Thursday, October 15, 2009

Strategic Planning Analogy #283: Run for The Exit

Let’s assume you are inside a large, unfamiliar office building that is on fire. If you do not get out of the building soon, you will die in the fire. Unfortunately, since you are unfamiliar with the building, you do not know the way out. What should you do?

Let’s say that you have three choices. First, you can try to find your way out with a friendly person who is equally unfamiliar with knowing a way out. Second, you can try to find your way out with a scenic tour guide who wants to give you a grand and exciting tour of the entire building before letting you out. Third, you can go with a guide who knows the most efficient path out of the building and is experienced in leading people out of the building.

My guess is that most of you would pick the third choice.

Many times, life can feel like being trapped in a burning building. There are pressures and stresses from every direction. All you want to do is quickly escape and get to a point of safety. Therefore, you look for the option that provides the easiest and fastest path to safety. In the story, that means finding someone who can quickly show you the way out.

Even the process of making a purchase can sometimes feel overwhelming, like being in a burning building. There are so many choices, so many risks, so many different kinds of deals. You can feel like you are surrounded by smoke, unable to determine what is the best course of action.

If you want to make a sale, it can be useful to think of yourself as the experienced guide in a burning building, the one who gets the customer to the exit door (with purchased product in hand) as quickly and easily as possible.

Today’s blog is based on some principles discovered in research by the Corporate Executive Board. As part of their recent research, the Corporate Executive Board looked at the selling process from the point of view of both the customer (most effective way to buy) and the sales force (the most effective way to sell).

After seeing the results, it occurred to me that the selling process is rather similar to the burning building story. In particular, the Corporate Executive Board came to two conclusions that are similar to the story.

1) It’s the Product, Not the Process
According to the Corporate Executive Board, “Customer effort is the most relevant indicator of loyalty in a customer service interaction.” In other words, customers are most loyal in their purchases to companies that minimize the effort customers must exert to get the product.

When comparing customers of High Customer Effort buying processes to Low Customer Effort buying process, the Low Customer Effort process customers were:

1) Far more likely to make a repeat purchase (94% vs. 4%)
2) Far more likely to increase their spending (88% vs. 4%)
3) Far less likely to spread bad word of mouth (1% vs. 81%)

The point here is that customers tend to make purchases not because the love the process of buying, but because they love the process of consuming. It’s the product they want, not the task of getting it.

Like in the story, what they really want is to get to the exit door as quickly and effortlessly as possible. The selling process is more like a burning building than a place where they want to hang out. The harder you make it to buy, the harder it will be to make a sale.

I am reminded of research I once heard about conducted by a disposable razor manufacturer. They found that when a customer bought a multi-pack of disposable razors, the number of days that the customer used the last razor in the pack tended to equal the number of days of use for all of the other razors in the multi-pack combined.

Was that last razor a lot more durable than the others in the pack? Of course not. The fact was that customers hated making the effort to go out and buy another multi-pack so much that they would put up with sub-standard performance of that last blade rather then make the next purchase.

The razor company concluded that if they could make the razor purchase completely effortless (like automatically shipping razors to the house on a routine schedule) they would sell a lot more razors.

As sellers, we may obsess about the selling process and look for ways to make it enjoyable. However, from the customer’s point of view, that process is like being trapped in a burning building—something to be avoided, or at least minimized. The customer in the burning building is not looking for a tour guide to turn the process into a leisurely, enjoyable vacation. They just want to get out.

As the Corporate Executive Board concludes, “Reduce customer effort—don’t focus on delight—in customer service interactions.” In other words, it’s the product, not the process, that the customer wants.

2) Be a Leader, Not a Friend
The Corporate Executive Board not only discovered that the “delightful transaction” approach is sub-optimal. They also found out that “relationship building” is a sub-optimal selling approach. Relationship builders tend to focus on reducing tension and creating a friendlier selling interaction. However, when you are in a burning building, you don’t want to make friends and reduce tension. Instead, you want someone who can help lead you out of that fire.

Therefore, it is not surprising that the Corporate Executive Board found the relationship building approach to be sub-optimal. Customers are not looking for friends, they are looking for product.

The better approach, according to the Corporate Executive Board, is the challenger approach. The challenger does three things:

a) Educates the customer about what best suits their need
b) Tailors the solution to the particular customer
c) Takes control of the process to make sure your goals are met.

You know, that sounds a lot like my leadership guide, the one who knows how to get you from the fire to the exit door quickly because they take charge in getting you what you need.

The leader takes the initiative, so that you don’t have to exert as much effort (reinforcing principle #1). They are also no-nonsense, realizing their job is not to eliminate the tension from being in the fire, but to eliminate the time in the fire.

If you want a strategy to increase sales, consider these two principles from the Corporate Executive Board. First, focus on minimizing customer effort rather than maximizing customer delight. It’s the product, not the process that should get the focus. Second, be a leader rather than a friend. Show the way to the best path for that customer.

If you want to have a delightful time with a friend, do it on your own time, not when trying to sell your product.

1 comment:

  1. Now is the time to identify and differentiate your customers' new needs. Beyond national economic health, this recession's impact on personal wealth has been acute and by some measures, households are worth no more today than decades ago. As consumers spend more time making purchase decisions, the differences they see across choices become more important. Research from the Corporate Executive Board finds that all customers, and especially those hit most hard by the recession, are more likely to respond to emotional differentiation rather than financial or functional terms. Changed Customer Needs is just one of six "Enemies of Post-Recession Performance" that will undermine corporate recovery, erode profits, and make past performance levels unattainable.
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