The Winter Members’ Meeting of the Institute for the Study of Business Markets focused on the theme of “customer experience”. Leading academics, business researchers, and practitioners from best practice companies provided what I found to be clear evidence that attention to the many factors that determine the quality of your customer’s experience with your firm has a positive bottom-line payoff. It was remarkable how often customer loyalty and purchase decisions were influenced by “little things” that are often overlooked.
In a subsequent discussion with an executive who also attended that meeting, he remarked that he too had found the presentations compelling, but that he had gotten little traction when he tried to gain support for actions that might yield improvements in the experiences of his own firm’s customers. His summary was that “we are still too much an engineering firm, driven by metrics, and anything that seems ‘soft’ to the executive team just doesn’t make the grade”. He noted that it was easy to sell an energy efficiency initiative or a new make-vs.-buy recommendation as long as the numbers supported the decision, but that anything that required what was “an act of faith” just wouldn’t fly. I don’t think his experience is in any way unique across manufacturing firms.
He asked if in my own experience I had any ideas about how to translate discussions about customer experience from “soft” to “hard”. As I reflected on that request and did some research, I found three pieces of evidence that, while not making the case on a bottom-line basis, provide explicit evidence that customer experience matters.
We have all heard variations on the phase “elephants never forget”, and the same fact seems to apply to customers. Over the course of many projects, I’ve had the opportunity to interview executives in the firms served by my clients. Often, in the course of those discussions, I ask these individuals to share a “success story” and also a “horror story” involving a supplier with which they had dealings. Most often, those stories did not involve the company for which I was working, but the character of those stories often provided insights as to what was important to the customer.
I went back and reviewed over a hundred of the horror stories I’ve heard in recent rounds of interviews. These interviews spanned multiple manufacturing and distribution industries, involved both large and smaller firms, and represented a fair spread in terms of geographic location. What was remarkable was that almost a third of these horror stories involved an incident that had happened more than three years prior to the interview. Six of them had happened ten or more years prior to when it was cited in the interview.
Elephant-like memories abound in most companies, and it is foolhardy to think that a bad customer experience will soon be forgotten. The opposite is true. It is likely to haunt your firm for a long time to come. And the two findings that follow compound the problem!
It’s a Small World After All
Many years ago, my wife and I took our children on what we determined after the fact was a “too early” trip to Disney World. They were just too young to enjoy it, and the week turned into the vacation to hell. Our young daughter was terrified by most rides, and I spent more time that I can imagine on the “Small World” ride. After that experience, I hoped to never again hear that phrase, but I find it the best summary of the second finding as I looked back on what customers had to say about their suppliers in the interviews that I’ve conducted.
I’ve frequently heard interview comments like “I understand your client is missing quality targets in Brazil, and I’m worried that will spread to impact on us in Detroit” and “What you need to tell your client is that until they solve the shortage problem in India, we’re going to be very cautious about expanding the relationship here in North America”. In many of these instances, the reaction of my client has been something like “I’ve never heard of quality problems in Brazil” or even “I didn’t know we had anything going with [that customer] in India”. Often, it is a fact that the customer has a better world view of the relationship with a supplier than the supplier has of the relationship with that customer. And, like the elephant-like memories that don’t forget a long-ago incident, news about a customer experience seems to travel the globe quite well.
There is another dimension to the “small world” phenomena. Many of our industries are compact, and there is quite a bit of mobility of the professionals that work in them, especially in recent years as economic conditions created high levels of turnover. A substantial number of the horror stories that I’ve heard began with “When I worked at [name of another firm in the industry], …”. Customer experiences quickly cross company boundaries, and become part of the folklore in other firms in the industry.
Especially for the individuals that experienced a problem that impacted on their own performance, a bad memory remains vivid even after they’ve moved into another position in another firm. “Fool me twice, shame on me” is for many people the reason why it’s a small world, after all.
Unique experiences stand out, and often dominate the day-to-day experiences that are routine and unremarkable. One case example illustrates that. In an interview with a customer of a packaging firm for which I was working, I heard the following story: “We had a critical order coming it, and the truck arrived at our loading dock. After it was positioned, we opened the doors, and a couple of mice ran out. Other than that, the truck was empty. Those [expletives deleted] at [supplier] had never loaded the truck, and sent it over a thousand miles with nothing in it.”
It turned out that this was one of the horror stories that I heard that was over ten years old when it was recounted, and I learned that in the seven most recent years, my client had met or exceeded the on-time full-delivery standards set by this customer organization. But in my interview, the interviewee that told the empty-truck story later offered the following: “My advice to your client – put some focus on logistics, to make sure that when an order is placed, it actually gets delivered”. One very extreme, and very old, experience had shaped the perspective of this customer.
I know that all generalizations are false, but my review of these interviews suggests that many customers are willing to generalize from a bad experience and use it to characterize a supplier, fairly or not. And combined with elephant-like memories and small world realities, the message to suppliers is clearly one that motivates constant attention to the details that ensure high-quality customer experiences all of the time.
The Rest Side of the Story
Paul Harvey newscasts often included a feature called “The Rest of the Story” in which he provided a story that lead in one direction until the rest of the story was told. My examples in this paper require the rest of the story as well.
I have focused in the paragraphs above on what I heard in response to a request for a “horror story”, using those case studies to illustrate the impact that bad customer experiences can have on a supplier’s relationship with a customer and even within an industry. But for every “horror story” that I’ve heard, I’ve heard far more “success stories”, incidents in which a supplier exceeded a customer’s expectations and made an important contribution to that customer’s success.
And everything that I’ve said about “horror stories” applies to those “success stories”. They are long remembered, they are widely shared within the firm and outside the firm’s walls, and they are often used as the basis from which to make generalizations about the supplier. So those firms that are successful in delivering positive customer experiences are rewarded for doing so, at least in the characterizations that their customers use to describe them.
Quantifying the bottom-line impact of customer characterizations of their suppliers, positive or negative, remains a challenge. But there is no doubt that the everyday experiences of your customers shape their perspectives, that customer memories are long, that those perspectives are widely shared, and that a single notable experience is often the one that defines the way in which a customer organization thinks about a supplier.