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© 2010, © 2011 LARRY BROUGHTON, All rights reserved.
I am the customer!
You’re not just an entrepreneur, leader or executive – you’re a consumer. With that in mind, how often do you use your own insights to fuel improvements in your business? It helps to imagine what you, as a consumer, would expect from your own business – from excellent customer service right through to the look and feel of your brand and marketing initiatives. How often do you challenge your team (and yourself for that matter) to think from your client & customers’ point of view? It’s in the small, daily actions and interactions that your organization builds its profile and reputation in the community. The next time you face an organizational challenge, or you want to rejuvenate the mood in your organization, think like your customer.
OK, so it’s our nature to want it all. As a consumer, we want stellar services and products, we want them cheap, and we want them NOW! As an aspiring entrepreneur, or rookie business owner, we really want to meet all those expectations.
Here’s the rub:
I have a coaching client named Michael, who has allowed me to share this with you. Michael has a great product idea that he’s bringing to market, that I’m convinced you’ll all be hearing about. There are several similar products available, but he’s been frustrated that they’re too expensive for what you get, they wear out easily, they just aren’t very aesthetically pleasing, and custom orders take weeks for delivery.
When he shared his value proposition with me that he wants to deliver an exceptional product; 10% cheaper than the competition; world class, US-based customer service; in-stock items delivered in 24 hours, and custom orders delivered within 72 hours, guaranteed; he could see the grimace on my face through my Skype video camera.
He immediately asked, “What’s wrong? I know I can capture market share [with this approach].”
“Well,” I said, “it’s a nice dream, but we rarely experience all three sides of ‘the triangle’ at any one time. You may be able to deliver, but at what cost?” Michael had not heard of “The Law of the Impossible Triangle.” Which reminded me that I should share the concept with you, too. The bottom line: reality sucks, sometimes.
The Law of The Impos
sible Triangle (also known as The Triangle of Truth, The Quality Triangle, The Reality Triangle, and others) is that you can expect to obtain two out of three (Cheap, Fast, or Good), but you’ll be sacrificing the third.
If you want something that’s fast and cheap, be prepared to lower your expectations about how good it might be. Lower pricing means lower priority and fewer resources to delivery on the quality. Good takes time. Good requires additional resources and expertise–read “more money.” If you want something cheap and good, you’re not going to get it very fast; and finally, it you want something of good quality, and you want it fast, it’s not going to be cheap.
Restaurants struggle with this dilemma everyday…fast food restaurants want us to believe that we’re getting the highest quality meals available, quickly, and inexpensively. Hey, I love McDonald’s Double Cheese Burgers and large fries as much as anyone, but come on, those aren’t the highest quality calories I’m consuming for fuel.
Michael pushed back for a little bit, assuring me that “you don’t understand”–God bless him. “Have you run the numbers on this yet, Michael? Won’t you need a larger, better trained, more costly team to produce these results than your competition? Why aren’t your competitors doing this now?”
After the initial sting wore off, we devised a plan to develop a product that is, indeed, superior to others on the market, it’s certainly more attractive, and it’ll be delivered quickly. With the pent-up demand for these attributes, I was sure we’d find our niche and wouldn’t need to sacrifice on the price point. So, we’ll exceed expectations on the GOOD & FAST elements, and expect consumers to pay a premium for an exceptional product.
We developed an on-line survey using the FREE version of SurveyMonkey.com to query the top 100 Centers Of Influence in his industry to get specifics on potential consumer
wants, demands, pricing, delivery options, etc. Michael now has a provisional patent on his improved product, he’s meeting with a “competitor” to collaborate on a joint product (utilizing their infrastructure and manufacturing facilities), and has pre-orders waiting for the product launch (at a 20% premium over the highest priced competing product)!
All this with bigger margins…I can hear the cash register ringing from here.
Don’t be seduced by The Impossible Triangle! Reality is your friend.
It doesn’t happen often, but I just recently received an email from a disgruntled guest at one of our hotels. We absolutely dropped the ball, and fell short of her expectations. Thank goodness I was able to reach her on the phone, and able to turn things around…pheww! She’ll be staying with us again next month.
How many customer complaints does your business receive each year? Surely they exist, and they’re certainly more expensive than most folks realize, or want to admit. For many reasons (including fear of what we might learn should we ask, and the systemic challenges of implementing customer survey programs), most incidents of disgruntled customers aren’t even recognized. Most organizations only hear from 5% of those customers who are dissatisfied (for every complaint, there are 20 more we don’t know about).
Of those who are dissatisfied and have their complaint resolved satisfactorily, 85% will continue to use our product or service and will become our cheerleaders by referring us to others. If left unsatisfied, the same 85% will never return, but rather become “jeerleaders” by actively bad-mouthing us to other potential customers.
There’s a direct and measurable cost involved in leaving disgruntled customers with unresolved product or service issues. There are also significant potential gains in getting more of these customers to tell us they’re unhappy, and resolving their complaints to their satisfaction.
If we had fifty disgruntled customers and did as most of the world does in dealing with them (neglect them), we’d hear from only two or three. If we did a great job of resolving their complaints, we’d continue to get business from two of them. If the value of our average customer were $10,000 per year in revenue, resolving these issues would be worth $20,000 per year. If our average customer stays with us for ten years, the lifetime of the value of those two customers is $200,000 in revenue.
What if we could somehow get all fifty disgruntled customers to complain by actively seeking input, and then we were able to resolve their complaints? In that case, we’d retain forty-two of them (85%), or $420,000 in terms of annual revenue ($4,200,000 over the ten year average lifetime). Same business, same customers—but, if we totally ignore them all, we lose their sales revenue and will have to spend marketing dollars to replace the lost business—just to stay even.
If we only take care of those we hear from, we’ll retain their $20,000 in annual revenue, but if we learn of and satisfy the others as well, the potential gain is 20 times greater—a 2,000% increase. What else could we possibly do to increase revenue by $420,000 per year without adding new customers? And keep in mind; this resuscitated revenue stream does not include sales from the positive referrals these forty-two customers send our way.
The bottom line: it’s clear that there’s real profit potential in reevaluating our attitudes towards dissatisfied customers with legitimate grievances. Increased profits mean increased opportunity to positively impact the lives of our team members, our families, and our communities.
Address the grievance. Go for the gold!
Customer Service is not a department, it’s an attitude!
My biggest gripe about the business world is experiencing poor customer service. I just can’t stand it, and none of us should have to. Maybe that’s why it hurts so much when we fall short in our organization. I can’t help thinking this has something to do with people not being happy, not caring enough for the client on the other end of the phone/counter, or simply being overwhelmed. Have you ever witnessed this in your own organization? And how do you deal with it? Consider this when hiring: attitude is more important than experience. How about this? For those folks who are not cutting it, cut them loose; and reward team members who are meeting your expectations to reinforce their behaviors. Is your organization able to boast about exceptional customer service?
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It doesn’t happen often, but just yesterday I received an email from a disgruntled guest at one of our hotels. We absolutely dropped the ball, and fell short of her expectations. Thank goodness I was able to reach her on the phone, and able to turn things around…pheww! She’ll be staying with us again next month.
How many customer complaints does your business receive each year? Surely they exist, and they’re certainly more expensive than most folks realize, or want to admit. For many reasons (including fear of what we might learn should we ask, and the systemic challenges of implementing customer survey programs), most incidents of disgruntled customers aren’t even recognized. Most organizations only hear from 5% of those customers who are dissatisfied (for every complaint, there are 20 more we don’t know about).
Of those who are dissatisfied and have their complaint resolved satisfactorily, 85% will continue to use our product or service and will become our cheerleaders by referring us to others. If left unsatisfied, the same 85% will never return, but rather become “jeerleaders” by actively bad-mouthing us to other potential customers.
There’s a direct and measurable cost involved in leaving disgruntled customers with unresolved product or service issues. There are also significant potential gains in getting more of these customers to tell us they’re unhappy, and resolving their complaints to their satisfaction.
If we had fifty disgruntled customers and did as most of the world does in dealing with them (neglect them), we’d hear from only two or three. If we did a great job of resolving their complaints, we’d continue to get business from two of them. If the value of our average customer were $10,000 per year in revenue, resolving these issues would be worth $20,000 per year. If our average customer stays with us for ten years, the lifetime of the value of those two customers is $200,000 in revenue.
What if we could somehow get all fifty disgruntled customers to complain by actively seeking input, and then we were able to resolve their complaints? In that case, we’d retain forty-two of them (85%), or $420,000 in terms of annual revenue ($4,200,000 over the ten year average lifetime). Same business, same customers—but, if we totally ignore them all, we lose their sales revenue and will have to spend marketing dollars to replace the lost business—just to stay even.
If we only take care of those we hear from, we’ll retain their $20,000 in annual revenue, but if we learn of and satisfy the others as well, the potential gain is 20 times greater—a 2,000% increase. What else could we possibly do to increase revenue by $420,000 per year without adding new customers? And keep in mind; this resuscitated revenue stream does not include sales from the positive referrals these forty-two customers send our way.
The bottom line: it’s clear that there’s real profit potential in reevaluating our attitudes towards dissatisfied customers with legitimate grievances. Increased profits mean increased opportunity to positively impact the lives of our team members, our families, and our communities.
Address the grievance. Go for the gold!
