Exceeding expectations or solving customer problems: What’s more important?

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Let’s say you set out to improve your company’s customer experience to drive better organization performance (kudos to you). What will be more important in attaining that goal: exceeding customer expectations, or solving customers’ problems?

That’s the question that came to my mind after reading Robert Passikoff’s recent article on Forbes.com, “The Final Frontier: Customer Expectations.” Passikoff points to a shift in the past 15 years: customer expectations have increased significantly, rising 24 percent in all categories. That number has increased even more in the technology sector. An entire book could be written (and probably has been) on why customers’ expectations are on a sharp upward trajectory.

But my question is not the focus of Passikoff’s article. He notes that measuring customer expectations is a tricky business and turns to customer loyalty as a correlating metric. After explaining how customer loyalty is measured and providing an example from the wireless carrier industry, Passikoff concludes, “… brands that are able to better meet – even exceed – growing customer expectations always end up on the top of the list.”



Fair enough. On the surface, it’s a good point, and one that seems hard to argue with. But I’m going to argue it anyway. Because here’s the thing: Customers seek out businesses because they have needs, and they expect those businesses to solve those needs. The business either solves the problem, or it doesn’t. Period. End of story.

Expectations are like averages; they don’t exist in the real world (only in your customer’s mind, and perhaps subconsciously at that). Therefore, to “exceed customer expectations” is a weak goal. I’d go as far as saying that expectations are a “false god,” sapping a lot of focus, energy and resources from what should always be the goal: solving the customer’s problem.

Passikoff started a great conversation about customer expectations and satisfaction, but then took us down a road that’s essentially a dead end. Tying customer loyalty scores to customer expectations is not the answer. Why? Loyalty scores are important, but they don’t take into account all the reasons customers stick with a company. The “how well” question is the field of loyalty. The “if/if not solved” is the field of performance.

Take the example in Passikoff’s article that examines how wireless carriers rank on the Customer Loyalty Engagement Index. AT&T came in first, followed by Verizon, Sprint and T-Mobile (in that order).

Passikoff notes that this list correlates very highly with customer behavior, such as churn figures, and that, according to the latest data from the Better Business Bureau, AT&T had the fewest complaints and lowest complaint rate of these four wireless providers. All this, even though there was speculation last year that AT&T would see an exodus of customers to Sprint and Verizon when the iPhone became available on those carriers. It didn’t happen; AT&T continues to outsell Sprint and Verizon.

Although these numbers seem to confirm the Customer Loyalty Engagement Index’s ranking, there’s something the data does not reflect: captive customers. I happen to be an AT&T customer, but I am is because I can’t get out of my contract, and when I’m at a point where I can, it’s difficult. So, I perceive I am stuck – loyal, but captive.

How many people are in the same boat as I am? Locking customers in prohibits a measure of loyalty AT&T should trust. Until we come up with a “complacency” or “frustrated and stuck” index and begin dissecting truly loyal, enthusiastic consumers from those who don’t have the time or resources to navigate the breaking of a contract, loyalty is one metric—but not the most important metric we can fully trust to drive improvements in customer experience and organization performance.



Which brings me back to a goal we can trust: solving the customer’s problem. AT&T solves my need for road-warrior connectivity and that’s why I show up in the positive in their revenue and profit performance.

Now, think about the problem or need your company exists to solve. The desire that triggers them to act. Do you know how often, and how well, you solve that need? Do you provide an effective solution? This is where we should focus our time and energy: On solving our customers’ problems.

17 COMMENTS

  1. “The business either solves them or it doesn’t. Period” is thinking that is extraordinarily rooted in the mid-20th century, and only proves the point that expectations are the necessary measure in a category.

    Solving problems, AKA primacy of product or service, are table stakes today. If you can’t meet the barest requirements you aren’t in the consideration set. So something more is required. Unless you’re a commodity, then only price matters.

    But we’re talking about “brand” here and you make the very point in your comment in re AT&T. You have your choice of carriers, but one (according to you) turns out to meet your expectations better than another. Not just connect one phone to another. That’s differentiation. That’s what creates engagement. And you don’t have to do it everywhere in what comprises the drivers of engagement and loyalty, you just have to “own” enough, meet or exceed expectations better than the competition and , voila, a loyal and profitable customer.

    Oh, and profits.

    And you are a captive of your own choice via your contract. But not for life. For years consumers bitched and moaned that if only another carrier had an iPhone, boy, would they leave AT&T! And when they had the chance to move, and 94% remained.

    But back to profits. Brand-to-ideal correlations with profitability has been independently shown to range from 0.83 to 0.901, which would have social scientists and CFOs, dancing on their tabletops! Want more in-market proof of practice? Check out our book “The Certainty Principle.” complete with in-market validity studies.

    Sorry, but your notion of problem-solution is all a brand needs to be competitive – not to mention profitable – is outdated. Process engineering and a lot of same-same technology in virtually every category ended up (’round about 1985) with most companies doing it OK. OK enough to solve the basic problems of the categories in which they competed and which consumers looked to. But being the same as everyone else, no matter what problem you solve really isn’t a practicable brand strategy in the 21st century.

  2. I think we might be arguing different notions/concepts here. When I talk about “problem/solution” I’m referring to the need, problem or desire that causes a person to trade something of value (typically money) to have solved. When I think customer experience, I think of what happens and how customers feel from the moment they realize a need all the way through using the solution and evolving to another need over time.

    So, we’re not just talking about customer service or phone calls or the product here–it’s more holistic. Re: AT&T, like I said in the post, they do solve a need for me (road-warrior connectivity). I acknowledge I can change at the end of a lock-in period, but I don’t because I perceive it’s difficult to change carriers. Eaiser to just re-up. I may not be contractually captive at that moment, but I feel as if I am.

    We agree that loyalty is important. We agree that if an organization doesn’t exceed my expectations at least once and a while, I am less likely to be loyal. The measure of success of any customer experience is if – and how well – the problem or desire or need that triggered me to act was solved. The If / If not solved is the heart of what drives performance. The how well question drives loyalty. My headline question was “which is more important?” For me, it’s the solving the need.

    All in all–it’s a great discussion. And one I’d like to hear more in the months/years ahead. Thanks Robert.

    Linda Ireland
    @lindaireland

  3. I do think you both are largely advocating the same idea. Solve a need well (good),exceed expectations (better, cause the need was solved).

    Neither of you went to wow, which often drives people to think they need to be hip or cool or fun, while ignoring the basics.

    I do agree exceeding expectations is a tough goal, since those, as Linda points out, hard to quantify and verify.

    Hank (@HBonCX)

  4. In the customer experience world, there is a lot of talk about the importance of wowing customers in order to please/ retain them. A lot of this talk can be hype.

    Whenever you ask a consumer to recall either a fantastic or a terrible customer experience; people are far more likely to recollect the terrible one. This is because, even in today’s increasingly service-orientated world, there is still so much terrible customer service out there.

    Wowing customers doesn’t have to be about exceeding a customer’s expectations. In a world in which consumers are let down so regularly by the companies they deal with, ‘wowing’ a customer can be as simple as delivering on your promises. Clarity, conformity & consistency are every bit, if not more, important than going the extra mile.

    I’ve been a customer of First Direct bank for 18 years and I’m wowed. They do not exceed my expectations, but they’ve never made a mistake and I can use the service how I want, when I want & when I want. Today I researched half a dozen business banks and not one of them can provide me with a similar service to the one I’ve had from First Direct for over ten years.

    I’m not saying that we should completely discount the principle of exceeding expectations; however we should also remember that exceeding expectations might come at a cost to the business. This excess cost might even be unnecessary for the business and undesirable for the customer.

    Most businesses would do well to simply focus on “getting it right”…

  5. Should companies focus on “delighting” their customers? I think it’s a worthy goal, if they want to develop genuinely loyal relationships.

    But it begs the question — What does “delight” really mean?

    Some say it means constantly exceeding customer expectations. Customers say jump, you jump that high and a little bit more. The challenge: how to keep it up!

    Others say it’s ok to just be consistent. I think that can be “delightful” if — and only if — the customer has been conditioned to expect erratic service such as Ian experienced.

    Every customer has a different view of what will “delight” them — motivate them to be a repeat customer and spread positive WOM. Personally, I like consistency. Others may prefer more sizzle.

    So, it all depends. Sadly, I think Ian’s correct that “Most businesses would do well to simply focus on ‘getting it right’ …” But I don’t think industry leaders will settle for this, if they want the most loyal customers.

  6. I often think that once we start conceptualising we go off in the world of word games to use the expression coined by Wittgenstein. So lets head back to the land of experience – specifically my experience.

    I first start looking / interacting with a ‘supplier’ when:

    – that supplier catches my attention with some product or service that grabs my attention and I think I want some of thatl This could be as I walk past a store front and see an eye catching jacket. It could be because I see an advert…. That is to say that the supplier creates that ‘desire’ (within me) for its product/service.

    – i have a problem – the shoelaces have snapped – and need a product or service to sort out that problem and return my world where it works as I want it to work.

    Assuming that when I turn up to buy the ‘supplier’ does a good job of serving me by communicating-selling-serving me the way that I like to be served and the price that I have to pay occurs as reasonable then I will buy. The business may now count me as a customer. I don’t tend to think of it that way. For example, I am a ‘customer’ of Sky and I do not go around thinking I am a customer of Sky. I just consume the service – television, phone calls, broadband – that I have bought. As long as that works, all is fine.

    Sooner or later I will have to get hold of the supplier because there is some kind of ‘breakdown’ in the ‘workability’ of my life and I am of the view that the supplier can help me out. It could be that I have an issue with the existing product/service, it could be I wish to upgrade or buy a new product/service.

    If this experience is a one that matches or exceed my expectations then I will be happy and most likely to continue with that supplier. Why? Because I feel good about that supplier.

    I might also continue with an existing supplier even though I do not like the way that supplier treats me. Why? One I have no alternative – there is no other supplier that meets my needs. Two, because I believe that all suppliers in the category are as bad as each other. Three, I am not willing to put in the time and effort to find and move over to another supplier. Four, I am not willing to take on the risk/cost involved in switching – this is a big issue when it comes to banks and broadband suppliers in the UK.

    Now here is the fun bit. You and me we get along fine – you have looked after me every time that I have needed you. Think marriage. This is how it was between me and the RAC (auto breakdown service in the UK). And then the ‘mistress’ comes along – I am not looking, she just comes along and catches my eye. This is how ‘I ended up in bed with the AA’ (the competitor to the RAC) and left the RAC. The AA lady offered everything that the RAC did and was that little bit more attractive. She paid attention to whereas the RAC occurred as ‘starting to take me for granted’ and the AA’s words were that much more appealing.

    To sum up:

    a) You have to have an attractive Value Proposition and communicate it in a way that I find attractive and I will reach out to you;

    b) When I reach out to you to buy you have to do a good enough job of helping me to buy and become a customer.

    c) When I reach out to you for help in dealing with any issue I have with your product or your organisation then you have to make it easy for me to get that issue resolved. It should occur as no effort at all. And it should occur as you care about me – like good friends care / look after one another.

    And you have to bear in mind that my eyes are open and there is always a ‘mistress’ waiting in the wings. That means you must not take me for granted. You have to actively think about how you will keep me interested and hooked on you. The best way of doing that is to ‘make me feel special’ and ‘enrich my life’. That means being genuinely interested in me and my life. It also means surprising me – giving me that little extra that I was not expecting. Stan Phelps calls this ‘marketing lagniappe’. Think about taking your partner on an unexpected dinner, vacation…that you know he/she likes and will make a difference.

    Conclusion. You have to do both: you have to get the basics right; and you have to throw in those special surprises that delight and thus reinvigorate the heart. And there are no guarantees. Affairs happen. Divorces happen. And sometimes people get divorced and then get remarried again. That is the reality of life. Alan Watts wrote a great book titled “The Wisdom of Insecurity” – it is worth reading.

  7. you have solved their problem with maximum ease. Ease alone will generate wow (in a service world where disease reigns supreme). Once ease is mastered, relevant connections that exceed expectations do come into play. Of course, when I think of expectations I always consider both exceeding what “typically is” and what “should be.” That’s my two cents. Love the impassioned and smart discussion above!

  8. Ian,
    It is sad but true that – sometimes and perhaps too often – simply solving the need that triggered someone to go looking for a solution can in itself exceed a customer’s expectations.

    Thanks for sharing your experience with First Direct Bank. It is a terrific example of how solving your need for consistent, reliable and matched to you banking is at the heart of why you’re there. It also helps us see the difference between that root-of-it-all solution in context with the occasional ‘wow’ moments insire us to tell stories and tie us emotionally to a brand and company. I agree with you we are not discounting the latter, rather putting them in the focus that drives long term performance.

    Thanks Ian. Let’s keep testing this!
    Linda Ireland
    @lindaireland

  9. Totally agree with you Bob, and with Ian. It’s true, and as you say “sadly”, that most businesses simply focus on getting it right, or at least eliminating negative experiences. But the reality is, and even sadder, it that very few actually get it right at every channel, let alone making it surprisingly delightful. A company who manages to eliminate negative experiences across all channels already has a big differentiator. Of course that is relative to every customer, who will encounter different touch-points throughout the customer experience lifecycle. The challenge is understanding what constitutes value at each channel and deliver specifically that value.

  10. Bob,
    I love the question you raise: should companies focus on delighting their customers? I believe the answer is yes – in a Stan Phelps, Marketing Langinappe kind of way. What I mean is that an occasional, suprising something extra goes a long, long way in inspiring loyalty. That’s a very good thing for long term performance and I whole heartedly support it.

    Yet I see top many leaders trapped in “consisitent wow” or “more is always better” thinking, and that can be a leak of both short term and long term performance. Take Walmart. If they tred to delight me with the things Nordstrom offers me – more pleasant lighting, a personal shopper, gift wrap and free samples -then over time, as these suprises build up, three unintended consequences can happen:

    1) My expectations go up and I become more difficult to surprise and delight
    2) There may be a diminishing point to the loyalty and spending I give Walmart. In other words, what Walmart spends on me and what I give back in customer value may not be a linear, 1 for 1 payoff.
    3) I start to mistrust Walmart’s promise to solve my “lowest cost all the time” need (because I wonder who’s paying for all the extras).

    All that said, many of us in this comment string seem to be in agreement that most businesses would do well to simply focus on ‘getting it right’ consistently, every day across all channels, across all touchpoints, and across time as customers learn about an organization, through the purchase process, after the sale and even as they evolve to new needs. Sprinkle in something positive at each step as icing on what moves a customer forward to a need solved – and we’ve got a high performance cake!

    LCI
    @lindaireland

  11. Maz,
    What a potent (and a bit scary) analogy! I love that you bring the chronology of a customer’s relationship with a business to the conversation. As customers, we remember what happens in a single relationship with an organization over time (as opposed to a multi-channel or touchpoint relationship).

    The “basics” are whatever it takes to move a customer further and fastest to a solution to the problem, desire or need that triggered them to act in the first place. In other words, the shortest line between my need and my need solved is “the basics.” The basics and a need solved are why Robert Pasikoff’s article sparked my post — no amount of wooing will keep me over time if my problem isn’t solved.

    Top performing organizations show they appreciate us, suprise us with things that underscore the promise (as noted in my comments to Bob above, Walmart should surprise with price rollbacks rather than valet service). Top performers DO indeed do both, and understand the purpose and payoff for each.

    And thanks for the book reccomendation as well – sounds terrific.
    LCI
    @lindaireland

  12. I’ve never been an advocate of “wowing” customers when the basics aren’t being handled well. I think customers for the most part don’t want to trade an occasional surprise for erratic service.

    But I think there’s a notion that doing a bit extra means adding cost or “raising the bar” in some way. Not so — this is the great insight that Stan Phelps had in his Purple Goldfish project.

    Wal-Mart doesn’t have to become Nordstroms to add some value in their service experience. If you look through the 1000+ examples, you’ll find many examples where a little creativity and empowered employees can help create some differentiation.

    Granted, the free cookies or popcorn given away by Doubletree Hotel and Five Guys do cost something, but it doesn’t redefine the entire value proposition. Doubletree doesn’t become the Ritz Carlton and Five Guys still sells hamburgers.

    Trying to create a “six sigma” kind of perfection is a laudable goal, but I don’t think companies should wait until they’ve perfected their delivery of the basics before trying to do something creative. These days, you need every advantage you can get!

  13. Bob,
    Whoa! Glad you have kept the conversation going. I am not advocating a “six sigma” kind of perfection. I have loads of respect for the discipline but I concur it is not the focus or goal here. I also agree many of the suprising extras – the langiappes – don’t cost a lot.

    I am saying that everything an organization does every day should be drawn from “What will move my customer faster or further toward a need solved well?” The “basics” as Maz, Joseph, David and Ian call them in one way or another, are most often about if/if not a need is solved. Surprises and delights mostly live in the “how well” portion of the goal.

    Even if two “surprises” cost the same, the one that’s tied to the promise of a solved need will matter more to the performance over time. Chocolate chip cookies at Hampton Inns work, and price rollbacks at Wallmart work, because they are tied to the needs those organizations are out to solve.

    Don’t wait to try something creative. So say we all. AND in the trying and choices, never lose focus on why your organization exists for customers.
    LCI

  14. Linda, your problem-solving paradigm appeals to me because I’m an analytic person. I like solving problems.

    But I’m not so sure that this is how customers ultimately decide what is “valuable.”

    This post started with a discussion about expectations vs. problem-solving. Is that the right question? It seems to me we want to offer customers what they consider valuable — that will motivate them to become loyal customers.

    As I read the loyalty research, there’s both functional and emotional aspect to loyalty. Give what they expected and/or solve the problem they have, and I see that as mainly the functional side of loyalty. This feels more like satisfaction to me, which is not enough to create truly loyal customers.

    To really “move” customers to become loyal advocates (not just passive/retained customers) I think companies should also focus more on the irrational side of things. Call it the fun dimension. And I’m not sure it has to have anything to do with the “problem” to be solved or the “expectation” to be met. What do cookies have to do with staying at a hotel, after all?

    Maz wrote an interesting post recently about “rationals” and the current hype about Big Data: http://bit.ly/yWlALT. Here’s an excerpt that I think is on point here:

    Daniel Kahneman in his latest book (Thinking, fast and slow) spells out that human beings are essentially a meaning making organism that thinks/works in stories and jumps to instant conclusions as long as the story fits the preconceived schema. He writes "The implication is clear: as the psychologist Jonathan Haidt said in another context, "The emotional tails wags the rational dog.” The affect heuristic simplifies our lives by creating a world that is much tidier than reality….” Mr Kahneman has titled one his chapters "Causes trump statistics".

    Another book worth a read is “Predictably Irrational” by Dan Ariely. In it he tells story after story, and backs them up with solid research, about how consumers reach decisions in ways that don’t make rational sense. And yet they can usually justify their decisions after the fact.

    My take: Yes we want our problems solved and expectations met. This has been the focus of Six Sigma and the CRMers for the past 20+ years and it has improved the overall quality and reliability of the products and services we buy. Think cars, electronics, mobile service. All to the good, but the next dimension will be adding the fun factor to the customers’ experience. And that means a journey into the irrational customer mind.

  15. Bob,
    Thanks for pushing our conversation forward here. I am just finishing up Thinking Fast and Slow – incredibly insightful – and appreciate you pointing me to Dan Ariely’s book as well.

    On the question I asked in the title of my post, we may have arrived at ‘agree to disagree.’ For me, every experience starts with a need, problem or desire a person would trade something of value to have solved. Their measure of success is if – and how well – that triggering need is solved. Top performing organizations master both solving the need and top “how well” list, yet if I had to – if I were forced to choose which half of the sentence to focus on for consistant performance I would choose solving the need. I often ask “If we had $10 of effort, time, resources, and thinking to spend, how would we spend it?” I would spend some on topping the “how well” list, but I’d spend more on the problem that triggered the customer to act.

    Thanks to you and all in this rich and provocative conversation! Smart thinking here!
    LCI

    I

  16. Linda

    The biggest bet for a business is to design experiences that avoid the problems. That way you achieve both – exceed by avoiding and solve when they happen. Customers are bound to reward such businesses.

  17. Nikhil,
    You’re right that “no problems in the first place” is the biggest bet. Here’s to that ideal experience – one that also solves the need that triggered a customer to start their journey in the first place. That would be the biggest payoff!

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