When we think either about a brand, making a major purchase, or evaluating a business or personal relationship, expectations and experiences are like yin and yang. They travel in opposite directions together; one grows while the other declines.  This concept is critical to understand and manage when you plan acquisition and retention strategies for customers, employees, and other people in our lives.

In a recent white paper, “Because I’m the Customer,” my good friend Harry Klein and I wrote about how a brand exists only in our mind and how we trap and analyze expectations and experiences.  I also listed the six sources of expectations.  This subject is important since people have a perception about doing business with us long before they become a customer.  Knowing this, we have an opportunity to shape peoples minds, to some extent, and help achieve our business objectives.

An earlier post on this topic focused on the relationship between expectations and experiences and show that the impact of expectations rapidly diminishes as they are replaced by actual experiences.  The importance of this idea is that we should apply a significant effort to making new customers become very comfortable doing business with us in a process called on-boarding.

This post takes the long view; i.e., what happens after the relationship extends beyond the “honeymoon” period.  The first thing that happens is your customer becomes familiar with doing business with you and actual experiences replace most expectations.  If your on-boarding process was successful, the relationship will be starting out strong and if your were not very successful, you are working with a lot of baggage.

In either case, your customer is at the stage where she compares your performance (her experiences) with her other partners (either business or private).  This introspection will generate a new series of expectations that manifest themselves as “if Amazon can ship to my home at no charge, why can’t my business partners ship to my business location and not charge me anything?”. This is an example of expectations being derived from personnel experience.

Another expectation may arise from other companies she with whom she does business.  For example, “my XXXXX salesperson gets me tickets to the Red Sox once a season, why can’t you?” or “how come I don’t get hassled by XXXX when I pay in 60 days and you start dunning me at 31 days?”  These are expectations against which your business performance is being measure!

What to Do When You Don’t Meet Expectations? First, Segment the Customer Base?

For most of us, when we do not WOW a customer we go out of our way to correct the situation and create a positive change in their perceptions.  For the remaining few, their automatic reaction is to say, “Screw them.  If they don’t like the way I do business let them find someone they like better and bug the hell out of them instead of me”.  As a default, both answers are wrong!  Sometimes it is not worth the cost of satisfying a low potential customer with a unique expectation.  Likewise, sometime it is very important to WOW a new customer who has the potential to make a major impact on your business for many years.  How do you know what to do?

Most businesses routinely segment their customer base into three groups:

  1. The critical few
  2. The group with long term potential
  3. Everyone else

Sounds easy until you start thinking about the criteria to use for the analysis.  For most people the default is annual revenue or profit; a few accounts can make or break your business no matter how large you are.  But first, consider breaking your customers into segments by product purchased, specific needs (equipment uptime) or long term potential then apply the revenue/profit filtering.

For example, think about how many 737’s Boeing has sold to Southwest Airlines and how many they are likely to purchase in the future.  But while the 737 division loves Southwest the folks responsible for the new 787 Dreamliner know that Southwest will never purchase one and so don’t care how they feel but they really want to make British Airways happy.  So, if all airplanes and customers were lumped together there would be lots of infighting about which Boeing customer deserves special consideration.  Assuming that the cost to dazzle a customer is non-trivial, each business area must do a cost/benefit analysis to determine which expectations can and will be met and which ones will be managed.

As you can see, understanding the relationship between expectations and experiences is not an academic exercise but leads to hard-nosed analysis and implementation where the stakes are high. Think about this whenever you hear a complaint or suggestion.

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