A Moment of Truth occurs when a customer comes into contact with a business in some way and experiences their level of quality. This contact creates perceptions and defines the business in the eye of the customer. This contact with the busines can be as brief as 15 seconds.
These mini ‘moments of truth’ are the moments that ultimately determine whether your business will succeed or fail. These are the moments when you have the opportunity to delight the customer or alternatively to give them a poor experience.
The term 'Moment of Truth' was created by Jan Carlzon, who managed the Scandinavian SAS Airlines. Jan Carlzon became the Chief Executive Officer (CEO) of Scandinavian Airlines in 1981; this was at a time when the airline had suffered a loss of $30 million in the two years prior. Carlzon as able to make SAS profitable within 12 months. In 1984 SAS was voted “Airline of the Year” by Air Transport Worlds.
Jan Carlzon used the term “Moments of Truth” to highlight those moments when important brand impressions are formed and where there is significant opportunity to create good or bad impressions.
Every “Moment of Truth” is important according to Scandinavian Airlines. The airline determined that each one of their ten million customers when interacting with the airline come in contact with five employees. This equated to fifty million moments of truth. By managing each of these interactions well, the airline was able to turn around its financial performance in a very short time.
A customer will experience many Moments of Truth during their process of doing business with an organisation. Combine these together and they create a Cycle of Service within which the organisation and its customers interact.
A positive moment of truth can raise the satisfaction levels of a customer, engender repeat business, positive reviews and turn them into raving fans over time. A negative moment of truth can do the opposite and can result in the customer looking elsewhere to get their needs met.
Whenever a customer interacts with an organisation a Service Encounter occurs. There are three main types of service encounters.
- Remote encounters
- Phone encounters
- Face-to-face encounters
A customer may experience just one of these or a combination of the three.
A remote encounter can occur without contact with a person. Think of the pop-ups on a website, recorded messages, online purchases such a retail shopping, buying tickets to events as well as flights and accommodation.
A phone encounter is often the most common type of interaction a customer has with an organisation. Examples of these are customer service, general enquiries and ordering. The phone encounter has a higher potential for variability in managing the moments of truth. The levels of variability relate to factors like the effectiveness and the efficiency when dealing with the customer, the tone of voice used and the level of knowledge of the employee to assist the customer.
Face-to-face encounters include in person interactions between the customer and the employees i.e. shop assistants, managers, maintenance contractors, wait staff etc. This a a more personalized setting and offers the highest variability to affect the experience the customer has with an organisation or individual.
Can you think of some moments of truth in your business?
Here are some questions to determine whether your business is succeeding in areas that can involve just 15 seconds of interaction:
- How do you or your employees answer the phone?
- What does your voicemail message REALLY sound like?
- What is the first thing you say at the beginning of a sales call or when a prospect calls you?
- What do you say at the end of a sales call?
- How quickly do you respond to enquiries?
- How do you and your employees describe your business when they are not working, such as in a social situation?
In 1986 Jan Carlzon, the former president of Scandinavian Airlines wrote a book, called Moments of Truth. In his book, Carlzon defines the moment of truth in business as this: “Anytime a customer comes into contact with any aspect of a business, however remote, is an opportunity to form an impression.”
From this simple concept, Jan Carlzon took an airline that was failing and turned it around to be one of the most respected airlines in the industry.
Disneyland has acknowledged the importance of the small moments of truth and has taken them to an even higher level. They understand the importance that these small moments of truth have on their customers. Cast members (Disneyland’s term for employees) are trained to acknowledge the guest (Disneyland’s term for a customer) with a smile or facial expression if within ten feet. If a cast member gets within five feet of the guest, they are to acknowledge them verbally. All the little moments of truth, combined with the major ones, as well as the product or service your organisation is selling, add up to determining the overall level of a customer’s level of satisfaction.
Identifying the Moments of Truth in a business helps us focus attention on areas where customers are evaluating us (often they do it subconsciously or after the fact) in terms of how well we satisfy their needs.
It is not just the moments when the interaction with the customer is on a positive level. The actions that are taken a client complains can have a significant impact on the business. The right response can result in increased client loyalty, increase the chance of a repeat sale, as well as them referring the business. Alternatively, handling client complaints in the wrong way can lead to complaints, poor reviews and loss of business. Recognise that the moment when a client complains can be a wonderful opportunity to grow your business.
The takeaway message from this article is to manage the moments of truth within your organisation. Seize every one of them, no matter if it is a negative situation. Use all situation as opportunities to show how good you and your organisation are. This will help build long-term customer loyalty and customer satisfaction.
The following quotes are excerpts from the book Moments of Truth by Jan Carlzon. Each of these is directly relevant to your business and the way in which you are currently doing business.
“We have reoriented ourselves to become a customer driven company - a company that recognises that its only true assets are satisfied customers, all of whom expect to be treated as individuals, and who won’t select us as their airline unless we do just that”.
“Scandinavian Air Service (SAS) is not a collection of material assets, but the quality of the contact between an individual customer and the SAS employees who serve the customer directly”.
“Last year each of our ten million customers came in contact with approximately five SAS employees, and this contact lasted an average of 15 seconds each time. The SAS is ‘created’ 50 million times a year, 15 seconds at a time. These 50 million ‘moments of truth’ are the moments that ultimately determine whether SAS will succeed or fail as a company. They are the moments when we must prove to our customers that SAS is their best alternative”.
We decided to stop regarding expenses as an evil which we should minimise, and to begin looking at them as resources for improving our competitiveness. Expenses could, in fact, give us a competitive edge if they contributed to our goal of serving the business traveller”.
“We had no guarantee that these additional expenses would bring in more revenue. But it was also our only chance because the other option of reducing costs had already been used”.
“A leader is not appointed because he knows everything and can make every decision. He is appointed to bring together the knowledge that is available and then create the prerequisites for the work to be done.”
“In a decentralised, customer-driven company, a good leader spends more time communicating than doing anything else. He must communicate with the employees to keep them all working towards the same goal, and he must communicate with his customers to keep abreast of the company’s new activities and services”.
“Leaders and managers must give guidance, not punishment, to employees who take risks and, occasionally, make mistakes. Wrong decisions should be used as a basis for training; right decisions should be used as the basis for praise and positive examples”.
“I should clarify here that the right to make mistakes is not equivalent to the right to be incompetent, especially not as a manager”.
“Unfortunately, most front-line employees have been following regulations for so long that few have the courage to try something new”.
“The work still begins with something handed down from above - overall objectives for achieving company goals. Upon receiving these broad objectives, middle management first breaks them down into a series of smaller objectives that the front-line people will be able to accomplish. At that point, the role of middle management is transformed from administration to support”.
“In changing a business environment, you can’t wield total control from the top of the pyramid. You must give people authority far out on the line where the action is. They are the ones who can sense the changes in the market. By giving them security, authority, and the right to make decisions based on current market conditions, you put yourself in the best position to gain a competitive edge”.
“A leader, then, is a person who is orientated towards results more than power, or social relations. Someone seeking power for its own sake may well sacrifice personal relationships and results to obtain it. Someone who is too socially orientated might tend to compromise at every turn in order to avoid conflict. In the long run, this hurts results. But the results orientated leader does not dictate the methods for achieving the results, and, moreover, does not need to claim the victories as his own”.
“Remarkably, many business executives begin by devising goals and strategies, and only later back into an examination of the business climate and the customer’s needs. Obviously, this is proceeding in the wrong order”.
“How can you know what your goals and strategies should be if you don’t have a clear idea of the environment you’re working in, or of what your customers want?”.
“This (business planning based on a sound perception of customers wants and needs) sounds very easy, but for those sitting at the top of the pyramid - and not working on the front-line, in day-to-day contact with the customers - it can be tricky”.
“As I learned more about SAS, I was amazed at how many of its policies or procedures catered to the equipment or the employees, even if they inconvenienced the passengers”.
“Only the customer, and the customer alone, will pay our costs and provide our profits”.
Disclaimer
This article is provided with the compliments of Alan Dinnie. It is genuinely intended to offer readers information to make better decisions and to give insight into various aspects of business in general, and more particularly related to the sale and purchase and management of businesses.
All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but may be subject to errors and omissions. No statement is made as to the accuracy of any description. Alan Dinnie makes no warranties or representations regarding the information and excludes any liability which may arise because of the use of this information. This information is the copyright of Alan Dinnie.
Nothing herein shall be construed as legal, accounting, or other professional advice outside the realm of real estate and business brokerage.
I trust you enjoy the article and that it provides you with useful information.
To your business success
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