Moments of Magic
By Dr. Tony Alessandra
Dec 3, 2003 - 3:27:00 PM
Differentiation is the key to survival and success in any business. There are three key fronts on which you can fight the differentiation battle: Price, quality, and service. Your ability to compete on price is limited. You can cut your margins just so far without jeopardizing your operation. It's difficult to compete on quality too.
Modern technology has caused most products to become commodities; hence, there is often little difference between Brand A and Brand B. Service is, therefore, the best strategy for competing in the marketplace. Being on par in terms of price and quality only gets you into the game. Service wins the game.
Moments of Magic or Misery
In 1981, Jan Carlzon took over as chairman of one of Europe's most poorly rated airlines, Scandinavian Airline Systems (SAS). Carlzon quickly implemented many changes, the most important of which was to manage the interactions that SAS employees had with its customers.
In 1987, Carlzon wrote a book entitled, Moments of Truth, in which he said, "Last year, each of our 10 million customers came in contact with approximately five SAS employees, and this contact lasted an average of 15 seconds each time. Thus, SAS is 'created' in the minds of our customers 50 million times a year, 15 seconds at a time. These 50 million 'moments of truth' are the moments that ultimately determine whether SAS will succeed or fail as a company."
Carlzon hit upon a concept that is simple yet profound. Every single contact between any employee and a customer is an important contact, regardless of its length or content. The term "Moment of Truth" describes a contact that is neutral in nature.
As we all know, however, there are other kinds of interactions between employees and customers. "Moments of Misery" describe interactions that have negative outcomes. A "Moment of Magic" is an interaction that exceeds the expectations of your customer and leaves him/her with a positive impression.
Moments of misery are a fact of life because people and companies are not perfect. Mistakes happen, which is unfortunate, because research has shown that customers tell an average of 20 people about moments of misery; but they tell only ten people about moments of magic. To break even, therefore, you have to create twice as many moments of magic. Of course, the point is not to stay even; it is to stay ahead by managing interactions and making them moments of magic.
How are moments of magic consistently achieved? The bottom-line answer is that a company has to be customer-driven versus operations-driven, where it puts the needs of its customers first. An operations-driven company puts its needs, policies, and procedures first. A customer-driven company may bend its own rules to please its customers. An operations-driven company uses its policy manual as its Bible and will, if necessary, disappoint customers by invoking the most ignorant excuse on the face of the earth: "I'm sorry, it's against company policy."
How To Become Customer-Driven
Since the middle of the 1980's, a lot of companies have talked about becoming customer-driven. Everyone aspires to becoming the next Nordstrom, Federal Express, or L.L. Bean. The transformation has worked for some, but for others it has been only talk. Talking the talk does not transform a company. Real change takes a concerted effort that requires Commitment, Communication, and a system for Conflict Resolution.
The Foundation: Commitment
Without commitment, customer-driven service will be just another flavor-of-the-month training that will sharpen the skeptics' barbs. Customer-driven service requires a 100 percent commitment throughout the organization, starting with the CEO. This top-down company strategy must include people who interact with customers, and employees who serve in support positions. The reason is simple: customers must be defined broadly, and that definition must include "internal customers." Interactions between departments are analogous to interactions with external customers--they are subject to moments of magic and moments of misery.
The commitment to customer-driven service
requires four very important steps:
1. Set clear objectives and service standards. High quality service must be defined so employees know what it looks like and how to provide it.
2. Train well. The commitment must include the time, money, and effort necessary to train employees properly. When service expectations are raised, employees must be given whatever skills needed to meet or exceed those expectations.
3. Monitor and measure service. Service has to be made concrete so that it can be monitored, measured, and made a part of everyone's performance review. In general, there are three ways to monitor service:
a) Ask customers for feedback.
b) The observations of management; and
c) the use of "mystery shoppers" who pose as customers and rate service on many dimensions.
4. Reward or retrain. People who excel at providing excellent service should be rewarded; those who need help should be coached or retrained. Your goal is to empower people to be creative, resourceful, and autonomous in their jobs. If they are punished for mistakes, they will become defensive and stop thinking creatively. The better approach is to coach, retrain, and show them better, alternative solutions.
One of the goals of customer-driven service is to change the service-provider's focus from individual transactions to long-term relationships. Effective communication is the key to building and maintaining long-term relationships and can be looked at from two perspectives: the macro and the micro. The macro level is the communication strategies used to stay in touch with customers. The micro level is the communication skills used when interacting with customers.
Customer-driven companies encourage communication in which customers feel comfortable giving feedback on how well the company is doing its job. This feedback should be solicited on a regular basis.
Conflict Resolution System
The third major building block of customer-driven service is a system for turning moments of misery into moments of magic. We have already conceded that moments of misery are bound to happen. Every company must, therefore, have a set of guidelines that helps employees "right the wrong." Customers do not expect companies to be perfect. They do, however, expect imperfections to be corrected quickly, painlessly, and fairly.
Every moment of misery is different, but there are some general guidelines that will give you insight into turning them around. When a problem occurs, listen actively, ask questions, and mentally trade places with your customer. Then determine the severity of the problem and a fair solution.
Incorporate the following steps into your conflict resolution system:
1. Handle the person first, then the problem. Let angry people vent their frustrations by listening to them before trying to solve their problem. This alone will go a long way toward resolving the problem.
2. Apologize. Offer a sincere, personal apology that shows you are committed to the relationship.
3. Show empathy. Validate customers' emotions by letting them know that you would feel the same way if their problem happened to you.
4. Find a solution. Resolve the problem with your customers, not for them. Ask questions that get them involved in the solution process.
5. Offer compensation. If the moment of misery was severe enough, you need to say and show that you are sorry. Compensation should be immediate (no time-delays), meaningful (high perceived value), and consumable (something that can be used or eaten soon so the incident is forgotten).
6. Follow up. After resolving a problem, you must follow up to make sure everything is satisfactory from the customer's perspective.
Meeting standards of excellence in business has always been important, but in today's increasingly competitive marketplace, it is absolutely essential for your company's survival and success. To meet those standards of excellence, your company and every one of its representatives in every one of its departments must have a customer-driven orientation and provide consistent moments of magic.
Dr. Tony Alessandra helps companies build customers, relationships, and the bottom-line. Audiences learn how to achieve market dominance through specific strategies designed to outmarket, outsell, and outservice the competition by applying Dr. Alessandra's high-tech and high-touch marketing, sales, service, and relationship-building skills. www.alessandra.com
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