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Exceeding customer expectations in the short- and the long-term

It's very hard to keep exceeding customer expectations, especially as they are always going up. Read advice from Don Peppers here.

Do you have examples of companies that exceeded customer expectations, either in the short-term or the long-term? What did they do right?
Well, customer expectations are not hard to exceed one time or two times or three times. It's very hard to keep exceeding customer expectations. And don't forget, customer expectations are going up and up and up. With every good experience they have at some other firm, every time a customer buys something in a store where he's treated very well, his expectations of the next store increase. So your competitor's actions have just as much an inflationary effect on customer expectations as your own actions.

I was dealing with a client of ours just a few days ago, operating in an industry that has very low customer satisfaction in general. And their customer satisfaction is no lower than anyone else's in the category, it's on a par, but it's like a commodity services category. And we were counseling them that that's not the measurement that the customer's going to hold you to. They're not going to look at their satisfaction with you versus your competitors. They're going to look at their satisfaction with you versus other companies in their lives, in different areas, in different industries, companies that have higher levels of satisfaction, companies that get it right, all the time, much more than you and your category competitors do. So you can't simply think of what your customer's expectations are relative to your particular industry or your particular category of service.

The companies that have done it right and exceed customer expectations in the short and the long term generally have several traits. First, they take the customer's perspective. They try to see their business from the customer's perspective, looking at their business with an "outside-in" view, rather than from their product's perspective or their service's perspective, looking out at the customer. They put themselves in the customer's position and they ask themselves "how would I like to be treated if I were the customer?" and then they try their best to do that. Companies that do a good job inculcate that particular attitude in the minds of their employees and their customer contact personnel and their channel partners. It is an attitude that is based on thinking that the most important thing for our business is earning the trust of the customer.

Let me give you an example: Royal Bank of Canada. They're an analytically sophisticated company. They have millions of customers, and they track something like 20,000 individual customer segments. They have something called the behavioral-based modeling tool, which evaluates marketing initiatives in terms of not just the amount of profit or cash returned from the initiative itself in the short term, but also the effect of that initiative on the lifetime values of the customers exposed to it. That way they can evaluate their initiatives in terms of the overall efficiency of the initiatives, not just in the short term but the long term. This has led Royal Bank of Canada to develop some really interesting policies. For instance, everyone at RBC gets automatic overdraft protection. Everybody. You have to be a customer for 90 days, and you have to have at least one deposit in the last 30 days, with a good credit score. But this is true of the vast majority of its customers and if it's true of you, then after your first 90 days at the bank you get automatic overdraft protection. This means they won't return a check to you for an insufficient funds notice and a $35 service charge, like other banks would do, just because you miscalculated and overdrew your account by five dollars or ten dollars or even $50. Everybody's overdraft protection is unique to them, it's individually tailored. What Royal Bank of Canada has found is that overdraft protection like that tends to improve levels of customer satisfaction. It minimizes the costs of processing, all these things that minimize customer defections in the first few days or first few months of their new patronage at the bank. And it's been a win-win for everyone.

Another company that works hard to exceed customer expectations is JetBlue. And here's a company by the way, in a category, airlines, where people's expectations are generally low. All the big airlines have done a very good job of hammering down customer expectations over the last several years. They charge you for everything but the use of the restrooms on the plane. But now here comes an airline, JetBlue, that basically puts video in the seatbacks, is a very low price airline, the flight attendants are attentive and friendly and well-trained, as are the gate agents, and it's just a terrific airline to check in on. If you've never used them, I highly recommend JetBlue, I use them all the time. And one of the advantages that JetBlue has, and I think an advantage that people talk about a lot, but I think one of the biggest advantages they have is the simple fact that people's expectations of airlines in general is so low. It's not hard to exceed those expectations and especially if you've got a new carrier like JetBlue.

So, I think there are lots of examples of companies exceeding expectations. But it's hard to do and expectations are growing more and more ambitious all the time. Customers are just getting more and more demanding, so you have to hurry up just to keep up with them!


Hear more in Creating Customer Value, a SearchCRM.com monthly podcast series with Peppers and Rogers.

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