Meeting Expectations Is Not The Goal
May 29, 2009 9 Comments
There was a thought-provoking article on BusinessWeek.com called ‘Meets Expectations’: The New ‘Exceeds Expectations’ which discusses research from the Corporate Executive Board. Here’s a key excerpt:
However, new research from the Financial Services Practice of The Corporate Executive Board finds that the pursuit of customer delight can actually negatively affect profitability and have diminishing loyalty returns. The key takeaway? Financial institutions that meet rather than exceed customer expectations maintain a profitability advantage of four percentage points.
My take: Since I did not conduct this research or see any of the analysis, it’s hard to discuss the findings. But I do want to discuss the implications.
First of all, it’s clear that within most normal ranges of activity, improved customer experience correlates to higher loyalty. And this is especially true in banking.
But even if “meeting” expectations may be appropriate, it doesn’t make sense to aim at just meeting customer expectations. That’s like a baseball player seting his sights on becoming a mediocre hitter. Companies that regularly meet customer expectations generally have a culture and a corporate desire to exceed customer expectations. So you need to separate the results from the desire. If you aim to be mediocre, you’re likely to end-up being sub-par.
This reminds me of a quote from Colin Powell:
If you are going to achieve excellence in big things, you develop the habit in little matters. Excellence is not an exception, it is a prevailing attitude.
But I absolutely agree that no company, financial services or otherwise, should try and make every interaction a memorable, delightful experience. I recently touched on this in a post about call waiting times. Companies need to understand that different interactions have different impacts on different segments of customers. So the first place to invest is in improving the “moments of truth” for key segments.
And when you think about how to invest in customer expectations, the Kano Model does a good job of framing what you need. Make sure you have all of the “must-be” attributes, dial up the “one-dimensional” attributes to meet your goal, and consider throwing in some unexpected “attractive” attributes.
At the end of the day, companies need to have a business-centric, thoughtful approach to customer experience. My suggestion, follow the three principles of Experience-Based Differentiation:
- Obsess about customer needs, not product features
- Reinforce the brand with every interaction, not just communications
- Treat customer experience as a competence, not a function
The bottom line: The path to excellence does not start with goals of mediocrity
About Bruce Temkin, CCXP
Customer Experience Matters® 
I’ve always tried to maintain the attitude and approach of “under promise and over deliver.” Great post!
AliSwi: That’s my motto as well…
Great post Bruce, and a great reminder that consistently exceeding expectations is the way to achieve the ultimate customer experience, not just meeting them.
One additional consideration I would suggest is that we better train people on helping set customer expectations as well. In my experience customers are often disappointed when they expect one thing and the team delivers another. Often a simple setting of the expectation would be perfectly acceptable for the customer and also provide a framework for each to know when the goal has been exceeded.
It is similar in my mind to the statistic from Harvard Business yesterday showing that people in the $50k to $75k earnings bracket are “happiest.” I don’t think that anyone expecting to make $150k is “happy” at $75k, but if that is your expectation then the objective has been achieved and at no greater cost than required.
Would love to get your perspective on this.
Bryan: Agreed, setting expectations is critical. That’s not just with people, but also with what firms do with their branding. I hadn’t seen the “happiness” analysis from Harvard. If it’s interesting, maybe I’ll look at that as well. I have an enormous consumer dataset to test theories like that. Thanks for the comment.
Hi Bruce,
Great article. In 2006 in Canada the telecommunications industry was facing an upheaval with the implementation of Number Portability (LNP) in March 07. Our organization began to focus on customer expectations to prepare for LNP and one thing we quickly realized was that customer baseline expecations, just the cost of doing business across the broad industry spectrum in our market, was higher than what we were consistently delivering.
We also did the financial analysis that showed consistently meeting the customers needs often equated to higher loyalty and future purchases – the extra stuff that would move them to truly delighted was icing on the cake, and what we often did well, but because we fell down along the way on the basic needs it just wasn’t good enough.
Eventually we were able to define core standards that would be established across the customer lifecycle, and of course the moments of truth that we would focus on for differentiation.
Still a work in progress, but quite the journey.
Leona: Thanks for sharing your organization’s customer experience journey. It sounds like you’ve made enormous progress. Good luck as you continue on!
Hi Bruce,
Please reference the following press release by the CEB, and a post on a similar blog that better explains the findings. This was a comprehensive study and shows what many execs have long suspected – delighting a customer in a service interaction might yield delight, but that doesn’t drive repurchase, increased spend or advocacy. Product performance, product value, etc. drive loyalty – service requests are typically an output of a product failure or question. It is difficult to positively inflect loyalty in these interactions, BUT you can mitigate further disloyalty. It’s a game of downside risk mitigation, not positive inflection.
http://www.reuters.com/article/pressRelease/idUS173520+16-Dec-2008+BW20081216
http://blog.vovici.com/vovici_blog/2009/05/customer-effort-score-a-loyalty-predictor-for-customer-service-interactions.html
http://everyexperiencecounts.blogspot.com/2009/02/corporate-executive-board-introduces.html
http://customerworld.typepad.com/swami_weblog/2009/01/customer-disloyalty-metric-customer-effort-scoreces.html
http://www.zimbio.com/member/swamicrm/articles/4262897/Customer+disloyalty+metric+Customer+Effort
I am having a real tough time with the concept that “exceeding customer expectations” can be viewed as anything but good for a service provider. I will study the results from the Corporate Executive Board, but on its face, I find the results and the ensuring message difficult to reconcile.
A delighted customer will stay at higher fees (retention), will serve as an enthusiastic reference for others (more customers), and will also be more likely to buy other services (more revenues from each customer). These “loyal” customers are worth multiples more than a merely satisfied customer who stays, but does not help with future sales.
The only caveat is that you must sell and service to those who seek a premium service experience. If you are selling premium service to someone who is ambivilent about it in the first place, then you are going to find it difficult to gain the advantage over other firms.
A couple of other quick points:
1. The issue of under-promising and over-delivering is good as long as you can attract and close sales to those companies who value a high service experience. If you under-promise, you might under-sell and lose the opportunity to delight.
2. I have heard of studies that show that consumers who have a product issue, but have that issue handled easily and expeditiously, are more likely to rebuy, than even those who do not have any issues. When things go wrong, it IS an opportunity to delight…maybe even the best opportunity.
If you would like to read more about delivering “Perfect Service,” my blog can be read at http://deliveringperfectservice.blogspot.com/. I will be addressing this study in detail in future posts.
Christopher: Great points. Every company has to ask themselves what it will take to build loyalty. I can’t think of any sustainable business model that does not need loyalty. Well, maybe morticians.