The finances of many organisations today…perhaps including yours…are organised much like the Victorians organised their factories.
Back in the late 1800s and early 1900s, science had advanced to the point where large-scale industrial production had become possible. Hundreds, thousands, or millions of items could be churned out in a factory, replacing the traditional hand-crafted production methods used for generations beforehand.
For Victorians, science, engineering, and rational thinking was key. All they thought they needed to understand their business was a sufficiently deep knowledge of its physical and mechanical components.
If science didn’t explain it, then it wasn’t worth knowing.
The only problem with this model is that the world is a profoundly irrational place, wrapped up in an occasionally rational-seeming cloak.
To understand the world as it really is, science is about as much help as trying to work out how tall someone is when all you know about them is the colour of their hair.
And that’s particularly true the bigger the problem you’re trying to solve.
Science can tell you how many malnourished people there are in the world.
Thousands of irrational thoughts compounding on top of one another keeps several billion people in a state of perpetual hunger even though the science tells us we just need to give everyone 2000 calories a day, along with a mix of vitamins and minerals, to put an end to hunger for ever.
The problem here isn’t the lack of scientific knowledge. We have as much of that as we need. It’s that the weight of irrationality in the world is vastly more powerful than the results any purely rational, scientific process can deliver.
Sometimes organisations try to counter this effect by trying to make unstructured, subjective data into something that sounds scientific so it can be managed using science (or, perhaps more accurately, the appearance of science).
An example
A great example of this is the NPS, or Net Promoter Score.
That concept is largely responsible for all those customer satisfaction surveys you get when you buy things nowadays, especially online.
There’s a 10-point scale where 1 represents a terrible experience and 10 represents a perfect one. I’m sure you know the sort of thing I’m talking about.
Personally, I’m a big fan of the concept behind the Net Promoter Score, which is that if more people rate your service as excellent than rate it as terrible, you’re probably providing a good service to the bulk of your customers and are therefore likely to get more referrals and recommendations from your current clients, growing your business in the process.
As a concept, that’s hard to argue with.
However, the reality is that people have learned over the years that a score of 7 out of 10 is seen by the company running the survey as “everything was OK”, so unless you feel particularly joyous or deeply upset by your experience, you’re unlikely to rate the experience any higher or lower than somewhere in the 6-8 region.
A small number of outliers apart, what does that tell us? Virtually nothing.
Although I can pretty much guarantee someone in those organisations is doing a lot of spreadsheet gymnastics to fill in a monthly report that says the mean of the responses is about 7, as is the median, and the standard deviation of responses is +/-1 meaning that the majority of responses fell somewhere between 6 and 8.
It’s very rational. It’s very scientific. It involves numbers and spreadsheets, so this must be good information…right…?
It looks rational, but is it really?
If this month’s responses are, on average, “about 7”, and so were last month’s, and so were last year’s, and so on back into recorded history, are you really able to run your business better on the back of that information?
Probably not…
And that’s before we even introduce the idea that tiny, tiny numbers of your customers will ever respond to your NPS survey in the first place.
Organisations obsess about the averages going from 7 to 6.8 and back to 7 again on a month-to-month basis.
They completely overlook the fact that 95%+ of their customers never complete the survey in the first place, so the business has absolutely no idea what those customers are thinking…good, bad, or indifferent.
Of course, science tells us that a representative sample – such as the people who respond to an NPS survey – can give us valuable insights into what the population at large, like an entire customer base, thinks.
Science tells us that, and in the context of a laboratory environment it’s true, within some statistical rules.
You don’t need to eat every cookie from a batch to quality control the output of a bakery. A sampling process, whereby a handful of cookies are randomly taken off the production line for testing, is a perfectly good way to assess the quality of a batch of cookies.
The problem here is that making cookies is a closed system. The bakery is in control of all the ingredients and the production environment. In that context, statistical inference works perfectly well.
But what about if you send a questionnaire to everyone who buys from you and just a couple of percent of your customers bother to send it back. What does that tell you about the mass of people who didn’t respond?
Probably very little.
All that’s happening here is that a thin veneer of science and rational thinking is being wrapped around an entirely irrational, and possibly unjustifiable, assumption that the people who didn’t respond would, on average…had they responded…given responses very much like the people who did respond.
To give just one simple example, it’s more likely than not that busy people respond to NPS questionnaires less often than people with nothing better to do. I remember a stat from a while back which said retired people were more likely to respond to customer satisfaction questionnaires than people of working age.
I can’t quote you the source for that as I’ve forgotten where I read it, but it doesn’t seem entirely unlikely.
That might not be a problem for you if you sell stair-lifts, but if you sell diamante-encrusted cowboy hats for hen parties, this dynamic may be somewhat less helpful.
Embrace the irrational
The main problem here is that organisations are trying to take something fundamentally subjective and irrational and turn it into something with a veneer of rationality wrapped around it.
Now that it looks scientific, we can manage it, organisations say. It can be charted and graphed as much as we like. It can go into RAG-rated KPI reports for the board. The possibilities are endless…
Endless, but not necessarily very helpful.
Some sort of NPS numeric tracking can help make sure you’re not completely screwing everything up. On those terms it can be a useful metric. It’s turning that metric into the be-all and end-all I’ve got more of a problem with.
Concepts like customer service are highly subjective – what you think is a good service and what I think is a good service are two entirely different things.
A company might think that having an always-on AI-powered chatbot available 24 hours a day is going to improve the service they give to clients.
I can’t say this forcefully enough, at least not without using language that would be seen as unprofessional on LinkedIn, but nothing makes me hate dealing with an organisation more than an always-on AI-powered chatbot.
We’re both being irrational here.
The company irrationally thinks that all technology innovations are automatically a good thing, and someone from their marketing or IT department has sold the board on some BS report from a big consulting firm that says “all millennials want to engage with AI nowadays”.
And I’m being irrational in the sense that I’m irrationally expecting the organisations I deal with to service me in the way I’d like to be serviced, when all the available evidence is that most organisations couldn’t care about their customer service in the slightest.
However, of those two points of view, you’re probably better working with the irrational world-view your customers have than with the irrational view your organisation has formed about their customers through a series of “strategy away days”, none of which were attended by a single customer.
After all, your customers have the money. If you want some of it, you’re more likely to get it by stepping into their world rather than forcing them to step into your world.
A simple way to embrace the irrational
Organisations shy away from using “irrational” information because it means acknowledging that they aren’t in control of every aspect of their organisation. On a very fundamental level, many organisations find this a very difficult concept to accept.
But when I’ve been trying to dramatically improve an organisation’s performance, I’ve found that “irrational” information is several orders of magnitude more useful than any more “rational” data.
There are a couple of stages to the process, but don’t worry. This is really simple.
First, you need to accept that you are not the ultimate arbiter of what my experience as a customer ought to be. The only opinion that matters is the opinion your customers have of your organisation, irrespective of whether you agree with them or not.
Secondly, you need to understand that reducing complex questions to a single number for someone to enter on a spreadsheet means you’re asking your customers to make a series of “irrational” trade-offs, so you lose a lot of the subtleties along the way.
To give a simple example, if I rated your service as “not good value”, does that mean – at least in my opinion – your product quality was poor, your prices were too high relative to the quality provided, that I’d have happily paid more if the product was made to a higher standards, or that I’m a natural skinflint and I begrudge every penny I give to someone else, irrespective of the standard of service and quality of product I receive?
If I knew which thought process zapped through your brain as you answered that question, I would get some helpful insights, but just asking a yes/no question or seeking a response on a scale of 1-10 tells me very little.
The third and final stage is to throw out your existing customer satisfaction questionnaires and just ask one question in its place: “What one thing could we do to make your customer experience better?”
Mostly, what you’re looking for here is the outliers.
There will be a few people who wax lyrical about how brilliant their experience of dealing with your organisation was.
There will be a few people who really disliked their experience and who will tell you in great detail everything that went wrong.
Then do something with it…
This doesn’t mean you have to act on every response.
The CEO of Southwest Airlines – the top-rated airline in the US at the time – used to say that the number 1 idea for improvement they had on their customer satisfaction questionnaires was for the airline to serve food on their flights. However he always refused to do that because a fast turnround for their aircraft was Southwest’s secret of success, so factoring in a catering supply element to their turnaround times would have decimated their business model.
So feel free to ignore ideas like that which get to the heart of your business model.
But for most other things, try to amplify the good feedback to encourage more of it.
You will probably be surprised by some of the “little things” people value highly but which you never thought were all that important, or things one member of your staff does, but most don’t, which could easily be incorporated into your standard operating model.
By the same token, do something about the things that haven’t gone well.
Sometimes that’s because there’s a mismatch of expectations which is more your problem than your customer’s. Perhaps your website is full of “top quality” positioning statements, but the reality is you just sell cheap products which aren’t designed to last. Either can the “top quality” messages or sell better products – nothing else is going to fix that problem.
More often, though, it will turn out that some of the “rational” things your organisation does cheeses your customers off in considerable numbers, but you never realised before. In that scenario, stop cheesing your customers off, even if you need to rethink your business model in the process.
I used to deal with an organisation I won’t name here which had a hugely complex sign-in procedure for information which was not exactly top secret material. I suspect if I spent enough time on Google, I’d be able to find the same information freely available.
A sign-on process which takes you to the 7th level of hell and then still insists on texting your mobile to confirm your identity is probably excessive.
All things being equal, they could probably have just texted my mobile and cut out everything else. Having me recall the 7th and 14th letter from my first pet’s name, along with my mother’s maiden name, and the 3rd and 12th letter of my first school did very little to increase the joy I experienced when using their service.
But we can’t do it all…!
When I explain this approach to people, sometimes they tell me they don’t have enough time in the day to take all the responses they receive, read through them, and fix them all.
At some level, I get that. Although that’s usually a giveaway for how much an organisation really cares about its customers – if it can’t be bothered to read through a dozen emails and do something about them, my working assumption is that the true level of interest they have in their customers is somewhere pretty close to zero.
However, at least in the beginning, you don’t need to.
Just pick up one response today and fix it. Any one will do. Select it at random if you like.
Then do the same tomorrow. And the day after. And so on…
After a few weeks, you’ll find that the number of unhappy customers writing in to complain has been magically reduced.
Now, you might find your NPS score hardly changes. After all, only 1-2% of customers will respond anyway, and most people score most things about 7 +/-1 almost regardless of their experience.
So any metrics based around improving NPS scores are likely to be a waste of time. (Unless someone games the system, which isn’t unknown in this area if there’s a big bonus pay-out if the NPS ticks up a bit.)
However there’s a very simple metric you can use instead – how many people have written in to say they’re unhappy about your service this month and have you fixed all the problems they wrote in about. You don’t even need a spreadsheet to track that. Just count them up.
My experience is that a large proportion of the problems people complain about can be fixed almost instantly and at a cost of pretty close to zero. Provided you step into their perspective of their experience and don’t try to force your opinions onto them.
As you fix more and more of those problems, you’ll get fewer and fewer people complaining about them. So you’ll know, even if your NPS score barely budges, that you made an improvement to your customers’ experience of dealing with your organisation.
Yes, some of these things might be “irrational” from your perspective, but if enough of the people who hand over their hard-earned cash to your organisation think something is a problem, don’t waste your energy arguing. Just fix whatever it is and move on.
Don’t think like a Victorian mill-owner, and imagine that enough scientific, rational thought on your part will solve every problem.
In an irrational world, you’ve got to engage with other people’s opinions instead of imagining you have all the answers.
Organisations which get this, and act on the “irrational” feedback they receive, find it remarkably easy to grow their revenues and their bottom line.
Organisations which think getting their NPS from 7.0 to 7.2 automatically means they’re doing a great job tend to spend a lot of time wondering why they aren’t growing as fast as they think they ought to.
Odds are, they’re not being irrational enough.