“Lagniappe”- And its impact on customer satisfaction…

The Principle of “Lagniappe”…

Being a native of New Orleans, I have always been accustomed to the term “lagniappe”. For those of you who don’t reside in the deep south, lagniappe is a cajun term used to describe the “little bit extra” someone gives you as their way of saying “thanks” and/or expressing their gratitude and generosity.

And today being Mardi Gras in New Orleans, I can tell you, there will be a lot of “lagniappe” to go around, from extra servings of  gumbo and king cake, to the myriad of beads, cups, dabloons and  other “freebies” that are thrown to the crowds from the parade floats.

Yes, the concept of lagniappe is still quite unique and special to those who live day to day in the New Orleans culture. It is special mainly because it is so rare to see it applied these days, largely because of the many who view this concept as “over servicing the customer” and an unnecessary gesture that could hurt profitability.

Lagniappe- As seen through the eyes of  Purple Goldfish…

A few days ago, I stumbled on a twitter post by Stan Phelps that referenced the concept of lagniappe as it related to marketing and customer service. My interest was piqued for two reasons. First, it was nice to hear the term since I rarely, if ever, hear the term used outside of Louisiana. But more importantly, it reminded me of the “balancing act” that is essential when applying the “lagniappe” mentality inside a business.

On Stan’s blog, there is a  recent post relating to his “purple goldfish project”, an effort to collect the many examples of “lagniappe” experienced by their readers. And there are some great examples starting to emerge if you take the time to read through the comments and entries. What a great idea to expose those companies who do in fact understand the value of great service and going that “extra mile”! There are so many posts lately on the “bad experiences” (see my recent rant on CS storefronts), that it’s refreshing to see the other side of the coin every now and then. So I really applaud Stan for getting that project going. Great stuff.

Lagniappe versus the Almighty Dollar..

Although I am a native of New Orleans, and lived there for nearly 35 years, living in the Northeast for the last 13  has tempered my views on the topic a bit. While I still value and cherish “lagniappe” when I experience it as a customer, I am now more keenly aware what it can sometimes do to the cost side of the equation. Any time I consult to a Customer Service or Marketing Executive, I am always working to find the optimal balance where good service and profitability meet.

If we think about this balance, it’s helpful to acknowledge the two very polar ends of the spectrum that are often at play- The Customer Service and Marketing folks, who view their primary goal as Customer Satisfaction, and who will do “what it takes” to earn it. And the Finance side of the business who view every investment in CS as a highly discretionary investment that, while perhaps necessary in the long haul, will have negative impact on short term profitability.

Of course, few of us operate on either end of that spectrum. Marketing and CS Executives are rarely that pollyanna when it comes to “satisfaction at all costs” , and Finance Executives  are rarely that blind to customer dynamics.But the underlying biases are certainly there at some level. And anytime I hear discussion of going beyond a customer expectation, my “antennas” go up almost instinctively until I can see that a balance is present.

It’s all about Exceeding Expectations…Isn’t it?

Well that depends.

For starters, let’s look at what we mean by “exceeding expectations”. There are many ways to exceed expectations. We can exceed the customers expectation through the product itself. We can exceed their expectations on how the product is sold and delivered. We can exceed expectations on what happens after a complaint. The list goes on….In fact, the “Purple Goldfish” project has good examples emerging of all fronts.

However, while “exceeding expectations” on any one of those dimensions will generally score you points in short term satisfaction, it’s doing it in ALL of the zones that will generate “sustainable” levels  satisfaction and loyalty over the long haul.

For me, all of the dimensions I reference above can be summarized into two broad categories, either of which we are capable of delivering on effectively (by meeting or exceeding expectations) or poorly (by failing to deliver). These are:

  • The  PRODUCT ITSELF (or service) that is purchased- With respect to physical products, this generally deals with quality (does it work consistently without failure?). But with softer products or services, it could be the quantity provided ( for many, lagniappe is  that extra helping or side dish you get with your meal at a restaurant), or a “feature” that you’ve grown to expect in the core product (In flight entertainment, availability  and features of your bank’s ATM, Lobby services provided.)
  • The SERVICE EXPERIENCE (in terms of delivery/ and follow up support)- Here I’m referring largely HOW the service is delivered. It’s HOW you are handled by the sales, service staff, or even the automated channels when you interact with them. This could be during the sale itself, during the account set up phase, as part of a general inquiry or bill payment, or as a follow up to a complaint. For these purposes, I view service as “how the product is delivered“- before, during, and after the sale.

Winning with “lagniappe”…

As the chart below shows, a strategy to exceed expectation on any one of those dimensions, while failing to do the same on the other is a pretty quick recipe for trouble. The below chart shows the range of customer experiences (from below to above expectations) on each of these two dimensions (Product on the horizontal, and the delivery/ “Service” experience on the vertical).

Starting in the bottom left quadrant, few of us would argue that failing on both dimensions is a clear path to customer satisfaction HELL. While its a painful way to go, it’s often quick, unless you’re in a protected monopoly or some other type of “controlled market” that will prolong the agony. Assuming the product concept is good, and  it has a decent enough business model, someone may actually step in to acquire and/or turnaround the business. But short of that, the days are numbered for companies that live in this space. Utilities and  Municipal Services providers can often fall into this category because of their largely protected monopoly environment, although there are exceptions.

On the other end of the spectrum (top right) are clearly the “winners” in this game, the ones who are generating and sustaining high levels of customer satisfaction and delight. Great product. Great service. Interestingly, in more cases than not, they also have lower cost structures for servicing since good products and good first time service resolution actually results in fewer required interactions. The investment up front in product design and development of a strong service process has paid off. Apple is a great example of a company in this arena. The core product is well designed and it works without fail. It’s easy to set up, use and it rarely breaks. The service, wherever it is provided- store, call center, self help, etc…always surpasses my expectations.

(click to view full size)

And while, it’s not the “holy grail” on the chart above, operating in the cross hairs (“core players”) can actually be a pretty safe place to play. It won’t earn you much in the way of lagniappe or high levels of customer “delight”, but there is something to be said for consistently meeting both expectations ALL THE TIME. Customers value that more than we often think. Look no further than Southwest Airlines and McDonald’s for examples in this domain.

Being one dimensional often means trouble…

As with most things, failing to have a balance usually spells trouble downstream. The same is true here.

Companies in the lower right, are those who have a great product, but fail miserably on the service side. Interestingly, many of the quasi competitive utilities like Cable and Cell Providers operate in this space. Their service rarely goes out, and most of the time is truly fantastic (above expectation). But the sign up processes, inquiry resolution, and in store interactions are often pure hell. Auto companies (operating through a dealer network that varies in its performance levels) can also fall into this category.

The trouble here is threefold. First, bad service usually creates a spiral of its own spending (how many times have you had to call a second or third time to get resolution?) Second, whatever gain you got by having a great product, is at best neutralized because of the poor service. And third, given a way to get the same product somewhere else (think bad car deal experience), you’ll take it. Barriers to switch (for example, it’s not easy to mentally “uproot your TV and cable system” after you’ve gotten used to it) can certainly delay the defection. But when those barriers go away (e.g. time for a new car lease?), it’s a whole different story.

That all notwithstanding, I think the most interesting quadrant is upper left. Here lie the companies that are trying so hard, often spending out the wazoo to essentially buy their way to a desired  satisfaction level. You know the types- the incessant stream of discounts, give aways, apologies, follow ups, etc… that occur on the heals of buying a poor product or service and failing to have even your most basic expectations met. Nothing ticks me off more than someone “begging” for a survey score (sometimes overtly), knowing full well that you aren’t satisfied.  Its easy in this area for costs to spiral out of control because you’re fighting a losing battle from the start. Until the core service is delivered, the customer doesn’t (and shouldn’t) care about anything else. This is the one quadrant where lagniappe can in fact hurt more than it helps. Hotels that give me free cookies won’t earn my satisfaction if my bed is uncomfortable or my room is subpar. A happy stewardess does nothing for me if the inflight entertainment is down on a 10 hour flight. And an apology or free drink coupon does not help much if my flight is delayed because of a mechanical problem on a plane that has been sitting there overnight!

Get to the crosshairs, THEN move from there…

If I had to give advice to a company, it would be to first get to basic levels of expectations on both dimensions. Then worry about the lagniappe.

Define what your core product is. Go beyond just the basic product to all the things that customers expect about the service or product they’re buying. What’s your equivalent to the in flight entertainment system? or the TD bank coin counting machine? or the Chase check deposit feature (by capturing image on your phone)? even you’re pricing and rate structure/ plan options?  These are the things that have brought customers to you. And they must work flawlessly just to meet expectations. Introducing new features and tools will do nothing if they either dont work, or are layered onto a poorly functioning base product

Do the same for your service offering and channels. Don’t embed a new self service channel, or new IVR if your underlying process still has major flaws. There’s nothing worse than getting stuck in a 7 layer IVR system, until you recognize that the analog process wasn’t much better. These kind of things speak volumes about the nature of your underlying process and service infrastructure. Same goes for those new kiosks, mobile bill pay, social media interaction, online knowledge base’s. Nothing is more frustrating to a customer than watching a company invest oodles in technology when it consistently demonstrates little in the way of savvy when dealing with the most basic of interactions.

Once you have your baseline set in each of these areas, and get your performance to the minimum expectation for both, you can look for more and more ways to offer those “extras” that will really make a difference, while also raising the bar for your competitors.

Who wants a second helping of crap?

Look folks, lagniappe is a often a good thing, particularly when it is added to a solid buying experience.

But when it’s not , any effort you spend to provide it will at best be neutralized, and may  even cause the opposite effect. After all, who wants a second helping of a crappy meal?

Fortunately, for those who are spending Mardi Gras in New Orleans, there’s little likelihood of a crappy meal. And if you do happen to experience one, you’ll probably be to drunk to notice!

-b

Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

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  1. #1 by Stan Phelps on March 8, 2011 - 11:06 pm

    Bob,

    Tremendous post covering ‘lagniappe’ on Fat Tuesday of all days. Fantastic and thorough analysis. Here are my topline thoughts:

    – Not every example of ‘marketing lagniappe’ costs money. In fact there are a quite a few examples of either extremely low or no cost. Little touches that make a big difference.

    – Love your matrix. We’re on the same page as I use something called the v/m matrix
    http://www.marketinglagniappe.com/blog/2010/04/13/put-up-or-shut-up-do-actions-speak-louder-than-words-when-building-your-customer-experience/

    – Lagniappe is not a substitute for either a bad product or poor customers service. You nailed it that its a priority to get the basics right. You can’t make chicken salad, out of chicken sh*t.

    Marketing Lagniappe is at the crossroads of three major elements of marketing:

    1. Product Differentiation: the little extra ‘thrown in’ adds value and can be a strategic differentiator. They help you stand out in a ‘sea of sameness’. Think Southwest and ‘Bags Fly Free’.

    2. Word of Mouth Marketing: giving something unique and ‘unexpected’ to your customer has the effect of disrupting schemas. The effect causes customers to want to talk about the experience. You are giving your customers something to blog, tweet, Facebook and talk about.

    3. Retention / Loyalty: Some say that retention is the new acquisition. Reducing attrition can lead to healthier bottom line. Plus, the little extra touches creates a bond between you and the customer. They convey that you care. In instances like DoubleTree Hotels, PotBelly Sandwiches or Midwest Airlines, ‘It’s not about the chocolate chip cookie, its what the cookie represents’.

    Enjoy Mardi Gras Bob.

    Best,
    Stan

    PS – I hope your post spurs some examples for the Purple Goldfish Project. Only 265 to go before we reach the goal of 1,001 examples

    • #2 by Bob Champagne on March 9, 2011 - 12:14 am

      You’re too kind Stan! It’s clear we are definitely “kindred spirits” in this space.

      I think our views complement each other quite well. I love the V/M matrix. Very cool.

      As you can tell from my other posts, I generally view the CS area through the lens of Enterprise Performance Management (hence, tend to be a little slanted to the finance and operational performance sides of things). That said, I am a CS/ Marketing guy at heart and have spent a large part of my career in that space. So as you can imagine, I spend a lot of time “mediating” dialog between the Customer side of the business and, at times, what appears at times to be “everyone else”

      CCO’s will make a lot more headway when they can put all of this into the bigger enterprise context- much like you do with the V/M discussion. While its only 25% (read: very big from an executive mind-space standpoint), it is rarely viewed with that level of proportional importance. And when you consider the impact on the Financial, Employee, and Sustainability areas, it’s even bigger.

      Good to have a “partner” in the cause. Thanks again for the comments, kind words and RT’s

      Re: Mardi Gras- It’s 7PM in Jersey and I’m still sober (in New Orleans, few of us could say that after breakfast :), although I am enjoying a good cigar. God I wish I were back in the south!!! Nothing like fat tuesday to catalyze the lenten sacrifice.

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