You Need Your Customers More Than They Need You
Kevin Peters sat alone in his car in the rain, watching the entrance of
an Office Depot store. He was wearing a baseball cap and a well-worn
pair of jeans.
Over the course of the last half hour he’d watched one customer after
another emerge from the store. None of them carried a shopping bag. On
their way out, they walked past an Office Depot employee leaning against
a wall under the awning, smoking a cigarette out of the rain.
Kevin was torn. On the one hand, he didn’t want anyone to know he was
there. As the president of Office Depot’s North American retail
division, he’d come to this parking lot in New Jersey on a gray,
dreary day to get a firsthand look at how customers experienced one of
his stores. His method, already followed at dozens of other locations,
was to observe customers coming and going, then enter, walk the aisles,
and talk to customers about whether they were finding what they needed
and how they liked the store in general.
The success of each visit hinged on the store manager not knowing he was
there. Kevin wanted to see the store as a customer on a shopping trip,
not as an executive on an inspection tour. But this situation was too
much. Frustrated customers were leaving without products while one of
his employees not only ignored them but laid down a cloud of tobacco
smoke for them to walk through on their way out the door. Should he blow
his cover by telling the manager to get his slacking employee back in
the store to help shoppers?
Kevin made a decision: This couldn’t stand. There was no way he was
going to sit idly by and watch his business erode one customer at a
time. He abandoned his undercover plans, got out of his car, and walked
into the store on a new mission.
Because he’d planned to go incognito, Kevin hadn’t bothered to find
out the name of the store manager. But he knew that every retail
location has a stanchion near the front of the store with a picture of
the manager and, right under it, this service promise: “If you are not
satisfied with your shopping experience, please see me or another
manager on duty.” Kevin walked over to the stanchion, looked up to see
what the store manager looked like—and found a picture of the smoking
When he tells this story you can see very real pain in Kevin’s face
and hear it in his voice. “The darn store manager! The person with
whom we trusted our customer relationship.” He pauses and repeats,
“The person with whom we trusted our customer relationship.”
What Went Wrong at Office Depot?
What underlying problem brought Kevin hundreds of miles away from his
executive office in Boca Raton, Florida, and into one of his own
The story began months earlier when Kevin first got the job of
president. It wasn’t a great time to take over the helm of a retail
chain. The economic downturn that began in 2008 had not been kind to
retailers in general, and Office Depot’s store sales had declined even
more than those of its competitors.
What puzzled Kevin was that, even as sales declined, Office Depot’s
“mystery shopping” scores—compiled by a third-party research
firm—were going through the roof. How could this be? How could
customers be having a great in-store experience while not actually
buying anything? The answer clearly didn’t lie in Office Depot’s
Boca Raton headquarters, so Kevin set out to find it in the stores.
Kevin visited over seventy locations across the United States fully
expecting to find a differentiated experience—one that set Office
Depot apart from other office supply stores and big box retailers. He
didn’t. Instead, the experiences he found ranged from, in his own
words, “poor to fair and, on a few occasions, good.” But never good
enough to truly differentiate Office Depot from its customers’ other
By the time Kevin finished talking to hundreds of customers and watching
them while they shopped, he’d begun to solve the puzzle. The
mystery-shopping scores were actually correct—they were just asking
the wrong questions: “Are the floors clean?” and “Are the shelves
fully stocked?” As Kevin put it, “Who cares?”
Not his customers, as it turned out. They’re mostly small-business
owners who don’t make money when they’re not in front of a client or
preparing work for a client. They want to find the office products they
came for, quickly and easily. In other words, they want to get in, buy,
and get out.
But Office Depot stores didn’t help them do that. They were large and
their signage was cluttered and confusing, making the stores hard for
customers to navigate. Employees, both associates and managers, were
neither as empathetic nor as helpful as they should have been. They had
been coached all along to focus on tasks, not on building relationships
with customers by listening carefully and responding to their needs.
Wham, bam, thank you customer, and—oh, wait—did you forget to buy
something? Sorry, I was so busy stocking the shelves and fixing the
planogram that I missed that part.
Ultimately, Kevin knew that if he wanted to reverse the downward slide
in sales, he needed to transform virtually every aspect of his in-store
You Are in the Customer Experience Business—Whether You Know It or Not
This book is about customer experience, something that is fundamental to
the success of every business. For most companies, customer experience
is the single greatest predictor of whether customers will return—or
defect to a competitor. It’s so critical that even virtual monopolies
like cable providers and health insurers suffer when they fail at it
(which most do, as we’ll see in the next chapter).
Customer experience goes to the heart of everything you do—how you
conduct your business, the way your people behave when they interact
with customers and each other, the value you provide. You literally
can’t afford to ignore it, because your customers take it personally
each and every time they touch your products, your services, and your
So why are so many business leaders seemingly blind to the importance of
customer experience? Primarily, it’s because they don’t know what
they don’t know—starting with what “customer experience”
actually means. Sure, most executives have at least heard the term
“customer experience,” but they often believe it’s just another
way of saying “customer satisfaction.”
That misunderstanding is a disaster in the making. Because if you
don’t understand what customer experience is and why it’s important,
you risk losing your customers to companies that do—think Apple,
Amazon, Southwest Airlines, or USAA.
To appreciate what customer experience really means, let’s start by
clearing up a few of the more enduring misconceptions about it.
We’ll do that by listing some of the things that customer experience
It’s not soft and fluffy. Of course you love your customers—if not
for them, you couldn’t pay your mortgage. But loving your customers
won’t help you succeed unless you do something about it, like offering
them products that meet their needs, and making it easy to find, buy,
and use those products—all critical aspects of customer experience.
It’s not customer service. People call customer service when they have
a problem. So equating customer service with customer experience is like
saying that a safety net is a trapeze act. Yes, the net is important to
the act. But if the performer needs to use the net then something has
gone wrong with the show.
It’s not usability. Yes, people appreciate it when a product or
service is easy to use. And ease of use has helped drive the success of
products and services ranging from Apple’s iPod to YouTube video
uploads. But usability is just one piece of the customer experience
puzzle—and not even the most important piece. Take your car, for
example. Even if the steering wheel is easy to turn and the brake pedal
feels just right, your driving experience will still be miserable if the
car fails to meet your basic needs, like running reliably and stopping
So if those are some of the things that customer experience is
not—what, then, is it?
It’s what products and services your company offers, how you manage
your business, and what your brand stands for. It’s what your
customers think happened when they tried to learn about and evaluate
your product, tried to buy it, tried to use it, and maybe tried to get
help with a problem. What’s more, it’s how they felt about those
interactions: excited, happy, and reassured, or nervous, disappointed,
Customer experience is how your customers perceive their interactions
with your company.
Once you understand that, you can manage your business from the outside
in, bringing the perspective of your customers to every decision you
Who are your customers? They’re both the people who have purchased
your goods or services and those who intend to buy your goods or
services. Even if they don’t actually buy anything, their active
interest in buying puts them on our radar. That interest leads them to
interact with you through your marketing efforts, your retail locations,
your websites, and any other channels you support. And that leads them
to form perceptions of their experience—perceptions that will
determine what happens next.
What qualifies as an interaction? Here’s how we think about
interactions: they’re reciprocal. Your customer takes an action such
as visiting your store or website. Your company responds in some way.
Maybe an associate walks up to your customer, or the website pops up an
invitation to chat. Your customer then responds to your company’s
response—asking the associate a question or accepting the chat
invitation—and so it goes until your customer achieves her goal, or
gives up. When you string a series of these interactions together you
end up with the steps in the customer journey.
Which brings us back to where we started: Customer experience is how
your customers perceive their interactions with your company.
As it turns out, those perceptions matter a lot—as FedEx discovered.
CASE STUDY: FEDEX EASES CUSTOMER WORRIES
Looking out from within the FedEx world headquarters in Memphis,
Tennessee, it might seem that the customer experience starts with
The company ships about 3.5 million packages per day in a mind-boggling
ballet of planes. If you were to hang around its “Super Hub” at the
Memphis International Airport for a month, you’d see about five
thousand FedEx aircraft pass through. There are parking slots there for
up to 175 aircraft at any one time. Handling all the packages that come
off those planes takes twelve thousand FedEx employees and more than
three hundred miles of conveyor belts that move hundreds of thousands of
packages per hour. It’s like magic.
But looking from the outside in, the customer experience begins when
FedEx picks up a package or when the customer drops one off. For many
customers, drop-off involves a trip to one of six-hundred-plus World
Service Centers and FedEx Office locations. FedEx had always treated the
FedEx World Service Center locations as convenient places for customers
who want to fly in, drop off a package, and fly back out again as
quickly as possible. They even had a name for this type of
customer—the Frisbee. FedEx thought that
Frisbees accounted for the majority of walk-in traffic at these
FedEx management believed they had been doing a pretty good job of
serving these customers. But satisfaction surveys told them that not all
customers were pleased with the experience. So in 2000, FedEx hired
Ziba, a design and innovation consultancy, to help redesign the customer
experience at the FedEx World Service Center locations. As part of that
work, Ziba interviewed and observed FedEx customers to determine how
they shipped packages and how they thought about shipping packages.
The results of the study were surprising. Only about 10 percent of the
service-center customers were Frisbees. The rest fell evenly into three
behavioral clusters based on how prepared they were when they walked in
the door, and how much help they wanted from a FedEx employee. Of these
groups, the most intriguing of all were the ones that FedEx dubbed
Confirmers are, in a word, uneasy. They walk in the door well prepared,
with wrapped packages and a clear sense of how long it will take the
packages to get where they’re supposed to go. But even so, they
can’t help worrying that something bad might happen.
At the time, FedEx team members did something that made perfect sense to
them but made Confirmers nervous. When a Confirmer handed over a package
to a team member, the team member would process it and then place it on
a pile (affectionately dubbed “the leaning tower of packages”).
These FedEx team members knew—with a high degree of confidence—that
each and every package in the pile would get to its intended
destination. For them, the shipping process was working. But just seeing
that pile sent a signal to Confirmers that their packages were not going
to make it to their intended destination. Based on that simple visual
cue, they thought that the shipping process looked broken.
As a result, Confirmers were on the verge of a panic attack because they
believed something with no basis in objective reality (“My package
will get lost because it’s on that pile!”). And that made them
highly at risk of taking their shipping business elsewhere.
The solution that transformed shipping into a great experience for
Confirmers was elegantly simple. FedEx placed a wall with five presort
windows behind the service counter. FedEx then trained their agents to
take a package from a customer, say thanks, turn around, and slide the
package through one of the windows. That sent a highly visible signal
that the package was safe and sound and well on its way.
What was behind the agent wall? The leaning tower of packages.2
The Three Levels of Customer Experience
As we’ve already seen, customer experience is about customer
perceptions. The research that Ziba conducted for FedEx reveals
something fundamental about those perceptions. What was it about the
shipping experience that disturbed Confirmers? After all, every time
they used FedEx their packages got to the right destinations at the
promised times—FedEx had optimized the shipping process with that goal
in mind. Yet despite the fact that their needs were being met, quickly
and easily, Confirmers were not having a good experience.
To fully understand why, you need to know that customers perceive their
experiences at three different levels: meets needs, easy, and enjoyable.
Every time they interact with a product, a service, a person, or an
automated system, they judge how well the interaction helped them
achieve their goals, how much effort they had to invest in the
interaction, and how much they enjoyed the interaction. FedEx employees
nailed the first two levels but blew it at the third when they failed to
grasp how customers felt about the shipping process.
Kerry stumbled upon the original version of this model—the customer
experience pyramid—in an academic paper by Dr. Elizabeth B. N. Sanders
when she was getting her master’s degree in human-computer interaction
from Carnegie Mellon.3 Like a lot of thinking that’s ahead of its
time, Dr. Sanders’s 1992 paper hasn’t gotten the attention it
deserves. We’ve applied it in our own research for a number of years
and tuned the version you see here as a result of our findings. It
proves out beautifully in the real world—as we’ll demonstrate in
Indeed, this model is so helpful when it comes to understanding customer
experience that it’s worth spending some time on. Let’s start with
the first level, meeting needs. That’s at the base of the pyramid for
a reason: It’s the bedrock.
What if Office Depot never had printer paper or toner in stock? What if
FedEx couldn’t get packages to the right destinations? These would be
company-killing failures beyond rescue by a sympathetic customer care
representative. Game over, thanks for playing.
When “Easy” Offers Competitive Advantage
But when companies do meet basic needs—and all of them must if they
want to keep their doors open—the next level of customer experience
always comes into play. Well, almost always. As it turns out, being easy
to work with is optional only for businesses where customers literally
have no choice.
Let’s look at a fairly benign example that illustrates this point: the
Ford Model T. It was not exactly “user friendly.” It took two people
to start a Tin Lizzie: one sitting in the driver’s seat and one
standing in front of the vehicle and turning a crank. The person turning
the crank took a big risk. Sometimes the engine would “kick back”
and start spinning the crank in the opposite direction, a design flaw
that broke many a crank-turner’s wrist.
Yet in its day, the Model T was a huge commercial success because it was
the only affordable car for the masses. It let Ford win out in the
marketplace by owning the base of the customer experience pyramid.
Today Ford couldn’t give away a vehicle that started with a crank and
might break your wrist in the process. With tons of competition for
low-priced vehicles, the company pays tons more attention to ease of
use. Now for well under twenty grand you can buy a new Fiesta with
touch-screen controls, a voice-activated navigation system, and a
hands-free dock for your phone.
Who can get away with being hard to do business with in this day and
age? Ironically, the best example we could come up with also has to do
with cars: the Department of Motor Vehicles. And the only reason they
can get away with it is because customers can’t take their business
In contrast, we’ve see many examples where ease of doing business
created a competitive advantage—or an entire industry. It was possible
to upload video to the web, but not much consumer-created video was
actually on the web until YouTube came along and made uploading easy.
Digital music players didn’t catch on because it was hard to get music
onto them. Then Apple launched iTunes and iPods (which also led to
iPhones and iPads and a market capitalization of $589 billion as of this
writing). Netflix, eBay plus PayPal—there’s real money to be made by
lowering the barriers to customers using your product or service.
Meeting needs. Making it easy to buy a product or use a service or get
customer service. It’s not hard to believe that these are important
aspects of a customer experience. But what about the idea that a company
should make customer interactions enjoyable? Not everyone agrees that
“enjoyable” is a key part of customer experience. Some people want
to believe that only a few industries, like media or retail, need to
worry about being enjoyable to work with, and not, say, manufacturing or
But remember our FedEx customer, the Confirmer. No offense meant to our
friends in Memphis, but package shipping has got to be one of the least
glamorous industries on the planet. Yet FedEx has an entire customer
segment whose experience—and therefore continued business—hinges on
positive emotional engagement. And FedEx does something about it.
Because when it comes to customer experience, package shipping is also
one of the most competitive industries on the planet.
Excerpted from "Outside In: The Power of Putting Customers at the Center of Your Business" by Harley Manning. Copyright © 0 by Harley Manning. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.