Managing Rising Customer Expectations With Limited Resources

Taking unproven routes can lead to exciting new possibilities. However, it could also lead to potential failure. That's what makes life interesting, isn't it?  Optimistic thinking has led to groundbreaking achievements, like the moon landing in the 1960s. However, it's important to strike a balance between hope and realism.  In today's episode, we explore the concept of optimism bias and how it plays a role in the "AI Hype Cycle." We discuss the pros and cons of optimism and why it can be risky and rewarding.  For those of you who don't watch MBA videos as a hobby, this video summarizes the Hype Cycle's importance and how it relates to the recent trend toward leveraging Big Data.  So, what is this hype cycle we keep referring to?  The Gartner Hype Cycle maps out the lifecycle of new technologies, including artificial intelligence (AI). Starting with initial media excitement, the Hype Cycle often leads to inflated expectations, followed by disillusionment as challenges arise. However, innovation doesn't stop there. As understanding improves, we reach a more balanced "slope of enlightenment," eventually leading to the "plateau of productivity," where technology adoption becomes more widespread and realistic. The discussion touches on AI's current status in the Hype Cycle, questioning whether we are at a turning point where initial optimism is waning. Some organizations overestimate the short-term benefits of AI, hoping it will be the silver bullet to solve all their problems, only to face disappointment when things don't work out as expected.  Like many other innovations, AI is more complex to implement than initially imagined, and optimism can sometimes blind organizations to its true limitations. Managing expectations is key: while optimism is necessary to drive change and innovation, one must temper it with caution and realistic planning.  Ultimately, this episode encourages listeners to temper optimism with practicality regarding new technologies like AI. Small, calculated risks are encouraged, but organizations should avoid placing all their bets on one solution. Balance is key to navigating the Hype Cycle successfully. More Key Points Discussed in This Episode: Understanding the pros and cons of optimism bias in business decision-making. An overview of the Gartner Hype Cycle and how it applies to AI. Why the initial excitement around AI may not meet short-term expectations. The risk of overhyping new technologies and the consequences of inflated expectations. The importance of balancing optimism with realism in the implementation of AI. Strategies for navigating the Hype Cycle without falling victim to disillusionment.  

Over the course of three years, Maersk Line improved its Net Promoter Score (NPS) by an impressive 40 points, resulting in a 10% increase in shipping volumes. Even more remarkable, this growth occurred during a global shipping decline.  But can other companies replicate Maersk’s success? Or are case studies like this more cautionary tales than roadmaps? We explore the value of case studies in business, particularly how they can be used to highlight the application of concepts and theories in real-world situations.  The Power and Pitfalls of Case Studies Case studies are powerful. People love stories, and case studies tap into this by offering relatable and engaging narratives that illustrate both challenges and solutions. For businesses, they’re a great way to demonstrate bona fides to clients and showcase what can be achieved through strategic change. However, case studies have their pitfalls, too. Maersk’s results were exceptional, but not every company is positioned to follow the same path.  In the Maersk example, the company was at a unique juncture—facing market pressures and a history of mergers that led to a decline in Customer Experience. Their leadership was open to new ideas, and they had the right project manager in place to lead a global CX transformation. The pitfall is many companies believe they are the same and will get the same results because they too are having a problem in Customer Experience. However, the specifics of one company’s success may not translate to another unless the conditions, challenges, and resources are aligned. In this episode, we discuss why case studies are best used for inspiration and education, not as one-size-fits-all solutions. It’s crucial to extract the underlying principles—like customer focus and strategic leadership—rather than overgeneralizing from one company's experience. In this episode, we also explore: The origins of using case studies as a teaching tool in business schools. How benchmarks are created and why they can be risky when generalized. The role of mental models in simplifying business decision-making. Risk aversion in organizations and the desire for examples to follow. The "silver bullet" mentality and why people seek easy solutions. The dangers of using case studies as the sole resource for business strategy.

If there is one thing that academics know how to do, it’s publish new research. It seems that umpteen studies are published every hour. It can be overwhelming to keep up with it all.  So, we undertook it to help you with this week’s episode.  We explore three fascinating studies in the realm of consumer behavior with insights from Dr. Morgan Ward, a Professor of Consumer Behavior at Emory University. From the influence of sound on social status to the role of streaks in motivating behavior and even how firms should use AI to deliver news to customers, this episode provides a wealth of information for businesses looking to understand and serve their customers better than they do today. Social Status and Product Sound Dr. Ward’s research delves into how consumers choose products based on the sounds they emit, linking these choices to social status. The study finds that people often seek status through two main channels—dominance and prestige. Some customers buy noisy products, like a Harley Davidson, to assert dominance, while others opt for quiet, high-end products, such as Dyson fans, to signify prestige. Ward emphasizes that understanding the status-seeking motivations of your target audience can help businesses design products that appeal to specific social power desires.  Key Takeaway: Customizing product sounds can signal social power, appealing to customers' status-seeking behavior. The Gamification of Behavior Through Streaks Ward also discusses the role of streaks in consumer behavior, particularly how brands use streak-based incentives to encourage continued engagement. Apps like Duolingo, Snapchat, and Headspace all capitalize on the idea of maintaining streaks to motivate daily usage. However, there are tradeoffs. Extrinsic motivators like streaks can sometimes overshadow intrinsic motivators, leading to a decrease in overall enjoyment and, ultimately, participation. Ward warns businesses to consider when streaks are appropriate carefully and to balance the motivations that drive consumer behavior. Key Takeaway: Streak-based gamification can motivate, but businesses should carefully balance extrinsic and intrinsic motivations. AI vs. Human Interaction: Finally, Ward shares research on when companies should use AI versus humans for customer interactions, particularly around delivering good or bad news. Interestingly, the research suggests that AI should handle bad news because customers perceive it as more impartial. In contrast, a human best delivers good news to create a personal connection. These findings affect how businesses structure customer service strategies and use AI. Key Takeaway: AI is better suited for delivering bad news, while human interaction is more impactful for delivering good news. Additional things you’ll learn in this episode: How cultural differences affect consumer status-seeking behavior. The psychological impact of losing a streak and how it influences future behavior. Why some products benefit more from gamification than others. The future implications of AI-human interaction in customer service.  

Colin doesn’t sit in aisle 13 when he flies on an airline. It’s silly but true. He also fancies his red knickers on days when he is speaking in front of large crowds.  While this errs on the side of too much information, it also foretells the topic of this week’s episode: superstitions and how they influence our decisions as customers and otherwise.   Many of us hold on to irrational beliefs that are common sense, even when they defy logic. Airlines, for instance, often skip row 13 because of widespread discomfort with the number, including Colin’s, despite no real reason to avoid it.  But how do these seemingly irrational habits affect customer behavior, and what can businesses learn from them? Customers often engage in superstitious practices, particularly when they feel powerless over a situation. Colin recounts a story of Asian customers choosing construction equipment based on serial numbers they considered lucky. In this case, selecting a machine wasn’t just about quality or functionality but also about seeking control over the unknown.  Humans are pattern-seeking creatures. Our minds are hardwired to find connections between things, even when none exist. Superstitions help people feel like they have some control, which influences customer behavior.  While some superstitions, like avoiding row 13, are passed down culturally, others are more personal. For example, the host tells a story about football fans ordering fries at a pub, believing it would help England score a goal. While everyone knew it wasn’t logical, the collective belief became a fun ritual. Superstitions also manifest in business. Companies sometimes hold onto outdated practices with no rational basis. The host shares an example of an advertising agency insisting on a six-word phrase at the end of ads, not because of any research but simply because "that's how it was always done." These business practices, like customer superstitions, can become embedded over time without questioning their effectiveness. In this episode, we discuss why businesses should understand and acknowledge that customers and companies aren’t always logical. We also explore how accommodating these irrational beliefs can lead to better customer experiences. Rather than dismissing superstitions, companies can work with them to create a more comfortable and personalized environment for their customers.  Additional things you’ll learn in this episode: How mental models shape customer behaviors The connection between biases and superstition in decision-making Why businesses often cling to irrational processes How to spot and eliminate unnecessary "superstitious" practices in your company Ways to accommodate and even leverage customer superstitions for a better experience  

Hurricane Debbie dumped 17 inches of water in Colin's home.  It was a traumatic experience, from wading through the murky water to the neighbor’s house—hoping not to encounter the alligators that usually hang out nearby—to watching a team of 12 recovery professionals sweeping through and gutting what remained inside after the water subsided. The experience has been emotionally draining, especially since they didn't have flood insurance, making the cost of repairs overwhelming. It exposed the emotional nature of these circumstances and reminded us of what is important when treating a distressed customer. This episode explores the Customer Experience lessons learned along the way.  The story begins with the frantic search for help after the flood. With no time to gather multiple quotes, a friend recommended Servpro, a disaster recovery company. While Servpro did a great job, one small misstep—using the term "demolition"—upset the host's wife, highlighting the importance of language and empathy in high-stress situations. Despite the upsetting circumstances, Colin and his wife appreciated the team's professionalism and sympathy. We also touch on a less positive customer service experience with the cable company. While their technician was helpful and empathetic, the initial process during the phone call didn't consider the host's extreme situation. The rigid, unempathetic procedure highlighted how companies, like the cable provider, can improve by empowering their employees to handle unique circumstances flexibly. While getting coffee, the lack of empathy from a cheerful barista served as another example of how businesses can fail to acknowledge customers going through difficult times. While we recognize that coffee chains do not specialize in disaster recovery, it was still a missed opportunity for them to show empathy in a moment requiring more than routine friendliness. A frustrating visit to a self-storage facility was another eye-opener. The company had implemented a tablet/virtual receptionist system, which lacked the human touch, particularly during hurricane season when people needed help the most. Companies should be prepared to offer a more hands-on, empathetic approach to meet heightened demands during extraordinary times. The episode is a call to action for companies to build flexibility and empathy into their Customer Experience strategies, especially during times of crisis. Businesses that show genuine concern for their distressed customers during challenging times will create loyal customers for life, while those who don't may lose them. In this episode, we also dive into: The emotional toll of disaster recovery and its impact on Customer Experiences. How language choice can impact a customer's emotional state. The importance of empowering employees to handle unique customer situations. Why self-service solutions may fail in high-stress scenarios. The critical role empathy plays in building customer loyalty, especially during crises.  

Customer feedback is critical to managing and improving your customer experience but it isn’t easy to get. Worse, it isn’t always useful and enlightening on what you are doing well, or perhaps more importantly, not so well.  In this episode, we tackle a common problem many businesses face: how to get more actionable customer feedback. Our guest, Tim Waterton, Chief Revenue Officer of HappyOrNot®, brings over 20 years of experience in helping companies gather and analyze customer insights. Waterton shares valuable tips on making the feedback process seamless, efficient, and impactful. One of the main insights Waterton offers is the importance of capturing feedback at the right moment—immediately after the Customer Experience. According to him, this approach ensures that businesses collect more accurate feedback as people's recollections of their experiences fade quickly. He suggests that feedback should be short and simple to encourage participation, using tools like micro-surveys (e.g., quick emoji selections). Waterton also explains the difference between feedback and reviews. Feedback is company-initiated, where you ask the customer directly, while reviews are customer-initiated and usually more detailed. Both have value but serve different purposes in understanding the customer experience. A key takeaway is the balance between positive and negative feedback. While many companies receive mostly positive feedback, focusing only on the negatives or positives can skew your understanding. You need both to find areas of improvement and highlight what's working well. We also warn about the dangers of over-automating customer experiences. Colin shares an example of a milkman who improved efficiency but lost personal connection with customers, ultimately losing Colin’s wife's business. This cautionary tale is a crucial reminder that companies must balance efficiency with the human touch, especially in the age of AI and automation. We wrap up with practical tips on gathering meaningful feedback, including choosing the right channels, keeping surveys relevant and concise, and acting on the feedback you receive. In this episode, you'll also learn: The difference between feedback and reviews and why both matter How to avoid "survey fatigue" and keep customers engaged The role of micro-surveys in capturing real-time feedback The importance of balancing automation with personal interaction Why acting on feedback is crucial to improving Customer Experience

One of the benefits of being in business and academia for years is that we have a lot of experience running workshops. This episode is a brain dump of all the stuff you won’t learn in a book but is critical to the successful outcome of your program. The first and perhaps most critical step is breaking the ice. By setting a relaxed and open tone, you ease participants into the session, ensuring they’re ready to engage. A simple question at the start can do wonders—something as quirky as asking attendees to share something strange about themselves. This activity breaks down barriers and injects some fun into the proceedings, setting the stage for a lively and productive workshop. As a facilitator, it's vital to approach the workshop without a predefined answer or outcome in mind. Your role is to guide participants in finding solutions, ensuring participants take ownership of the results. This approach fosters a deeper connection to the material and encourages lasting change.  For instance, when working with a client like Maersk Line, the world's largest shipping company, it’s important to ask the right questions and provide tools rather than answers. This method leads to better results and enhances the participants’ sense of accomplishment. Also, flexibility is key when it comes to planning your workshop. While having an agenda is important, adjust it as discussions evolve, allowing for deeper exploration of ideas and ensuring that everyone is on the same page.  Similarly, consider the group dynamics when dividing attendees into smaller teams. Mixing personalities and ensuring a balance of perspectives can prevent dominant voices from stifling creativity and lead to more innovative solutions. In this episode, we dive into these essential strategies for leading a workshop that leaves a lasting impact. Drawing from years of experience, we explore practical tips to ensure your workshops are engaging, effective, and memorable for all participants. If you listen, you will also learn the following: Ryan wrote a script for Broadway, and Colin is married to his stepsister. No, really. How to effectively manage group dynamics by balancing personality types and seniority levels. The importance of having a clear goal for the workshop and aligning all activities towards achieving it. Why off-site workshops can prevent distractions and boost creativity. The significance of determining the ideal team size for different workshop activities. Techniques to ensure follow-through on workshop outcomes back in the workplace. The impact of physical space on group energy and interaction during the workshop.  

Claire Dunwood has a pickle. She wants to know how to manage rising customer expectations with fewer resources than she used to have. This episode seeks to help her—and you—do exactly that. It’s pretty common to hear problems like this today. Responding to rising expectations is easy when there is no limit to the resources you can throw at it. Doing that same thing on a budget is a different kettle of fish.  We kick off by exploring how expectations form. Expectations for experiences, even for those we've never had, are often built from adjacent or similar experiences, drawing on memories, media, or past interactions. Therefore, customers have preconceived notions about how their interactions with your brand will unfold, even before they’ve engaged with you. Claire noted that customer expectations seem to be constantly rising. Effective management of rising expectations requires identifying which aspect of the expectations is rising—rational, emotional, or sensory—and whether it aligns with your business goals. We discuss the importance of focusing on the aspects that drive the most value for customers rather than trying to meet every rising expectation. A key takeaway is the importance of focusing on what matters most to your customers, as highlighted by the Blue Ocean Strategy. This approach suggests excelling in the most important areas to your customers and letting go of everything else. Knowing your customers well is essential, as it helps you decide which expectations to meet and which to disregard, ensuring that you spend your resources wisely. In this episode, we share practical strategies for managing customer expectations, including understanding customer needs, proactive communication, setting clear boundaries, maintaining consistency, and leveraging technology. These strategies help balance the demands of rising expectations with the reality of limited resources. In this episode, we also talk about: The formation of customer expectations from adjacent experiences The categorization of expectations into rational, emotional, and sensory The concept of outcome-based prioritization when resources are limited The role of transparency and proactive communication in managing expectations How to decide whether certain customers are worth the effort based on their expectations and profitability Examples of businesses effectively setting and exceeding customer expectations The importance of staying agile and responsive to customer feedback  

Personalization is a developing area in Customer Experiences. With AI driving what could be possible, many of you might be wondering how you can best leverage its capability in yours. To that end, we invited our special guest, Graham Hill, Ph.D., to explore the rapidly evolving field of Personalization in Customer Experiences. With decades of experience in customer relationship management (CRM) and Customer Experience, Hill shares valuable insights into how personalization, particularly with the help of AI, is reshaping customer interactions and driving business results. Hill explains that personalization operates on a continuum, ranging from broad, branded communications to highly individualized content tailored to a single customer’s needs.  He also emphasizes balancing mass and personalized communication within a marketing strategy. While mass communication builds general brand awareness, personalized and individualized content can significantly enhance customer engagement and drive sales. Hill discusses the impressive impact of personalized communications, noting that customized content can be up to nine times more effective and individualized content up to 44 times more effective at eliciting customer responses than generic communications.  However, he warns against over-personalization, advising businesses to consider their goals and the specific problems personalization can solve before investing heavily in these technologies. Hill also critiques traditional segmentation methods, advocating for outcome-based segmentation instead. By understanding what customers are trying to achieve and how they measure success, businesses can design more effective personalized communications that resonate with customers at different stages of their journey. The episode also features a case study from Hill’s work with Toyota Financial Services, where implementing personalized communication in the repurchase management program led to a significant increase in response rates—from 10% to 35%. Hill’s approach underscores the importance of clear goals, continuous improvement, and a customer-centric focus in personalization efforts. In this episode, we also explore: The balance between mass communication and personalization in marketing strategies. The significant impact of personalized and individualized content on customer engagement. The importance of outcome-based segmentation for effective personalization. The dangers of over-investing in new technologies without clear goals. Practical steps for understanding customer needs and enhancing key interactions through personalization. The role of AI tools in supporting but not overshadowing simple, effective personalization efforts.  

Fair Warning: this episode regarding excuses was prompted by recent experiences with tradespeople during Colin’s kitchen renovation. No one likes excuses, least of all your customers. Lately, Colin has been hearing many amazing excuses about why something can or cannot be done in his kitchen project. It got him thinking about excuses and why people make them. Today’s episode explores the ideas of excuses and what they tell us about human behavior. Consider examples like long call center wait times blamed on “high call volume” or companies deflecting responsibility for faulty products or order issues by passing the buck to manufacturers. These situations highlight the commonality of excuses in everyday interactions. It is important to understand the difference between an excuse, which is used to avoid blame, and a reason, which acknowledges the cause of a problem and usually is followed by steps to make it right. Additionally, we explore the psychological motivations behind excuse-making, including our innate desire to see ourselves as right, and how this plays into consumer behavior and decision-making.  One important concept that supports our behavior around blame is Confirmation Bias. When avoiding blame, we tend to favor information that supports our existing beliefs (i.e., that it is not our fault), even in trivial matters. Additionally, we delve into the concept of Fundamental Attribution Error, where we are more likely to attribute others’ mistakes to their character while excusing our own based on external circumstances. This human tendency to avoid blame and protect our ego is universal. However, the consequences bear a sharp contrast to the benefits of taking responsibility, especially in leadership roles. A case study from the UK’s Post Office scandal illustrates the severe consequences of excuses on a larger scale, where avoiding responsibility led to widespread harm and even imprisonment. From this, we draw lessons on the importance of honesty and accountability in both personal and professional contexts. In this episode, we explore the fine line between a reason and an excuse and examine how they function in various Customer Experiences.  In this episode we also discuss: The psychological need for self-preservation and its impact on excuse-making. How Confirmation Bias affects our decisions and perceptions in everyday life. The difference between taking responsibility and deflecting blame in customer service. Real-world examples of excuses versus reasons in customer experience. The potential long-term damage of excuses to trust and relationships. Strategies for handling mistakes and building stronger customer relationships by owning up to errors.