PLAYING PERCENTAGES CAUSED CONFUSION (UNDO); NEXT TIME, I’LL MAKE THE GRADE
I spent an interesting and enjoyable Thursday morning last week presenting a session on Marketing Myths and Concrete Promotion with the memberships of the Michigan Concrete Association (MCA) and the Michigan Aggregates Association (MAA) at MCA’s 2008 Winter Conference.
The morning was enjoyable, because I enjoy the constructive tension between audiences and speakers, the ‘heck you say!’ mentality of engaged meeting attendees, and the adamant look in an audience’s collective eyes as it challenges the speaker to wrest its confidence and sympathy.
As the keynote speaker for the opening session, I felt it was my duty to set the tone for the conference. I decided to begin my presentation by provoking conference attendees, confidently intoning:
This provocation startled no one. With a number of MCA members nodding their heads in sympathetic agreement, I began preaching to the choir, working interactively with MCA and MAA members to identify and debunk common marketing myths.
Be Careful What You Wish For
The morning was interesting, because while debunking a myth about customer service, I suddenly, and with no intent or malice, became quite provocative.
In contention, was my assertion one-hundred-percent customer satisfaction is not a practical, profitable objective for your business.
I shared pleasing customers is something every business must do. I also shared research by Kevin J. Clancy and Robert S. Shulman showing that something less-than-perfect service is the most profitable position for a company.
Shulman and Clancy, in their book Marketing Myths that are Killing Business, proffer the average customer satisfaction level for most industries is 82%. They maintain companies able to improve this grade to 90% will blow their competition away and move to the head of the class. But they contend and my experience in the ready-mix industry supports their contention the money and effort required to move from 90% to 100% is often enormous, relative to the benefits.
Studies by Clancy and Shulman and others show as customer satisfaction increases, sales and profits also increase. But this holds true only to a point.
As the cost of satisfying customers moves beyond that point … Shulman and Clancy suggest 92% … the costs associated with increasing levels of satisfaction begin to erode profits.
I shared this example with MCA and MAA members:
It’s Not Always Wise to Play by the Numbers
Reading supporting arguments regarding how the costs associated with increasing levels of satisfaction beyond a given point will begin to erode profits does put the concept in solid perspective. But hearing those same supporting arguments can, and did, cause confusion.
Some MCA and MAA members perceived I was advocating providing good customer service only 82 percent of the time that it was okay to provide ‘less-than-good service’ (my paraphrase of their sentiment) 18% of the time. They maintained one-hundred-percent customer satisfaction is indeed a practical, profitable objective for a business … that to establish a lower goal is counter-productive, even though 100% is almost (always) impossible or at least impractical to expect to achieve.
Food for Thought
It is a long drive from Kalamazoo, Michigan, to my home base in 53172, and I had a lot of time to replay the confusion this portion of my presentation caused.
To MCA and MAA members:
I Stand By My Testimony
One-hundred-percent customer satisfaction is not a practical, profitable objective for your business.
An objective of providing consistently excellent service, though difficult to quantify, is a much more practical and profitable objective for your company.
To comment on this post, click HERE. Please include the phrase “100% customer satisfaction” in your subject line.
PS: The MCA Winter Conference was held at the Radisson Plaza Hotel in Kalamazoo, which promises 100% Customer Satisfaction. Should the hotel staff fall short of perfection, they pledge to make things right, or you don’t pay.
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