Wednesday, April 15, 2009

Don’t Confuse Patience With Customer Satisfaction

Customers know business is difficult. So they put up with a lot. They’ll give a business or an industry a chance to work through its problems — but only up to a point. Over time, patience gives way to impatience, and then, customers may go off and look for alternatives.

Patience is good, but business managers who expect more ruthless behavior from customers can get confused. If you believe that customers wouldn’t still be hanging around your business unless they were happy, you might not take a look at the problems the customers are having until the customers have given up on you.

Customer patience creates a lag between a business’s performance and its sales measures — a lag that can extend for many years. Take newspapers as an example. Newspapers in the United States peaked in the 1980s, but the numbers on the industry could give you a different impression. Circulation was at its highest later, around 1990–1993, and advertising revenue continued to edge up until 2005 or 2006. That means readers were complaining about newspapers for 20 years before the more numbers-oriented newspaper publishers started to pay attention.

I don’t mean to pick on newspapers. You can point to similar stories in the record business, pro sports, and elsewhere — not to mention the Internal Revenue Service. Most businesses today are managed by numbers: scorecards, financial statements, quality reports, and the like. It’s management by failure — they don’t pay attention to a problem until it hurts their results. Management by failure is inherently slow because you wait for a failure to occur before you take action to understand a problem. Any company can have a huge advantage just by trying to get ahead of problems, to notice them quickly and respond faster than the customers will.