Exceeding Customer Expectations and Perceived Value--Under Promise and Over Perform

Value...what do we value? What's more important, actual value or perceived value? Is there such a thing as too much value? Jennifer White in her excellent book Work Less, Make More argues that we can add too much value into our companies and products or services. At some point, there is so much value that we "don't count" parts of it. Two things come into play: 1. What I call supposed value, and 2. What Mrs. White calls perceived value.

1. Supposed value is when we provide a bunch of stuff that our customers don't really want, or want but "don't count". We suppose that they need these things and it leads to frustration because we count them and our customers do not. I'll give you a few examples and you'll quickly understand what I mean. 

1. A. Supposed value that customers don't really want.--Eliminate all these quickly.

Our Playstation 3 will play region 2 DVD's. For those of you who don't know what that is, here's a synopsis. The media world is divided geographically into 6 regions. Region 1 is the US and Canada. Region 3 is Japan, Europe, South Africa and the Middle East. Discs from regions other than your own have coding that prevents players in other regions from playing them. Often tourists are annoyed that DVD'd they buy in Europe don't play in the US.

My wife is happy that our Playstation will play her foreign videos. I suspect that she is one of a small percentage of customers who were thrilled by this news. In fact, it's likely that most people with Playstation consoles don't know what this means and don't care. Listen to that--They payed extra money for value that they don't care about. Sony got smart in latter releases of the same console--they lowered the price and eliminated this hardware. Now the blue-ray player we do value. 

1. B. Supposed value that customers don't count.--Gently help your customers count these.

A friend of mine grew up on a large dairy farm. His father worked very hard to keep everything running well, but at the end of a hard day's work he always made it home on time. One day his father got stuck out on a job and came home over an hour late. When he arrived at home his wife was very upset that he was late and hadn't called. She thought the worst. He was never late, so he must be dead or injured. He was surprised that she was so upset...after all, he's never late. She should cut him some slack for this one occurrence, he thought. 

They are both right. This is supposed value that this farmer provides every day. He counts it. and supposes that she will too. He works hard to come home on time. He leaves farm jobs unfinished to make his family a priority. She takes it for granted. She doesn't "count it"...unless it's missing. This is a case where "we don't realize what we have until it's gone". 

Parents and children often have this problem of unperceived value. It can be very damaging to a relationship and happens frequently in close relationships. One party overvalues something, the other takes it for granted They are suddenly offended when things don't go as usual. 

My wife and I often nip this one in the bud when one of us starts complaining that something didn't go as expected instead of saying, "I can't believe you didn't take out the garbage!!" we'll say, "Thank you for taking out the garbage all the other times.". 

This is dangerous territory because we need to distinguish between what our customers don't want and what they do want, but are not counting so we can eliminate the things they don't need or want, and gently help them "perceive" the value of what they just aren't counting. Pray that you don't accidentally eliminate something they really do want but aren't counting. It can be tough to know the difference. 

2. Perceived Value is that bunch of things that you provide that your customers love...they "perceive" or count the value even if it doesn't really exist. There are two categories. 

2. A. Perceived value that customers don't really need, but value anyway.--You will want to eliminate anything that falls into this category that costs you more money than it brings in. Double down on anything that brings you more money than it costs (hype, fads, brands and one hit wonders fall into this category). These are what make rabid customers, but it can be fickle. 

Beanie Babies. Need I say more? They are merely tiny stuffed animals, but when there was a shortage, people got injured at the mall trying to get their hands on one and were willing to brave weather, long lines and threats of death to get one. Just know that all good fads come to an end. For some reason customers perceived value where there really was none. 

Black Pearls (Tahitian pearls). In the 1970's black pearls were considered inferior to white pearls (never mind that pearls are just parasites covered in layers of calcium carbonate-what antacids are made from). In the mid 1970's Salvador James Assael a pearl manufacturer if you could call him that, brought several black pearls to jeweler Harry Winston in New York and had them set in extravagant settings and placed them in the window next to expensive stones. This piece of sheer marketing genius created for these junk pearls a perceived value far greater than that of white pearls. This perception remains true today. Starbucks did the same thing with gourmet coffee.

2. B. Perceived value that customers need and love.--Run with these. It's your bread and butter. These are what create consistent customers. 

What do you get at McDonald's that doesn't fall under the heading of hype from above? A consistent size, shape, look and taste (not to mention quality of meat, at least in cleanliness) to everything on the menu anywhere in the world. And you get it fast, to boot. Start messing with quality and customers will run for the hills. 

How can you increase perceived value? Some ideas: 

Find ways to gently point it out. I read a book once that said if you come in early and leave late, send your boss an early morning e-mail periodically so he might notice your sacrifice.

Under promise and over perform. I recently failed at this when I told my banker I'd email a document within the hour and then didn't get it sent for several hours. Now I look like a slacker. How much better to have said I'd have it by the end of the day and then send it in several hours instead?

Figure out what your customer wants and give it to them.

Surprise them. Front loading special bonuses makes a customer feel like you only have a bonus because you want a sale. Back loading special bonuses make a customer feel important or valued. They value you in return. Zappos routinely sends flowers with their shoes. 

Inexpensive ways: remember names (of customers, kids, grand kids), use names, send a thank you email or note with specific information from a prior meeting, smile, say thank you, make a special offer for each customer group "just for people like you (new customer, old customer, young customer, etc.), communicate well, remember birthdays, remember special events (and mention them), point out features, refer out when you can't meet needs (keep a list of professionals handy).

The possibilities are endless. Get out there and exceed customer expectations and create perceived value. 

Your Customers Are Not You

I've been doing a lot of research on advertising and marketing. In the process a friend of mine from LDS Business College's Self Reliance "Starting and Growing My Business" class suggested I take a "free advertising class" and take a close look at all the mail that comes to my house and dissect the strategies of the advertisers that have targeted me.

What are they doing well?

Which pieces of mail am I likely to open?

Why am I drawn to some parcels and not to others?

Which mail do I look at right away and which go on "the stack"?

I have also been checking out the newspaper advertisements, billboards, TV ads, want ads, garage sale signs, other signs etc. There is an old phrase, "When the student is ready, the teacher will appear." I have learned much about good and bad advertising. One of the main principles is that your customer does not care about you. They do not think like you. They do not know what you know. They do not have the same needs, wants and desires as you. But if you can draw their attention and let them know that you can give them what they need, want and/or desire, you will never go hungry again!...I digress.

A graduate student named Elizabeth Newton at Stanford University performed a study in 1990 about tappers and listeners which I think applies. Try this at home!

Ms. Newton divided a group of human guinea pigs into two groups "tappers" and "listeners". She asked to tappers to choose a familiar song and tap out the rhythm on a table for the listeners to guess. Before the listeners guessed, she asked the tappers to predict the probability that the listeners would correctly guess their song. Out of 120 tapped songs, listeners guessed only three correctly (2.5%). Tappers had predicted a success rate of 50%.

Think of that! The tappers conveyed their message effectively 1/40 times, but guessed that they would convey their message 1/2 times! Does this every happen when we are marketing?

We hear the tune of how awesome our product or service is. We think about all the time and work we put into thinking of a name, a jingle, a meme. We think of all the ways we have made ourselves better than the competition. Then we tap out our message and the customer does not understand or care.

When we advertise we need to make sure that we are not being like the tappers. We should not play the message we have chosen. Instead we need to tune into the song our customers are tapping and fill those needs--not the needs we think they need filled, not our needs. Then we will be able to create simple, effective marketing strategies and campaigns that reverberate with our customers and highlight the ways our products and services meet their needs. Not what we think they should need, and especially not what we need or want.

If we play the game of tapping out our marketing message, we will likely have a success rate similar to Newton's tappers about 2.5%. If we instead tune into what our customers want. We will be tapping out a song they already hear and our success rate can be much higher than 50% with our target market.

Try the game this way. Have a listener hum a song, then begin tapping out that song on the table. See if the hummer can figure out what you are tapping. What do you think the success rate will be now? Let's play tappers and hummers. In this game everybody wins!

Now go figure out what your customers want and advertise that! Listen to them and they will hear and understand your message loud and clear!

Addendum: While I was in the processes of writing this post my (Italian) wife told me that McDonald's had run an ad in Italy stating that Italian kids like Happy Meals more than pizza. While this may be true, it's not a song that they want to hear!

Quiz: Recently in preparing an exercise class I heard some statistics that the class can help elderly people avoid falls. This is a measurable fact. We may even hear an old person say they don't want to fall and are fearful of falling (the class also decreases fear of falling). Should I run an ad that says "ATTENTION OLD PEOPLE: come to my exercise class so you can avoid falling!"?

No! That is not the song they are singing. If it is, it's not the song they want to hear. They don't want to be called old, they don't want to exercise and they don't want to be reminded that they might fall.

How 'bout this: "Mature adults come try this new class! You can stay independent and healthy while meeting new people!"

I'm sure you can come up with an even better message. Leave your comment below to improve the above advertisement!