Richard tried to shake us from our corporate slumber by challenging us to exceed customer expectations in some unique way.
Entire industries tend to do things a certain way out of inertia, and find it hard to break out of these standard operating procedures. Why is that? Is it feasible to build massive competitive advantage by doing things differently? Richard suggests that companies can’t create this "game changing" type of innovation from day-to-day executional improvements based on customer feedback. It's a broader strategy about transforming what customers expect in your industry.
As we are in London, Richard used a London Tube analogy…how can you “mind the gap” between what customers expect, and what they want. Most companies operate around the level of expectation. Very few successfully get to what customers want, and even fewer figure out how to exceed that high bar.
Richard illustrated this with some examples.
He started by describing several companies that had changed their industry by creating “great innovations” in customer experience to exceed not only what customers expect, but what they can envision on their own as “something I want.”
But I thought the most intriguing example he offered was that of RyanAir. RyanAir CEO Michael O’Leary is, on the one hand, the poster child for bad customer experience. Richard quoted one of his extreme statements about the airline’s cancellation policy:
“Say my Granny fell ill. What part of ‘no refund’ don’t you understand?”
Richard asked, “Is he really the villain of customer experience?” Expectations can be shifted not only upward based on innovations in service or product, but downward by lowering price. Richard argued that RyanAir has been able to exceed expectations in a very unconventional way…by setting the expectations SO LOW based on rock bottom prices that customers are happy to get there safely and at a good value.
Then Richard turned to the UK banking industry. Most UK banks have negative Net Promoter Scores. It’s to the point where the government is discussing how they might legislate improved customer service. Has it really come to this? There are some notable exceptions, including First Direct, which has an NPS in the range of 40%, considerably higher than most other major UK banks. What is it that a company like First Direct can get right that is so difficult for much of this industry?
What’s the “industry standard” in your business? Richard gave these parting thoughts on how you might break away from the pack:
- Understand your existing “zone of tolerance” and develop ideas outside of it.
- Avoid Standard Operating Procedures that are based on industry practice, and instead focus on customer experience as a guide.
- Think like an entrepreneur trying to attack and remake your industry through experience innovation.
