Eighty percent of companies believe they deliver a superior customer experience, but only 8 percent of their customers agree, says Bain & Company. Here’s how to repair the disconnect. From Harvard Management Update.
The authors of this article call it the dominance trap: The larger a company’s market share, the greater the risk it will take its customers for granted. “As the money flows in, management begins confusing customer profitability with customer loyalty, never realizing that the most lucrative buyers may also be the angriest and most alienated. Worse, traditional market research may lead the firm to view customers as statistics. Managers can become so focused on the data that they stop hearing the real voices of their customers.”
According to the article, “financial software powerhouse Intuit briefly fell into this trap, despite a history of excellent customer service. In 2001, its Turbo Tax program commanded 70 percent of the retail market for tax-preparation software and 83 percent of the online market. But then it began doing things that annoyed customers, such as upping the price of tech-support calls and limiting software licenses to one computer. Store-based retail growth flattened, and as Web-based tax preparation sites sprang up, online buyers started jumping ship. In 2003, Turbo Tax’s share of the online market plummeted.”
The article cites a Bain & Company survey that revealed just how commonly companies misread the market. The company surveyed 362 firms and found that 80 percent believed they delivered a “superior experience” to their customers. But when customers were asked about their own perceptions, they rated only 8 percent of companies as truly delivering a superior experience. The conclusion? “It’s easy for leading companies to assume they’re keeping customers happy; it’s quite another thing to achieve that kind of customer devotion.”
So what sets the elite 8 percent apart? They take a distinctively broad view of the customer experience. “Unlike most companies, which reflexively turn to product or service design to improve customer satisfaction, the leaders pursue three imperatives simultaneously:
- They design the right offers and experiences for the right customers.
- They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration.
- They develop their capabilities to please customers again and again—by such means as revamping the planning process, training people in how to create new customer propositions, and establishing direct accountability for the customer experience.
Each of these “Three Ds” draws on and reinforces the others. Together, they transform the company into one that is continually led and informed by its customers’ voices.”