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How to Exceed What Customers Want
Net Promoter Conference '10: Satmetrix CEO encourages companies to move beyond the "zone of tolerance" to redefine customer experiences.
Posted Feb 15, 2010
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NEW YORK — In 1993, customer experience researchers Zeithaml, Berry, and Parasuraman put forth a model to define the range of customer perceptions of a service between the desired and the minimum acceptable standards. Called the "zone of tolerance," the somewhere-in-between level is where most organizations aspire to place. Richard Owen, the chief executive officer of Satmetrix, told attendees at the opening keynote of the Net Promoter conference that real customer experience disruptions come from companies that go beyond the zone of tolerance. Owen, whose book  Answering the Ultimate Question was featured in CRM's "Required Reading" in April, said that in every industry there are two sides to customer perceptions:

  1. What the customer expects (usually based on prior experiences), and
  2. What the customer actually wants.

Companies generally rest somewhere in the middle of those two points, mostly because industries are married to standard operating procedures (SOPs). Businesses may veer in one direction or another in the zone of tolerance, but generally they come short of meeting what customers want. 

However, Owen posed the question: "What if you start on the other side of what people want and you redefine what people want?" Although seemingly a foggy concept, Owen provided examples of companies that have redefined industry practices by rethinking what customers want. 

David H. McConnell, the founder of beauty products company Avon, had a simple idea to eliminate the impediments to perfume sales. His main innovation was through distribution and the concept of bringing products to a customer's home.  That same theme of distibution innovation has reoccurred in history, Owen said. Just take a look at the success of McDonalds, Netflix, Dell, and to some extent, Amazon. "Some companies seem good at taking existing business models, turning it on its head, and, in doing so, creating a new industry and new expectations for customer experience," he said. Retail giant Wal-Mart is also a distribution innovator in that Sam Walton sought to bring stores to the small towns in the Midwest. Although the company has been criticized of running small mom-and-pop shops out of town, Owen said that Wal-Mart has to its credit the bringing of choice, distribution, and price efficiency to consumers. 

Not all companies and industries disrupt customer expectations in a positive way. Take the airline industry, for example. "Who would have thought five years ago that the battle for the airline industry would be a battle for bags," Owen said. This is an example of companies trying to redefine the industry in the other way. "Let's lower your expectations... let's pretend your bags are passengers and charge them," Owen joked. 

Although the battle over bags has lowered customer expectations, it has made room for some shining stars in terms of experience such as Southwest Airlines and Virgin America, Owen said. General Motors has tried to redefine expectations in a positive way with its introduction of money back guarantees on automobiles. Also, the company's brief stint selling cars on eBay demonstrated that it was capable of thinking outside the box when it comes to distribution. However, soon enough, Owen said, GM's standard operating procedures kicked in and the company shied away from disruption. All too common, Owen pointed out, "We run things for the benefits of operation, and not for the benefits of our customers.

Moving forward, Owen said companies should take the following approach to rethinking the customer experience:

  1. Understand your existing zone of tolerance and develop ideas outside of it. Be cognizant as to if your industry is behaving not by want customers want, but by how they expect it to be run.
  2. Try to understand which of your SOPs are defined not by what customers want but by industry practice.
  3. Think like an entrepreneur trying to attack and remake your industry.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine.

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