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CCMC Executive Interview

John Goodman, Vice Chairman, CCMC

An Authentic Voice for Improving CX Calls for Common Sense to Rule 

There are numerous people who position themselves as authorities in analyzing the phenomenon of customer experience, but few—if any-- possess the extensive background, documented expertise and history of accomplishment of John Goodman. The self-described ‘customer experience, researcher and entrepreneur’ was the co-author of a revelatory 1970's study of consumer complaints and customer service for the White House Office of Consumer Affairs. His conclusions were instrumental in changing the public perception of customer service and helped lead to the repositioning of customer care as a profit-producing industry. Since that time, he has personally directed approximately 1000 customer experience studies for companies of every description in just about every conceivable space. He is the author of the CX books ‘Customer Experience 3.0’ and ‘Strategic Customer Service,’ of which a second edition was published in 2019.   

Goodman is also actively involved in the prestigious Customer Rage Study, based on research that he has conducted for 41 years. Since 2003, it has been conducted biannually under the auspices of CCMC and the W.P. Carey School of Business at Arizona State University. The findings of the 2019 edition will be revealed in the spring of 2020, but some of the results of the 2017 study were discussed in detail in the January 2020 edition of Consumer Reports. The article noted the “decades of discontent” that consumers have been subjected to, with more than 1/3 feeling anxious, betrayed or sad by the way companies handle problems they’ve reported with a product or service. In fact, only 18% were completely satisfied with the actions that companies took to resolve their issues: lower than the 22% of respondents who said they were fully satisfied in 1976.

“In a way, it proves that nothing changes, but everything changes,” said Goodman. “The kinds of things that frustrate consumers have evolved over the years, particularly in light of their rapidly rising expectations. But there is still a high percentage of consumers who don’t complain, as well as many whose problems originate from not reading directions. It’s been a constant over the years that 30% of customer dissatisfaction has been caused by the customer.” This figure correlated with the responses to a question Goodman asked company executives about how high a level of complaints resulted from either customer error or unrealistic expectations and revealed that 28.6% of them believed these to be the root causes. “This doesn’t get companies off the hook,” he observed. “They share in the responsibility to save the customers from themselves.” He cited the example of a satellite communications company where one of the first questions salespeople asked customer was if they were gamers and if they were playing a fast-shot online game like World of Warcraft. If they said they were, the rep informed them immediately that their product was not suitable since the latency of a signal traveling 88,000 miles would slow them down too much to compete effectively.

Providing a higher level of transparency involves a sense of discipline on the part of a company to realize that it is not worth the effort to sell to customers who are not going to be happy and will call six times as often to complain. “Savvy businesses are now putting more effort into determining the type of customer that they won’t be able to satisfy,” said Goodman. “What drives people to complain? It depends on how serious the issue is. For instance, if a cereal package is torn, it might be 2%: if the product tastes a little off, it might be 20-30% and it there are bugs in the box, it will be over 50%.”

Other measures businesses can take to avert dissatisfaction is get a better idea how the customer will use the product or service being purchased. “When I was talking to AARP, I asked what I thought was a really stupid question: why do people join?” said Goodman.” It turns out there are five different primary reasons. By listing them on the application, the organization was the able to tailor the welcome package, which resulted in dramatically higher use of this important introductory document. Prior to that point, they had been sending out a roughly 75-page welcome package with about 80 different toll-free numbers to call.  Not surprisingly, this was read by hardly anyone who had a life.”

He also noted that Avis has done a good job in improving the visibility of its disclaimers. “Understanding that not everybody does things consistently, they put a headline on their contract that stated: “We know you don’t like unpleasant surprises” and listed three bullet points that everyone read.” An insurance company he worked with also improved customer relations by pointing up what might be perceived as a negative - the amount of valuables coverage. “Most customers barely skim over a homeowner’s policy,” he said. “So quite a few were surprised to learn about the clause that valuables were only covered up to $5000 after a fire or other incident. Many homeowners have quite a bit more than that and are often angry to find out after the fact that they’re not covered. In working with an insurance company in Alabama, we sent out a welcome letter saying there were three things that consumers tended not to notice, the first being the valuable limitations. This was critical in that the average Alabaman has $6,000 worth of guns alone, not to mention jewelry. The salespeople hated that letter because they felt it was rubbing the customer’s nose in what they weren’t being covered for. But when policyholders read the letter, many of them asked to buy a rider to cover their valuables. It not only eliminated the issue but generated more revenue.”

This brings home the point that transparency is more than just a new buzzword, it’s what people want. It also works in b-to-b transactions. GE was pitching a program to Wal-Mart whose executives said they wouldn’t want to be that upfront in their communications. They held their ground thinking they had lost the contract but then they got a call saying that they been given the business because they were the only ones who told them they were being foolish not to be honest about what would work and what wouldn’t.” Businesses prosper by determining what customers really want and if they can’t give it to them in a partnership, just let the prospective partner know or walk away.

One other example of the bitter pill of telling the truth having a sweeter outcome is military insurance and financial service giant USAA. “We were doing a baseline survey and heard from a customer who had asked about a specific investment and was told by the rep that he would be better off paying his credit card balance. The customer said he was angry at first and felt like he was being told by his mother to clean the room. But then he quickly realized that the advisor was forgoing a sale to act in his best interest which made him a USAA customer for life.” Goodman had earlier met with a retired general there who revealed that USAA was making a billion-dollar investment in technology. Goodman asked him if they had done a cost-benefit analysis and he replied ‘we know it’s good for the customer, we’re not going to worry about it. We’re the best in the business and have a 94-96% approval rating.” Even when you’re the best, you can always get a little bit better.

Customers know when a company cares about them and it pays off in word of mouth. On the flip side, companies that have a monopoly and feel they can treat customers in a cavalier fashion often wind up paying the price when competition comes on the scene. “In the b-to-b environment, we were involved with a company that produced the coatings that made glasses get darker in sunlight. For quite a while, they were the only game in town. They were profiled in a Harvard Business Review article on companies that customers love to hate. About 46% of this company’s customers said that if there were any other place to go, they’d be gone tomorrow. Leadership was aware of the finding but said they would take slow steps to improve. Then, another company came into the market and they lost half their customer base almost instantaneously.”

Goodman sees merit in one of the latest popular trends of measuring customer effort but there is a caveat.  “While it’s not a bad idea, the way customer effort is assessed is not always an accurate gauge. Ideally, businesses want to keep the problem from happening in the first place. But if that doesn’t work, it’s important to give customers the motivation to report issues and make it clear what channels they can use,” he said. “There are several problems with this approach. Ninety percent of customers will now try to self-serve before they pick up the phone to call. That means they go to the website.  If they can’t find the right information there, by the time they call, they are already frustrated. So, the customer effort score is not just based on how the agent handled the incoming call, but the time they already spent trying to get an answer that wasn’t there. It’s just not fair to rate the agent on customer service or even NPS in these circumstances, but many companies still do.”

He sees the silver bullet in solving this dilemma is determining the five most common problems and putting the answers up on the home page, making it simpler for customers to immediately resolve their issue without having to dig around or place a call. “After being told they were getting a lot of calls on ‘how can I print my invoice,’ AFLAC resolved this issue in one CX meeting. An IT guy said that that there was a link four clicks in on the site that made it possible. The head of quality said, ‘let’s move that to the home page right away’.”

While flagging significant service issues on a company’s home page seems to be an obvious solution, the challenge is that real estate is often controlled by marketing which is focused on using it solely to expound on the beauty and the poetry of the product.  “We resolve this issue by asking how many people who come to the website are potential new clients versus existing customers coming to get things done. The proportion is usually 80-90% existing customers. This gives us the wherewithal to make a case for saying we understand the need to market to new customers but give us 30% of that territory to be more responsive to those people with whom we are already doing business.”

Goodman also considers empowerment of front-line personnel a key priority. “If a supervisor approves of an action nearly all the time, why waste more time to review it? The most recent edition of the Harvard Business Review has an article on innovation and one of its primary points is people need room to experiment and have to experience failures. Adding to agent empowerment can be implemented as a pilot project and individuals that that take it too far can be addressed on a case-by-case basis. For example, American Express has implemented flexible solution spaces by type of issue.  Agents are told that there are four approved ways to handle such a situation and to use their best judgment to provide great service. We have found that even compliance and legal are comfortable when broad boundaries that give people flexible options.”

He has written a paper that he has presented at several industry conferences noting that technology providers are so concerned with espousing the efficiency of their product that they lose sight of putting the technology in context to determine if it is in fact creating some of the consumer frustration. In many cases, such solutions have made positive contributions in building loyalty, preventing problems, increasing resolution speed and ease of use, but suppliers seldom quantify such benefits in their single-minded promotion of efficiency. If they were able to document the CX impact—how the solution contributes to making the customer happier---they could make a more powerful business case for their product. When Goodman attended presentations by vendors at several major companies, he was dismayed and somewhat alarmed that about two-thirds of them had no idea of the importance of -- or even how to go about--measuring the CX benefits of their products. One technology he noted as having such impact is speech analytics. In a 2019 study on Voice of the Customer success, CCMC found that 100% of companies using it achieved high performance in the critical area of fixing issues. “Companies can use it to find keywords that can show intent, determine sentiment and in some cases, even detect root cause. By combining this with the input of empowered employees, companies can identify and take steps to fix broken processes.”

Goodman also points out that long-time procedures can be continued well beyond the point that the need for them has changed, citing as example the practice of flight attendants making a big point in safety instructions about not tampering with restroom smoke detectors. “That began in the 70s after a crash was caused by a passenger disabling this device. From that one incident that took place more than 40 years ago, we are still talking about this.”

He has suggested—not tongue in cheek—that some companies with complex products create what he refers to as a panel of customers who have made what would seem to be preposterous mistakes with a product or service. “To some degree you have to be able to design products for people who don’t read the directions. My favorite example of that is at Clorox where they get numerous suggestions each month about making it taste better with specific recommendations about making a cherry flavor. Apparently, many people brush their teeth with it, because it does whiten teeth.

Resolving CX issues seems to come down to common sense, both on the part of the customers themselves and the companies that are slow to make necessary changes. He cited Harley-Davidson as being proactive in that area with its customers in Minnesota who often leave their bikes out throughout the frigid winters. “Harley sent out an email sorted by zip code that told customers that they knew their batteries were probably dead, but they had a $40 charger that will have them ready to go on the first nice day of spring.” 

Goodman notes that having an organization’s CFO buy-in on improving customer experience can make a difference. “There are some very savvy CEOs who understand customer experience, such as the one at MoMA (Museum of Modern Art) who became the chief sponsor for CX improvement and there are others who are concerned only with arcane metrics.  The forward-thinking ones know that a business can’t save itself into prosperity: they want to generate higher margins, higher revenue, as well as better word-of-mouth --and word-of-mouse.”

Please click here to learn more about John Goodman, Vice Chairman, CCMC.