Fourth in a four part series on The Three Rings of Perceived Value.

Years ago author and speaker on organizational excellence, Tom Peters, declared, “we can no longer afford to merely satisfy the customer. To win today, you have to delight and astound your customers — with products and services that far exceed their expectations.” That’s even truer today.

Third of 3 Rings of Service Quality - Jim ClemmerThe first two rings (my last two blog posts) deal with things — technology, products, services, systems, processes, structures, and so on. That’s much of the high tech component of service/quality. The Third Ring deals with people.  This is the high touch side of service/quality. To push our customer’s sense of perceived value out to the max we need a healthy balance of service/quality high tech and high touch.

The Third Ring moves beyond customer satisfaction to customer delight. It’s the “wow factor” that exceeds expectations. That’s what keeps customers coming back — and raving to everyone else. The quality guru, W. Edwards Deming, once declared “It will not suffice to have customers that are merely satisfied… profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them.”

The Third Ring is where the large investments made in Basic Products/Services (First Ring) and supporting services (Second Ring) can multiply exponentially. Third Ring enhancements are often small monetary investments with huge pay‑offs. The Third Ring is where the human touch is added. It’s those intangible signs of personal care and commitment that say, “We’re pleased to serve you. We want to do whatever we can to make your relationship with us as delightful as possible.” In the first two rings we can objectively point to specifications, selection criteria, equipment, facilities, support systems, and the like to give clear, rational reasons why an organization did or didn’t live up to customer requirements and expectations. The Third Ring is about feelings. It’s emotional and often irrational. At its best, the Third Ring is a series of tiny gestures and insignificant signals that make dealing with an organization a rare delight. It’s a sense of warmth and attention that makes for true user friendliness.

The Third Ring is made up of thousands of little things that either add up to a high “wow index” or that bit by bit drive customers and internal groups nuts — a death of a thousand paper cuts. These “moments of truth” are any time a customer or partner makes contact with your team/organization, whether by phone, electronically, letter, or in person. Each interaction forms some kind of impression. Each day in a medium or large organization there are thousands of moments of truth. Each one is so minor it’s almost insignificant. So what if the phone rings a few extra times? And does one little typo really make that much difference?

On its own, each moment of truth is pretty small stuff. Your team/organization is certainly not going to sink or soar on the basis of that one tiny event. But each moment of truth is like a grain of sand placed on the scales of justice. Either that minute, almost weightless grain of sand goes on the side of mediocrity (“So what else is new? You just can’t get decent service these days.”) or it is placed on the side of outstanding performance (“Incredible! What unbelievable service. They are such a delight to deal with!”). Over time, the scale will start to tip in one direction or the other. Thus are apathetic, antagonistic customers or raving, enthusiastic fans created. And from such tiny beginnings are reputations made and brands built.

American Express finds that one of the most sensitive issues their frontline call center staff deal with is how to tell a cardholder who has been called to the phone in the establishment he or she is using an American Express card that the purchase can’t be authorized. Their customer research shows that how the situation is handled actually has a greater effect on satisfaction than whether the customer is approved or declined for the charge.

Who makes your organization’s First and Second Ring decisions? Who decides what products, services and support your organization will offer? Who establishes the organization’s systems, processes, practices, and structure? In virtually every organization it’s management. Those are big dollar or overhead decisions. The bigger the decisions, the higher up they’re made.

What about your moments of truth? Who decides whether to bend a rule to help out a customer? Who decides whether to answer that phone on the second ring? Who spots the error in the invoice and pulls it out for correction? Nine out of ten times frontline staff make those decisions. Of a thousand moments of truth in a given day likely over 900 of them are managed by a staff or team member with no supervisor or manager in sight. Team members live in, control, and get their job satisfaction (or disengagement) from the Third Ring. This is their territory. They own it.

John Sharpe founder of The Four Seasons hotel chain summaries the distinctive challenges of the Third Ring: “The trouble with service delivery is that it can’t be checked in advance, like a piece of crystal, or a luxury car. We can’t sample it, package it, systemize it or automate service, though Lord knows a lot of managers try. It’s only produced at the moment of consumption, our win-or-lose moment. That service delivery is often performed by the most junior of our employees, often the lowest-paid and presumably least-motivated.”

Further Reading: