Customer Management: Do we really know how good we are?


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“The way of a fool seems right to him, but a wise man listens to advice”. There is a cautionary tale from this reference from Proverbs 12:15 for any business which wants to improve its way of working; how competent you think you are is probably not the reality of how competent you actually are. The worst performers think they are good, and the best think that everyone is like them or better. The effect has Nobel prize winning roots in Psychology . It is called the Dunning-Kruger effect and we see its impact demonstrated in businesses across the world. Dunning and Kruger found that, for a given skill, incompetent people will:

  • tend to overestimate their own level of skill;
  • fail to recognize genuine skill in others;
  • fail to recognize the extremity of their inadequacy;

Meanwhile, they found that people with true ability tended to underestimate their relative competence. In addition, participants who found tasks to be relatively easy erroneously assumed that the tasks must also be easy for others.

Customer Management: Do we really know how good we are?There are strong parallels in business. TCF and their partners use a methodology called SCHEMA® to assess and benchmark an organisation’s competency in ‘managing customers’. These assessments are carried out on large companies throughout the world and some SCHEMA assessors are baffled by a finding from the assessments they carry out; the best companies, those who are most effective and efficient in the way they manage customers, think others are as good or better, and the worst believe they are much better than they are. The best will listen to advice and are hungry to learn.

They will combine external advice with their own thinking and determine how they will improve. The worst are reluctant to accept that they are poor performers, and often there is a culture within management that simply will not accept bad news. The worst companies, using Dunning and Kruger’s terminology, suffer from “illusory superiority, mistakenly rating their ability much higher than average”. You see this too in the way companies view and manage customer feedback. “What are customers talking about, I know my service is good; the research must be flawed”; “The customers’ complaints weren’t valid because that’s our process”.

We have noted another parallel with Dunning and Kruger’s work. They found an improved ability in poor performers to estimate how good they are was achieved after minimal tutoring in the skills they had previously lacked, regardless of the negligible improvement in actual skills. In the business world, after a short intervention, where a worst performing company is objectively shown its assessment scores and listens to examples of best practice from elsewhere, the ‘light’ turns on even resistant senior management. This is the start of the path forward to improved performance and the delivery of a more profitable customer experience.

Neil Woodcock is Chairman of The Customer Framework and Visiting Executive Professor at Henley Business School.

[i] Dunning and Kruger were awarded the 2000 satirical Ig Nobel Prize in Psychology for their paper, “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments”.[10]
[ii] SCHEMA Customer Tools

Republished with author's permission from original post.

Neil Woodcock
Neil is Chairman and CEO of The Customer Framework Ltd. and visiting Professor at Henley Business School. An honours graduate, he worked in B2B sales & marketing with Mobil Oil, B2C marketing with Unilever and consultancy services with Andersen Consulting & McKinsey. Neil has written 5 books on customer management, is on the editorial board of leading journals and is an Honorary Fellow of the IDM.


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