Small Business by Donald A. Smith: Customer interactions have moments of truth

DONALD A. SMITH, SCORE volunteer. Consults internationally in organizational performance, process improvement and business systems.September 17, 2013 

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Donald A. Smith

Think about the moments in your life when, as a customer, your expectations have or have not been met. They can be subtle; the vague feeling the experience was more work than it should have been, or it felt unexpectedly comfortable and easy. Of course the times we remember most are painful ones, where we say “I’ll never go back there,” or the exquisitely delightful ones that linger long in our minds. Most of these moments we experience are somewhere between these extremes, and they have a name.

A moment of truth is any exchange of information or work that involves the customer. Any interaction or involvement of a customer in the process of obtaining the value of goods or services is a moment of truth. What we need to understand about moments of truth is that from the customer’s point of view, these interactions consume precious and limited resources. These expended resources represent costs, in addition to the money exchanged, for a good or service.

Note that time is often the most valuable resource a customer is struggling to manage. Therefore, we need to realize moments of truth can be a significant part of the overall cost of the product or service for our customer. We also need to realize every moment of truth should deliver the expected level of value to the customer. If the moment of truth fails to deliver expected value, as often happens, it actually takes away value. This is called a failed moment of truth. Failed moments of truth can have a devastating effect on any organization.

A Swedish academic, Richard Normann, was the initial discoverer of moments of truth. His research into value creation systems and the significance of moments of truth produced a startling statistic. He found that, on average, it took 12 successful moments of truth to undo the negative effects of one failed moment of truth. Additionally, he found the negative energy of failed moments of truth had a tendency to cause subsequent failed moments of truth. The net effect is a negative downward spiral of the organization, which he described as a “vicious circle,” that, once started, is very difficult to stop. On the other hand, he also found that highly successful moments of truth, those that delivered greater than expected value, had an energizing effect on the organization, which he called the “virtuous circle.”

Organizations caught in the vicious circle are usually struggling to reach their financial objectives. They are also often characterized by low employee satisfaction and high turnover. Unfortunately, the organization itself is often the last to realize the problem.

On the other hand, it’s easy to recognize those organizations in the virtuous circle. They have very high employee satisfaction with low turnover.

In which circle is your organization? If you want to get your business on track to the virtuous circle, you must start with your moments of truth. You need to understand where they are and scrutinize them for their ability to consistently and reliably deliver value to the customer. You need to remove all that fail to deliver customer value! When it comes to moments of truth, don’t fool yourself; fewer are better and less is indeed more.

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dasmith@latchgroup.comtvscore@yahoo.com

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