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simple to measure, it does not necessarily explain business outcomes well nor are
the findings of an NPS study easily managed. Since we manage what we measure,
it is quite important for organizations to measure the right elements, and by meas-
urement we do not simply mean a customer satisfaction index or a NPS score, but
ensuring that all that is measured is aligned to the firm’s and brand’s strategy.1
It
must be mentioned here that the relationship between customer satisfaction and
business outcomes is often not easy to understand (Keiningham, Gupta, Aksoy
Buoye, 2014), because of the large number of imponderables involved. The rela-
tionship is far more complex than it is made out to be and often unfolds over a
long period of time (Chandra Rao, 2012).
My belief is that the approach to customer satisfaction, including its measure-
ment, is going to change in the near future. I see a number of seemingly unrelated
events across the globe. However, when I look at all these events through a certain
lens, I see a distinct pattern emerging, that of ‘On Brand Service Delivery’(Barlow
Stewart, 2004). On brand service delivery is about ensuring that the brand
experience is completely aligned to the brand promise. Let us look at some of
these discrete events that define this pattern.
1. A study of mobile service brands by Nielsen in Asia, indicates that, those
brands which are strong on both brand equity2
and customer satisfaction
simultaneously, have 14 points higher market share compared to those mobile
service brands that were strong either on brand equity or on customer satisfac-
tion (but not both). Interestingly, this same study indicated that while telecom
service providers are well differentiated on brand equity, there was very little
difference on customer satisfaction. This meant that most telecom service
providers offer an undifferentiated customer service or experience.
2. If one reviews customer satisfaction questionnaires (Chandra Rao,
2012), one would find that in any sector, there are minor differences
between the questionnaire of one brand of service provider and another.
This indicates that most companies today are offering and measuring ‘com-
modity’customer service. The questionnaires are mostly similar, especially
in the factors (themes) and attributes that are covered in the survey.
3. J.D. Power IV, in his book (Denove Power, 2006) on customer satisfaction,
provides an interesting fact about the Toyota Camry. Toyota found that in
2004, about 3 million people walked into their showrooms to buy a car but
about half walked out to buy a competitor product. They found that it was not
for reasons of product quality. Some bought other brands because of price and
some for other reasons. But Toyota found that nearly 15 per cent of customers
did not find the sales experience up to the mark. The book quotes ‘after years
of gaining market share on the shoulders of product quality, Toyota now real-
izes that future growth will depend on providing a sales experience that
matches the quality of its vehicles’. Clearly Toyota understands the impor-
tance of aligning its service quality to its product/brand quality.
4. An EY Asia Pacific Retail Banking study (EY Asia Pacific) suggests
that the customer satisfaction scores of most banks is going up. Yet, the
share of the wallet is decreasing, possibly because most customers are
unable to differentiate one bank from another, based on quality of service,
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and hence, customers end up choosing a bank/product based on charges,
fees or interest rates.
5. Customers who visit Disney Land sometimes have to stand in long queues
to buy tickets for a ride. Yet, these customers are not dissatisfied when they
walk out of Disney Land because of the delivery of Disney’s promise of a
‘magical experience’. In order for customers to truly experience the
‘magic’, Disney makes a lot of effort to deliver the same at every moment
of truth. Consider for example, the hitching posts (Connellan, 2003) in the
streets which are cleaned every night so that they look bright and shiny
every morning. Imagine, if so much attention is paid to the hitching posts,
the kind of detailing that goes elsewhere into the making of the Disney
experience truly magical. For example, Cindrella’s castle has bigger stones
at the bottom than those at the top. This makes the castle look much bigger
than it actually is (Connellan, 2003). All this detailing ensures that the
experience and feel is truly ‘magical’, as promised. Disney, it appears, is so
obsessed with the detailing that the same customers see different things
from the same painting or mural, every time they visit Disney (Connellan,
2003)! Thus making every visit ‘magical’. It is not just about the detailing,
it is also about people. The cast (as Disney employees are called) are
encouraged to drop whatever they are doing and offer to help, when they
see a guest (as Disney calls its customers) in need (Connellan, 2003). If
they see guests puzzling over a map, they offer to help. If someone is try-
ing to take a group photo, they offer to take a picture so that everyone can
be in the picture. It is such delivery of the magical kingdom promise that
makes customers go back to Disney Land over and over again! Long
queues matter less to them than the magical experience! Disney’s service
is ‘On Brand’.
6. The SouthwestAirlines brand promise is about fun and low prices (Freiberg
Freiberg, 1998). In order to keep prices low, Southwest Airlines does not
provide passengers with meals, does not provide baggage transfers, does
not offer reserved seats and is very focused on short hauls and secondary
airports. In order to keep their service ‘fun’, they take care to hire employ-
ees with a certain attitude. These ‘fun employees’ effectively are able to
engage their customers on every flight. The employees crack jokes, do fun
things and all these are spontaneous because of the kind of employees that
are recruited and the culture that Southwest Airlines nurtures. Southwest
Airlines knows that it’s not just about delivering the promise but also about
not doing anything that does not relate to the promise!
7. Some organizations are creating a new role in their structure—Head of
Customer Experience, distinct from Head of Marketing. Here is a descrip-
tion of this role from an online advertisement of one company.
Following an extensive review of the brand, we are about to relaunch our brand
with a new positioning. The Head of Customer Experience will play a vital role
in ensuring that we place the customer and the insight central to all our business
decisions and that all our processes, procedures, and initiatives that touch the
customer adhere to the brand positioning. (emphasis added)
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Why Is This Happening?
Over the past several years, managers have been largely preoccupied with improv-
ing operational effectiveness resulting in the rise of the quality movement, the
six-sigma movement, etc. A natural fallout of these improvement efforts was the
overall enhancement in customer satisfaction.
Organizations are also benchmarking themselves with their competitors, not
only within their markets but also with companies in other regions. So when a
company makes a change in any of its processes other companies quickly follow
those best practices. This tendency is resulting in ‘raising the bar’ when it comes
to service delivery at customer ‘moments-of-truth’.
Often, the vendors/partners of service providers in any industry are common,
for example, network equipment providers in the telecom space, software compa-
nies in the banking space or management consultants. These vendors learn from
one organization and then transfer that very knowledge to another organization.
This results in similar equipment, processes and advice to organizations.
As a result, customer satisfaction of most organizations is going up. However,
in the process, there is hardly any differentiation in the services delivered from a
company in one sector to another.
Another recent global Nielsen study of mobile service providers and retail
banks indicates that the standard deviation of brand equity is much higher than the
standard deviation of customer satisfaction. This suggests a high variation in
brand equity but low variation in customer satisfaction. The customer satisfaction
index was also found to be higher than the brand equity index for each brand.
Importantly, this pattern was observed in both the categories (mobile services and
retail banks) and in each of the 11 countries in which the study was conducted.
The inference is clear—while service providers are able to differentiate them-
selves on ‘brand’in the eyes of the customer, they have not been able to do a good
job at differentiating themselves on service delivery. Most service providers in
mobile service and retail banking seem to be offering what we are now calling a
‘commodity service’.
This is best explained in the words of Michael Porter in his path-breaking arti-
cle in HBR (Porter, 1996).
After a decade of impressive gains in operational effectiveness, many companies are
facing diminishing returns. Continuous improvements have been etched on manager’s
brains. But its tools unwittingly draw companies toward imitation and homogeneity.
Gradually, managers have let operational effectiveness supplant strategy. The result is
zero sum competition, static or declining prices, and pressures on cost that compromise
companies’ ability to invest in the business for the long term.
The challenge for most organizations is not to reduce their efforts on operational
effectiveness but to do this in a meaningful manner that will allow an organization to
truly differentiate itself based on service quality. How can an organization do this?
Every organization exists because it creates some value or benefit for its
customers. These values needs to be (a) relevant to the customer; (b) act as a
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differentiator from competition; and (c) should also be sustainable in the long run.
This warrants for a clear positioning and is in the realms of strategy.
However, creating the right values is not good enough for success. The organiza-
tion needs to deliver these values/benefits to its customers at every touch point, at
every interaction that the customer has with the service provider. Simply put, the
organization needs to deliver what it promises—effectively and efficiently.
Effectively—in the context of ensuring that the customer experiences that the ser-
vice provider delivers is in line with all that is promised. Efficiently—in the context
of delivering these services quickly, ‘first time right’ and at low cost/no wastage.
The outcomes to an organization that creates the right values and delivers
them well cannot be over-emphasized. It translates into high brand equity and
therefore profits which in turn results in an increasing base of loyal and bonded
customers (Figure 1).
Figure 1. The Promise—Delivery Continuum
Source: Author.
This also means that the organization is not only well-differentiated in the
promises it makes, it is also well-differentiated in the way it delivers service.
Whenever a customer satisfaction report on the retail sector is made public,
Walmart often finds itself at the bottom of the table (Keiningham et al., 2014) and
then all the gurus talk about the actions that Walmart must take to improve cus-
tomer satisfaction. On the other hand, Walmart is one of the most profitable retail
companies. If one looks at it from Walmart’s point of view, they probably do not
care (and thank god for that!). This is because Walmart’s promise is ‘everyday low
prices’. They do not promise great service and ‘everyday low prices’ is the reason
customers walk into Walmart and the organization delivers this consistently day
on day, year on year. They are able to do this because all their systems, processes,
people are geared to delivering the lowest price possible. Walmart has made a
clear and definite promise and ensures that their promise is delivered effectively
and efficiently.
This entire concept seems intuitive and simple, yet implementing this concept
remains a challenge. One reason is the organizational structure. Most firms have
a marketing head that drives the positioning or strategy and they also have a head
of Customer Service that drives service quality or service delivery. These two
positions rarely work together; often they compete with each other for resources/
budgets and also for the next promotion to CEO/MD. My experience is that
marketing often blames customer service for poor service delivery leading to
customer churn. Similarly, customer service blames marketing for promising the
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earth to acquire customers, promises that cannot be met. For a brand promise to
convert into a differentiated brand delivery there is a need for these two functions—
marketing and customer service—to collaborate with each other. The other key
reasons for non-delivery of brand promise revolve around benchmarking, common
vendor pool and excessive focus on operational effectiveness as discussed earlier.
Having said the above, the most critical reason in my opinion, is the way an
organization views the strategic importance of service quality. Janelle Barlow and
Paul Stewart (2004) have suggested that organizations can follow four types of
service strategies. We have adapted these service strategies without losing their
essence and Figure 2 explains the same:
Figure 2. The Four Service Strategies
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Organizations that look at service as a cost or service as a necessity will never
end up building great service companies. Those organizations that view service as
a competitive edge focus their energies in improving customer satisfaction.
However, over time, while these companies do indeed improve customer satisfac-
tion, they do so at the cost of poor differentiation compared to competition. One
can see this in sectors such as mobile phone services, automobiles, retail chains
and consumer banking. Hence despite improving customer satisfaction, these sec-
tors end up competing on price and promotions.
Those organizations that view service delivery as an expression of the brand are the
ones that will not only improve customer satisfaction but will also be seen as being
‘different’ compared to its competitors. The outcomes are stronger brand equity, higher
levels of customer loyalty and brand ambassadors leading to higher profits and growth!
How can an organization bring about such alignment?
A Recommended Approach
In order to be able to align the brand promise with the brand delivery one needs a
mechanism to be able to do that. The Promise–Delivery Matrix (Chandra Rao,
2012) is one such mechanism that can help an organization bridge the gap between
promise and delivery (Figure 3).
Figure 3. The Promise–Delivery Matrix
Source: Author.
In this matrix, the benefits or brand promise is listed on the Y-axis. In the
above telecom example, the benefits offered by the service provider to its
customers are ‘Always Available’, ‘Convenience’, ‘Speed’, ‘Friendly Employees’
and ‘Entertainment’. On the X-axis, are listed all the points of interaction with the
customers.Intheaboveexample,themomentsoftruthare‘Network’,‘Activation’,
‘Recharge/Billing’, ‘Call Centre’, ‘Store’ and ‘VAS’.
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Every cell in the matrix contains attributes that are specific to a benefit and
specific to a moment of truth. For example, in the call centre area, one could have
attributes such as, ‘The call centre is open 24 hours a day’ (availability), ‘one can
connect to the call center in the first attempt’ (speed), ‘the call centre executive
resolved my problem in the first call’(speed), ‘the call center executive was warm
and friendly’ (friendly staff) and so on. The brand promises of the telecom com-
pany are now being aligned to the delivery at the call centre and when surveying
customers this is what is asked in the research questionnaire as well. All the other
cells can be filled up in a similar fashion. In some cases, the cells could be empty,
for example network and friendly employees.
The mobile service provider can now measure and manage the alignment of the brand
promise with the brand delivery. This will not only enhance the brand equity of the
mobile service provider but also differentiate its service from those of its competitors.
The mobile service provider also no longer is focused on improving operational excel-
lence but has brought back strategy into service delivery.
Since, the telecom company is now measuring how its promises are being deliv-
ered; it will also be able to track, across time periods, the impact of each of the
benefits/values on brand equity. From the matrix illustration above, the organiza-
tion could very well find that the contribution of ‘Entertainment’ is going up over
time while the relative impact of ‘Always Available’ is going down or vice versa.
In a similar fashion, the service provider can also track the impact of each of the
touch points (‘Network’, ‘Activation’, etc.) on brand equity, across time. Besides
the impacts, the firm can also track how customers are rating each of these benefits/
values and touch points compared with its competition. Using the impact and per-
formance information, the organization can define its future direction. This kind of
approach can provide clear and insightful information to organizations.
In order for the organization to be able to deliver value in line with the brand
promise, the organization will need to make some structural changes or bring in
mechanisms that lead to better co-operation between the teams that create the
value and the teams that deliver that value (essentially marketing and customer
service). In the absence of such cooperation, organizations will continue to meas-
ure and manage ‘Commodity Service Quality’ as against ‘On Brand Customer
Experience’. The structural or other changes could relate to common KPI’s for
marketing and customer service (brand equity, alignment index—for example). It
could mean compulsory job rotation—from marketing to customer service and
vice versa at senior levels. It could mean that key policies of the company (includ-
ing recruitment, training, advertising, investments) are aligned to the brand
promise. It could mean high level monthly alignment meetings chaired by the
COO or CEO.
Whether organizations like it or not, they will have to move towards an ‘On
Brand Customer Experience’. Organizations cannot view service delivery or
customer experience independent of the brand and only as improvements in
operational excellence; organizations will need to bring strategy back into
service delivery by ensuring that the brand promise is delivered at every
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interaction point with the organization. Indeed, the management and measurement
of customer satisfaction will no longer be about just plain satisfaction but about
relevant satisfaction or satisfaction in the context of truly aligning the experience
with the brand promise. In essence—how well the brand promise is internalized
into the actual delivery of the service, at every customer interaction or moment
of truth. Most organizations today manage customer satisfaction from an inside–
out view. Hence, the focus is usually on improving processes, systems, training
of people, etc., since the lens of the organization is on the delivery points such as
the call centre or the store rather than on the customer’s needs. However,
customers do not care if an organization has a call centre or not. Customers do
not care whether the firm has 500 stores or 1000 stores. What customers want are
benefits like convenience or availability or speed or problem resolution. When
the organization looks at customer satisfaction as an ‘On Brand’ customer
experience, the lens of the organization is ‘outside–in’. The starting point
becomes the customer. The focus of the organization is not just on improving the
processes but improving, reinforcing and enhancing the benefits or promises
such as convenience or speed that the organization makes to its customer. This
approach needless to say makes the organization customer centric and as we all
know such an approach has a positive impact on the brand equity and hence
loyalty and profits.
To conclude:
1. Organizations need to clearly define what it will promise to its customers.
The promise(s) should be relevant to its customers, well-differentiated
from competition and sustainable.
2. However, this by itself does not help the organization. The organization
needs to deliver these promises at every touch point with the customer—
effectively and efficiently. In order to manage this, the firm will need to
redefine the way it measures customer satisfaction to ensure that the meas-
urement revolves around the alignment of delivery to the promises made.
The promise–delivery matrix is a tool that can help organizations build the
alignment.
3. The organization needs to communicate the promises it makes to its cus-
tomers in a consistent manner. The communication could also include
aspects that the service provider will not offer its customers (as in the case
of Southwest Airlines).
4. The benefits of such an approach are immense to any organization. It
means a customer-centric organization, it means an organization that is not
only able to differentiate itself on the promises it makes but also on its
experience or service delivery and therefore it means stronger brand equity
leading to loyalty and profits.
Notes
1. For emphasis, some key words and sentences have been italicized by the author.
2. Nielsen has a proprietary way of measuring brand equity amongst consumers/customers.
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