Moments of truth. Is that just a catchy phrase? Or is it another marketing gimmick? Actually, moments of truth (MOT) represent a simple and powerful tool to increase sales hit ratios.
Jan Carlzon is renowned for his use of moments of truth to achieve customer focus. He’s the man who became president of the ailing SAS Airlines in 1981.Within one year, he turned the organization around from losing $30 million to making $1 million. For many, Carlzon is in the ranks of Lee Iaccocca and Jack Welch. He credits the turnaround to moments of truth. Once Carlzon and SAS identified their customers’ MOT, they reorganized the airline to manage them flawlessly.
It all started when Carlzon began talking with passengers about their perceptions and conclusions of their trips on SAS. He discovered that when a typical passenger put down their tray and found on it a coffee stain that had been overlooked during the pre-flight cleanup of the plane, the passenger concluded that the airline was probably also careless about its engine maintenance. Armed with this belief, the passenger decided not to fly this unsafe airline.
Carlzon and his staff couldn’t follow this logic. What did coffee stains have to do with the maintenance of the engines? The team that cleans the trays is different from the one that maintains the engines. How did passengers conclude that there was a correlation between a coffee stain on a tray table and poorly maintained engines?
The answer: As human beings, we take very specific experiences and generalize them throughout an organization. This is the power of first impressions. These specific experiences strongly influence individuals’ decisions to purchase from, stay with, or leave an organization. Irrational behavior? Definitely! Does it happen all the time? Yes. Every day, in every business.
These experiences are highly specific. Remember, it was not crumbs on the tray or a scrap of paper in the aisle, but a coffee stain on the tray.
So, where are your agency’s coffee stains? Would you like to know? What specific experiences have your prospects and customers had that led them to conclude that your agency isn’t the type that they want to handle their insurance needs?
To identify your customers’ moments of truth, you need to have a heart-to-heart talk with yourself. First, are you willing to invest the time and money to unearth the core of what your customers really want? If so, are you willing to reorganize your agency so that you can flawlessly deliver positive moments of truth to your customers and prospects?
Although the advantages and rewards are incalculable, this is a tall order. FedEx offers a great example. Why do many people who customarily use other overnight delivery services pay a premium for FedEx when a particular package must arrive on time?
To find the answer, go back to when FedEx wasn’t the best. FedEx didn’t want true competitors – it wanted loyal customers who were willing to pay a premium for its services. Management realized that they needed to speak with many their customers, particularly the most profitable ones (A’s) and uncover their MOT. FedEx invested time and money in market research and successfully identified its customers’ moments of truth.
FedEx happened to be very fortunate. Downright lucky. The research clearly proved that it had one MOT that was five times more powerful than any of the other of its moments of truth. For any company, that is a dream come true. It would allow the company to really focus on one MOT and not have too many to integrate into its business.
What was this gold nugget of a MOT? The customers wanted “on time delivery.” You might think this is obvious. However, is it really that clear? Don’t we also want the air bill to be easy to complete, the person at the 800 number to be knowledgeable, the pick-ups to be timely, the invoicing to be accurate, the packaging to be sturdy enough to protect the contents, the drop-off locations to be convenient, etc. We have many “wants” regarding our overnight delivery service. Although customers rated all of these “important,” what they wanted above everything else was for their package delivered on time. Period.
FedEx used this data to redesign its delivery process, hiring and training of employees, warehouse, airplanes, airplane routes, procedures, etc., on a single focus: Deliver packages on time! Period.
FedEx knew that if it could outperform its competitors in just this one area, it could charge a premium that its customers would willingly pay. Management was so convinced of the power of this MOT that when an employee hired a small airplane to deliver a package on time, they rewarded him generously. He was an example of an employee who jumped through hoops to do his job. That’s what FedEx wanted. Employees who got it! Employees who understood what the customers really wanted.
Yet, imagine how these executives would have responded to the employee’s hiring the airplane if they hadn’t identified their core MOT. They would probably have deemed this employee’s efforts overly ambitious, inappropriate and costly. The only suitable action would be dismissal.
So, an additional benefit for a business which has identified its MOT is that it allows everyone in the company to know the “rules of the game.” This in turn makes it easier for everyone to work together so that everyone wins at the game!
Consider your agency. What are your moments of truth? Are you willing to uncover and then address them? There are many data gathering techniques and questions to identify your customers’ MOT. However, for now, let’s keep it simple.
There are three main questions. They focus on the decision-making process of your A, B, and C customers. Learn how they make their decisions. What do they value? How do they weigh one factor against another? What will change their mind? What or who influences them? This is the information your agency needs to know:
- Why did you decide to do business with us?
- Why have you stayed?
- Why would you or why did you leave?
Be wary of accepting a customer’s first responses; they’re usually more global than specific. Remember those coffee stains. They were not the passengers’ first responses. So, probe beneath your customer’s first response. Ask three to four probing questions – the usual number to uncover the nugget that is the MOT.
For instance, suppose your customer says that she decided to become a customer because your producer was very professional. That is too vague to be a MOT. What does she mean? Was there a little gray in his hair or was he knowledgeable; did he shake the customer’s hand and smile or was he impeccably dressed? Without the probing questions, you will have responses but not the specific ones that amount to a MOT. You’re in search of coffee stains – the one or two small items that are easily manageable and that made significant differences to your customers, or former customers.
Some suggested follow-up questions for customers who would respond “professional” might be: “Would you tell me what ‘professional’ means to you?”
Or, “What did the agent do that indicated to you that he was professional?” Continue asking questions that surface small elements of the customer’s experience. Such as, “Tell me more about that.” Or, “Do you remember the moment you decided to become our customer? If so, what did the agent say or do at the precise moment?” Some people might feel hesitant to ask probing questions of a customer. They are concerned that the customer will feel pushed or nit-picked. On the contrary, what I have found is that customers sense my genuine interest, easily answer questions, and provide me with their MOT.
After you question your customers, you’ll have a large variety of responses. Keep these answers the customer’s own words. Don’t substitute your words. For example, don’t combine “friendly,” “warm and open” and “amicable” into one category. Bear with the large number of responses. At some point, two or three reasons will pop to the surface – they’ll become apparent.
These are the moments of truth. They form the key selling messages for each customer segment. You’ll find that the reasons are different for your A, B, and C customers in each of your market segments. The top two or three reasons why each customer segment decided to do business with your agency in turn become your agents’ best screening questions for prospects. This is how the MOT will help your agency boost its sales hit ratio.
Because you want more A’s, your procedures need to focus their most concerted efforts on the prospects who are most likely to become an A customer.
Prospecting is time-consuming and expensive. Insurance has the highest customer acquisition costs of any industry. Identifying the prospects who are most likely to become A customers makes it easy to focus the agent’s time and resources to successfully attract these prospects to your agency and hold acquisition costs to a minimum.
Producers need to memorize the reasons that each customer segment decided to do business with your agency. Then they need to formulate questions to ask these prospects so that they can learn the relative importance of these reasons in the prospect’s decision to become a customer. For instance, with one of my clients, it’s a customers’ MOT was that the producer asked detailed questions about their risk management needs that no other agent had ever asked. A screening question would be, “To many of our clients, our in-depth knowledge and detailed questions about their risk management needs are of paramount importance. Is this true for you?”
At some point, the prospect will strongly agree with the set of reasons for one of the customer segments. This means that the producer will know with a high degree of certainty that the prospect is an A, B, or C so that he can decide how to use his time and the agency’s resources to increase sales hit ratios.
The moment of truth approach provides a simple and easy way to identify your prospects’ decision-making methods. With this information, prospecting becomes more fun and more rewarding. Your producers will have the information they need to set priorities and sort through prospects quickly and efficiently.