1. Riding the Wave of Customer
Experience: Moving From Firefighting to
Delivering Psychic Pizza
John Goodman, Vice Chairman, TARP
December 7, 2010
3:45-4:45 PM
Challenge to Developers
• Make company easy to do business with
• Understand the real causes of dissatisfaction and conduct
preemptive education
• Impact loyalty and word of mouse to dramatically increase
revenue
• What the Director of Service needs from SF apps
• What the CMO and CFO need to measure and manage the
overall customer experience
• Getting beyond the technology – making it either
transparent or a cheap delighter for both customers and
employees
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2. About TARP
• Founded in 1971—39 years of customer experience leadership
– White House Complaint Studies 1970s-80s (instigated 800#s and GE
Answer Center)
– Assisted 6 Baldrige Winners and 43 Fortune 100 Companies
– Initiated concept of ―word of mouth‖ (TARP/Coca-Cola 1978 Study) and
―word of mouse‖ (eCare and Click & Mortar studies 1999)
• Offices in Wash., D.C. and London
• Credited with developing the approach
for quantifying the impact of quality
on revenue, cost & WOM for companies
like Neiman Marcus, Toyota/Lexus, AOL,
USAA, Cisco Systems, Xerox, 3M,
National Geographic, MoMA, USO, HP,
Honda, Hyundai, Apple and Qualcomm.
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Formula For Maximizing Customer Satisfaction
DOING
EFFECTIVE MAXIMUM
THE RIGHT
CUSTOMER
JOB
RIGHT THE
+ CONTACT = CUSTOMER
SATISFACTION
MANAGEMENT & LOYALTY
FIRST TIME
Respond to
Individual Customers
Customers, donors, citizens
will:
Improved Identify Sources Use again
Product & Service of Dissatisfaction
Use or donate more
Quality
Tell others to use or donate
Conduct Root
Try your other products &
Cause Analysis services
Feedback on
Prevention
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3. Firefighting Mode
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Riding the Wave of Customer Experience
Management: Six Big Ideas
1. Staff doesn’t cause most customer dissatisfaction –
sales, products, processes and customers do
2. It is cheaper to give great service than just good
service, the revenue payoff is 10-20X the cost
3. An effective Voice of the Customer includes all kinds
of data describing the overall customer experience
4. People are still paramount – make the front line
successful with flexibility and clear explanations
5. Deliver technology that customers will enjoy –
delivering psychic pizza via any channel
6. Sensibly create remarkable delight
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4. Employees Do Not Cause Most Customer Dissatisfaction
The majority of customer dissatisfaction is NOT caused by employee error or attitude but
by products that cause disappointment and broken processes*
Customer expectations Customer Employee
must be set and they must 20%-30% 20%
be educated on how - Wrong expectations- Fails to follow
-Fails to follow
to avoid problems - Customer error policy
and surprises. policy
-Attitude
At least Company 40%-60% Poorly designed products,
30% of - Products and services Processes, and marketing
contacts are don’t meet expectations create most unmet
preventable
- Marketing miscommunication expectations. Further,
- Broken processes employees are often not
equipped with effective
*Finding based upon TARP analysis problem cause responses to problems.
data in over 200 consumer and B2B environments.
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What is Easy to Do Business With?
• Know where to look and find it
• Get immediate access to it
• Eliminate bureaucracy
• Get my answer and ideally anticipate my next
question
• Follow through including notification of exceptions
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5. TARP’s Tip Of the Iceberg
Three quality
actions:
1. Extrapolate to
market place
2. Quantify word
of mouth
impact
3. Break down
barriers to
feedback
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Customer Expectation: Key Factors Driving
Satisfaction
• No Unpleasant Surprises
• If Trouble Encountered
– Accessibility, Taking ownership, Apology
– Clear, believable explanation
– Creating an emotional connection rather than just
courtesy
– Money is often not the best solution
– Timeliness and Keeping promises
• Handle on First Contact Results in 10% Higher
Satisfaction and 50% Lower Cost
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6. 1. Prevent Problems By Setting Proper Expectations
• Welcome packages
• Welcome calls
• Encourage questions before customers get
into trouble
• Confirmations and progress reports
• Reconnecting
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2. Get CFO Support by Quantifying the Impact
of Problem Experience on Loyalty
I II III IV
Question/problem Contact Contact Market
experience behavior handling impact
% Very % Definitely % Definitely
Word
Satisfied with Will Keep Will of
No ABC Purchasing Recommend Mouth**
Question/
problem 81% 82% 69% ---
experience
70% Satisfied1
82% 86% 74% 1.7
44%
Customers Contactors Mollified2
52% 42% 42% 4.4
34% 32%
Question/
Dissatisfied3
problem 35% 22% 32% 5.5
23%
experience*
30% Non-
contactors
40% 42% 39% 2.9
66%
* In the past 6 months
**Average number of friends/colleagues told about the experience with ABC
1 Top box (i.e., I was completely satisfied)
2 Second and third box (i.e., I was not completely satisfied, but the action taken was acceptable and I was not completely satisfied, but some action
was taken)
3 Fourth and fifth box (i.e., I was not at all satisfied with the action taken and I was not at all satisfied because no action was taken)
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7. Estimate Customers and Revenue At Risk
Demonstrating financial impact with the CFO, CMO and the General Counsel
x x x
50% Most
Satisfied Repurchasing = 2,000
25% 30% Some Not
Complain Mollified Repurchasing = 6,000
200,000
Customers 20% Many Not
with Dissatisfied Repurchasing = 9,000
Problems
75% Do Not Some Not
Complain Repurchasing = 37,500
Total Customers At Risk = 54,500
At $1000 per customer, $54.500,000 at risk
Three strategies: Prevention, Solicitation of Complaints and Improved Response
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Show The CMO That Negative Word Of Mouth
Can Trump Marketing
Example calculation of potential impact
10% Tell
two = 2,000
delighted
10,000
customers 70% Tell
one = 7,000
satisfied
20% Tell = -12,000
dissatisfied six
-3,000
20% dissatisfaction can counter 80% satisfaction
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8. Great Service Is A Word of Mouth
Management Mechanism
Example calculation of potential impact
10% Tell
two = 2,000
delighted
10,000
customers 80% Tell
one = 8,000
satisfied
10% Tell = -6,000
dissatisfied six
4,000
10% decrease in dissatisfaction results in net positive WOM
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Problems Raise Sensitivity to Price,
Hindering High Margins
Percent of customers dissatisfied with fees rises with number of problems.
90%
80% 74%
70%
60%
46%
50%
40%
30% 22%
20% 10%
10%
0%
No problems 1 problem 2 to 5 problems 6 problems or
more
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9. 3. Create a Unified Voice of the Customer
• Customer surveys
• Customer contact and interaction data
• Internal operations process and quality data
• Employee input
• Together, these elements are used to prioritize
opportunities for product and service quality improvement
Surveys of Customer Internal process
customer + + = End to end view
contact and and quality data and economic
satisfaction and interaction data and employee
loyalty priorities for
input action
Take The Role Of Chief Customer Officer
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Set Priorities Based on Revenue Damage
Overall Problem % Won’t % Customers
problem experience freq recommend potentially lost
(45%) (%)1 Will not2
Meeting promised delivery
27 10.5 1.3
dates
Product availability within
23 0.0 0.0
desired time frame
Meeting commitments/follow
21 30.0 2.8
through
Equipment/system fixed right
20 22.2 2.0
first time
Adequate post-sale
19 10.0 0.9
communications
Returning calls 16 33.3 2.4
Minimum customers at risk 9.4%
1 Based on multiple problem selection
2 Based on will not repurchase only
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10. 4. Create A Culture of Success
• Stellar Leaders and Culture Are Great, But..
• Tools
– Issue driven flexible solution spaces
– Clear believable explanations
– Tools and information to get it done now
• Training – ongoing training and story telling
• Motivation – celebration via victory sessions
& promotability
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5. Deliver Technology People Enjoy
• Why people hate technology
– Wastes my time
– Gets in the way – phone trees
• Why they love it
– Anticipates
– Simplifies
• Delivering psychic pizza
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11. 6. Delight: Heroics and Constantly Exceeding
Expectations is NOT Necessary Or Even Smart
Average lift to repurchase or
Delight experience
recommend (Top Box)
Service beyond expectation - heroics 12%-14%
No unpleasant surprises 22%
Friendly 90 -second staff interaction 25%
Personal relationship over months 26%
Tell me of new product or service I 30%
can really use
Proactively provide information on 32%
how to avoid problems or get more
out of your product
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Ten Myths About Service and Benchmarking
1. Always exceed customer expectations
2. Answering the phone really fast is the key to success
3. People always prefer talking to people
4. The customer is always right
5. Complaints are down, things are getting better
6. Employees are the cause of most dissatisfaction
7. Price and cost cutting is the key to success
8. We’re better than the average in our industry – that’s great!
9. We’re at 90% satisfaction – let’s declare victory!
10. We measure Net Promoter so we’re done!
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12. Mandate for Developers
• Make company easy to do business with
• Eliminate or preempt the causes of dissatisfaction
• Aggressively solicit customer frustrations
• Facilitate quantification of the impact on loyalty and word of
mouth
• Provide flexible solutions, rationales and follow-through
• Provide the Voice of the Customer the CMO needs to
understand and manage the overall customer experience
• Get beyond the technology – make app either transparent or
a cheap delighter for both customers and employees
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Summary
• Communicate to set proper expectations and educate to avoid problems
• Aggressively solicit complaints and understand the non-complaint rate
• Create a unified VOC that quantifies revenue and WOM at risk
• Make the front line successful with tools and guidance
• Deliver psychic pizza
• Delight sensibly
• Better a Small Success Than a Big Disaster:
Practice Continuous Experimentation With Measurement
• Outlined in detail in Strategic Customer Service published by AMACOM
• jgoodman@tarp.com or 703-284-9253
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