What a stupid strategy: "Exceeding expectations"

So many companies boast they "exceed expectations" or "go beyond expectations." This is short-sighted for three reasons. First, customers are looking for companies to deliver exactly what they promise, not more, not less.  Second, it sets up even greater grounds for dissatisfaction when companies fail to meet whatever promises they make.  Finally, it is an unprofitable strategy.  Customers vary in terms of profitability.  Providing service above and beyond what a customer is worth in terms of profit does nothing but hurt the bottom line.

Now, there is another reason why it is a stupid strategy.  In almost all cases, it is not true from the customer's perspective.  Harvard Management Update recently reported on a Bain & Company survey that found 80% of businesses feel they deliver a "superior experience" to customers. 

The same survey found that customers feel that only 8% of companies deliver a superior experience.

Quite a disconnect, isn't it?

Comments

[andymusic]

Well I completely disagree and can disprove each of your points.
A)To Rebutt your first excuse: Customer's aren't simply just looking for a service anymore. It's more than a simple product or purchase that makes you any different from any other company.
B)Your Second Excuse: Exceeding expectations isn't something you promise and then don't deliver. It's something you don't even mention until you can actually do it. You are right, don't promise anything you can't do, however, don't promise it, and then when the customer finds out what you did, you will exceed what they actually expected you to do.
C It is one of the most profitable strategies ever written. How do you think the Ritz-Carlton has made so much money? Return business. Customers come back to you because you are different, or better than another company. You offer them something the business next door doesn't. And you may even be able to charge more based on this. = PROFIT.

That's all I have to say. Have a great day!

[Mike Bawden]

Interesting facts and figures, Nick. I'm always running into this expression (as well as "we're unique in our field" and "we strive for quality in everything we do") all the time. Everybody seems to be unique in the same way. Ha!

Maybe this expression should be changed to "we strive to exceed our customer's initial expectations?"

I've added this post to my list of "must reads" on Tuesday's (12/20) "Much Ado About Marketing" blog.

Thanks again,

Mike Bawden
Brand Central Station

[Jim Brodhead]

I can appreciate the logic of this view in general but when major players are marketing their products or services as a commodity, the picture changes. Observe the marketing of GEICO and Progressive and it’s clear that cost alone is their primary focus.

If an insurance company lives by price it dies by price and by costs and price based marketing will result in a client profile where, in general cost trumps value. Increased market share will depend on adding value to the transaction and exceeding expectations seems virtually synonymous with adding value.

[Ton Zijlstra]

Exceeding expectations is indeed a strange strategy. However it is I think clear where this notion comes from: publicly traded companies.

Stock prices tend to incorporate expected future profits. For stock to rise above that (i.e. keep shareholders with interest only in the shares happy) it has to exceed expectations in terms of ROI. However once you do that, than THAT gets incorporated into your stock price as well, and you have to do even more to improve stock behaviour.

For an investor in a company to do well, a company has to return a profit. For an investor in stocks of a company to do well, the stocks have to return a profit, which means the company has to do well above expectations. Most stock holders nowadays tend to not be stake holders in the company they're trading stocks from, but they are able to pressure management. The pressure management feels, which in essence has nothing to do with the basic health of the company, then gets translated into how they deal with their customers, promising service above expectations. It is merely what they need to promise their stock holders as well.

A vicious cycle that can trap companies. Also see Christensens Innovator's Dilemma and dito Solution for more on this.

[Barry Welford]

I'm not agreeing on this one. I'm sure the Harvard Business Review survey is right. However a big part of Exceeding Customers' Expectations is achieved by merely Doing What You Say You're Going To Do. Unfortunately so many companies fall down on that. So deliver what your customer needs on time, without product defects and at a reasonable price and you'll be one of the rare suppliers that do.

Once you've done the basics, then there are low-cost ways of just adding the icing on the cake. Try to personalize this shopping experience in some way. Make it easy to get in touch with you to report even the slightest imperfection. Show you care for the customer as a human being. If you think a bit, none of these will add much to your annual cost budget.

I would encourage everyone to first meet the customers' expectations. That's the biggest challenge. Then exceeding them is a piece of cake.