The satisfaction and profit disconnect

“Customer satisfaction is not a surrogate for customer retention. While it may seem intuitive that increasing customer satisfaction will increase retention and therefore profits, the facts are contrary. Between 65% and 85% of customers who defect say they were satisfied or very satisfied with their former
supplier.”

–Frederick Reichheld

Questions asked at listening posts must be designed to find out whether products and services bought by satisfied customers are continuing to meet their needs.

Should existing products be adapted to respond to new needs? Should new services be added to respond to changing lifestyles?

For example, when a leading provider of baked goods saw sales begin to level off, they decided to find out why. By asking questions, they learned that most loyal customers were growing older, and becoming more concerned about fat and cholesterol in their diets. These customers were not dissatisfied with the company's products or delivery. They stopped buying the company's baked goods because the product line did not meet their needs anymore. They discovered that if the firm offered low-fat products, the loyal customers would be happy to buy them. By listening to their most loyal customers, the company determined that they should offer new products, which have become very successful.

Listening posts must be designed and used to measure satisfaction, of course, but they must also be used to measure factors that will gauge the possible defection of satisfied customers.

 

The Ritz

I was standing outside room 1036 of the Ritz-Carlton, just off the Boston Common, equipped with a room service cart with a light meal for two on it, with my trainer, Steve Posner.

I was training for a week to become a room service waiter at the Ritz for the purposes of a Harvard Business Review article I was writing, and was trying to learn how the Ritz achieves what might be called "extreme customer service" on the part of its employees.

I raised my hand to the door, going over the script in my head, pretty frightened as it turned out. I knocked on the door and said, "Good evening, in-room dining." I walked in with my cart, pushing rather than pulling it so that it kind of jiggled and tinkled and almost tipped over as I went into the room, and asked the woman in the room if I could open the bottle of water for her and help her in any way set up her meal.

And then she said, "That would be fine, if you'd like to," and then basically I stood there, hands behind my back, kind of slack-jawed and desperately trying to remember what I was supposed to do next.

Suddenly I remembered, "A-ha! Explain to them what they're receiving tonight." So I lifted off the warming tray and said, "You have a cheeseburger medium rare and a salad and beer and water." And then I stood there again.

Meanwhile my trainer, having basically given up on my ever opening the bottle of water, went over and did just that, and tried to smooth things over for me as we left the room. As we headed down in the elevator, he said, "We've got a little more training to take care of."

This was kind of my maiden voyage as a room service waiter at the Ritz, but the purpose of my going through the training and the process was really to try to find out what makes that hotel chain so successful in providing service to its customers.

They have a lot of rules, they have a very extensive training program, which they offer actually to other companies trying to offer top notch customer service. But my strongest takeaway from the week I spent learning to be a room service waiter was that empathy may be the most important aspect of providing extreme customer service.

The problem with my first trip into that room was I was thinking all about myself and not about my customer, my guest in that hotel. And the challenge over the course of my week was to get outside my own head and to get inside the heads of the people I was serving.

There was one instance where my trainer, Steve, did a wonderful thing. We were taking some champagne and pastries up to a room of a newlywed couple who would be arriving in a couple of hours. He not only was very careful in putting the rose petals around the champagne glasses, crossing the spoon — there was a lot of care given — but he was also at that very moment thinking about his own grandparents' wedding.

And he told me as we were doing this, he said, "On my grandparents' 75th anniversary, they showed pictures of their wedding. And while the pictures were old and kind of funny and from long ago, it meant something to them. And I want this experience to be meaningful to these people as well."

Empathy, getting inside the heads of the people you're trying to serve, was my strongest lesson I had from that experience as a room service waiter.

First-class customer service is all about empathy for the customer.

Observing the customer

There is no substitute for watching your customers while they are using your product or service. Get out into the field with qualified observers, and see how your customers use your product in real life. You'll find out what they like, what they don't like, and ways that they would improve your product or service. You'll be surprised to hear things you never even thought of.

For example, at a major photocopying company, observers in the field found that copy machines were usually placed in storerooms. People frequently stood on the machine to reach the highest shelves. Knowing this, product designers created a copy machine strong enough to support a person's weight.

When you go into the field, bring along observers with different backgrounds and skills. Different perspectives can provide valuable information.

Word of mouth

One of the things we are learning in the media is that the change that we're going through right now is something that is going to extend itself beyond media companies. One of the key elements we're learning in the media is that we have to pay more attention to the consumer.

The consumer has got much, much more control of the relationship than they used to and that's really going to be true in almost every business from now on. And that's one of the things digital platforms do; they match buyers with sellers — it's the reason eBay works so well, or Amazon.

You can find something you're looking for in a much easier way than you used to be able to. Any company has to worry about the fact that consumers can find information wherever they want and has to understand what that consumer wants and go after the consumer, and build a relationship with the consumer to keep them, to make them understand why they should stay with their product.

So a great example of that is a company called "Nespresso." They built a business where, 15 years ago when they started to build this business, you had to buy the coffee directly from them. They treasured that and they stayed after the consumer, wanted the consumer to have a good experience.So the consumer would call in and order the coffee by phone, even though they could get the machine at any number of stores. This phone call was the first connection the company would have one-on-one with the customer and they encouraged customers to call in and to order. And they would do what they could to get them all their canisters. But they used the opportunity to speak to them.An interesting thing happened: the Web came along and they also opened up some stores — they could have personal contact in stores. They actually built a Web site where you could order the coffee from. And a huge percentage of people moved to the Web to order the coffee. The interesting thing was they didn't stop calling though. They liked the calling experience so much that, even though they weren't buying from the phone bank, they were actually calling and asking questions about the coffee and doing stuff.

And the company, instead of cutting back on the call center and firing people and laying them off or trying to shorten the length of calls, went the other way. Invested more in it, added more people, and created what is an old fashioned social network, but the ultimate social network.You're actually talking to your consumers and customers and learn so much on a continuing basis that they encouraged their people, on the phone, to stay on the phone with customers — to talk to them more, to chat them up about new coffees that are coming and to explain how the company does everything it does.

And the business has grown dramatically. They're extremely happy with it. They have more and more customers every month. They've cut way back on traditional advertising. They believe word of mouth is what matters in that business and that social networking and all of the things that are at the heart of a consumer relationship are the heart of their business.Adapt your service strategy to the unique needs of your consumer. In the case of Nespresso, phone conversations provided the personal touch that their customers craved.

A wedge of lime

There's an interesting thing about Corona beer that a lot of people don't know about. A lot of people realize that Corona uses, in their advertising and, in fact, the way the beer is served, they use a wedge of lime in the bottle. Now, here's the story. It turns out that when this was initially being done, it was being done by people, consumers, who were consuming and drinking the beer. The people at Corona, the company — actually a Mexican company called Grupo Modelo — didn't like this.

And the reason they didn't like this is because they recycle their bottles. And this meant that every time there was a wedge in a bottle, it had to be taken out when the bottle had to be cleaned, to be reused. So they tried to initially discourage this.

And then they realized that consumers really like this ritual of putting the lime in the bottle. Since then, it's become part of the way that Corona beer gets marketed, to the point that they put it in all of their advertising.

To me, this is a wonderful example of how you learn from your customers, from your consumers, what's important to them. See, a lot of brands don't understand that a brand is more than just a logo, it's a relationship with a customer. And the customer co-creates this relationship with all kinds of rituals — in this particular case, something as simple as a wedge of lime in the bottle.

That today has made Corona beer iconic. When you see a clear glass bottle of beer with a wedge of lime, you almost don't have to see the brand name on it, you know that it's Corona.

So, great example of how you can use a consumer ritual as part of your brand, a ritual that the consumer has initiated.

When companies embrace consumer rituals as part of their brand, the customer relationship thrives

Get customer feedback

"All the smiles in the world aren't going to help you if your product or service is not what the customer wants."

–Carl Sewell and Paul Brown

The successful company is the one that meets and exceeds the expectations of its target customers. To accomplish this, it listens continually to its target customers to find out what products and services they want to meet their needs, and the way in which they want the products or services delivered. But customers are moving targets—their expectations are constantly changing. For this reason, organizations need as many opportunities to hear and respond to customer feedback as they can find. Every organization has listening posts, places where employees hear customer feedback. Organizations can create both formal and informal ways to find out how they're doing.

Communication is key

The relationship between the loyal customer and the successful organization is a dynamic, ongoing process based on constant two-way communication and responsiveness.

The difference between average and excellent organizations is how effectively management generates feedback, listens to it, communicates the information internally, and acts on it. Instead of "telling" through constant advertising and hard-sell pitches, companies must focus on "listening." Every organization already has built-in mechanisms for getting feedback, but they are not necessarily used well.