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Chapter 2

Moments of Truth

 

Moments of Truth. Scandinavian Airlines (SAS).

Nordstrom. American Honda. Sanwa Bank.

Rockwell International

 

Most people’s contact with your business happens only periodically and is usually limited to just a few moments, a few Moments of Truth. What your customer decides—whether or not to buy, now or in the future—happens during these moments.

"Moment of truth" is an old saying, its coinage lost in antiquity. However, in a business context, Jan Carlzon, author of Moments of Truth, helped to popularize it as a business metaphor. His lessons ring true.

In The No Boundary Manager, we use the metaphor of Moments of Truth because it illuminates the boundaries between your business and its customers. What happens in your Moments of Truth is crucial. A customer is either born or lost in that contact with your business enterprise—in their buying experience, their service experience, their support experience, their telephone experience. And this all happens in their Moments of Truth.

The larger point here is about consequences. A good Moment of Truth can earn you free word-of-mouth advertising—all good. A bad Moment of Truth can also earn you free word-of-mouth advertising—all bad, which can be devastating. Buyers tend to share their pains more urgently than their pleasures; therefore, consequences deserve more attention than we usually give them.

Moments of Truth cut to the heart of things. In The No Boundary Manager, it is bedrock language. Moments of Truth can provide No Boundary Managers with important, valuable, nontraditional feedback—loaded with consequences. Choose, in short, to create favorable Moments of Truth. 

 

Scandinavian airlines

Jan Carlzon, formerly president and CEO of Scandinavian Airlines, described Moments of Truth in his book:

Rudy Peterson was an American businessman staying at the Grand Hotel in Stockholm. One day he left the hotel and headed for Arlanda Airport, north of Stockholm, to accompany a colleague on a Scandinavian Airlines flight to Copenhagen. The trip was only for the day, but it was important.

When he arrived at the airport, he realized he’d left his ticket back at the hotel. He had set it down on the bureau to don his overcoat and had forgotten to pick it up.

Everyone knows you can’t board a plane without a ticket, so Rudy Peterson resigned himself to missing the flight and his business meeting in Copenhagen. But when he explained his dilemma to the ticket agent, he got a pleasant surprise.

"Don’t worry, Mr. Peterson," she said with a smile. "Here’s your boarding card. I’ll insert a temporary ticket in here. If you just tell me your room number at the Grand Hotel and your destination in Copenhagen, I’ll take care of the rest."

While Rudy and his colleague waited in the passenger lounge, the ticket agent dialed the hotel. A bellhop checked the room and found the ticket—exactly where Mr. Peterson had said it would be. The ticket agent then sent an SAS limo to retrieve it from the hotel and bring it directly to her. As it happened, they moved so quickly that the ticket arrived before the Copenhagen flight departed. No one was more surprised than Rudy Peterson when the flight attendant approached him and said, "Mr. Peterson? Here’s your ticket."

Under Carlzon’s leadership, SAS became a customer-driven company. SAS recognized that its only true asset is satisfied customers. "Customers don’t talk about planes and offices and organization; they talk about their experiences with the people at SAS," Carlzon said.

In this case, SAS’s buyer was rescued from an awkward situation—his ticket was left back in his hotel room, and a ticket agent rescued him. Do you think Rudy Peterson has told a few friends and business associates about SAS? You can bet he has.

 

Nordstrom

You’ve heard success stories about Nordstrom, a retail store legendary for its customer service, and in The No Boundary Manager we revisit Nordstrom to develop a better understanding of the reason buyers buy from one business and not another.

Sandy Preto, now a training consultant with Advent Software Inc., a NASDAQ-listed software company, recounts a Moment of Truth when she was a sales representative for a Nordstrom store in Walnut Creek, about 30 miles east of San Francisco. She had been working for Nordstrom for one year.

One day after the Loma Prieta 6.8 earthquake shook San Francisco, a woman in her mid-thirties entered the Walnut Creek Nordstrom’s. The woman appeared unfamiliar with the store layout but eventually landed in Sandy’s department.

The woman explained that she lived in San Francisco’s Marina District (damaged by the earthquake). She was frazzled. She had just lost her apartment, it had been condemned, and she wasn’t allowed to enter it. She wasn’t familiar with the Walnut Creek store and didn’t know where to look for a dress—her sister’s wedding was on the coming weekend, and she didn’t have a bridesmaid’s dress. She had already purchased one from the San Francisco Nordstrom store, but her dress had been destroyed along with her other clothes. The woman described the dress in detail.

Although Sandy had never seen the customer before, she helped her find the right dress department. By this time, three other sales reps joined Sandy and helped the woman find the same dress—except it was a size 14, not a size 8, which the customer needed. To make matters more difficult, the Walnut Creek store had only a limited supply of that dress, all size 14 or larger.

On the spot and after discussion with her colleagues, Sandy gave the dress and the necessary alterations free to the customer. A happy, grateful customer left the store, and she received her resized dress on time for her sister’s wedding that weekend.

     Sandy did not have to get permission to replace the dress at no cost to the customer. Later, Sandy and her colleagues were recognized for making the right decision.

     When asked how much training she had received, Sandy replied, "One day—at the downtown San Francisco Training Department." She learned about Nordstrom’s customer policy, and was encouraged to build a personal book of customers. At the end of her training day, Sandy was given a 3 by 5 card. On it was written: Use your best judgment.

    Customers we talk to believe Nordstrom’s sales representatives and store managers are empowered to make decisions. Those same customers talk warmly about Nordstrom’s personalized service. In our opinion, Nordstrom’s "service" is about their management of the customer’s postpurchase risks. How many times have you heard Nordstrom’s customers say something like "If I change my mind, I’ve learned to trust that I can always take it back—no questions asked. That’s the great Nordstrom secret. I can return whatever I purchased for full credit—and get cash." Call it service, if you must, but it’s really about the management of their buyers’ postpurchase risk.

 

AMERICAN HONDA

Employees are buyers as well as sellers. It’s important that businesses perceive this. Many a business direction has been undermined by a lack of employee support.

Tom Ross, chief information officer (CIO) at American Honda, tells about Moments of Truth concerning internal customers of the Information Services Division, the people who use computer hardware and software systems in their work at American Honda.

American Honda’s Information Services Division (ISD) realized that many of their Moments of Truth between its users, mostly internal customers, and their enterprise computing services organization is through a customer service center’s Help Desk function.

Even though they have many excellent technical employees supporting their computer operations, the Help Desk is managed by relatively few support experts. They receive help calls from all over the organization. And these Moments of Truth are critical. The quality of these interactions help ISD’s customers decide how well their IS systems are doing. And this occurs at only a very few points of internal customer contact: at the Help Desk, on the telephone, and with division liaison representatives.

The CIO said, "We need to focus on making these Moments of Truth the best they can be, especially as our systems migrate to more complex technology."

This story emphasizes that Moments of Truth reside not only in interactions between traditional external buyers but also in a business’s internal buyers. In this case, the seller is the Information Services Division, and the buyers are any employee who in one way or another use IS systems or services to get their work done.

 

SANWA BANK (now United California Bank)

Here is a Moment of Truth told by Cheryle Carmitchel, formerly the vice president and branch manager of Sanwa Bank of California.

A customer left an urgent message on my voice mail saying that he and his wife had made an offer on a home, and he had to provide the seller with assurance of financing within ten days or their offer would be unacceptable.

When he had looked into the mortgage approval process, he realized that he had no idea how to get through the maze of forms, rules, and decision-making—not in ten days.

I faced several challenges: the ten-day time limit, my customers already owned a home and a condominium, and the husband was to leave in two days to give an IBM seminar in China. He would be gone for fourteen days.

Although I was in Los Angeles attending a bank course, I phoned the people needed to arrange the financing: my banking services officer, a mortgage officer, an appraiser, a title company officer, and my client’s bookkeeper. My strategy was for my client to keep and rent their existing home and to get new Sanwa Bank financing for the new home. If they qualified, Sanwa Bank would provide the required new financing. But nothing would be easy or guaranteed to happen on time.

Fortunately, before my client left for Beijing, he had a piece of helpful news: the condominium was rented, and the rent covered its mortgage payments, taxes, and the condo fee.

Within ten days, I assured my customers that home financing was available. When the husband returned from Beijing, he and his wife signed the documents. And their original home, which they kept, became a part of their retirement assets.

Her client revealed opinions commonly held by retail bank consumers. In his mind, all banks present a problem: the customer’s decision process requirements are out of sync with the bank’s approval process. Bank approval processes are parochial, slow, and almost never delegated to the bank’s points-of-sale.

When questioned why he felt this way, he quickly asserted, "My friends and I don’t much believe all that advertising stuff about relationship banking. Bank bureaucracies and centralized approval processes are the opposite of relationship."

"Cheryle’s in the frontline," he said. "It’s where the action is, and it’s the only personal interaction with Sanwa Bank that I had—and I needed that in order to get my home financing—to clear out all that damned bureaucracy."

 

ROCKWELL INTERNATIONAL

Dana Abrams at Rockwell tells of a small group of information technology personnel who found themselves on the frontlines, interacting directly with current and potential customers of the business.

In the early days of the World Wide Web and Mosaic, Rockwell’s Information Systems Center (ISC), the company’s IT organization, established the corporation’s first home page.

Immediately after they went online, e-mail messages began to flow in from all over the world, seeking information about products, employment, business propositions, and community service. Many of these e-mail messages were going unanswered, so it was proposed that the official webmeister for the company be established in ISC.

The reason for this atypical assignment was that the ISC personnel were most familiar with the Internet and the intricacies of the directory services. And they were also most familiar with data sources throughout the company. But, most important, in ISC there was an intense interest in the Internet and the communications linkages it afforded.

It was a matter of representing the company to the electronic communications community throughout the world via the Internet. In this sense, a small group of IT personnel saw themselves on the company’s frontline.

Thus, for quite some time, the people who built the Internet/intranet facilities at Rockwell also provided the content to customers, prospective customers, employment applicants, and anyone seeking to engage Rockwell through this electronic medium.

The above stories emphasize in different ways how customers—whether external or internal—interact with us, with our businesses. They are the Moments of Truth in which buying or not buying happens, and about what buyers tell other buyers and nonbuyers. They largely define us.

What are your defining Moments of Truth?

In becoming a No Boundary Manager, find out what happens in your defining Moments of Truth, at the boundaries—the frontlines—where buyers and nonbuyers interact with you. Focus on the frontline, as much as on the bottom line, and find out what your customers think of you, from the outside in, from their perspective.

 

After all, the first 15-second encounter between a [customer] and the frontline people … sets the tone of the entire company in the mind of the customer.

—Tom Peters, Foreword, Moments of Truth

 


© 2002, The No Boundary Manager, and Its Great Wall™ Concepts