post, collecting data and analyzing it constitute the easy steps of implementing a Customer Satisfaction/Customer Feedback program. The more difficult part lies in what comes next: Taking the time to understand and accept the information; identifying initiatives that make the most sense from an ROI perspective; implementing those initiatives according to a timeline that is shared with others; and assessing their success (or failure) in a timely manner.

Sounds simple enough. So why do some companies fail to act on the findings of the information that was just shared with them? Here are some of the reactions I’ve come across over the years, and which you don’t to hear…

#1.        “WE ALREADY KNEW THIS”: The company needed to check a box – get a number – and as long as the number is on par with expectations, no action will be taken. This is typical of organizations that don’t understand the value of customer relationships and want to continue to do business as usual, now that they’ve complied with the CEO’s request to measure Customer Satisfaction. And if the number is below expectations? Then comes Reaction #2…

#2.        “I DON’T BELIEVE IT – YOU DIDN’T TALK TO THE RIGHT PEOPLE”: Yes, as childish as it may seem, this is a fairly common reaction that you hear when the findings are not in line with expectations – or worse, when they contradict the “official line” that was provided at the onset of the program. This is pretty common when the CEO has a strong relationship with a few “high-value” customers and relies on golf course conversations to “drive” strategic decisions. But should the results be acceptable, here comes #3…

 #3.        “WE HAVE MORE IMPORTANT ISSUES TO DEAL WITH”: What issues? Often times, it has to do with meeting next quarter’s financial objectives. Short-term issues are what drive decision-making – forget any type of sustainable, long-term strategy. “Is there anything in the data that tells me how we can boost sales next month? How do we reduce costs? What do we need to do to reduce inventory? We need to get our new delivery system up and running within the next two months – that’s our priority” And so on…

 #4.        “THIS IS VERY DISAPPOINTING NEWS – WE CAN’T SHARE THIS WITH THE STAFF”: The staff, or other stakeholders such as the Board of Directors? Yes, I’m talking about those instances where results are buried, because they simply don’t look good. Forget understanding why the numbers are down, or lower than expected, or have not improved as much as hoped. No – instead, let’s bury our heads in the sand and pretend it never happened. This is typical of risk-averse organizations, where little information is shared and departments/divisions keep to themselves or work in silos. Therefore, if the news is not so great, no one will notice if it’s not disseminated.

 #5.        “THIS IS REALLY GOOD STUFF; WE’VE LEARNED A LOT TODAY. SINCE I’M MOVING ON TO ANOTHER POSITION, I WILL MAKE SURE MY SUCCESSOR FOLLOWS UP WITH YOU”. Ah, the kiss of death feared by every consultant! What are the chances that the successor will indeed follow up, unless there is a strong mandate coming from senior management? This happens a lot when there is not a designated Customer Satisfaction/Voice of the Customer Champion within the organization (as opposed to a “project manager”, or a “point of contact” identified for the circumstance). In organizations where rotations among managers are common and no one “owns” the program, chances are whatever follow-up takes place will prove arduous and painfully flow.

Now, needless to say, many companies have realized and accepted the importance of proper action planning and follow-up when it comes to customer-based programs; they also understand that improvement initiatives, no matter their source, are long-term investments that require dedication, consistency, and perseverance. But once in while, the voices of naysayers will be heard. In that case, with a little bit of practice, and knowing which questions to ask up-front, it is easier to anticipate (and hopefully prevent) such disappointing outcome.

AT&T U-verse TV Marks 2-Million Customer Milestone; So Why Are They About To Lose My Business?

AT&T U-verse just celebrated its two-millionth customer. That’s great news overall, because it means that more consumers now have at least one alternative to cable TV – particularly if, like me, they are married to someone who refuses to install a dish on their roof!

Unfortunately great news doesn’t always translate into great experience. Since we switched earlier this year from the company I love to hate (Comcast) to AT&T U-verse as our HDTV provider, I have become so disillusioned by AT&T U-verse that I am considering the unthinkable: Switching back to – gulp! – Comcast. Why? Two words: Picture Quality. Whether it’s unbearable pixelization, staring at a screen that is entirely red, or having a feeling of double-vision when watching my favorite TV shows, my HDTV experience is not what I had in mind when I bought a 52” LCD HD television.

And yet, as disappointed and upset as I may have been over the past six months, I still have to make that one call to hook back up with Comcast. Two reasons for that: I hate Comcast with a passion – there’s no denying that fact. But let me also give some credit to AT&T U-verse. Here’s a case where the “Exciters and Delighters” so dear to Kano and the model named after him (see below) are so strong (powerful?) that they can make up for the failure to deliver the “Basics” – in this case, a decent picture.

So in my case, what are those delighters? Well, first there’s the fact that I can now enjoy TV5 – a collection of French-speaking programs (news, movies, game shows, documentaries, etc.) originating from the French, Belgian, Swiss, and Canadian public televisions. Any day, I get to watch the same shows that my family watches in France – including international soccer and rugby games. What a… delight! Then, there’s the convenience of being able to watch recorded shows on any TV in the house – not just the one hooked up to the DVR. “Kids, if you want to watch the last five Sponge Bob episodes, please go to the basement!” And I should also mention the ability to manage my recorded shows remotely, from any computer with internet access.

If I switch back to Comcast, gone will be my delighters. And for the moment, I’m not ready to give them up. But it’s a risky proposition for AT&T U-verse, which is spending a lot of advertising and promotional dollars on customer acquisition. In fact, Comcast has picked up on AT&T U-verse’s quality issues and certainly makes a point of it in its TV commercials.

The morale of the story? It’s quite unusual for Delighters (which tend to be optional) to win over the failure to deliver on “Basics” (which tend to be “Must-Haves”) – and probably not a strategy that will work in the long run. Will customers such as myself hang on to the service long enough for AT&T U-verse to fix its quality issues? In my case, most of the goodwill has been eroded; all it will take is another embarrassing moment with my neighbor. And with the Holidays coming up, there will be plenty of opportunities for that to happen,,,

A (Personal) Cell Phone Bill Of $21,917.59??? Communications Providers Need To Learn How To Communicate With Their Customers!

On Friday, while I was driving home, I heard this story on the radio, about an unemployed father whose son had racked up a cell phone bill of nearly $22,000 – even though he had asked his provider (Verizon) to limit his son’s usage to phone calls and texts (http://www.clickondetroit.com/money/21933125/detail.html). This story hit close to home, since the same thing happened to me not even two months ago; our October bill showed that my son had incurred close to $400 (in less than two weeks) in data usage even though a few months earlier, I had called Verizon (again!) and asked them to disallow internet access for my son’s phone.

Thankfully they had a record of my call, and reluctantly ended up issuing a credit. But it did take three phone calls and way too much of my time; and the experience certainly left a sour taste in my mouth – particularly after the last person I spoke with told me that “if this happens again, you won’t be reimbursed”. When I replied that “this shouldn’t happen again, since internet access had been blocked on this phone”, I was told that “sometimes, there can be some malfunctioning and internet access might take place”. In other words, what this Verizon customer “service” representative was saying, was that if Verizon screws up, the customer has to pay for it! Interesting business concept, isn’t it?

One would think that cellular phone providers could easily prevent such mishaps – for instance, by implementing control procedures similar to those credit card companies put in place a few years ago. They could also inform users before they get online that they are about to incur charges – or letting know, once they disconnected, of the charges they just incurred. And I’m not talking about a small print at the bottom of the screen that no teenager wants to concern him/herself with when he/she’s anxious to “connect”! And these are just two simple suggestions – I’m sure there are other ways to avoid such unpleasant surprises several weeks down the road.

So what will it be? Will the AT&T and Verizons of this world continue to value short-term profits at the expense of their very own customers (and long-term relationships)? Or will they see the light and invest in proactive (and honest) communication practices that demonstrate that they truly want what’s best for their customers? Certainly, there must be an app for that!

Benchmarking Can Deliver Valuable Information – But Only If It Is Designed To Be Relevant And Meaningful

Comparing your performance to that of others’ is human nature. Knowing “how good you are” simply isn’t good enough; our ego needs that comforting and confirming reassurance that we are indeed better. Better than what? Better than whom? Better how? Doesn’t matter, as long as we’re “better”. Just ask those who grew up in the 70’s watching the adventures of Steve Austin, the astronaut worth $6 Million (remember we’re talking 1974 $$): “Better. Stronger. Faster.” We never were told who or what Colonel Austin was compared to; knowing that he was now better, stronger, and faster was all we needed to know.

The world of Customer Satisfaction measurement is no exception; after all, who doesn’t want to know “how well do we compare to Company ABC in Customer Satisfaction?” However, if done improperly, benchmarking can be meaningless and, worse, misleading. If you are about to embark on a benchmarking initiative, here are some common mistakes you should be aware of.  

1. You can’t compare across industries: Check out this article, “84 Percent of Wireless Consumers Satisfied, Said GAO: What Does it Mean?”, at http://election-2008.tmcnet.com/topics/technology-impact/articles/70788-84-percent-wireless-consumers-satisfied-said-gao-what.htm ; it shows how much scores can vary depending on the industry you’re in. Clearly, if your objective is to get a Customer Satisfaction Index in the 80’s, you’d better be selling chocolate or beer; but good luck to you in you work for a Cable or Satellite company!Yet, executives like to benchmark themselves against other well-know, reputable brands – thereby setting unreachable goals. Honestly, what are the chances that Comcast (which has essentially scored in the mid to high 50’s over the last seven years) reach a score of 80 in the next five years?
2. Differences in scales also prevent accurate comparisons: The same article highlights another issue – one resulting from the use of different scales. One survey reports an average score (the arithmetic mean of all responses) on a 0 to 100 scale, while the other reports “Top-Box” scores (the percentage of respondents who, in this case, are “very” or “somewhat” satisfied with their wireless phone service). Top-Box scores will very often look “better” (as in “higher”) than mean scores. But how do you know which “true” score reflects the better performance?
3. Different companies attract different customers: In a competitive environment, customers will “self-select”. Let’s take retail apparel as an example: Consumers who shop based on price are more likely to be found at Wal-Mart, while those who shop for quality are more likely to be seen browsing at Nordstrom. According to the American Customer Satisfaction Index (ACSI – www.theacsi.org), Nordstrom scores about 10 points higher in Customer Satisfaction than Wal-Mart – a 13% difference. Does this mean that Nordstrom is “13% better than Wal-Mart”? Probably not. While I would argue that you could get what you pay for, and that “going cheap” often results in lesser gratification (and in the end, less Satisfaction), comparing Nordstrom’s score to Wal-Mart is both “unfair” and irrelevant because there are other factors that come into play. Such factors include size of the customer base, socio-demographic characteristics of the respective customer bases, dollar amount per transaction, etc.
4. Customer Satisfaction is inversely related to market share (within an industry): Think about it. If you have only one customer, it’s pretty easy to identify his/her needs and attend to those. If you have 100 customers, it’s probably still manageable, but chances are it will be harder to consistently meet all of their expectations. Now, imagine you have 1,000,000 customers. Is it reasonable to expect that every single one of them is going to have a flawless experience with your company?
5. Focusing too much on what your competitors do better than you (and trying to catch up with them) could lead you to take your eyes off of what truly matters to your customers: You can’t be everything to everybody. Southwest Airlines understands it better than anybody else. The company offers a no-thrills service on a limited number of destinations, and you can’t select your seat in advance. But guess what? They don’t charge fees for the first two bags you check. And they have the best record for on-time arrival. Do you think their next improvement initiative should be to match Delta/Northwest’s industry-best, super user-friendly website? I think not…

Certainly, knowing how well you are doing compared to your competition is relevant. It provides context to your own scores and, if well done, benchmarking can deliver valuable competitive information. But however tempting being better, stronger, and faster might be, successful companies are those that are able to deliver a service (and/or product) that meets their customers’ expectations without overinvesting in programs or initiatives that add nothing to their bottom line.

Exceeding Expectations Could Prove Costly Mistake

Now and then, I come across articles, books or… blogs that tout the merits of “exceeding customer expectations”. Essentially, the concept goes as follows: Simply delivering a product or service at a level that meets customer expectations is not enough; instead, you need to “surprise” or “delight” your customers by providing an experience they did not expect. Only then, according to the promoters of “Customer Delight”, will you earn your customers’ eternal gratitude and loyalty. Sounds good – seems to make sense. But how realistic is it? And more importantly, is it a profitable proposition in the long run?

Exceeding Expectations With Consumers Today Raises Expectations For Tomorrow

The question that immediately comes to mind is this: What do you think your customers’ expectations for their next experience with your organization will be after you exceeded their expectations on their most recent experience? Can you do less than you just did? See, here’s the problem with the concept of “exceeding expectations”: Once you’ve delivered at a certain level, you can’t go back – and are forever tied to providing that same level of service or quality your customers just experienced. Now, how long do you think your organization can sustain such an effort? Think of your customers – how you service them and what it would take to “exceed” their expectations. In you’re a retailer, exceeding expectations usually means adding staff (either for immediate availability or allowing them to spend more time with the consumer), increasing hours of operations, or offering apparel of all styles, sizes, and colors – and having it in stock too! If you’re a hotel, it may mean providing several styles of shampoo and conditioner for oily, normal, and dry hair, allowing 10:00 AM check-in and 4:00 PM check-out, and – gulp! – providing free internet access. OK, that last one was one of those features that (hopefully) will soon become part of the standard offer. But you get the gist of it. Exceeding expectations will cost you a bundle; and it would be a big, big stretch to assume that the return on that type of investment would justify such expenses.

Hard Enough To Consistently Meet Expectations

When you think of it, isn’t it already hard enough to consistently meet customers’ expectations – when expectations are often raised by consumers’ increasing ability to share and learn about current users’ experiences with the product/service at hand? Indeed, today’s relationship between seller and buyer is now dominated by the buyer (consumer), who can educate him/herself with the click of a button about your products’ quality and features, pros and cons, price competitiveness, etc – prior to the purchase. Because there’s less that is unknown, expectations are more specific and tangible, and customers know exactly what to expect. Anything less will result in disappointment, low satisfaction, and low re-purchase intent.

Little Return For Huge Effort

But that doesn’t mean that anything more will do much for your company in the long run either. This is where the law of diminishing returns comes into play. If you meet you customers’ expectations, more likely than not, they will renew their experience with your organization next time around. Why not? You’ve provided what they needed, most likely at a cost they felt comfortable with. So why take chances? Most customers are risk-averse, and would rather go with what they already know and feel comfortable with. Sure, providing something “extra” will create that moment of “customer delight”. But will it actually result in additional future spending, when you’ve most certainly earned it by providing what the customer expected? I would argue not.

Tough To Create “Delighted” Customers

Just for a moment, put on your “customer hat” and imagine filling out a survey about your most recent experience at a retailer. Per the definition of the supporters of the consumer delight concept, to qualify as a “delighted customer”, you’ll have to answer most questions with a 9 or a 10 (if the survey uses a 1-10 scale). Not just a question here and there, but the vast, vast majority of them. How likely are you to do that? Just think about your most recent visit to Wal-Mart, Nordstrom, Macy’s, Toys R Us, Target, Dunham’s, etc. From the moment you walked in to the moment you walked out, was your entire experience there worth a “10”? The layout: 10? The store associates: 10? The merchandise: 10? The check out: 10?

And it’s not just you; if 1,000 customers are surveyed, they will be expected to do the same. Now, seriously, what do you think are the chances of that happening?

Optimizing The Customer Experience

In the end, it’s all about finding the right balance – what experts refer to as the “optimization of the Customer Experience”. Provide too little, and you’ll lose customers; provide too much, and you’ll lose your shirt. Customer Delight (exceeding expectations) is a nice and appealing concept; but for most businesses, and particularly in today’s ultra-competitive environment, meeting customers’ expectations will prove challenging enough – as well as good enough.

“Satisfaction Guaranteed”? A Powerful and Low-Cost Proposition – But How Many Times Can You Use It?

A couple of years ago, my family went for an Easter vacation in Southern California. One of the things we did was take a two-hour boat ride on the ocean, with the promise that we’d see whales – SATISFACTION GUARANTEED! And if we didn’t, guess what? We could take another two-hour boat ride for free. How enticing!

Well, we did get to see plenty of friendly and graceful dolphins… but no whales. And after spending two hours on a relatively uncomfortable boat, with little else to do on it but stare at the Pacific Ocean, we decided not to exercise our “guarantee”. When you think of it, the chances of observing whales remained miniscule. Besides, it was dinner time; and if you’ve ever travelled with three boys in their early to mid-teens, you know how unruly and rowdy they can get when they need to be fed! And who wants to deal with that?

Most Attractive When Incremental Cost Is Minimal

I’ve often remembered that experience since then, particularly when noticing the “Satisfaction Guarantee” promise on a TV screen, radio commercial, or POS display. When you think of it, it’s probably one of the most powerful and simple-to-grasp marketing messages. And under the right circumstances, it doesn’t cost a dime! Clearly, I’m not talking about the “Satisfaction guaranteed or your money back” type of deals. But rather, offers where the incremental cost of the guarantee is essentially nil to the service provider – as was the case with our boat ride. And in some sense, we were the ones who decided not to go for a second tour; so how could we hold anything against the boat operator?

“…or Your Money Back”? More Expensive, But Still The Right Thing To Do

Many retailers, such as Best Buy and Costco, have long ago understood the merits of a “no questions asked” return policy. Certainly, you’d want to minimize and keep a lid on the number of returns, which otherwise can become a very costly proposition. But for most retailers, this is a good decision in the long-run – particularly when you focus on the entire customer experience (which includes the experience with the product they just purchased), rather than just on the transaction at the point of sale.

Coming Soon To Your Local Dry-Cleaner!

The preponderance of the “Satisfaction Guaranteed” offer has never been greater. Lately I have seen it advertised at various stores within shopping malls, in TV commercials for everything from kitchen knives to hair re-growth, by companies offering lawn services and gutter cleaning services, and hair salons. Now this last one is particularly interesting: Can you actually make up for a bad hair cut?

And let’s not forget General Motors’ initiative announced this fall, where the #2 car manufacturer was offering to take back any new vehicle within 60 days following the purchase – no questions asked. (I personally think it’s a shame the initiative was short-lived and lasted only 2 ½ months, but that’s a whole other discussion).

Best Strategy Is To Provide Satisfying Experience

Thinking back, the boat ride experience left me with a mixed feeling, as I realized there was little chance I would ever get to take advantage of the “satisfaction guaranteed” offer. Rather, I felt I was the one being taken advantage of! Nonetheless, this is another sign that a growing number of companies, large and small, realize the importance of providing a fulfilling customer experience that meets (not exceeds) expectations. It’s just that some companies manage that message better than other.

But the day will come when the frequency of the “Satisfaction Guaranteed” message will make it a “given” – no longer a differentiating factor. So why not start now and focus on providing the expected quality right from the start rather than promise what you can’t deliver? After all, actions speak louder than words – which in this case means that companies providing an experience that doesn’t require some type of correction or adjustment will continue to lead their competition in terms of market share, profitability, and financial performance.

Ford May Have Improved Its Vehicle Lineup, But Customer Experience Needs To Catch Up

When our oldest son came home from college for the summer last May, it was time to add a vehicle to the family fleet. We wanted something that was safe, reliable, somewhat fun to drive but with good mileage, and could be used by any family member. That meant sports cars, SUVs, minivans, and trucks were out. We asked around, checked various websites, and in the end narrowed the choice to either the new Mazda 6 or the new Ford Fusion. We had leased a Mazda 6 a few years ago and quite liked the car again this time around; but remember, I live in Michigan, home of the Big 3, or Big 2, or … well, let’s just say that when you live in the Detroit area – particularly these days, when everywhere you go, you can see abandoned dealer lots and other signs of major economic distress – there is some pressure to support the local economy. So in the end, we chose to “buy American” (whatever that means, since the Fusion is assembled in Mexico and less than 50% of its contents are made in the US).

Vehicle Quality Is Only One Part Of The Ownership Experience

I must say, I quite like the Fusion; it has some nice features, drives well, and has generally met our expectations. It validates the overall impression that Ford has significantly improved its line up over the past few years and is able to deliver vehicles that customers actually want to drive. Unfortunately, the car itself is only one aspect of the “Ownership Experience”; a big part certainly, but one that can easily be undermined by the other significant aspect of owning a car – the dreaded (dealership) service experience.

You Think Setting Up An Appointment Is Easy? Think Again…

This morning, I called the dealership to make an appointment for an oil change and scheduled maintenance – something pretty basic, I thought. First I was put on hold for at least 5 minutes, at which point I decided to hang up and call again. This time, no one picked up and I went straight into the dealership’s overall voice mail system. I left a message, but since no one had bothered to call me back after 30 minutes, I called again – my 3rd try. This time, I was able to speak with someone in the Service Department, who simply told me to stop by whenever I wanted. Well, that sounds very friendly; however, I don’t know about you, but when it comes to dealership lounges, I am someone who likes to be in and out of there as quickly as possible. So I reiterated I wanted to set an appointment, like I do when I take my other cars for service; but I was told that for this type of service, there was no need to set one up and instead, I should just show up and hope they were not too busy, since customers are handled on a first-come, first served basis.

A Revolutionary Concept: Make It Easy On The Provider And Hard On The Customer!

Now, here’s a revolutionary concept! “Let us offer you a service that minimizes the disruption to us, the provider”, as opposed to one that “takes into account your experience and satisfaction”. Who cares if you have no idea how quickly or slowly you’ll be able to get done? This “service” is advertised on the dealership’s website as something like “We make it easy for you – no need for an appointment, we’ll get you out the door quickly”. Problem is: Their definition of “quickly” may not be the same as mine! And when I try to plan my day ahead, I like to have some notion of how long I am going to be stuck in one place or another.

Not The First Negative Experience With Ford Dealers

I had actually intended to lease a Ford Fusion a few years back – I mean, I tried really hard. I drove to several dealerships over a two-week period, each time calling ahead to make sure the cars advertised in the newspaper were actually in stock and available. But each time I was given the run-around – either some “detail” had been conveniently omitted, or the car I was interested in was actually at another dealership, or somebody had a hold on it, etc. I eventually gave up and turn to the local Mazda dealership, where I had a positive experience and signed my lease within hours. I can’t say my experience was all that much better last May when we got the Fusion, but given how desperate dealers were for business at the time, once I made it clear what it was I was looking for, it was easier to finalize the deal.

Focus On The Whole Experience, Not Simply The Transaction

In the end, it’s all about connecting the various dots (transactions) that make up the Customer Experience, rather than treating each of them as a distinct, separate, and unrelated touch point. Sure, what will drive my next purchase decision for a car will be the product itself rather than the service provided around it. But all things being equal (let’s face it, most cars within a segment tend to offer the same features and equipment level), how I am treated in the dealership might well tilt the balance in one direction rather than the other. And if Ford wants to keep my business, it will need to make some profound adjustments in its dealer network – Motor Trend Car of the Year or not.

Be Realistic When Setting A Target For Your Customer Satisfaction Score

I came across an article this week that talked about the “relevance” of Customer Satisfaction for some industries or businesses (“When Customer Satisfaction Might Not Matter, And When it Does” – http://callcenterinfo.tmcnet.com/analysis/articles/72074-when-customer-satisfaction-might-not-matter-when-it.htm). While I didn’t find the article particularly informative (basically, Customer Satisfaction is relevant in competitive markets, not so much in monopolistic conditions – duh!), it did remind me of the importance of taking into account the environment in which your organization evolves before setting up a target for your Customer Satisfaction score.

Too many times have I come across CEOs who wanted to set a specific target (usually, some unattainable score) without wanting to consider some fundamentals factors, external but also internal, that might affect the range or number a company should set as a realistic objective. What are those factors?

Competitiveness Of The Market – In A Broad Sense

It’s not just the number of competitors (suppliers) that one can turn to; the ease of switching (or conversely, the existence of switching barriers), the maturity (life stage) of the product/service, the number of customers your company interacts with, and the type of customer it attracts also have an effect – positive or negative – on your “overall number”. The table below summarizes how each of these factors typically influences Customer Satisfaction levels:

Factor	Influence on Customer Satisfaction
Number of competitors	++
Ease of switching	++
Life stage	+
Number of customers	-
Customer demographics	Varies (depending on education, gender, age, location, income level)

What’s Your Score Today?

Let’s start with where you are today. I have mentioned in another post that Customer Satisfaction is all about meeting (rather than exceeding) customer expectations. One direct consequence of this statement is that your current score should be the foundation for any future target setting. If you’re at 55, there’s no sense aiming for 80 – at least not for another five years. You might get there eventually, if your current low score is truly reflective of poor performance. Or you may not, unless you (and your competitors) can “reset” customer expectations to a reasonable level. But expecting a 25-point jump within a year would be ludicrous and irresponsible – setting yourself up for failure. 

The Human Element

The proportion of “human intervention” in the delivery of your service or product is typically negatively correlated with Satisfaction levels. That’s because humans, unlike machines, are more often than not likely to act outside of the “norm”. And when they do, it’s usually not for the better.

Think of your computer and what you would answer if you were asked to rate your overall satisfaction with its manufacturer, Chances are your answer would mostly be a reflection of how the product is functioning – as opposed to who made it. And product quality is something most companies have under control these days. So your answer is likely to be on the higher side.

Now, think about last time you went to a restaurant and what your experience was like… This time, is it mostly about the “product” (the food) or is it about the waiter/waitress? Or both? And by the way, were you seated right away or did you have to wait? Most restaurants have some training in place (albeit, sometimes basic); they will train their staff to some fundamentals and expect them to follow guidelines set up by management. But in the end, how each waiter/waitress delivers on those guidelines will depend on their personality, motivation level, professionalism, and, fundamentally, what type of day he/she’s having. And when they don’t deliver according to guidelines, more often than not, it will result in a negative experience – hence, a lower Satisfaction score.

How Do You Define Satisfaction, Anyway?

Imagine for a minute that you manage a casino, and that you want to measure “Guest Satisfaction”. The single most powerful driver of a casino’s Guest Satisfaction is whether players won or lost money. However, as a manager, you want to maximize profits, which means you want to take as much money from your guests as possible. Can you reconcile those two contradictory objectives?

What some casinos will do is measure everything except the outcome of a guest’s visit. Instead they’ll ask questions about the staff, the facility, the food, etc. – everything about the gambling experience, except its outcome. Can you blame them for this?

When Customers Are Forced Into A Relationship

One client I worked with was a national franchise of home heating & cooling services. What we found for them is that no matter how stellar their technicians and customer service agents may be, their overall Customer Satisfaction score seemed to be “capped” by the sheer fact that the service they provided was, in most cases, the result of something gone bad – a clogged drain; a furnace that wasn’t working in the middle of winter and – yikes! – might need to be replaced; a leak under the sink; a toilet that overflowed; etc.

Although the service provided by the staff was typically very good, what created the need for the service in the first place lingered in the customer’s mind and negatively affected their overall experience with our client. After all, what’s going to make you feel more satisfied: spend $200 on a water heater repair or on a nice dinner and movie?