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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 |