Customer Experience

Customer Experience Strategy and Planning

It is widely cited that attention customer experience is lacking in most organizations. This barrier stifles potential and can greatly harm the health of your business. Implementing customer experience planning and customer experience strategy can greatly increase your ROI.By putting the customer at the core of your business, you will create immense opportunity for growth and development. But how should you go about planning and carrying out these changes? Below, you can learn straight from CX industry professionals about the skills, tools, and resources you need in order to plan an effective strategy that will drive customer satisfaction and the overall success of your business.

You No Longer Have Only One Brand

Actually, you probably never did.  But you certainly don’t now.  With the growth of the internet and its reviews, social media and blogs, you now have as many brands as you have customer-facing employees.

The 18-year-old at your cash register, the retiree who greets your shoppers and the aggressive salesperson cold-calling prospects are your brand – and they create your brand message to a far greatr extent than does your CEO, your product development group or your advertising.

I was reminded of this as I spoke with a friend whose company has an outsourced pop machine.  Recently, their delivery person began refusing to actually load the soda into their machine.  I don’t know whether this is corporate policy, the result of an overscheduled route, or a difficult delivery person.  But, since every company I know has their machines loaded for them, my suspicion is it’s him.  The brand message is clear:  “We charge you an extra 35 cents per can to drop soda off on your doorstep, and we’re not paid to do any more.”   As you might imagine, this message does not resonate with the customers, and this brand will likely be replaced!

For another example of how the staff is the brand, let’s look at two nearby Caribou Coffee locations.  My local neighborhood spot is fine, but nothing exceptional.  They deliver my far-too-hot tea and generally smile.  Just another coffee shop, with the requisite trivia question and the chalkboard with questions of the day.  The brand message here is, “We have coffee.  And a place to sit and drink it.”

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Targeting Your Service Recovery to Avoid the “Hail Mary”

Last week I visited a company in St. Louis who put me up in a Hampton Inn. Hampton Inn isn’t at the top of my hotel list, but it isn’t on the bottom, either. It’s a fine hotel, with a hot tub mercifully free of screaming kids. But as I was getting ready for the day I found my hot water disappearing, and had to shave without any hot water at all.

I was mildly annoyed, but that was all. As I stopped by the front desk for another purpose, I waited (and waited!) for the manager who was on the phone. Finally, I gave up and sought out another staff member, asked my question, and casually asked whether they knew they were out of hot water. In my mind, the conversation was over. No big deal.

I was running late, so sat down for a quick breakfast. The manager then sought me out, apologized for being on the phone, then quickly mentioned they were comping my room, saying “We want you to come back here.”

Great service recovery, you might think. But was it?

—————–

Few activities impact a hotel (or indeed, any service company) more than service recovery. Beldona’s and Prasad’s study of hotels in Orlando found that poor service recovery was actually more damaging than having no service recovery at all.

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Drivers: the Secrets to Creating a Great Customer Experience

The Heart of the Matter

Typical Customer Experience Measurement Programs treat all customers as one homogenous group, rather than as unique segments. These programs need to analyze customers based on their value to the organization and analyze what drives the behavior of each segment. This white paper lays out a process for developing and analyzing these Customer Experience Drivers.

Introduction

Do you understand what motivates your best customers and sets them apart from the rest? For example, why do some customers:

  • Come to your restaurant every week, whereas others only when they have a coupon?
  • Call you first for consulting help, while others make you bid for the lowest price?
  • Require constant hand-holding, compared to others who are very inexpensive to maintain?

And how do you find more customers like the first group?

Simply said, some customers are engaged with your company, love your products and services, and trust you. These customers tend to be your most loyal and profitable. Others buy from you because you are convenient or have a good price. These are often expensive to serve and contribute less to you business’ bottom line. You need to learn what drives the former, to find more like them.

This is true for both B2B and B2C companies. In fact, because the order sizes are typically much larger, this is even more critical for B2B companies.

Without this understanding, product development and marketing become a best-guess effort. Driver Analysis is the process used to determine what motivates your best customers.  It extends your current NPS, Satisfaction, or Engagement studies to discover and measure these underlying motivations.

Driver Analysis is the practice of including motivations in your Customer Experience Measurement Program, then correlating these motivations with your customers’ Lifetime Value. This process separates those who purchase based on convenience or price from those truly profitable customers who view you differently, and then shows the motivations of each group.

For example, quick service restaurant customers selected the chain they visited the most. Within a restaurant’s most-frequent visitors, those who were “engaged” spent $8 a month more here than the average. What drove this engagement was not “the Quality of Food,” or “Speed of Service.” Instead, it was “the Warmth of the Greeting.” Similarly, Gallup found that B2B customers who rated their partners high on “Impacts my business” are stickier – they remain customers longer, and are more profitable. The specific drivers vary by company – even within an industry – but are critical to understand how to motivate customers to spend more with you.

Another reason to use drivers is to target efforts in your different delivery segments. Using the restaurant example above, imagine the situation where a general manager is told her store NPS or satisfaction score is low. While this is important to know, it does not tell her how to improve these scores. Drivers provide insight on where action is needed.

Similarly, drivers help B2B account teams know where to focus. Satisfaction or NPS helps evaluate the state of the relationship – drivers identify how to improve it.

So, how do you discover these drivers? See Figure 1 for an overview. The process starts with your staff, and then expands to your customers.

White Paper

This post continues in: Drivers – the Secret to a Great Customer Experience White Paper. Please download it to learn the entire end-to-end process!

Shopper Education: The Hidden Casualty of Price Wars

Introduction

How do shoppers learn what they need to know about new products? Traditionally, the retail associate provided this product wisdom, but slashes to labor budgets have left shoppers on their own, accelerating their move to online competitors.

The Harvard Business Review’s The Future of Shopping by Bain consultant Darrell Rigby is an outstanding article on the future of retail. Rigby shows the risk to brick and mortar retailers if they do not react to the growth of online shopping. He proposes a vision for omnichannel retailing – combining the impact of a physical store with the opportunities of online and mobile shopping. It is a terrific call to action, filled with great thinking. The original link requires a registration to HBR, but you can also access it here.

This article led me to consider one aspect only briefly referenced: the role of product and category information in the shopping experience, and how changes in retailing have removed the traditional source of information from the shopping experience.

Consider the evolution of bricks-and-mortar retail as it experienced the growth of its online cousin. As Rigby recalls, in the early days of online shopping retailers built separate Internet organizations, dreaming of spinning them off for Internet riches. This separate reporting structure led to disconnects between the online and in-store experiences. With the crash of the DotCom bubble, companies eventually integrated the Internet with their brick and mortar stores.

Or did they?

Certainly, integration is better today than in the past. Shoppers can research whether a book is available at their local Barnes and Noble. They can order a product at Best Buy and pick it up 30 minutes later (Penney’s, on the other hand, has had issues). The Bricks and Mortar experience has merged into the DotCom. But physical stores have not returned the favor.

To understand why this is important, we need to review the Price War between traditional retailers and Wal-Mart and online competitors, and how this war impacts the store experience.

The Price War

Much of retail lives in conflict with Wal-Mart and its Every Day Low Pricing. Costco and low-cost pure-play Internet competitors such as Amazon.com have only increased these pricing concerns. These are not trivial fears, as these competitors’ continued growth shows the impact of Every Day Low Pricing. But selling against low price is nothing new. Retailers can still win, even with this price disadvantage.

But retailers cannot match Wal-Mart on price without a complete revamp of their business model. The fastest way to Chapter 11 is to attempt to pair a high-service experience with the lowest price. The economics simply do not work. Unfortunately, many retailers are landing in this No Man’s Land, with Best Buy as Exhibit A.

Last February Best Buy floated moving to Every Day Low Pricing. At the same time, they made no effort to discontinue their sales-focused labor strategy (as opposed to the cheaper “Where is this product” labor approach at Wal-Mart and Costco, or no labor at Amazon). Neither did they end their use of promotions to drive sales. This disconnect creates higher labor costs than competitors like Wal-Mart, who already enjoy the advantage of traffic drivers such as groceries. It is a no-win game, and Best Buy’s recent results show what happens when you try to play in this No Man’s Land. Neither they nor their customers are winning.

The alternative is to embrace the shopper, equipping her with the information she needs to make a purchase, rather than leaving it up to her to do the research.

Consumer Education: The Loser in the Price War

Consider how high-consideration products were purchased before the Price Wars or the rise of the Internet. TV created awareness, leading consumers to talk it over with a few friends before going to the store. Shoppers reviewed the product packaging (P&G’s “First Moment of Truth”), then found a sales associate to learn more about the product and its alternatives. They either purchased it, went home to read Consumer Reports, or visited a competitor to talk with their sales associate for a second opinion. Overall, a fairly linear experience, and one on which the store associate had a huge impact on a shopper’s (and retailer’s) success.

That world no longer exists. As Google argues in Zero Moment of Truth, consumers are now much more likely to search for information or ratings before making a purchase. This is partly because the growth of the Internet and product rating sites makes it easier. But a contributing factor is that retailers forced consumers into this model.

The Price War caused retailers hoping to keep track with low-cost competitors to cut any cost possible. Labor was their biggest expense – so it was reduced substantially, with disastrous impact to the customer experience. While this Wall Street Journal article focuses on the checkout line, shoppers see the same results in the aisles: Retailers have cut labor for short-term gains, but with long-term consequences to the customer experience.

Remember Circuit City? They were once the consumer electronics leader, even being featured in the seminal Good to Great. They were a model company. Until they weren’t. What big decision accelerated their demise? They fired “3,400 of arguably the most successful sales people in the company” in a move to save costs. But this type of move was not unique to Circuit City – retail labor was seeing regular cuts across the board.

Unfortunately, now that this labor has been slashed, shoppers are expecting more education than ever before. They want to compare products and learn what others think. They once went to stores specifically to ask associates for this type of information. With no one to ask, consumers are finding it the only way possible – by turning to alternate methods, particularly the Smart Phone.

Imagine this scenario: Your shopper is at your store when she remembers she needs a new coffee maker. She looks for a sales associate to help narrow down your ten models, but you do not staff this aisle. She reads the packaging, but does not find enough comparable information to make an informed choice. She reviews the shelf tags, but its four bullet points only repeat what is on the packaging.

You have now left her with three choices:

  1. Make her best guess (if she’s wrong, expect a return – which is bad for both you and her);
  2. Go home, do some research, and buy one from you (or your competitor) next week;
  3. Use her Smart Phone to educate herself on the product and check out reviews.

What do we expect? Of course she uses her Smart Phone. And once she pulls it out, you have lost. Because why wouldn’t she pull up a competitor’s site while she’s at it? And if their pricing is better, she will order it from them – especially if she can pick it up on her way home.

The irony is, you as the retailer have all the information she needs to buy today. You have the ability to accelerate her purchase, sending her home with the perfect coffee maker today. For example, Target’s website offers 15 separate product details: product height, width, and even the surface treatment (matte!). It is easy to compare between models, and she can also read reviews (43 for the Mr. Coffee 12-Cup Programmable Coffeemaker – Black). But none of this is in your physical store – at least not conveniently. There may be a kiosk five aisles over – but she is not going to go look for it.

A 2011 study at an international retail chain found that “Insufficient Product Information” was a top driver of customer disengagement, resulting in significantly lower spend for consumers reporting this problem. Today’s shoppers expect more information – not only in consumer electronics, but also in:

  • Groceries (Is it healthy? Organic? Low fat?)
  • Appliances (Is it green? How much energy will I need to run it?)
  • Pet food (According to Google, 1/3 of pet food consumers search for information on these products)

In Zero Moment of Truth, Google reports that the average customer uses 10.7 sources of information before buying. How many of these are yours?

How has it come to this?

How is the store, where we traditionally learned about our product choices, now the place with the least information? It is almost as if we designed the experience to accelerate shoppers’ transition to online shopping.

Product Education is a missing sales driver

It is time for a customer experience do-over. How do you provide the information necessary to accelerate consumer purchases so shoppers buy from your store today, instead of your competitor’s website tomorrow? A quick review of some options:

Increasing labor is clearly one alternative. Retail associates can not only educate shoppers, but also close the sale and add in complimentary products. Best Buy found that for every 10th of a point it boosted employee engagement, its stores saw a $100,000 increase in operating income. While this is distinct from adding labor, it does show that effective associates improve financial results.

Apple is another example. Apple elected an anti-Wal-Mart retail model, refusing to compromise on staff talent or shopper information, and has been rewarded with sales-per-square-foot of $5,626 – easily the highest of any national retailer. I was at a competitor when Apple started their huge retail growth, and we studied them to improve how we educate shoppers. Unfortunately, we could not replicate their model: We had signs, they had people. And people always win.

Labor is the most expensive option, but it is also the most powerful. A 2009 study shows that 10% of all retail revenue was spent on employee wages. However, it also found that increases in labor at the chain they studied were correlated with increases in store profitability. Effective labor works.

But not any labor will do. Apple invests significant time and money into their training, teaching its sales associates a different sales philosophy: not to sell, but rather to help customers solve problems. The quality of your associate talent and management is what makes the difference.

You can also learn from Apple’s merchandising, particularly as it applies to shopper education. Apple supplements their labor with an innovative use of the iPad as a product information source. Each item at the Apple Store has an iPad placed right next to it with links to product information.

Or consider the digital price tag. Today’s paper tag is outdated – information is limited and static. Digital price tags offer the ability to provide updated and detailed product information, supplementing the traditional role of the associate.

The goal of this post is not to put out the all-inclusive guide on how to merchandise effectively, but instead to show how the Price War has impacted the customer experience, particularly regarding how customers research products and categories. Shoppers are leaving bricks-and-mortar retail now – and we are pushing them away. It is time to help them buy from us.

There is still time to react. You can fight the Internet at its own game, by bringing your online information to the shoppers in your stores. Better yet, unleash your killer app – your associates – in the battle. Fighting the Price War while simultaneously trying to engage customers is a losing battle. Select a path today, then invest whole-heartedly. Your customers will thank you.

Measuring the Segmented Customer Experience

Segmentation is a critical tool in developing products and marketing offers. Companies routinely separate customers into segments to understand and satisfy their unique needs. So why is segmentation so rarely used when measuring the customer experience?

Some segmentation methods include:

  • Demographic. Best Buy built customer segments such as Jill (the Soccer Mom) or Buzz (the young tech enthusiast), creating successful store offerings around each.
  • Behavioral. Health insurance companies build segmentation schemes around consumer behavior and demographics such as Young and Healthy or Chronics.
  • Psychographic. Can be based on lifestyle, opinions, hobbies, or similar items. Grocery stores use segments such as the Indulgent Shopper and the Convenience Shopper.
  • Geographic. Suburban, rural, and urban are common B2C segments.
  • Industry. Most B2B companies include at least some segmentation around industry.

When conducting a Customer Experience Measurement survey (whether Satisfaction, Net Promoter Score or Engagement), most programs combine all respondents into a consolidated set of results, combining customer segments into a watered-down whole. There are clear logistical reasons to do this – it is easier and cheaper to build one set of results than 3-7. But what is the impact?

>>> Read more in the attached white paper: Measuring the Segmented Customer Experience.

Review of The Ownership Quotient

The Ownership QuotientThe Ownership Quotient by James L. Heskett, W. Earl Sasser, and Joe Wheeler

My rating: 5 of 5 stars

What if your employees felt like they owned the company? If they were so engaged to be there that they went out of their way to make a difference on a regular basis? Just as importantly, what if your customers felt the same way, and invested the time to help your business grow, giving referrals and great ideas?

These are the central ideas behind The Ownership Quotient. Leading businesses have realized the limitations of satisfaction. Measuring satisfaction does not link to improved business results except at the very low end. The question is: what do we replace it with?

The leading candidate is the Net Promoter Score, which has created great buzz. Other contenders include Emotional Engagement, and Ownership. All do better than satisfaction – which is best depends significantly on your business, and what you are trying to address.

Moving beyond the measurement, though, this book does an excellent job of outlining the steps necessary to increase your customers’ and employees’ sense of ownership in your business. Utilizing case studies from Harrah’s, Apple, Rackspace and others, a philosophy of ownership is outlined that can definitely drive improved business outcomes.

Heskett and company do a great job of showing the limitations of Net Promoter’s one question, capturing the essential emotional nature of ownership. True leaders understand that peak performance requires capturing the hearts of your customers and employees, and this book showcases many best-in-class examples. I particularly like the ING Direct example of how they specifically “fire” customers who do not fit their ideal mode – one of the hardest (yet most impactful) efforts a business can undertake in order to focus on the most engaged and profitable customers.

Driving your employees and customers’ sense of ownership is critical, and this book makes a compelling case, including many great examples used by companies today.

View all my reviews

Give Customers the Information They Need

How do you know what your customers need?

This is no idle question.  Giving your customers what they need is critical to building their engagement and loyalty.  You cannot create a great customer experience by leaving them guessing.

The first step is to put yourself into your customer’s shoes. This is pretty common practice– most companies provide ample opportunities for their employees to use their products through discounts, distribution of free product, etc.

But the problem is, as members of the company, we’re not real people. We get so used to our products that it is almost impossible for us to think like our customers do. But we go on assuming that if we build products that we like, customers will like it, too. While this classic Dilbert post is clearly tongue-in-cheek, it’s funny particularly because so many of us assume customers are as passionate (and patient) about our products as we are.

For instance, at Best Buy I implemented multiple attempts to sell Media Center PCs. These were special Windows computers with home theater capabilities that were going to be the hub of the American home theater. Why not? Our computer merchandise team used them and loved the experience. Unfortunately, it turned out real-life customers weren’t as keen on loading virus checkers on their TVs, or rebooting their DVD players.

Putting yourself in your customer’s shoes is a critical first step – but it’s just the first step. To further develop your insight, you need to take a step back and watch your customers. See where they struggle. This is how Intuit’s Quicken became the leader in personal finance software. The idea for Quicken was hatched when founder Scott Cook watched his wife struggle with tracking their finances. As Cook was quoted saying in the Harvard Business Review, “Often the surprises that lead to new business
ideas comes from watching other people work and live their normal lives… You see something and ask ‘Why do they do that? It doesn’t make sense.’”

This philosophy led to Intuit’s unique “Follow Me Home” program, outlined in Inc. Magazine’s profile of Cook. Intuit uses continual customer observation to drive development. And here is the key to their philosophy– “If there were problems, the fault was Intuit’s, not the customer’s.”

A retail experience last holiday season reminded me of what happens when you don’t take the time to understand the customer experience. I placed an order for my wife’s present on December 12 at JCPenney’s online site and received an immediate confirmation. I didn’t think much more about it, waiting to be told that the order was in.

After ten days, I realized I hadn’t heard anything– and it was just three days until Christmas. Getting nervous, I checked the status of the order online. Each item was listed “in stock” with no other status, so I assumed it must be ready and went to the store. There I learned that the order wasn’t in – they were back-ordered. I was assured it would be ready the next day. At home I looked at the order again, with everything still “in stock.”

The next day I called the 800-number before wasting time at the store, waiting for 20 minutes before being told my order was already at the store waiting for me (no notification had come yet), so I picked it up. Then, six hours after I picked up my order I received an automated call that my order was ready. This was December 23, cutting it a bit close!

The designers of this experience clearly did not take the time to consider the information customers need – particularly when problems occur. “In Stock” suggests it is ready to go – “In Transit” or “Back Ordered” would have been better. This was a routine order, but the experience left me very frustrated.

Contrast this to when I ordered an iPod and an iPad for store delivery at Best Buy. While placing the order online I was informed that the iPod was back-ordered, but the iPad would be shipped to the store immediately. An email alert came once the iPad was ready, including the expected delivery date for my iPod. When the iPod was further delayed, a third email alerted me of this. During all of this time I was able to view the order online, including the up-to-date status. Another notification told me when the iPod was at the store, and a follow-up email confirmed that I had picked it up.

Unlike JC Penney, Best Buy kept me fully informed of the status of my back-ordered item. How much more does it cost to alert customers that there are issues?  More importantly, how much does it cost when we don’t communicate?

Barnes and Noble also gets it. When I order a book online I receive a confirmation, and they send another email letting me know the book was waiting for me behind the counter.  Domino’s goes to the extreme – not only do they email when the pizza goes out to delivery, their website tells you when it is put in the oven, and even who is putting on the toppings! They understand that customers want information.

How do you determine what information customers need? Don’t base it off of your own experience. You have access to more tools and information than any customer. Instead, learn from Intuit.  Watch a real customer place an order. See where they have issues. Then follow up with them regularly as the order progresses. That is the only way to truly design the experience around the customer.

This holiday season, give your customers a present.  Give them the information they need.

Creating a great customer experience at Hawaiian Airlines

I ran across this great article on creating an outstanding customer experience at Hawaiian Airlines:  http://blogs.hbr.org/cs/2011/11/to_win_customers_get_out_of_th.html

I particularly like his three requirements to maintain an unbeatable customer experience:
1) Get very close to their customer;
2) Benchmark against itself on a consistent basis, and
3) Empower employees to address the unexpected.

#1 and #2 are quite common.  But it’s #3 that I particularly like, because it helps you avoid over-managing the experience.  When you hire the right people, you can train and empower them to delight the customer without having to over-manage the experience.

What are your three rules?

How Clear Are Your Instructions?

Have you ever eaten a frozen lunch by Michelina’s? These are inexpensive meals for a quick lunch. To heat it, you open the lid and put it in the microwave. After it has run for 2-3 minutes, stir it and put it back in. But for how long? The cooking directions are on the bottom of the box! If you didn’t memorize the timing before you started, you’re now in the position of either guessing the length of time, or holding it above your head so you can read the directions.

How does this happen? Do Michelina’s employees not eat the food? Do they spend so much time with the meals that they have the directions memorized? Or have they made a deliberate decision to sacrifice the functionality in favor of the branding on the top of the box?

This reminds me of the Tropicana rebranding failure from a few years ago.  You can learn more about it here and here.

To summarize, Pepsi (the owner of Tropicana) released new packaging for Tropicana. It looked okay on a carton-by-carton basis. But what about when you saw it in the store? First, it looked like a store brand. Second, all the versions looked nearly identical. Notice how the original clearly says “No Pulp Original.” Color variations differentiated the varieties, making it easy to shop. Now, look at the new version. Pulp free is there – but you have to look for it. It takes more work than the original. In addition, whereas the original had the iconic orange with a straw in it, the new one looks like a store brand! Imagine 7 varieties of the new carton all lined up together. It makes the shopper work harder.

Just to showcase the issue, I’d love to measure how may Tropicana shoppers actually look for the brand name when they pick up their juice.  I’m certain a sizeable minority just look for the orange. But don’t take my word for it – take the consumers’. Sales dropped by 19% before Pepsi reversed the decision!

This is an interesting product branding discussion. But how can we learn from this in developing our own customer experience?

Let’s examine how the Pepsi decision-makers shop for orange juice. Not the consumers – the people involved with developing the product. Pepsi has a pretty sweet deal for employee purchases. Pepsi provides heavily-discounted beverages for bulk purchase at the headquarters. Why would you ever shop at a grocery store when you could pick it up at work and save yourself a bundle in the process? You wouldn’t.

At first this program seems like a good idea, as it will get employees to drink more of their own products, and they can reinvest that knowledge back into the product development process. From an R&D perspective, that makes a lot of sense.

But this leads to the employees missing the shopping experience. I have no particular insight into the team that decided on the branding. They probably spent a lot of time in stores, and they probably mocked up a store display at headquarters. But did they deliberately put themselves in the customers’ shoes? All signs point to a definite “No.”

Let’s contrast this with Best Buy, where I do have some experience. Best Buy has both an online and a physical store experience. They offer employees a discount to they shop in the stores – but not when they shop online. Why not? Store employees (particularly those near the corporate campus!) would like nothing better than to get those corporate employees out of their stores. So why not send them all online for their purchases?

The answer revolves around customer experience. Best Buy knows that if they offer the discount for online purchases, a substantial number of employees will never go to their stores. As a result, they will never gain that insight that comes from searching through three stores to find that special power cable for their phone. Only by physically walking through the customer’s steps can you gain the insight needed to create a great customer experience. Best Buy knows this. Pepsi didn’t.

What are you doing to make sure that you have a deep understanding of your customer’s experience?

Seeing through your customers’ eyes

It’s not easy to think like a customer. In Made to Stick, the Heath Brothers talk about “The Curse of Knowledge.” We often know so much about a topic that we simply can’t understand the perspective of those who don’t know as much.

This is critical to keep in mind as you develop your customer experience. We get so accustomed to the way things are that it takes a very deliberate effort to step back and see it from a customer’s perspective.  Over-featured phones, sales-prevention processes and convulated forms are constant reminders of what happens when you design the experience from a company-centric eye.

Seeing things through the customer’s eye is clearly critical to developing a successful experience. The challenge is:  how do I do it?  And how do I get the rest of my company to think this way?

Retailers have a fairly easy to watch customers shop. But that doesn’t mean they necessarily do it.  In Why We Buy, Paco Underhill tells a story about working with Macy’s. While they were investigating a different part of the store, their cameras also picked up a tie rack on the race track, and they saw something amazing. Particularly on busy days, customers would browse for ties until somebody walked close behind them and accidentally brushed their backside as they went by – what Underhill called “butt brush.” Once customers (especially women) experienced butt brush they immediately abandoned shopping. Once the problem was spotted, the response was easy. Macy’s moved the tie rack and sales increased immediately!

But how many store associates walked by that tie rack every day? If you take the time, you will realize that there are dozens of ways to improve the customer experience right in front of you. But we’re often so busy running the business that we miss simple opportunities to improve our customer’s lives, and thus our results.

Retailers have no excuse for these types of problems. In the Lund’s example from my earlier post, how much effort does it take to walk a store and look for problems? But how often do we do it? Clearly, not often enough!

But this opportunity extends far beyond retail. Almost every service business has its own way of going “undercover customer.” While the watching cannot always be literal, customers share their experience in more ways than you might expect. Intuit developed its software by following people home to watch them install it, recording every misstep or issue along the way.  At a healthcare financial services provider we “watched” our customers by matching behavioral data with demographics to get a better understanding of who was opening accounts and how they saved or spent their dollars.  Clickstreams are another example – who is using your website, and how? Where do they come from, and where do they go next?  Use inductive reasoning to look for trends, and use these to improve your customer experience.

Watching customers helps you understand what they actually do, breaking your myths about your customers’ behavior.  Have you watched your customers today?