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The Paradox of Excellence: Don't Let Great Service Kill Your Business

By Don Gray and Todd Hendries

NOTE:  Published in the Rainmaker Report by RainToday.com April 23, 2008

Services are continuously improving as companies strive to exceed client expectations and secure their market leadership. Yet, the marketplace has never been more volatile and customer and client churn has never been higher.

Consider providers of information technology expertise. Techtel, a leading supplier of demand-tracking studies, and Fresh Perspectives, a growth strategy consultancy, surveyed 600 buyers of IT services.†

Within three years, up to 9 percent of buyers are confident they'll be using a different supplier, another 6 percent are certain they'll switch vendors if performance doesn't improve, and a whopping 40 percent are uncertain they'll remain with their present provider.

Likewise, in the telecommunications industry, churn rates are as high as 35 percent per year.‡

Conceivably, an entire customer or client base could turn over in just a few years. That's an expensive proposition considering that, according to research of industries spanning financial services to retailing, it can cost five to 10 times more to replace a customer or client than it costs to retain one.

The opportunity costs are enormous, too. According to Bain & Company, a top international consultancy, a mere five percent increase in customer retention can increase a company's profitability by 75 percent.

Why are clients so eager to jump ship when products and services are delivered faster and more efficiently than ever, quality initiatives are more aggressive and customer support is usually at work 24-7?

The Paradox of Excellence

As we work with clients across a broad array of industries – from public relations firms to financial services to manufacturing – we regularly witness the answer to this question: it's called The Paradox of Excellence.

When you silently do your job very well, you become invisible, until bad news catapults you into the limelight. The longer you do a good job, the more your perceived value erodes as clients forget the pain you're relieving. When that happens, you are setting yourself up to lose business. Worst of all, most of us don't realize what's going on until it's too late.

The Paradox of Excellence was identified by authors Dave Mosby and Michael Weissman and outlined in their book by the same name.

Wal-Mart vs. Wells Fargo

Here's an example of this that everyone can relate to: Wal-Mart. It is one of the best-run organizations in the world, but they've gotten a lot of bad press because they allowed their great business practices to become invisible.

For instance, in the '80s and '90s they spent a fortune on information technology that measured the amount of time a bottle of shampoo stayed on their shelves – and made sure that it was shorter than any other retailer. Multiply this times 120,000 items per store. They wanted to sell more and sell it faster than any other retailer to stay competitive.

For nearly three decades, they have been excellent merchandisers and astute retailers. Yet, they've kept how they made it happen a secret. So when bad press erupted around predatory practices, it was too late to explain the other factors that created their success.

You want people to know the value you bring before negativity emerges, otherwise you just look defensive.

In contrast, Wells Fargo was trying to increase the average number of products used by its customers, even though they were leading the industry with an average of 3.3 products per customer. They realized what attracted customers wasn't the quality of their products or services, but how well they communicated the value of their offerings.

So, they focused on getting everyone who touched the customer to reinforce the fact that Wells Fargo wanted to be a single-source provider of all of their financial needs. The result: the number of products per customer jumped to 5.2 in merely two years.

Professional service firms can learn a lesson from these organizations and take several steps to overcome the Paradox of Excellence:

  1. Know what your clients genuinely value and expect. Never assume you already know. You can learn this information by conducting research.

    • Pay attention to and encourage all types of client feedback – negative and positive. Seek it out. Write it down. Study it.

    • Look at the larger marketplace, such as trade articles and websites, to see what is being valued on a broader scale.

    • At least once a year, review the state of your business relationships with your clients. Review what your partnership has accomplished and where it is going. In this performance evaluation, interview your clients without inserting any of your own ideas or opinions. Never get defensive if they criticize and be open to pleasant surprises.

      You should leave with a comprehensive list of what your clients appreciate about you. You should also know what they expect of you and have a way to ensure you are meeting those expectations.

    Consider one of our clients, a Fortune 500 manufacturer that guaranteed its customer repairs would be made on site, within two hours, and would be completed in the first visit. Their contracts also promised regular, preventive maintenance.

    The manufacturer was highly conscientious in satisfying the contract, and they thought that was enough to satisfy their customers. But here's the rub: the manufacturer's staff never told their customers they had visited.

    By not sharing with the client what they were doing, the manufacturer was missing an opportunity to reinforce what the customer cared about most – that the manufacturer was regularly and promptly on site providing exceptional service.

    Their customers were hungry for that kind of communication – it's what they valued, and the manufacturer wasn't providing it, even though they were following the contracts to the letter.

  2. Prioritize the client assessments you've collected and track how you're performing against them. Share your performance levels with your entire company and look for ways that they can reinforce your value when they interact with clients. To do this, you need to identify the key performance metrics your client expects.

    A long, complex project may have several key areas of performance such as scope, milestones, and business-impact requirements. The project team needs to be aware of any changes to key metrics and proactively communicate them to the client.

  3. Quickly address any unrealistic expectations and why they're happening. Once you do that, you can then better manage those expectations, and create more realistic ones through communication.

    The manufacturing company mentioned earlier made sure every time an engineer visited a site, he would follow up with a report on what he accomplished – why he was there and what he did.

    In addition to real-time reporting, sales professionals would review these reports with the clients every six months, further reinforcing outstanding service. Today, their customers fully appreciate how much effort goes into ensuring their products are functioning properly.

We are all guilty of doing our jobs well without understanding why what we do is valuable to those we serve – and this can have dire consequences. To survive in today's ultra-competitive business environment, it is critical to make the effort to know what your clients genuinely value about you and consistently reinforce that value. Because, when they don't value you anymore, it's too late.

† Sarbanes-Oxley Compliance Journal, November, 2005
‡ Telecon, January 17, 2002, Astrid Bohe

Don Gray is a principal of the Sales Engineering Group. He has more than 30 years experience in sales and marketing, international management, strategic planning, and sales process development and coaching. He is certified in a wide array of selling methodologies and has facilitated workshops on selling and business solutions worldwide.

Todd Hendries is a principal of the Sales Engineering Group. He has more than three decades of sales, sales management, marketing and training experience, and has delivered more than 400 sales training programs worldwide. He is expert at helping organizations identify their market value proposition and integrate it with their sales culture.

 

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