The importance of Customer Experience

Jeff Bezos once said “Start with the customer and work backward. That is the best way to create shareholder value.”

I think without continually focusing on your customer experience whether a product or service business you simply will not have a business long term. 

However, it is often voiced as a criticism that company boards and executive leaders do not focus enough time and attention on the voice and experience of the customer. 

Two people I admire for their customer focused philosophies are Danny Meyer and Tony Hseih, the founders and CEO of Union Square Hospitality, a restaurant group and Zappos an online shoe company (now part of Amazon) respectively.

Danny Meyer, developed a concept he called "Enlightened Hospitality." With this, he differentiated between “service”, the technical delivery of the product and “hospitality”, how people feel during the experience.  He believed that every human wears an invisible sign saying “make me important” and with that in mind he focused on making his customers feel seen, valued and appreciated. 

Zappos became famous for its exceptional customer service, which went beyond expectations. Hsieh believed that creating "WOW" moments for customers, such as free upgrades or going the extra mile to solve problems, built loyalty and word-of-mouth marketing.  To underpin this they had a KPI of measuring how long it took to satisfy every customer call with no limit (one famously lasted 10+ hours!) emphasising customer satisfaction over efficiency metrics.

Meyer demonstrated a similar philosophy, whether it's offering complimentary dishes for a special occasion or resolving a problem with grace, Meyer believed in exceeding expectations to create what he called "RAVES" moments that customers talk about and remember.

I believe this customer focused philosophy can be summed up by one of my favourite quotes by the American Poet Maya Angelou,  “I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”  

A philosophy that is so important for managing customers and team member experience.

Whilst the above examples of leaders successfully ran restaurants and an online shoe company, I do think focusing on human psychology and creating a positive emotional experience can be applied to all customer experiences whether a product or service, B2B or B2C.  

Monitoring customer-related metrics is also essential to understanding how the business is performing in terms of customer satisfaction, loyalty, and overall experience.

I think the best metrics provide a mix of qualitative and quantitative insights, helping boards evaluate the effectiveness of strategies and make informed decisions.

It would be interesting to ask yourself – how is your customer experience? How many customer focused KPI’s are you tracking and what are we doing to ensure your customers have a “WOW” or “RAVE” moment.

As always, I would value your thoughts and comments below.

Jeff Bezos once said “Start with the customer and work backward. That is the best way to create shareholder value.”

 I think without continually focusing on your customer experience whether a product or service business you simply will not have a business. At my old spinal implant business, Surgi C – our key mantra was service and support.  We believed we could do this better for our surgeon and nurse customers than large competitors and it underpinned everything we did.

However, it is often voiced as a criticism that company boards and executive leaders do not focus enough time and attention on the voice and experience of the customer.  

Two people I admire for their customer focused philosophies are Danny Meyer and Tony Hseih, the founders and CEO of Union Square Hospitality a restaurant group and Zappos an online shoe company (now part of Amazon) respectively.

Danny Meyer, developed a concept he called "Enlightened Hospitality." With this, he differentiated between “service”, the technical delivery of the product and “hospitality”, how people feel during the experience.  He believes that every human wears an invisible sign saying “make me important” and with that in mind he focused on making customers feel seen, valued and appreciated.  

Zappos became famous for its exceptional customer service, which went beyond expectations. Hsieh believed that creating "WOW" moments for customers, such as free upgrades or going the extra mile to solve problems, built loyalty and word-of-mouth marketing.  To underpin this they had a KPI of measuring how long it took to satisfy every customer call with no limit (one famously lasted 10+ hours!) emphasising customer satisfaction over efficiency metrics.

Meyer demonstrated a similar philosophy, whether it's offering complimentary dishes for a special occasion or resolving a problem with grace, Meyer believes in exceeding expectations to create "RAVES" — moments that customers talk about and remember.

I believe this customer focused philosophy can be summed up by one of my favourite quotes by the American Poet Maya Angelou  “I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”  A philosophy that is so important for customers and team members.

Whilst the above examples of leaders successfully ran restaurants and an online shoe company I do think it is simply human psychology and creating a positive emotional experience can be applied to all customer experiences whether a product or service, B2B or B2C.  Also, to achieve it successfully an equal focus on your team members training, development and incentives is crucial.

Monitoring customer-related metrics is also essential to understanding how the business is performing in terms of customer satisfaction, loyalty, and overall experience. 

I think the best metrics provide a mix of qualitative and quantitative insights, helping boards evaluate the effectiveness of strategies and make informed decisions. 

It would be interesting to ask yourself – how is your customer experience? How many customer focused KPI’s are you tracking and what are we doing to ensure your customers have a “WOW” or “RAVE” moment.

Would value your thoughts and comments below.

Appendix Notes

Key Features That Define These Companies:

• Personalization: Tailoring experiences to individual needs.

• Proactivity: Anticipating and addressing customer needs before they arise.

• Consistency: Delivering a seamless experience across all touchpoints.

• Empowerment: Giving employees the tools and autonomy to resolve issues.

• Innovation: Continuously improving processes and products.

Union Square Hospitality Group, which is successful. Then eventually, in case you don't know who Danny Meyer is, he found Shake Shack.

Danny Meyer – 

Key aspects of Danny Meyer's approach and philosophy:

Professional Research: Meyer coined the term "professional research" - constantly studying and learning about his craft outside of work hours. He made detailed observations and took extensive notes about restaurants, food, and hospitality.

First Principles Thinking: Meyer would challenge assumptions by asking "Who wrote the rule?" This allowed him to innovate, like turning a hot dog cart into what would become Shake Shack.

Careful Growth: Meyer was very conservative about expansion, learning from his father's business failures. He waited years between opening new locations to ensure proper infrastructure and people were in place.

Focus on Hospitality: Meyer prioritized how customers felt over just the food itself. He believed hospitality and creating community were key differentiators.

Problem Solving: Meyer viewed business fundamentally as problem-solving, adopting the philosophy that "success lies not in the elimination of problems but in the art of creative, profitable problem solving."

Key Business Achievements:

Built successful high-end restaurants in NYC

Founded Shake Shack, which grew from a hot dog cart to a multibillion-dollar public company

Pioneered innovative approaches to hospitality and restaurant operations

Demonstrated how to scale while maintaining quality and culture

His methodical, people-first approach combining careful study, principled innovation, and focus on hospitality created a highly successful business model that transformed aspects of the restaurant industry.

Note: I've referenced the highlights using your provided links while keeping them contextual within the summary rather than explicitly calling them out.

 “I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

― Maya Angelou, American Poet

Meyer prioritized how customers felt over just the food itself. He believed hospitality and creating community were key differentiators.

Based on the highlights, here are the key aspects of Danny Meyer's approach to customer service and hospitality:

1. Foundation of Hospitality Meyer believes that hospitality is the foundation of his business philosophy. As stated in Setting the Table, "Hospitality exists when you believe the other person is on your side." He emphasizes the difference between something happening "for" versus "to" a customer.

2. Making People Feel Important Meyer learned from studying Mary Kay that everyone goes through life wearing an invisible sign that reads "Make me feel important." He applied this insight to make both customers and employees feel valued.

3. Problem-Solving Approach He views hospitality as creative problem-solving. His philosophy is that success comes from effectively handling problems rather than eliminating them entirely.

4. Customer Preferences Meyer pioneered systems to track and anticipate customer preferences. For instance, at his restaurants, they would note customer preferences and ensure those preferences were met on return visits without the customer having to ask.

5. First Principles Thinking He consistently challenged industry assumptions by asking "Who wrote the rule?" This allowed him to innovate in customer service, questioning standard practices and finding better ways to serve guests.

6. Quality at Every Level Even with simple concepts like a hot dog cart (which became Shake Shack), Meyer focused on delivering exceptional quality and service. He believed excellence in hospitality could be applied at any price point.

7. Long-term Relationships Meyer focused on building lasting relationships with customers rather than maximizing short-term profits. He understood that creating community and belonging was as important as the food itself.

This approach to customer service helped Meyer build both high-end restaurants and successful casual concepts like Shake Shack, demonstrating that his hospitality principles work across different market segments.

here are specific examples of how Danny Meyer focused on customer service:

1. Computerized Guest Preferences Meyer implemented an innovative "guest history system" that tracked customer preferences in rooms, food, drink, and other details. When customers returned, staff could deliver their preferences without them having to ask.

2. First Principles Thinking in Service Meyer challenged conventional hospitality norms by asking "Who wrote the rule?" For example, he elevated the hot dog cart concept (which became Shake Shack) by focusing on quality and service, even for a simple food item.

3. Making Customers Feel Important Drawing inspiration from Mary Kay, Meyer embraced the philosophy that everyone wears an invisible sign saying "Make me feel important." He trained his staff to make customers feel valued and respected.

4. Hospitality vs. Service Meyer distinguished between service (the technical delivery of a product) and hospitality (how people feel during the experience). He focused on creating positive emotional experiences for customers.

5. Problem-Solving Approach He viewed customer service challenges as opportunities for creative problem-solving. Rather than seeing problems as obstacles, he saw them as chances to improve the customer experience.

6. Quality at All Price Points Meyer demonstrated that excellent hospitality could exist at any price point, from a hot dog cart to fine dining establishments. He maintained consistent service standards across all his ventures.

7. Infrastructure Before Growth He was careful to ensure proper infrastructure and training were in place before expanding, ensuring service quality wouldn't be compromised by growth. This meant sometimes growing slower than possible to maintain standards.

These examples show how Meyer created a comprehensive approach to customer service that prioritized both technical excellence and emotional connection with customers.

Danny Meyer, a celebrated restaurateur and the founder of Union Square Hospitality Group (USHG), is renowned for his pioneering approach to customer experience, which he encapsulates in the concept of "Enlightened Hospitality." His philosophy centers on creating exceptional experiences for all stakeholders, starting with employees and extending to customers, suppliers, and communities. Here's a summary of how he approached customer experience:

Core Principles of Danny Meyer's Customer Experience Philosophy:

1. Prioritizing Hospitality Over Service:

   • Meyer distinguishes between service (the technical delivery of a product) and hospitality (the emotional connection with customers). For Meyer, hospitality means making people feel seen, valued, and appreciated.

2. "First, Take Care of Your Employees":

   • Meyer believes the foundation of excellent customer experience begins with happy, empowered employees. He ensures his staff feels supported and valued, enabling them to deliver genuine hospitality to guests.

3. The Virtuous Cycle of Hospitality:

   • He emphasizes creating a ripple effect: when employees feel cared for, they deliver outstanding service, delighting customers, who then become loyal patrons and advocates for the business.

4. Anticipating and Meeting Unspoken Needs:

   • Meyer encourages his team to "read the guest" by picking up on subtle cues and proactively addressing concerns or desires, often before they are voiced.

5. "The 51% Rule":

   • When hiring, Meyer prioritizes emotional intelligence over technical skills. He looks for individuals who possess qualities like empathy, optimism, and self-awareness, which he deems essential for delivering exceptional hospitality.

6. Building Long-Term Relationships:

   • Meyer’s approach goes beyond transactional interactions. He focuses on creating memorable experiences that foster lasting emotional connections with guests.

7. Feedback as a Gift:

   • He views customer feedback as an opportunity to improve and deepen relationships. Meyer’s businesses actively seek input and use it to refine operations.

8. Generosity as a Core Value:

   • Whether it's offering complimentary dishes for a special occasion or resolving a problem with grace, Meyer believes in exceeding expectations to create "raves" — moments that customers talk about and remember.

Key Examples of Danny Meyer's Approach:

• Union Square Cafe: Meyer introduced a culture where staff remembered guests' preferences, greeted regulars by name, and created personalized experiences.

• Shake Shack: While it operates at a larger scale, the fast-casual brand incorporates Meyer's hospitality principles, offering thoughtful touches like polite, friendly service and clean, inviting environments.

The Impact:

Danny Meyer’s approach has transformed the dining experience, inspiring industries beyond hospitality. His ideas have become a blueprint for creating customer-centric cultures in diverse fields like retail, healthcare, and finance. His success underscores that focusing on hospitality and human connections leads to both customer loyalty and long-term business success.

1. Customer Satisfaction Metrics

• Net Promoter Score (NPS):

  • Measures customer loyalty by asking, “How likely are you to recommend our company to others?”

  • Indicates the likelihood of word-of-mouth growth and customer advocacy.

• Customer Satisfaction Score (CSAT):

  • Measures immediate satisfaction with a specific interaction, product, or service.

  • Example: "How satisfied were you with your recent purchase?"

• Customer Effort Score (CES):

  • Assesses how easy it was for customers to resolve an issue or complete a task.

  • Lower effort often correlates with higher loyalty.

2. Retention and Loyalty Metrics

• Customer Retention Rate (CRR):

  • Tracks the percentage of customers who stay with the company over a given period.

  • High retention rates indicate strong loyalty and satisfaction.

• Churn Rate:

  • Measures the percentage of customers lost during a specific period.

  • A rising churn rate is a red flag for dissatisfaction or competitive threats.

• Customer Lifetime Value (CLV):

  • Estimates the total revenue a company expects to earn from a customer over their lifetime.

  • Useful for assessing long-term profitability and the value of retaining loyal customers.

3. Engagement and Interaction Metrics

• Active User Metrics:

  • For digital businesses, track daily active users (DAU) and monthly active users (MAU) to measure customer engagement.

• Time to Resolution (TTR):

  • Monitors how quickly customer service resolves issues.

  • Shorter resolution times typically lead to higher satisfaction.

• Support Ticket Volume:

  • Tracks the number of customer issues reported. A sudden spike may indicate product or service problems.

4. Financial Metrics with Customer Focus

• Revenue Growth from Existing Customers:

  • Tracks upselling, cross-selling, and repeat purchases.

• Customer Acquisition Cost (CAC):

  • Measures the cost of acquiring a new customer.

  • Boards can assess whether customer acquisition strategies are cost-effective.

• Revenue Churn:

  • Tracks revenue lost from churned customers, providing insight into how churn impacts financial performance.

5. Experience Metrics

• Customer Feedback and Sentiment Analysis:

  • Boards should review aggregated qualitative feedback from surveys, social media, and reviews.

  • Sentiment analysis tools can measure the emotional tone of customer interactions.

• First Contact Resolution (FCR):

  • Tracks the percentage of customer issues resolved on the first interaction.

  • Higher FCR rates are linked to better experiences.

6. Operational Metrics Affecting Customer Experience

• On-Time Delivery Rate:

  • Tracks how often products or services are delivered within the promised time frame.

• Product/Service Quality Metrics:

  • Monitors defect rates, downtime, or return rates to ensure quality standards meet customer expectations.

7. Competitive Metrics

• Market Share and Brand Perception:

  • Tracks how customers view the company relative to competitors.

• Share of Wallet:

  • Measures the percentage of a customer's total spending within a category that goes to the company.

8. Employee-Customer Linkage Metrics

• Employee Net Promoter Score (eNPS):

  • Measures employee satisfaction, which often correlates with customer satisfaction.

• Employee-Customer Interaction Quality:

  • Assesses how employees perform in customer-facing roles using feedback or quality assurance measures.

9. Sustainability and Ethics Metrics

• Customer Perception of Corporate Social Responsibility (CSR):

  • Tracks how customers perceive the company’s environmental and social impact.

  • Increasingly important for boards focused on long-term brand equity.

How Boards Should Use These Metrics

1. Establish Benchmarks: Compare metrics against historical data, competitors, and industry standards.

2. Align Metrics with Strategy: Focus on metrics that directly tie to the company’s strategic priorities (e.g., NPS for customer-centric strategies or CAC for growth-focused strategies).

3. Monitor Trends: Look for patterns over time rather than reacting to single data points.

4. Use Dashboards: Implement clear dashboards to present customer metrics alongside other KPIs during board meetings for actionable insights.

By monitoring these metrics, boards can ensure the company remains aligned with customer needs, identifies potential risks early, and drives long-term success through customer loyalty and satisfaction.