citizen Evangelist

As I mentioned in my previous post, most companies today place an irrational belief and investment in the notion of customer satisfaction. Before we get too deep into this topic, let’s break down what satisfaction is, and what it isn’t in light of today’s business environment.

When looking at the etymology of satisfaction, one might get the idea that it is a worthy thing to invest in. I mean seriously: “reparation for sin that meets the demands of divine justice” Reparation for sins? As producers, we’re certainly guilty of that.

But, what we as humans… as citizens… as real people forget is just how cynical we are about business today. What is satisfaction, but a judgement point that brings nuetrality of opinion or forgiveness to a sin? Let me put this another way. If sin is to crime, then satisfaction is to parole. Or, in plain english: satisfaction isn’t about being great, its about being forgiven or not getting punished.

In the context of Christensen’s Innovator’s dilemma, it is important to note that new technologies fail to adhere to the accepted performance metrics. Translated: innovations that win redefine how satisfaction is measured. Further, in taking the approach of Guy Kawasaki or the ideas touched on in Moore’s Crossing the Chasm

As the competition continues to continues to refine their new innovation and redefines what the market place perceives as valueable, the incumbent has a moving target which they need to meet.

What tends to occur, instead, is that companies in today’s marketplace would prefer to use traditional “war” metaphores to conquere new markets and place military regimes in place to control the native populations. The new products which are positioned in those markets are similar to types of local uprisings which overthrow the existing governments.

The people (or citizens) in countries and in markets prefer benevolent leadership. When the party in power acts more like a dictator than an elected politician, their real problems start. In the same vein, when the party in power seeks to meet the needs of everyone all the time, they are more likely to meet the needs of no one.

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I just read a very interesting article in the June edition of the Harvard Business Review. It is titled Eager Sellers & Stony Buyers: Understanding the Psychology of New-Product Adoption and written by John T. Gourville

The basic message is this: consumers of technology tend to overvalue the status quo and the losses they would incur to switch solutions by a factor of 3. Producers of technology tend to overweight the benefits of their new technology and ignore the costs psychological costs associated by switching to their solution by a factor of 3. The math: 3 x 3 = 9 time effect. Or a 9x gap in perceptions between the producers and the potential consumers.

Now… I’m assuming that most who read this will see it as a very insightful and significant perspective, probably one that augments the work done by Moore and Christensen. What I find intriguing is how this could be leveraged by incumbant technologies (read: those of us producers who are not start-ups, but instead, need to defend our installed base).

I believe that this is laregely due to classic framing by producers and cognitive dissonance by customers. In other words, many companies get trapped into thinking that focus on customer satisfaction is enough. I’ll address the core problems with satisfaction in the next post, but for now, I want to focus on pyschological accounting and what I’ll call the incumbant halo and why it takes either a serious pain or a sly company to much energy to create the inertia for change.

Customers make an emotional commitment in the process of buying a product. The level of that emotional commitment will vary from product to product and from person to person. Regardless of the level of commitment, the thing to remember is that it is hard for us as human beings to sever relationships when a positive emotional commitment exists.

Or, when the halo is in place, a company with a positive emotional quotient can do no wrong and a company with a negative emotional quotient can do no right.

It is incumbent upon us as producers to fully understand the emotional connection our customers have with our products or services and then determine how to strengthen them.

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Every company, during the early portion days of its formulation, embarks on a trajectory that focuses its energies on building the framework for sustainable competitive advantage. The possible paths to pursue are:

• Product Innovation: the strategy which demands a high level of research and development in order to product discontinuous innovation within the corporation
• Supply Chain: the strategy which focuses the companies energies on minimizing costs, increasing organizational throughput, and ultimately ensuring that the company can out produce the competition while under-cutting their prices
• Relationship Management: the strategy which focuses the organization’s energies on building and leveraging relationships with customers, suppliers, and other stakeholders in the value chain.

The best strategy requires a company to elect to outperform the competition in one in the most extraordinary way. While companies can try to maintain leadership in more than one area, it is foolish to try and be all things to all people.

No matter which framework is chosen, Milton Friedman taught us that the social responsibility of a business is to increase its profits. In the act of creating profits, the company fosters economic growth and empowers the market in which it operates. These benefits ultimately deliver the quantity of financial rewards required to lift all of the market participants to a new economic level. At least, in theory, this is the financial juggernaut which has propelled the United States into a long-standing position of dominance within the world. However, like many things, it appears as though the growth and level of innovation which once appeared to be without end may actually be slowing… at the very least, transitioning away from our shores to other regions. At no other time in the history of the United States has it been more important to understand and harness the elements of innovation. If we are able to do so, it will allow our local economies to capitalize on their vast knowledge worker resources and sustain/increase their growth.

What is the principle foundation of sustainable competitive advantage at your company?

What is the value of innovation in your organization?

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I can remember while growing up the kind of trust and faith my parents placed in a large number of brands. I was always hearing statements like
“You’ll never go wrong with _____”
or
“You can trust _______.”
As time passes and my experiences have grown, I’m finding that the number of brands that I can say that about can be counted on the fingers of one hand. I’ve begun to question whether I’ve started to expect more from companies than they can afford to offer or if the quality of output of companies has dipped into the realm of the below to barely acceptable.

I think in many cases, the sad state is the latter.

When my wife and I bought our first home, we were clueless and overwhelmed on a number of topics. The last thing we wanted to worry about were our decisions about major appliances. Because I had been taught to believe that Sears represented a brand which could be trusted, it was a no brainer to look to them for our major appliance needs.

Oh, how things have changed at Sears.

Let me set the context a bit, because the story could get a bit involved if I left myself fully express the rage I still feel towards them over a year since I told Sears that I would tell anyone who cared to listen how Sears have treated me and that I would never patronize their establishment again.

We purchased a refrigerator, freezer, washing machine, dryer, and vacuum cleaner all roughly at the time same. We wanted to make sure that we were well covered, so we also purchased the extended service warranties for two or three years. All of the appliances, with the exception of the refrigerator, have worked flawlessly to this day. The refrigerator, however, had a propensity to frost over and then cause the food to rot.

We called Sears At Home Service to come out and take a look. They sent someone out and they replaced the timer.

MISTAKE NUMBER ONE: The floor sales person who sold us the major appliances told us that if we ever experienced a frost over and food loss, the extended warranty would provide up to $150 for food replacement. This was never offered and later denied.

We watched very closely, hoping that the frost over had been conquered once and for all. We were disappointed to find that the symptoms had returned about two months later. We wrestled with them for a while… Defrosting every month or so to get the frost over taken care of. We got tired of this, so we called in Sears At Home Service again.

The timer was replaced. Again, we hoped for the best. Alas, it was not to be. More of the same ensued.

We finally called in service for the third time, and this is where the fun really started. During an earlier visit, the technician told us that if we were to manually defrost the freezer (read: use a hair dryer to complete the task) we needed to be really REALLY careful, because he’s seen people melt the back of the freezer. Needless to say, we told the serviceman / technician not to bother with manual defrost, we were happy to let it occur naturally.

The technician told us that it was likely that some other part was to blame for the frost-over. I left the room to take care of my business. Here’s what happens next

MISTAKE NUMBER TWO: The serviceman / technician failed to replace the parts for the ice-maker.

First thing I noticed when I returned was the smell of burnt plastic in the kitchen. The parts laying on my kitchen floor was the second thing I noticed. The third thing was:

MISTAKE NUMBER THREE: The serviceman / technician left without saying good bye.

I was confused by what had occurred, so I decided to pop my head into the freezer and see if I could tell what had or had not been left disassembled. Low and behold, I discovered where the smell of burnt plastic was coming from:

MISTAKE NUMBER FOUR: The serviceman / technician had melted the rear of my freezer.

I immediately called the Sears service line, waited on hold for 15 to 20 minutes, and then was told:

MISTAKE NUMBER FIVE: The first available time for a visit to reassemble my freezer and investigate my claim of damage would be in two weeks.

Now, believe you me, I made sure that they had someone out sooner than that. In fact, the next visit was in two days. However, would you believe who that the next visit was from?

MISTAKE NUMBER SIX: Sears sent the same technician who caused the damage to determine whether any damage was caused.

I don’t know who was more surprised when I opened that door. I could tell by his face that he recognized me and was immediately uncomfortable in the fact that he was back in my house. And, he became immediately defensive and confrontational when I began to address my grievances. The guy walked out of my house, slammed the door and drove off without looking at anything.

Of course, I had to call in and report this. Again, I asked for someone to get right out. The technician they sent was extremely nice, reassembled the freezer, and confirmed that there was damage to the freezer that was obviously caused by heat, such as a hair dryer, but could not verify that it was caused by the prior service person. Of course this isn’t what I wanted to hear, but I understood. Once he had completed his report, I got back on the phone with support to check into what next steps would be.

MISTAKE NUMBER SEVEN: There was no report on file indicating that damage was done. We needed to get a District Manager to visit on site for that to happen.

After a few days, the district manager stopped by. He wasn’t nice… But wasn’t mean. He asked to see the freezer. He made a few notes without comment. He left.

Now, that wasn’t quite what I expected. I expected some form of civility. Some level of apology. I actually wanted some level of admission of guilt at this point. Nope. What we received instead was:

MISTAKE NUMBER EIGHT: The reported damage was deemed cosmetic. No recourse offered.

I’m sure you can imagine that I was fuming now. Take a look at the Sears Protection AgreementS. In most of their promotional documents they claim that they provide 100% Customer Satisfaction for the service agreement. When I asked for my money to be refunded for the Service Agreement:

MISTAKE NUMBER NINE: Because a service call had been made (despite the fact that they damaged my freezer, and provided 100% dissatisfaction) could not be refunded.

Further, when I went to complain on the fact that the damage was caused by the technician, they claimed that they could not repair the damage, even if they wanted to, because the plastic which was melted is part of the body and would require replacement of the entire system. Note the following on their service coverage statement:

“Product will be replaced with a like item from Sears if the repair cannot be completed due to unavailability of functional parts or technical information”

MISTAKE NUMBER TEN: Sears offered not an apology. Nor did Sears offer to repair or replace the damage caused by the technician. Instead, Sears offered a $50 gift card to buy more SearsProduct.

At that point in time, I swore the following:

1. I would never shop at Sears again
2. I would tell anyone who cared to listen not to ever shop at Sears again
3. I would take Sears to small claims court.

I probably could have made a good case for myself.. But I did what I suppose most corporations bank on, I gave up my quest to engage them in small claims court. I know too little about legal requirements in Texas and had increasingly less time during the period where it would have been appropriate to bring such a claim.

Oh Sears… What have you become? With increasing pressure from the likes of Wal*Mart, HomeDepot, Lowes, BestBuy, Circuit City, and oh so many more… I would have hoped you would react to my threat seriously. Do you you realize that you have not only caused me harm but you have also insulted me? Do you not realize that I am only one voice in the universe, but a representative one? Do you really want to drive more of your customers away?

If you don’t begin to change your ways immediately, you no longer deserve your customers.

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What came first? The customer? or the Profit?

The implications of this answer should get your head wrapped around the right set of questions that I’m going to be trying to explore.

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