10 Feb Why Great Customer Experience Is Free
This blog post got away from me. I initially intended it to be a simple article about the birth of the Total Quality Management movement and how it relates to the customer experience movement, but before I knew it, it became a launching platform for a whole bunch of topics. Read on to see how it took a turn on me.
In the 1970s, the American auto industry had a rude awakening. American cars ruled the world all the way from 1908, in the era of Henry Ford’s Model T, through the 1960s, the era of the Corvette, Camaro, and Mustang. The Big Three automakers — GM, Ford, and Chrysler — had such a commanding oligopoly for so long that by the 1970s, they could produce products that were shoddy and unreliable and the market would still buy them. That all changed when Japanese manufacturers like Toyota and Honda started providing cheaper, higher-quality cars to the US market. The Big Three were ill-prepared to deal with competition, and to this day, they haven’t regained their previous level of market domination.
The Japanese manufacturers — Toyota, in particular — were able to produce better, cheaper cars by creating effective quality management systems. They produced better cars without significant added cost of production simply because they baked quality into their processes from the start. The Big Three resisted at first, arguing that all that extra quality stuff was expensive, time-consuming, and unnecessary. Eventually, competition forced them to change their ways, but for years, the concept that “quality costs extra money” persisted.
In 1979, Philip Crosby wrote Quality is Free: The Art of Making Quality Certain. In his book, Crosby describes how quality is an enterprise-wide endeavor, not just something relegated to the manufacturing or service groups. He also makes the case that quality must be objective, not subjective, and that quality can be measured objectively in real monetary terms:
The first erroneous assumption is that quality means goodness, or luxury, so shininess, or weight. We must define quality as conformance to requirements if we are to manage it. The second erroneous assumption is that quality is an intangible and therefore not measurable. In fact, quality is precisely measurable by the oldest and most respected of measurements — cold hard cash.
While his book didn’t necessarily launch the quality revolution, it became an important manifesto and how-to manual for the cause. Nearly four decades later, the corporate world almost universally accepts Crosby’s ideas on the importance and value of product and service quality.
Customer experience as a discipline faces a similar situation to that of quality in the 1970s: some organizations get it, many don’t, and they all struggle to pin a concrete value on it. When I present my keynote presentation on customer experience design to executives, they pay attention and are actively engaged and interested, but great customer experience — or its absence — doesn’t show up as line items on the profit and loss statement. For most executives, it’s an interesting idea but not one that has tactical benefit tomorrow, so it’s usually back to the grind and nevermind. At the same time, those same executives will keep complaining about flattening or declining revenue, price pressure, lack of new clients, losses to competition, high employee turnover, lack of employee engagement, the difficulty of finding new employees, and poor culture — all of which gets addressed on the path to creating great customer experiences.
And this is where the article got away from me. See, it turns out that there’s a lot of parallels between quality and experience design, and that opened up a whole world of possible topics.
So here’s my thesis, and I’ll work to flesh this out in future blog entries:
- Great customer experience, like quality, is free. This one’s important. The cost of implementing great customer experience systems is more than outweighed by its benefits.
- Creating great customer experiences is the primary purpose of any organization with customers. Everything else is a byproduct.
- Great customer experiences increase customer retention, increase the amount each customer spends, makes customers willing to accept new products or services from you, and attracts new customers through word-of-mouth marketing (the best kind of marketing!).
- Customer experience quality can be measured, but it must be measured through the eyes of the customers.
- Customer experience quality has a concrete, measurable value. So does its absence.
- Great customer experience provides a competitive advantage, at least until your competitors start to create great experiences for their customers.
- Everybody owns customer experience quality. The whole organization must practice its precepts, not just the part of the organization that is customer-facing.
- Customer experience quality requires a corporate culture that embraces and reinforces it.
- Customer experience quality requires the right people, the right processes, the right settings, and the right systems.
- Customer experience quality requires persistence and discipline. Something so global and all-encompassing can’t be created through ad hoc and point solutions.
- Customer experience quality must start from the top. It’s impossible for an organization to embrace a global behavior and the changes that go with it without the active support of the executive team.
- Technology opens whole new realms of possibility for creating great customer experiences. It also opens whole new hellish pits.
My goal is to make it painfully obvious that designing great customer experiences is not only cost effective but that, over time, it’s mandated by the market if you want your organization to succeed without being the lowest cost provider of a commodity product or service. I hope I can make the journey entertaining.