Rising Expectations

 Lately, I have found when I talk about how the game just got tougher, many businesspeople tell me the problem is really the customer, because their expectations are continually rising. The solution, they say, is to manage down these ‘unrealistic’ expectations.

But attempts to reduce customer expectations are doomed to fail. When I studied at the University of Stockholm nearly 40 years ago, the Swedish government recognised a phenomenon they called ‘rising expectations’. They had learned that whatever they did for their citizens this year was not going to be enough to keep them happy next year. In business we have yet to understand that our customers are always asking themselves, “What has this business done for me lately?”

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n short, we must dramatically improve the way we look after our customers. Minor improvements will not be enough. The key to making such a step change is to ask yourself these three mind-opening questions:

 •   What would we have to do to delight our customers?

 •   How could we improve the way we look after our customers so in six months we will be embarrassed by what we do now?

 •   Which problems do our customers have that they would just love us to solve but do not expect we will? 

If you do not know the answers, ask your team members and your customers. They’ll tell

you everything you need to know to succeed.

Businesses must dramatically improve the way they look after their customers if they are to succeed.

Customers today are outraged. A recent study suggests two-thirds of New Zealanders are typically unhappy with the service they get. Research by Colmar Brunton found that 52 percent of Kiwi customers getting a bad experience rate their rage at five or more on a scale of one to ten and 26 percent as eight or higher. University of Queensland research suggests customer rage is caused by rude, uncaring or incompetent team members.

Outraged customers progress from shock, to frustration, anger, exhaustion and hurt. Consequently, they make threats, slander the company, look for revenge or even become violent. In England, an angry customer recently drove his car through a plate glass window at Tesco. In Australia, people sent out to cut off electricity have been threatened with being shot and customers whose appliances failed have threatened to blow up the manufacturer. Give your teams a hug each day before they go out into the marketplace or onto the shop floor because they may not come back!

Of course, you may believe your organisation is an exception to the rule. Perhaps you are right – or perhaps you suffer from delusions of adequacy. One study found 75 percent of managers rated their customer service as being between good and excellent. Unfortunately, 57 percent of their customers rated it as being between good and poor.  An American study found 80 percent of managers believed they were doing a good job of looking after their customers but only eight percent of their customers agreed. Why is there such a disconnect? Studies show 67 percent of companies do not measure

customer satisfaction. Many of those that do, ask customers only about what they think is important. Also, often when managers review survey results, they are quick to look for ways to explain away the results.

To make matters worse, many managers do not understand how the quality of their customer care affects their business. An American study found that nearly 70 percent of managers did not know the cost of getting or losing a customer, or the cost of handling a complaint. In New Zealand, Colmar Brunton research found customers having a bad experience tell 13 others and 56 percent recommend the listener avoids that company. On the other hand, when they have a good experience they tell nine others and one-third recommend the company. London School of Economics research found that organisations having a large number of people saying good things about them and very few saying bad grew four times faster.

Most disturbingly, we still do not seem to get it. A newly released PricewaterhouseCoopers study found only 44 percent of 620 New Zealand managers surveyed plans to grow their business next year by improving their ‘customer focus’. Fifty-six percent are planning to grow by cutting costs, which long-term will not grow your business – or by entering new markets, which is the most expensive and difficult way to grow. Ironically, the survey also found the biggest positive impact on business performance over the last year was gained through better customer focus.

Myth Busting 2: It's Not Rocket Science

I often hear managers, who are concerned by the rising level of customer dissatisfaction say, “Why are companies providing such poor service? It’s not rocket science.”  But service excellence is rocket science! There is far more to being able to create a great customer experience than getting team members to smile and be friendly - and much of what needs to be done takes place behind the scenes.

To begin with, for the paying customer to have a great customer experience, you need policies that put the customer first. Many managers are well intended. They understand how important it is to look after their customers but inadvertently create a bad experience because they have policies that put their company first.

For example, last year before Christmas, I went to my local building supply store to buy some outdoor tree lights – not Christmas lights, just plain white ones. They had two boxes on the shelf but I knew two would not be enough so I asked if any more would be coming in. The team member looked in the computer and said there were more on order. “They won’t be in by Christmas,” he advised, “but they will be here early in January.” I said that was fine and purchased the two boxes.

At the end of January, I returned for more lights but found none on the shelf. I asked another team member whether they had come in and been bought by other customers. He checked on the computer and told me they hadn’t arrived yet. I asked when they would be coming in. He said he didn’t know. “That’s not good enough, mate,” I told him. “I’ve been waiting for several weeks already.”

He suggested I put in a special order for the lights. “That way you’ll be sure to get them quickly,” he promised. So, off we went to the special orders counter where I was handed over to yet a third team member. She collected the information needed to raise a special order and asked for a 50% deposit. I refused, saying it was bad enough I had had to wait this length of time. I wasn’t going to give them half the money now as well. “Well, that’s our policy,” she told me.

“That’s a dumb policy,” I said. “I’m not paying.”

“Well, that’s our policy,” she repeated.

“It’s still a dumb policy,” I said. “I’d like to talk to the manager, please.”

The manager came and asked what the problem was. I told him. “Well, that’s our policy, he said.”

“That’s a dumb policy,” I replied.”

“We have to have that policy,” the manager persisted.

“Is that so?” I said. “And just why would that be?”

“Because sometimes people place a special order and then when the goods arrive they don’t want them and we have to sell them.”

“Gosh, that’s really unfair,” I said. “Here you are in retail and you have to sell stuff!” I then pointed out that I wasn’t asking them to bring in something they don’t usually stock. I was only asking they bring in something they should have had on the shelves for the past six weeks. The manager saw my point and agreed to waive the deposit. I thanked him and added, “I’m in business too and the first thing you have to decide when you’re in business is whether you’ll put yourself or the customer first.”

Quick as a flash, without a moment’s hesitation he said, “Obviously you put the customer first.”

“Where have you been for the past 20 minutes,” I asked. “If you really put the customer first, we wouldn’t have had this conversation.”

This is a great example of a manager or company believing it is important to put their customers first but through their policies and processes actually putting themselves first. Now, here’s the kicker. Two months later, I cancelled my special order because the lights had not arrived. I was glad I hadn’t paid the deposit. Imagine the trouble I would have had trying to get it back!

If you believe it is important to put your customers first, review your policies an processes to make sure that is, in fact, what’s happening. If you’re not sure, ask you’re customers. They will tell you everything you need to know to succeed.

Is providing an outstanding customer experience starting to sound a bit more like rocket science?

Myth Busting: It's Just Common Sense

A childhood friend, who has just finished reading my new book, teased me by asking, “Don't you ever feel guilty about making a living from telling people common sense things they already know?” It’s a reaction I get a lot. “But it’s just common sense,” people tell me.

I always reply, “No. It’s not common sense. It makes sense but it’s not common sense. If it was, we wouldn’t live in a world where customers are outraged. We wouldn’t live in a world where every year consumer trust in the companies they deal with declines to an all time low. We wouldn’t find that in 2011 people say they expect better service than they got in 2010 but believe they are getting less.

Looking after your customers so they come back and buy more certainly makes sense. There is a growing body of evidence to show that providing good service is great for your business. One of my clients, a retailer in Australia, has found there is a strong relationship between how customers rate the service in a store and the financial performance of that store. An American study found that companies that put their customers first gained 4% more new customers, retained 4% more existing customers and increased sales to existing customers by 8%. A global study by American Express found that customers in Canada, the USA and Australia who got good service spent up to 13% more. A study by the London School of Economics found that companies that had a lot of people saying good things about them and very few saying bad things grew four times more than other companies.

Do business leaders understand that great service is good business? You probably only need call your local telephone company to find out what makes sense is not common sense.

New Book Coming Out

For those people following my blog: I'm sorry I haven't written for a while. I've been finishing a new book called Believers (www.believers.co.nz). It is a collection of columns I have written over the past five years for New Zealand Business. It will come out in early August. Back to blogging tomorrow as I start my next book called SOLD.