Understanding Customer reactions

Last week, I introduced ways in which you can manage customer expectations.

McKinsey in their review of banks performance focus clearly on the moment of truth or the customer experience in assessing whether banks have increased performance.

McKinsey Moments of truth in banking

So how you manage the expectations and experiences of your customers really does influence their purchase behaviour.

Let me go further, by introducing you to a little background.

I believe that the value of your brand is composed of the brand image it has in the minds of consumers, the expectations that are set up and the positive and negative experiences they have of your brand. around 1990 I came up with the following equation, and i haven’t been able to track if someone came up with it before me.

brand value = image + expectation + experience

I have used this idea, and the idea of building value piece by piece by influencing consumer experience or “moments of truth”, where the consumer actually interacts with your product or brand and whether they believe this experience is better than or worse than the expectation they had in their mind.

Where the experience is better than the expectation there is an improvement in brand perception. Where its worse, the perception goes down.  Both these movements are gradual like dripping cents into a bank account, but over time they mount up.

So how can I use this idea to diagnose where my customers are?

I’ve amended a chart developed by Andy Hanselman to describe the interaction of expectation and experience.

expectation and experience1

This depicts the relationship between a customers expectations and experience and how this can build business performance.

  • The first step is measurement- measuring current consumer perceptions before and after using the business, to assess current performance, and identifying where to focus
  • Second step is customer decision journey or user experience mapping- noting down all the steps and contacts between the business and the consumer.  The business must learn to manage each of these steps.
  • Third is assessing performance of our experience and building in a continuous improvement approach.

Managing our consumers is a real challenge, lets me share a personal example.

I travel Singapore airlines, I have for 25 years. My expectations for travelling SIA are very high. and so I often get disappointed at quite small things- it won’t make me disaffected nor choose to travel with another airline. But occasionally the experience of the food, or the aircrew, or luggage handling wasn’t to my high expectations.  Recently I travelled on Sri Lanka Airlines and on Emirates… my expectations of these two airlines were based on my experience of SIA, and actually it made me feel that SIA wasn’t too bad.  the experience of travelling with the competition reduced my expectations from SIA and will make me enjoy the next flight i take, I’ll be delighted with their performance.  The experience of other airlines re-calibrated my expectations of Singapore Airlines.

So I think this is both a useful equation in understanding how to build value as well as a good diagram on how to assess the status of your customers in the never ending battle with creating great customer expectations.