The First Principle: The Customer Is Always Right—Provided the Customer Is Right for You
The right customer is one you are prepared to serve in every sense. It is the one you are targeting—not the other way around. You have the capability, you understand what the customer wants and needs, this is the customer around whom you have proactively designed your service offering, and a customer whose business you can realistically win—that is, win and serve profitably.
“Design is about decisions and trade-offs and therefore everything is designed. It is just that most things are often not designed well,” says Jon Campbell, vice president of customer experience and innovation capability for Boston-based design firm Continuum. “Positioning is the art of sacrifice, and it goes for selecting customers as well as defining brands.” Selecting customers, like so many things, is both art and science. It is easier to define the customer experience—that is, the one you want your customer to have—than it is to define the customer, because odds are you have more than one right customer.
And it is easier to define your wrong customer than it is your right one: By definition, the customer who you are not designed to serve profitably is wrong for you. We will look at wrong customers in more depth, and what to do about them, later in this chapter.
One way to determine your right customer is to examine your most valuable customers. Data vary about the cost of acquiring a new customer, with studies putting it at anywhere from 5 to 25 times the cost of retaining a current one. It is logical that keeping a customer would cost less: You do not have to spend time and resources hunting and capturing; you’ve just got to keep who you have happy. If you’re not convinced that retaining customers is so valuable, consider research done by Frederick Reichheld of Bain & Company (the inventor of the Net Promoter Score) that shows that increasing customer retention rates by 5 percent increases profits by 25 percent to 95 percent.
The stats on retention are compelling; clearly, keeping customers matters. But there’s a premise hidden behind those stats, and it might not be true: that all those customers are equally worth retaining. The statistics do not make distinctions between the value different customers represent. Your most valuable customers are those who not only are loyal but who spend more per transaction and from whom you have a significant share of wallet. (The customer who comes to your restaurant every day for a bowl of soup and a cup of tea may be beloved but isn’t as valuable as the person who comes in once a month with a group of hungry—and thirsty—clients. That isn’t to say the first customer isn’t important ; a key distinction. There is likely a lot of customer capital between the two of you, but you are not likely to extract a lot more dollar value from them.)
The Second Principle: Don’t Surprise and Delight Your Customers—Just Delight Them
“Surprise and delight” have become a mantra for customer experience. We think that is wrong. Forget about surprising customers: Just delight them. We know that is counterintuitive. Indeed, Wikipedia’s definition of customer delight is “surprising a customer by exceeding his or her expectations and thus creating a positive emotional reaction.” But why, we ask, should doing a good job be a surprise?
Delight might seem like an odd word when thinking about something as ordinary as delivering a good cup of coffee quickly, or as life-changing as helping critically sick people figure out how to integrate a much-needed drug into their daily existence. In the former case delight seems overblown, in the second inadequate. Yet comparison is not really the point: A company’s job is to design and deliver delight on its own terms, by fully meeting the expectations of customers, just as Harry Potter and the Philosopher’s Stone is delightful and Hamlet is, too.
Designing your services and their delivery to delight customers enables you to woo them, wow them, and win them predictably, scalably, reliably, and economically. You deliver every time. That is tough enough. It is the foundation on which delight must rest. If a surprise comes as well—a chocolate mint on the pillow—that is fine. But the heart of delight is getting it right.
Service design allows you to figure out where your opportunities for delight are and are not, and to create the conditions that enable you to make the most of them. Complex services like auditing financial statements generally involve many more touchpoints than simpler transactions; many more things can go right or go wrong; they usually occur over a more extended time frame—weeks, months, even years, compared to minutes or hours for, say, a restaurant meal. Though the circumstances differ, the principle remains the same: Do not surprise: Delight.
The Third Principle: Great Service Must Not Require Heroic Efforts on the Part of the Provider or the Customer
Nothing is more satisfying than a company that really knows its stuff. Both customer and company win when the job gets done well: one call, logical user interface, a single point of contact, flawless execution. Efficient and reliable every time. Kitchen chaos that sets the staff aflutter but nevertheless results in a sumptuous, gracious meal may provide comic relief on Downton Abbey, but relying on behind-the-scenes heroics is an untenable operating model for a business. Service—whether in a great house or a great business—must be designed so that it is scalable—and the delightful nonsurprise to your customer.
Think of the apparent ease with which a great pianist plays a complicated sonata. You should be delivering your service with the same mastery and confidence, based on practice and preparation—and design. To deliver service in that way, your organization must be skilled, agile, and conditioned. The customer should never see you sweat, because you’re not sweating.
Well-designed and delivered services do not waste time or money—yours or your customers’. This is our Third Principle of excellence in service design and delivery: Great service must not require heroic efforts on the part of the provider or the customer. It is a combination of efficiency and elegance—nothing is left out, nothing is superfluous. The two elements—efficiency and elegance—should be mutually reinforcing. Often, however, they are not; sometimes they are at war.
Consider what happens when companies manage to deliver great service without great service design—that is, when they place the burden of customer experience solely on the backs of employees, without providing the structure and tools they need. Across the business world, companies celebrate “customer service heroes” who go out of their way to deliver that order, fix that problem, or get that document out in time. Every heroic effort is an indication of an opportunity to redesign work so that you do not need superpowers to deliver superior service.
The Fourth Principle: Service Design Must Deliver a Coherent Experience Across All Channels and Touchpoints
Consistent, coherent service depends on having a unified view of the customer and presenting a single face to the customer. A unified view means fully understanding how customers interact with you at all points and how they would interact if you’d let them. The second, the unified face to the customer, involves identifying and removing internal obstacles to effective collaboration across departments and business units.
Changing from one channel to another should be easy for customers, like throwing a switch on a model railroad and sending the train down another track. Time was (and not long ago) it was all but impossible. Before digitization, customer records were in someone’s file or ledger, difficult to share with a colleague down the hall, let alone in another division. It took decades before banks’ computer systems were integrated enough to allow them to see if a checking account customer also had a mortgage. The problem is still thorny: Everyone who has ever phoned a credit card company quickly tires of reciting his or her account number several times during the same call.
Solving the information problem does not mean you have solved the behavior problem: If divisions of a company spitball each other, customers get hit. Hence cross-platform excellence is more than optimizing each channel and the links among them; it starts with experience, and works back to channels. Similarly, customers should not feel a difference when they are passed from sales to service.
The goal is for channels and departments to be something customers do not need to think about. That does not mean you can afford to not think about them—on the contrary, coherence demands your closest attention. But channels are a means to the end, and when you achieve coherence, customers will recall the experience, not how they get there. This is beyond the omnichannel world; call it the nonchannel world. It is one where both companies and customers put customer experience first, with the choice of channel being completely irrelevant.
The Fifth Principle: You’re Never Done
It is no surprise that businesses need to renew themselves continuously, which is why it is startling that many companies in the services sector have no systematic way to think about innovation, whether in new offerings, new processes, new forms of customer experience, or new business models. To be fair, goods-producing industries had a head start. The first business R&D facility, Thomas Edison’s Menlo Park, New Jersey, laboratory, opened in 1876. In 2004—128 years later—IBM established the first-ever center to study services science. When it comes to research, experimentation, and science-based progress, services have a lot of catching up to do.
Even the idea of experimentation and innovation in services, let alone the development of a solid, effective process for doing so, is new to many service companies. They think of themselves as the downstream recipients and beneficiaries of manufacturers’ R&D. The CEO of a multimillion-dollar truck dealership in Ohio, a family business more than a half-century old, told us: “You’d think innovation is for a manufacturer, but I’ve come to realize that it is important for our dealership, too—we can innovate things, we can plan better ideas of how to take care of our customers.”
Consider the explosion of service innovation in this young century, ignited in large part by ever-faster, ever-cheaper, ever-more-flexible information technology. The financial services industry has been upended by innovation, from simple transactions (the number of bank tellers has fallen more than 13 percent since 2000, as consumers do more banking at ATMs and online) to the most complex (dangerously so, some argue) financial derivatives. While derivatives date back to pre-Roman times, innovation in these new “products” has contributed to a sevenfold growth in derivatives markets just in this century. Bank branches today look as different from their turn-of-the-century ancestors as, well, Victoria’s Secret stores do.