Customer Outrage or Enthusiasm: The Choice is Yours!

Furniture World Magazine

By: Dr. Maurice A. Ramirez Businesses large and small want happy customers, happy employees and happy vendors. Regardless of whether a multinational corporation or a “Mom & Pop” furniture store, enthusiastic supporters are a marketing asset while a single outraged person is a liability. Studies have shown that the average “satisfied customer” refers five people while the average “dissatisfied customer” finds 11 people to chase away. Businesses and whole industries spend huge sums of money meeting customer expectations and even larger sums of money raising those expectations further. It is a never ending chase and if you lose, twice as many people will hear from the disappointed than ever heard from the content. The key then is to manage the factors that determine the satisfaction of customers, employees and vendors with their experiences interacting with a business. Let Your World PIVOT Around Them! When people are born, they believe that they are the center of the universe. As children grow and mature into adulthood, they slowly learn that the world does not revolve around them. Businesses seek to make customers again feel the world PIVOT around them. The PIVOT model provides a simple mathematical approach to understanding and even predicting the emotional response to an experience. PIVOT stands for: P = Probability I = Impact V = Vulnerability O = Outrage T = Tolerance Each component of the PIVOT model places a numerical value on the factors that determine the emotional response to a business encounter. It is a predictor of “Customer Sentiment.” To apply the PIVOT model each component must be understood. Probability Probability = The likelihood of an experience occurring (0% to 100%) Drawn from traditional risk management and actuarial sciences, the probability of an event occurring is based on the historical frequency of that event. Most simply, probability is the number of times an event occurs divided by the total number of possible events. Impact Impact = The impact of an experience (positive or negative) on a scale 0 to 3 (0 = No Impact; 1 = Minimal Impact; 2 = Moderate Impact; 3 = Significant Impact) It is often said that no event or experience is without impact, but assigning a value to the degree of impact is often complicated. The PIVOT model deals with response to an event and is inherently subjective, thus Impact is a subjective measure based on past experience with an event. Vulnerability Vulnerability = The susceptibility to the impact on a scale 0 to 3 (0 = None; 1 = Minimal; 2 = Moderate; 3 = Significant) Like Impact, Vulnerability is a historically based, subjective measure of the susceptibility to the Impact. Obviously, if something has occurred previously but had not Impact, the Vulnerability is zero; however, when an Impact has occurred in the past, people have an inherent and subjective sense of Vulnerability which can be subjectively measured. Outrage Outrage = The perception of the experience on a scale -3 to 3 Outrage was first identified as a component of risk communications by Paul Sandman, PhD. In his model, Sandman identified two factors that influenced and predicted the need for risk communications in the event of a business debacle, Hazard & Outrage. Sandman found that while a high perceived Hazard necessitates risk communication, low Outrage mitigated that need while high Outrage necessitated risk communication even with a low perceived Hazard. Sandman never quantitated the level of Outrage, but in the PIVOT model, Outrage is a calculated value. Calculation of Outrage requires an understanding of two additional values, Expectation and Satisfaction. Expectation = Perception of what reality SHOULD BE on a scale 0 to 3 (0 = None; 1 = Minimal; 2 = Moderate; 3 = High) Satisfaction = Perception of what reality ACTUALLY IS on a scale 0 to 3 (0 = None; 1 = Minimal; 2 = Moderate; 3 = High) Understanding Expectation and Satisfaction, Outrage can be calculated: Outrage = Expectation – Satisfaction The interesting result of calculating Outrage is the insight this provides. Since Expectation is the perception of what reality should be while Satisfaction is the perception of what reality actually is. Given that a business cannot change people’s perception, Outrage is actually the difference between Expectation and REALITY. Tolerance Tolerance = The sentiment regarding the event. Tolerance is the measure degree of Enthusiasm or Anger in response to an event and like the calculation of Outrage, calculating Tolerance gives tremendous insight into why seemingly bad business news results in good while seemingly good business news can become a full fledged business disaster. To calculate Tolerance, first calculate Hazard and Risk. Hazard = Impact + Vulnerability Risk = Probability x Hazard = Probability x (Impact + Vulnerability) Having previously calculated Outrage and now having quantitated Risk, Tolerance is simply calculated, noting that if Outrage is a negative number, the positive number (absolute value) is used to calculate Tolerance. Tolerance = Risk (to the power of Outrage) Therefore Tolerance (anger or enthusiasm) equals Risk raised to the power of Outrage. Choosing Epidemic Enthusiasm Even though we are in the furniture business, a look at a classic historical business example from the drug industry demonstrates how accurate and powerful the PIVOT model is for predicting customer sentiment. McNeil Pharmaceuticals is the textbook example of risk communications after the cyanide contamination of their Tylenol product. Applying the PIVOT model: Probability of dying from taking a contaminated pill = 100% (1.0) Impact of such an event = 3 (high) Vulnerability to such an event = 3 (high) Hazard = Impact + Vulnerability = 6 Risk = Probability x Hazard = 6 Expectation of the general public was high (3 points) as there had never before been a significant problem with a McNeil product and after the poisonings, Satisfaction was low (1 point). Outrage = Expectation – Satisfaction = 2 Tolerance = Risk (to the power of Outrage) = 36 When Outrage is a positive number (Expectation > Satisfaction), the Tolerance score is a reflection of the Anger (negative image) felt towards the business. But, when McNeil responded by publically withdrawing the product from the market and pledging to not return to store shelves until safety could be assured, Satisfaction was high (3 points) and Outrage was effectively reduced to zero. Tolerance = Risk (to the power of Outrage) = 1 When Outrage is zero (Expectation = Satisfaction), the Tolerance score always equal to 1. (Mathematically, any number raised to the power of zero equals 1). The reintroduction of Tylenol was another matter. The Expectation of the public was low (1 point), no company had ever made a tamper resistant medication before. Upon release of the repackaged Tylenol caplet and the elimination of the capsule form, public Satisfaction was high (3 points). Outrage = -2 Tolerance = Risk (to the power of Outrage) = 36 When Outrage is a negative number (Satisfaction > Expectation), the Tolerance score is a reflection of the Enthusiasm (positive image) felt towards the business. McNeil did what no company had done. It took a business disaster with a high degree of public Anger (Outrage = 2 and Tolerance = 36) and by setting reasonable, obtainable expectations, mitigated the public Anger (Outrage = 0 and Tolerance = 1). Finally, by exceeding expectations, Anger was transformed to Enthusiasm (Outrage = -2 and Tolerance = 36). Most importantly, McNeil did all of this without changing the Hazard or Risk equations surrounding the incident. Manage What is Manageable Ultimately, Probability, Impact, Vulnerability, Perception and Reality cannot be changed. Of all the factors that determine customer sentiment, Expectation is the only factor that can be changed before and to a lesser degree during an event. Thus if Expectation can be preemptively made to matched reality, Outrage is changed. Through expectation management, Anger is downgraded to Concern; Concern is converted to Opportunity; and Opportunity is upgraded to Enthusiasm. About the Author: Dr. Maurice A. Ramirez is the founder and president of the consulting firm High Alert, LLC. He serves on expert panels for pandemic preparedness and healthcare surge planning with Congressional and Cabinet Members. Board certified in multiple specialties, Dr. Ramirez is Founding Chairperson of the American Board of Disaster Medicine and serves the nation as a Senior Physician-Federal Medical Officer in the National Disaster Medical System. Dr. Ramirez has a new book: “You Can Survive Anything, Anywhere, Every Time.” His website is www.High-Alert.com.