Mike Hohnen

Coaching for personal growth, change and development

Marketing

How does one design a great experience?

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Positive Experience We talk a lot about the customer experience.  We even talk about an experience economy. But what do we actually mean, and when can we qualify something as an experience?

Firstly, let be clear. Everything is an experience. Unless we have managed to shut down every sensor in our system, we will be experiencing something. The challenge is that experiences come in three broad categories: God, bad and indifferent. Most of your experiences belong to the last category – indifferent. If I ask you ‘So how was your train commute this morning compared to the same Monday last year?’, you would probably give me a rather blank stare.

This Monday last year? Sorry, I can’t remember at all what that was like.

Why not? Because the experience was bland, it was no different from all your other morning commutes. To put in very simple terms, there was no emotional trigger.

What makes us remember one experience and not the other depends on to what degree our emotions were stirred. Remember your first teenage date? Most of us do. Or the birth of your first child? The stronger the emotion, positive or negative, the more the experience is etched into our memory.

So most of our experiences are quickly forgotten. There is no emotional trigger. What we retain are the negative and the positive experiences.

So what do we mean by positive and negative in this context? Do I need to bring in a 12 man Mariachi band for this wedding party to be successful or would a 3 piece Jazz trio work just as well or better?

It’s not about the ‘thing’.

It’s about the customer and their perception of what is going on. You see, what causes a shift in our emotional makeup is tied to shifts in the circumstances that we happen to be in. When circumstances change to the better (compared to what we expected), then we are slightly happier; if they shift to something much better than we expected, we are very happy. On the other hand, if they shift to something worse than we expected, we are miserable. And if everything is running exactly as we thought it would, we are … indifferent.

Once we understand this, we have a great design tool at our disposal. We need to work on managing expectations. So standing in a queue at the airport security for 10 long minutes is hell on earth if you thought you would be through in a breeze; but it’s actually not too bad if there is a sign that says from this point on just 10 more minutes, and if we then get through in 8 minutes is actually a good experience.

In most types of customer journeys, there will be things that need to happen that may not be easy to frame as positive. Queuing is one, having a tooth fixed at the dentist might be another. It is not always possible to turn negative experiences into something positive but we can often neutralise them by putting the customer more in control, helping them set their expectations. So my dentist will say ‘In a moment I am going to do this. It might be a bit painful but it’s quick and you will feel much better afterward.’ Now I know what to expect. Ouch! It happens exactly as she said, so no shift in my emotions. Then she finishes up and we have a little chat about my last vacation and what I plan to do next weekend. She is such a nice lady. And there you go. The negative aspect was neutralised and she ended on a positive note making a personal connection: Man I just love going to the dentist.

So if you want to design a great experience, you need first to map out the customer journey, touch points by touch points. Then you make a note, for this type of customer persona, would this be considered positive, neutral or negative? Then, make a plan to eliminate or neutralise the negatives, upgrade a few of the neutrals to positive and make sure that whatever else happens, you end the experience on a positive note. Nothing affects our emotional state as much as the way things end. A movie that ends on an unhappy note is rarely a success. It just doesn’t work.

And finally, what is the one thing we can always do that consistently exceeds our customers’ expectations at any touch point? Be nice and make a personal connection. It blows them away.

This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future’s posts, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.

What has Value – From a Customer Perspective?

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Value Equation

Why Value Is Not about Money

In the old economy – the one dominated by goods – value was created through the transfer of ownership. I create or produce something; and when I transfer the ownership to you, you give me money in return. The way you check the value of what you bought has to do with the specifications. Whether you are looking for strawberries or a new car, it is about product attributes. This ‘widget’ is _______ (stronger, faster, slimmer, tastier…) than the other ones you have looked at.

In the new economy – the service economy – value is created in use.
When I rent a car, use a consultant, or search for a great place to stay for my vacation, there is no transfer of ownership. It is all about utility – I need something, and my preferred service is the one that best takes care of that need. When my need is met, it translates into a result for me. And most of us are more than happy to pay for getting the result we need.
So, if our aim is to create a great customer service experience, the starting point is to make sure that what we are offering matches the value expectation of the customer.

In order to do that, we use the Value Equation – a tool that originates from the research conducted to produce the Service Profit Chain framework. The Value Equation has four elements:

R Is for Result

What is the result that the client is expecting or looking for? Do we understand the need? If I buy an airline ticket from Paris to Rome, and we end up in Berlin, the airline did not deliver the result that I was expecting. So, no matter how cheap the ticket is or how many drinks they serve, it is a lousy service experience. Do you book a table in a restaurant because you are hungry? Maybe. More often, you have a different need. Maybe you are looking for a special moment, an occasion to celebrate or an ideal setting for a special conversation. Whatever it is, the food is just an instrument in providing the real result that you are looking for.
This means that for every service product we create, we need to ask ourselves, “What is the result they are looking for?”

P Is for Process.
You can fly from A to B with many different airlines. In general, they will all get you to where you planned to go; but each one does it their way. The difference comes out in their process.
From a customer point-of-view, a process has five elements. Each plays a part when evaluating to what extent the value proposition actually covered their needs.

 Time. How does time play into the need or result that they have? Is it important that we are on time? Is it important that we are fast or slow? If my wife and I are having dinner before the cinema, we are looking for one kind of time experience. If we are celebrating her birthday the following week, we are looking for a different kind of time experience. Same people, same restaurant, but different situations.

Reliability. Do we do what we say we will do? Are we consistent?
Competence. How does the customer experience the competence level of our employee at a given touchpoint? How well do our frontline teams respond when asked a question or a request for help?

Empathy. To what extent are our employees able to see the situation from the client’s point-of-view? When a customer feels understood, we are more than halfway to solving their needs.

Proof of service. Do we provide a service that the client does not notice – are there ways that we could remind the client that we are servicing them?
Under the fraction line we have –

$ for price and E for effort
The client pays a price for our service; but depending on the service package, they also put in more or less effort themselves. If you buy a sofa from IKEA, the price is low; but you put in quite a bit of effort yourself. If you fly Virgin Upper Class, they will pick you up at your office and take you and your stuff right to the plane. A different experience than flying Ryanair – and, to be fair, also at a different price point.
So, there you have it.

If you want to understand how customers perceive value, the value equation is your key. And, your starting point for developing a great customer experience is to understand how you tailor your customer value proposition to each segment using the Value Equation.

Simply enter your email below to download the Value Equation

Building the emotional connection

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Here is a great example of a brand making the emotional connection

In my view a brand is a product that you have feelings for – it becomes a brand the moment you ‘care’ about it in some way.

That is also the reason why we spend so much time talking about the importance of generating customer loyalty when we work with implementation of the Service Profit Chain.
Emotions drive loyalty.

Your ‘product’ becomes a brand in your guests head as a result of the emotional connection that your staff makes with the guest.

The first step in brand building is therefore making that connection ( it is not advertising spend) – then you can always reinforce that with clever advertising as it is done here – but it starts with positive moments of truth

Customer Loyalty – the magic formula

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Most of us experience a market situation that can best be described as hyper-competition. Supply out strips demand in virtually any category you can think of.

When that plays out advertising becomes less and less useful because there is already so much of it that few people, if any pay attention to it.

So the name of the game is customer loyalty – trying to draw customers closer to us in such a way that they are less tempted to switch to the competitions latest bargain offer.

Many companies use a variety of sophisticated marketing tools and tricks to do this from simple punchcards that give you your 10Th coffee for free to more elaborate loyalty clubs like what many Air Lines have developed.

But I don’t think that bribing customers to come back is what really counts. It may produce some form of customer renetion but there is no emotional loyalty.

What is loyalty then if not retention or what is the difference you may ask?

Well, there are two reasons we need customer loyalty. One is the obvious, that it is much cheaper to sell to an existing customer than it is to acquire a new one.That is the Customer retention part.

But more importantly loyal customers tell their friends – in fact the more loyal they are the more they talk about it – and that is what makes the all important difference between mechanicaly loyal and emotionally loyal.

When you have positive emotional feelings about a product or a brand you become an ambassador or what Fred Reicheld calls a ‘promoter’.(Here is a quick overview of the Net Promotor Score system)

Obviously in order for customers to become loyal they must first of all be satisfied to some degree. Customer satisfaction is the prerequisite for customer loyalty. But how much customer satisfaction does it take to create lasting loyalty?

From deeply dissatisfied to relatively happy, nothing much happens. Then, as satisfaction becomes more than just satisfaction and turns into enthusiasm, loyalty increases sharply.

But notice that when we deliver the right service/product at the right price, at the right time, and to the agreed-upon specifications, we score a 3 or possibly a 3.5 if we are lucky.

“Hey! But that is not fair,” you might be thinking, “we are doing everything perfectly and just as agreed, and all we get is lukewarm feedback!”

Doing everything perfectly and as agreed upon is exactly the problem. When clients read your marketing material or listen to your sales pitch, they learn that you will do this, this, and this for them at this price and on such and such terms.

So, who will be impressed when you actually deliver on what you said you would deliver?

You are performing exactly as expected. If you do less, they will be annoyed. If you do more, they will be en route to enthusiasm. If what you do far exceeds their expectations, they will be ecstatic.

But what can we do more than delivering everything we said we would?

We can establish an emotional connection. And because so few companies get it, it is still unexpected. When we touch our customers emotionally we exceed their wildest expectations.

Just think of a wonderful service experience you have had at some point. What made it exceptional? The mechanical stuff or was it because some one touched you at an emotional level some how?

Nine times out of ten you will find that what creates enthusiasm and loyalty is an emotional connection.

So forget the punch cards and the bonus points – what you need to work on is your team.

It is the attitude and loyalty of your team to your business that drives true customer loyalty. ( see my previous post on Employee loyalty here)

Loyal employees create loyal customers – that is the magic formula and that is also at the heart of the Service Profit Chain

It's all about value

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From www.4hoteliers.com

Travel is changing. There’s a lot of talk about average rates dropping in many markets, but don’t kid yourself, it’s all about value. Packaging is a wonderful way to add to perceived value without sacrificing your rate positioning in the marketplace. Getting more for less is pretty much a human concept. There is still a lot of business out there; we’ll just have to work smarter to get it.

Keeping up will require a greater emphasis on the hotel’s location and perceived value. Hoteliers will finally realize that people travel to get to a particular location and then, with few exceptions, choose a hotel based upon the best-value deal within that location. Hoteliers will ultimately understand that rate alone doesn’t sell rooms, no matter how low; what one gets for that rate is how we determine “value”. Perceived value sells rooms, not rates.

Read the full article here