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Archive for March, 2010

My last blog post discussed the failures of Sony and McCulloch in assuming that they understood the needs of their customers instead of actually knowing. You know what the old saying is when you assume. The penalty for assuming the needs of their customers for McCulloch and Sony was steep, to the tune of billions in lost profits. In the case of McCulloch, this mistake ultimately led to the undoing of the company, as they went into bankruptcy in 1999.

Sony executives made what they believed to be a correct assumption that picture quality was the crucial need that a customer would consider when purchasing a personal video recorder. Yet, the Beta Max became extinct. Why?  Sony didn’t fully understand the needs of the customer and which needs would be greater drivers in the final decision-making process of the recorder that the customer would buy.

Many operators may make the assumption that good greens is all they need at their course. While good greens are important, I have identified 38 separate touch points that can affect the experience of a customer at a public course. Not all customer touch points are equal. Based on research published by Professor Noriaki Kano, I have classified touch points into the following groups; penalty, reward or a combo of penalty & reward factors. For example, one of the touch points that I mapped out is the sand bottle on a golf car. The customer expects it to be full, and when a course meets this expectation by providing a golf car with full sand bottles the course won’t realize any additional reward in terms of customer loyalty, it’s expected! But if the customer reaches for the sand bottle and they are empty, customer loyalty likely will take a hit. Put another way, in my book an empty sand bottle on a golf car equals strike one. That’s not to say that this mistake can’t be overcome. If my experience is great at every other touch point, I’ll probably forget about the sand bottle. But if I am left unfulfilled at the other touch points, that empty sand bottle will be just one piece of ammunition in my rifle when I take aim and fire at the course through my negative referrals to friends. Failed touch points like these, make up the fertile breeding ground of irate assassins. When the course provides the customer with the ammunition of unfulfilled expectations on key touch points, assassins will be determined to complete their hit by launching an all out assault on the business that failed them.

A key tool that can help companies understand the needs of the customer is a “Customer Corridor Map.” I hope to help public golf course operators rethink the needs of their customers by mapping out the customer corridor for a round of golf. The goal of this map is to help courses shift their focus on customer needs from an inside-out approach to an outside-in approach.

The lifecycle of the customer experience from beginning to end at a public course

Bottom Line: An outside-in approach to the needs of your customer will allow you to better understand your customer touch points and maximize the customer experience!

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Most companies approach what their customers need from an ‘inside-out’ perspective. This type of thinking dates back to the acquisition or business development stage. Unfortunately most businesses use this inside-out thinking from the conception stage and it continues during the operations stage.

I was recently reading a great book1 that discussed the stories of Sony and McCulloch (chainsaw manufacturer). Both companies paid dearly by using an inside-out approach instead of an outside-in approach.

When Sony invented the Beta Max video recorder in 1975, they had a monopoly on personal video recording, and the recorders sold briskly even at a price point of around $2,000. A few years later, JVC introduced the VHS player. At the time of the introduction of the VHS format, Sony executives were unconcerned. The picture quality of the Beta Max format was far superior and they already had a head start on the VHS format as Beta Max was introduced a year earlier. Also the format of the VHS tape was larger and bulkier.

Yet, to the shock of Sony executives, the VHS format started to gain market share. By 1980, the market was split 50/50 and a few years later the Beta Max format was extinct. So why would consumers choose a format that was introduced later, had poorer picture quality and used heavier/bulkier tapes? The reason was that Beta Max tapes only recorded for one hour. The Beta Max was great for videotaping a sitcom episode, but not for videotaping a sporting event. The fact that Sony didn’t understand that consumers wanted a tape recorder that could record three hours, more than they cared about picture quality, cost Sony billions of dollars in profit.

If Sony used an outside-in approach to what their customers wanted, we may have never seen the invention of the VHS video format. The best ways a company can develop an outside-in approach is by developing a ‘customer touch-point map.’ This type of needs assessment is necessary for every type of business, from retailers to manufacturers to facility operators. A customer touch-point map will match up your offering to the needs of your customers.

In the 1960s, McCulloch dominated the marketplace of chainsaw manufacturers. Lumberjacks were the predominant buyer of chainsaws, and the McCulloch chainsaw was THE brand to own. The McCulloch chainsaw was extremely loud and spewed smoke everywhere. But these factors were not of concern to lumberjacks. The problem wasn’t that McCulloch didn’t understand their customers; they didn’t understand who their customers were! McCulloch completely overlooked the growing residential market of homeowners looking to trim a couple of branches and cutting some firewood. In 1963, Homelite entered the chainsaw marketplace with their XL12 saw, the first lightweight chainsaw, weighing just 12 pounds. In just two years, Homelite overtook McCulloch as the dominant chainsaw manufacturer.

My Take: America has changed tremendously over the past 30 years. I consider the three greatest obstacles to growing the game are time, difficulty and money, in that order. Fifty years ago, golf was a game for America’s elite, but not today. Today the game is more accessible to people of all income brackets than ever before. Yet the game is declining!

I think the reason for this decline is that many golf businesses don’t truly understand the needs of their customer. The private club sector is facing enormous pressures today, but most clubs are still operating with the same offerings and policies that they used 20 years ago. The needs of the customer have changed, yet the private club model has not.

The Sony story illustrates that businesses need to use an outside-in approach to understand the needs of their customer. The McCulloch story shows that businesses also need to understand not just the needs of the customers, but who their customers are. It is crucial that these concepts, although extremely basic, are not taken for granted. Both Sony and McCulloch thought they understood their customer and didn’t feel the need to actually ask their customers what they needed. So the question is: “Do you actually know who your customers are and what they need, or do you just think that you know?”
Source Notes
1Denove, C. & Powers, J. (2006). Satisfaction. New York: Penguin Group.

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