Archive for the ‘Behavioral Psychology’ Tag

Creating great customer experiences

Creating great customer experiences — what leaders like Disney, Zappos and Nordstrom do on a consistent basis — is one of the few areas left for companies to differentiate and generate good margins. Making it happen, however, is easier said than done; fundamentally, it is a people issue.  How do you get employees to go beyond the call of duty to regularly exceed customer expectations? By empowering them to develop emotional connections with each customer.

A great client experience can happen wherever an organization interacts with a customer. And, it is not limited to face-to-face interactions or front-line staff.  Zappos, an online retailer, provides great experiences through call centres and online dealings. A great customer experience is hard to pin down because the definition of “great” and “experience” are tough to define.

“Clients see good service as table stakes,” says Kathy Kenny, assistant vice-president of product management information delivery at investment-servicing company CIBC Mellon. “They expect us to consistently go above and beyond, anticipate their needs and turn every request into a value-added interaction.”

In general, a wonderful experience has many elements including proactively solving a customer’s problem, delivering unique value and exceeding their expectations.

Here’s an example. A modestly sized client of a private bank was on vacation during a massive rainstorm that had pummeled the city. On his own accord, a representative of the bank did a drive-by of the house and found a large tree was poised to fall on it. The bank employee, on his own, engaged a tree service to fix the problem, informing the client after he returned home. The employee didn’t consult a script or seek advice from a manager. He went the extra mile because it came naturally to him and that was the organizational expectation. The bank’s management believes creating these kinds of experiences — and not financial returns — is the key reason why it enjoys virtually 100% client retention even with above-average management fees.

The difference between a successful transaction and a great experience is the presence of an emotional connection — a happy, content and trusting feeling — between the parties. These connections should occur across the entire customer journey — not just at selected touch points. Research, cited in the Harvard Business Review, found emotionally engaged customers are typically three times more likely to recommend a product and to remain brand loyal (though this is debatable). How do you develop customer-pleasing staff?

Hire for attitude

Emotionally engaging and passionate workers do not materialize out of thin air; they emerge through a strong recruiting process that provides a regular stream of suitable employees. Experiential leaders like Apple and Southwest Airlines use psychological testing and group interviews to see how people treat each other and communicate.

Set lofty expectations, and reinforce them

Management should set high expectations for how they want their customers treated. However, employees won’t take care of customers if they are not trusted, treated with respect or listened to through formal and informal mechanisms. Importantly, management also needs to regularly and visibly reinforce these expectations and positive behaviors.

Encourage emotional connectedness

Despite advances in technology, engaging customers and solving their problems is still largely undertaken through personal contact. Emotion is the grease that more easily facilitates this interaction. Staff members have many ways to introduce emotion including taking ownership of issues (rather than blaming others), displaying empathy, being proactive and always exhibiting good interpersonal habits (e.g., shaking hands, keeping eye contact, and being active listeners).  Organizations should also look toincorporate tenets of behavioural psychology in their service models.

Get out of the way

When people have clear expectations and are trusted to do their jobs, they feel valued and empowered.  As a result, they are more likely to connect emotionally with the customer.  Rules and metrics are helpful but can be detrimental, especially if they stifle creativity and skew behavior.

Capture and share best practices

Great experiences often arise from creative problem solving at the front lines.  These learnings should be captured and shared to improve overall corporate performance.

Of course, motivated employees need supporting technology and operational systems to fulfill their promise. In some cases, companies may need to redesign their service models. However, these can only go so far in delighting customers and producing an experiential advantage. However, firms need to empower motivated front-line staff so they can emotionally connect with customers at every touch point to achieve this end.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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Better change management

Organizations that cannot change are at risk of declining competitiveness, profitability and employee engagement.   According to numerous studies, anywhere from 70-90% of all change initiatives fail.  Failure has many fathers.  One cause I regularly come across in my consulting work is when change agents fail to consider the influence of the employee’s worldview.  Accommodate or tweak the worldview and your odds of success improve considerably.  One way to do this is to leverage the power of internal social relationships and reframe the business challenge to secure buy in.

Most change management efforts follow a similar formula:  a CEO establishes a need for change; a “burning platform” or future state narrative is created and communicated through the organization; a plan is developed and teams are dispatched to spread the gospel and implement the change.  No doubt this is a logical approach.  It has proven to be ineffective in many cases, in my opinion, because of its inordinate emphasis on appealing to the rational mind.   While having a rational business case or approach is important, we now know from psychological research that individuals do not behave rationally all the time or act on the basis of objective conditions.

To foster change, managers need to look beyond the rational to the person’s subconscious and social relationships, where a different behavioral trigger resides.  The trigger, a person’s worldview, is an involuntary but helpful cognitive lens that provides a shortcut to understanding events and choosing the best course of action. In general, people act within their worldview (an intrinsic state as determined by their culture, history, biology or status) and as they think is expected of them by their peers. Given its subconscious location, an adult’s worldview is usually not of their choice or making.  Many unrelated individuals and groups will share similar worldviews, yet, these lens can also vary based on the influence of different intrinsic and extrinsic factors like pay, censure etc.

Simply put, modify an employee’s worldview and you are on the way to changing their behavior.  Below are two of many factors that influence an employee’s worldview: the impact of social relationships and their perceptions of situations.

The ties that bind

There is an old dictum that soldiers in a foxhole are motivated to fight, not for country or ideology, but to garner the respect of their fellow soldiers. Research says that most people’s perception and behaviors are correlated with the expectations of the larger social groups they are a part of as opposed to their individual casual or rational calculations. This (often) unconscious social obligation is what psychologists call delegation. For example, someone who has never stolen anything may end up stealing if they associate with a gang of thieves and are convinced to do it just once. Once a skeptical individual complies with the target change, subsequent behaviors are more likely to follow the desired path – if positively reinforced by the social group.

There are many ways to leverage social power.  One tactic is to structure teams in a way that uses social obligation to nudge reticent employees into quick behavioral change and ongoing compliance.   Our firm recommends that transformational teams be deliberately seeded with more committed change agents than skeptics.  These change agents would exploit peer pressure to incite quick change.  We also suggest managers prioritize informal social networks over formal organizational structures during their roll out planning.

Make it real

Employees look at a situation or a management goal through the prism of their worldview. One problem we often encounter is that corporations spend little time or effort defining a business situation that is not seen as distant, unconvincing or unappealing on an emotional level. When this happens, a person’s subconscious worldview will kick in and block or slows down action. Fortunately, once a person truly understands the situation or the need for change, they are more likely to change their worldview to accommodate the desired behavior.

The perception of a situation should be built and reinforced over an extended period through multiple vehicles including storytelling, visualization, and game playing (through simulations or gamification programs).  Managers must take care to ensure that their carefully-crafted perception does not lead employees to destructive behaviors or the neglect of other duties.

Change will always be difficult.  Leaders can improve their chances by first understanding an employee and group’s worldview and then tweaking it in a systematic and methodical way through tailored engagement and communication strategies.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

The worst question in a sales conversation

Perhaps the most popular opener of many sales reps is the question: “What keeps you up at night?”  A recent article in the Harvard Business Review by the authors of a new book, The Challenger Sale:  Taking Control of the Customer Conversation says that this technique may prevent sales and reduce customer loyalty.  According to Matthew Dixon and Brent Adamson and proven through our consulting experience, a better strategy would be to redesign the entire sales experience.

Conventional wisdom underscored by numerous sales training programs says that the above question is a good beginning to a sales conversation.  The objective is to identify a client’s burning needs so that the rep can promote his or her own solution aka help them sleep at night.  No doubt, this approach has worked with many clients.  However, it suffers from three important but habitually ignored flaws which limit its effectiveness: 

  1. Diagnosing needs by a sales rep is a very difficult undertaking, especially in real time.  The more complex the product or problem, the tougher the process;
  2. We have seen this seemingly innocuous question be perceived as disingenuous or cliché when delivered crudely and;
  3. The question is based on an unproven assumption that companies including their agents will always understand or will admit to a stranger their true needs.

A new strategy

A better sales path would be to tell customers what they need to know.  In essence, the sales person educates customers on problems and solutions that they may not be aware of.   This isn’t your standard solution-selling approach, focused on open-ended needs diagnosis. Instead, this sales strategy emphasizes delivering valuable information to customers instead of extracting information from them. In effect, the sales rep assumes the role of a problem-solving, trusted advisor at the beginning of the conversation. 

Customers benefit in many ways from this new approach.  They get fact-based insights and solutions from the outset; they feel that they are not being “sold to” and; they experience real empathy for their concerns.  These types of sales interactions will predictably improve closing rates, increase client satisfaction scores and enhance loyalty.  In our research, sales outcomes improve for a variety of reasons: 1)  a company or sales rep can more easily differentiate themselves, particularly in highly transactional or commodity markets;  2) delivering value up-front establishes an implicit obligation for the client to continue a conversation and;  3)  providing rich insights clearly demonstrates corporate capabilities and knowledge.

Research-based findings

Dealings such as these are core elements of a client-centered sales experience, which has been proven by research to be the major driver of customer loyalty. Dixon and Adamson conducted a loyalty study on 5,000 business customers. The biggest driver by a factor of 2x is something most companies don’t even consider: the Sales Experience, which was identified as a loyalty driver by 53% of all customers.  For perspective, Product & Service Delivery and Company & Brand Impact was each noted by 19% of the respondents.  Interestingly, the Price-to-Value Ratio was identified as a customer loyalty driver by only 9% of respondents.

According to the study, customers will reward suppliers who offer a compelling sales experience which includes “offering unique and valuable perspectives on the market” and “educate them on new issues and outcomes.” Simply put, loyalty and closing rates are more a function of how you sell than what you sell.

Turning theory into practice

Importantly, figuring out the right sales experience is not something to leave to your individual reps to figure out. The entire organization plays a part.  For example, sales management has a key role in designing a differentiated, advisor-based experience based on a customer’s stated and hidden needs and the seller’s unique capabilities. Specifically, we have used the principles of behavioral psychology to help tailor the experience – messages, practices and process – to the customer’s unconscious drivers of feelings and behaviors. Finally, marketing plays a critical role in identifying and messaging the teachable insights and equipping reps with the sales tools to deliver them to customers.

For more information on services and work, please visit the Quanta Consulting Inc. web site.

Want to Perfect your Client Experience? Use Behavioral Psychology

Whether you sell to consumers or businesses, optimizing your Client Experience (CE) is crucial for improving loyalty, operating efficiencies and service levels.  In some competitive industries like financial services, hospitality, transportation, telecom and retail, getting the CE right can be a key strategic differentiator and driver of long-term profitability.

The CE is an amalgam of on and offline customer interactions, from awareness building & product knowledge transfer to selling & post purchase support.  When designing CE systems, most firms look first to accommodating internal needs (e.g., structure, people, rules, process) first before considering what customers want or how they think.  In particular, little attention is paid to how customers really want to be treated or how their behaviors and impressions are driven by sub-conscious drivers.  Of course, getting the structure, people and processes right is an important element to improving performance.  However, it is not the only factor to consider.  All CE designers can benefit from incorporating the insights of Behavioral Psychology (BP), in areas like process design, employee training, technology deployment and resource allocation.

In a groundbreaking Harvard Business Review article, Richard Chase and Sriram Dasu outlined 5 key operating principles companies can leverage to improve service performance and customer satisfaction.

 1.         Finish Strong

Most service providers believe that the beginning and end of a customer interaction are equally weighted in the eyes of the customer. From a BP perspective, they are mistaken. The end is far more important because it’s what the customer remembers later on. Of course, a strong first impression and overall performance is important.    However, a firm is better off with a relatively weak start and a modest upswing at the end than with a great start and a mediocre finish.

2.         Get the Bad Experiences Out of the Way Early

According to BP, in a sequence of events involving good and bad outcomes, people prefer to have undesirable events come first – so they can avoid dread – and to have desirable events come at the end of a sequence – so they can savor them.  This insight has important implications for services like health care where providers must deal with anxious and inexperienced people on a regular basis.

3.         Segment the Pleasure, Combine the Pain

BP can teach customer service leaders in the hospitality, theme park and health care industries many things about how good and bad experiences should be structured and timed.  For example, customer experiences seem longer when they are broken into discrete segments. In addition, people have an asymmetric reaction to losses and gains. Most people would prefer small wins spread over time.  On the other hand, most people would prefer losses to occur in once incident.  These learnings teach companies that they should break pleasant experiences into multiple stages to stretch out the enjoyment and combine unpleasant activities into a single stage or event.

4.      Build Commitment Through Choice

Most of us are happier and more empowered when we believe we have some control over a process, particularly an uncomfortable one. Usually, it does not even matter if the control gained by the customer is largely symbolic. Consequently, savvy service managers in industries such as telco, transportation and hospitality will allow customers some measure of control over their customer experience even at the risk of introducing extra cost and complexity.

5.         Let People Have Their Rituals

Most customer service designers don’t understand the importance of ritual in people’s lives. Most of us find comfort, order and meaning in repetitive, familiar activities.  People unconsciously see these rituals as trust-building mechanisms between unfamiliar parties. Rituals are particularly important in sectors with longer-term encounters like professional-services and health care where certain activities like the exchange of business cards, establishing credentials and timely follow ups help mark key moments in the relationship.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.