How not to Plan your Company’s Future
5 common mistakes when identifying customer needs
Copyright © JC Mowatt Seminars Inc.
Used with permission of the author:
Author: Jeff Mowatt
From the series Influence with Ease ®
23 March 2007
When managers plan their business strategies, common sense dictates that these game-plans should be in line with customer needs. The first step in planning is therefore to identify customer preferences. Unfortunately, most conventional approaches to determining customer needs are flawed. Here are five of the most common methods used to gather customer opinions along with their drawbacks. Keep these often-made mistakes in mind when planning your business strategy.
Mistake #1 -- counting cash
One way to find out what customers think - indirectly at least - is to look at revenues. The assumption being that if revenues are increasing then customers must be happy. Dangerous. A repeat customer isn’t necessarily loyal. Customers may come back more by default than desire. If that’s the case, the moment your competitor finds a way to truly satisfy your customers, those repeat customers will abandon you. Or, if your team is providing support services to internal customers, you may be setting yourself up to be outsourced. So, even though your revenues may indicate that you have happy customers, unless you do the research, you are potentially vulnerable. Business leaders whose companies endure are those who do not just assume that customers are happy, they create the right systems to know it.
Mistake #2 -- counting complaints
Some managers assume that if they merely reduce the number of customer complaints, they are satisfying more customers. In reality, fewer complaints often mean that fewer customers are angry enough to complain. It doesn’t necessarily mean that they are happy. When it comes to measuring complaints keep in mind your own experience when visiting a restaurant with mediocre service. It wasn’t bad enough to complain. But, it wasn’t good enough to bring you back. If the restaurant manager was only counting complaints as a measure of customer satisfaction, he or she’d be off track.
Mistake #3 -- trust focus groups
A popular method of collecting customer information is using focus groups. This is where a manager or consultant gathers a group of customers and asks their opinions. Consultants often like focus groups because the information looks scientific and they can charge a fee for conducting them. It’s been my experience, however, that focus groups tell you a lot more about group-think than anything else. In virtually every focus group I’ve been asked to observe, opinion leaders in the group influence the responses of others. That alone renders focus groups practically useless in terms of finding out what individuals really think.
Mistake #4 -- paid phone surveys
The most promising way of identifying preferences is to have a one-on-one conversation with the customer. The problem is that the conventional approach to interviews receives miserably low response rates. Imagine you’re at home one evening when the phone rings. An unfamiliar voice on the line says, “Hello Mr. or Mrs. So-and-so, we’re conducting a survey on…” You’re thinking, “Not again,” and end the conversation – click.
As an alternative, rather than using standard telephone surveying, the manager of the company uses a resource I often recommend to my clients — business students. Picture yourself again at home. The phone rings. When you answer, a youthful voice says, “Hi, I’m a business student at the local university. For my marketing class I’m doing a project where I’m conducting a survey on such and such.” You find yourself saying, “OK, kid, let’s make this quick.” Response rates soar. Bonus - students work for the price of Kraft Dinner!
Mistake #5 – trust high ratings
On a customer survey, you can ask, “Overall, are you satisfied with the service?” And you may get results that show that 96% said, “Yes.” But be careful how you interpret those results. This is where many managers assume that they’re getting an A+ score. Think of the question again; it asks if overall you are ‘satisfied.’ In other words, the survey is asking if the service is adequate. By responding ‘yes,’ customers are not saying that they were impressed or even pleased— merely that they were satisfied. It doesn’t mean they feel loyal. Imagine your sweetheart talking to a friend and describing you as being adequate. You’d probably see that as reason for concern! It certainly isn’t reason to think you’re getting an A+ performance rating. Yet, that’s exactly what so many managers think when they see a 96% customer-satisfaction rating.
The lesson is that managers need to stop interpreting high percentages the way we did in high school. If you have a 98% customer-satisfaction rating you may still have serious problems in customer loyalty. According to marketing research expert, Dr. Mike Heffring, “It has been shown that it’s the percentage of people who give you excellent or outstanding ratings (e.g., nine or ten on a ten-point scale) who matter. If you increase that percentage, then market share actually moves. If you don’t, then you may feel better if the percent satisfied goes up but the impact is insignificant.”
Identify what customers really think
In other words, when it comes to planning your corporate strategy, the focus becomes, What do managers need to do to shift customers from being ‘satisfied’ to being ‘delighted’? Just make sure as you do this, that you also ask yourself if your current information is telling you what your customers really think.
This article is based on the critically acclaimed book, Becoming a Service Icon in 90 Minutes a Monthby business strategist, consultant, and international speaker Jeff Mowatt. To obtain your own copy of his book or to inquire about engaging Jeff for your team, visit http://www.jeffmowatt.com or call 1-800-JMowatt (566-9288)
Jeff Mowatt B.Comm. CSP, is a customer service strategist who consults, lectures, and writes on the topic Influence with Ease®. He is the author the critically acclaimed book Becoming a Service Icon in 90 Minutes a Month.Jeff's insights are the culmination of over 25 years of experience and consulting with dozens of corporations. An award winning communicator, his first series of "Influence with Ease®" articles has been featured in over 200 business journals. For an overview of these publications and more information about Jeff's work as a business advisor click http://www.jeffmowatt.com.
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