CHAPTER FOUR

Offer a Great
Product or Service

“The man who comes up with a means for doing
or producing almost anything better, faster, or
more economically has his future and his fortune
at his fingertips.”

—J. PAUL GETTY

A great product or service is the key to business success, and without it, nothing else works for very long. Fortunately, there is a simple measure that you can use to determine and predict your current and future levels of sales and profitability. It is this: Pay attention to how often your customers say, “This is a great product” or “This is a great service.” Everyone in your company should be focused on triggering this response from your customers every single day.

Focus Single-Mindedly on One Measure

This customer response, every time someone consumes or uses your product or service, must be the focal point of all your business operations and activities. Triggering this response must be the vision, mission, purpose, and goal of all your business activities. Make it your business and personal reason for existing.

To trigger this response, you must set excellence as your minimum standard of quality both in the product or service you offer and in the way that you deliver it.

Philip Crosby, in his book Quality Is Free, defines quality as when “your product or service does what you say it will do when you sold it, and it continues to do it. The percentage of times that your product delivers on your promises is your quality rating.”

What’s Your Quality Rating?

Imagine that a market research company was going to do a survey and rate your company, your team, and your products and services against all of your competitors. The researchers would ask 1,000 customers in the marketplace how each company in your industry rated in their perception. If there are ten companies competing in your industry, where would you fall on a scale of one to ten in terms of quality perception?

Your quality rating is defined as the level of quality that customers and noncustomers give your product or service in comparison with other products or services that compete directly with you. You cannot improve unless you have a benchmark against which to make those improvements. As much as 90 percent of your success in business will be determined by how quickly and enthusiastically people say “This is a great product” or “This is a great service” after using your product or service.

“This Is a Great Product”

For two decades, there was one company that was admired for having achieved this response from its customers by almost every measure. Challenge yourself to see how quickly you can guess what company we are talking about.

The company was so admired that leaders in every industry would make pilgrimages to its factories on every continent to see how they performed their magic. “No one had a better culture of customer focus—they’re maniacal about quality—and no one is catching them,” said Best Buy cofounder and former CEO Brad Anderson after his tour of this company’s headquarters years ago. Anderson was leading Best Buy’s own transformation to become the world leader in consumer electronics retailing, and he was deeply impressed by what he saw from a company in an entirely different industry.

“Those folks won’t be overtaken by competitors; they’re too far ahead. To beat them, they will have to lose what they worked so hard to build,” Anderson said.

His words were prophetic.

An Obsession for Quality

The secret to the company’s success was an obsession for innovation and quality in everything it did. Managers were black belts in Six Sigma, lean manufacturing, and every new form of process management. There wasn’t a quality method they didn’t master.

Even the company’s worst critics and competitors were forced to admit it was one of the greatest product and service companies of the twentieth century. It won accolades for being flexible, open minded, and customer-centric—perhaps the toughest things for a big company to be.

The most prestigious rating agencies gave the company top marks for innovation, quality, reliability, styling, and comfort. Although the products were originally created to serve the entry-level and middle market, quality and performance boosted their reputation to rankings commensurate with the best luxury brands.

Ironically, there was a time, decades ago, when products made in this country had been considered the bottom of the heap. But after years of humiliation, the Japanese business community launched the equivalent of a moon mission to become the best in the world. Made in Japan became a synonym for excellence and high quality.

In the remote case that you hadn’t guessed it by now, we are talking about Toyota Motor Corp. But not just its short-term problems. We are talking about the importance of a company’s reputation. And, in particular, about how your reputation for quality can literally make or break your career and your company.

Your Reputation Makes or Breaks You

Your quality reputation determines everything. The perceived quality of your product or service should be what keeps you up at night.

Much of Toyota’s industry-changing ascendance in quality came during the tenure of the current president and CEO, Akio Toyoda, which makes the automaker’s recent collapse of quality perception a temporary yet tragic phenomenon. He started with an ambition to “impress and delight customers,” but then eventually lost his genius for listening to them.

You have to throw your whole heart into giving your customers the very best products possible, every single day. For every person who is halfhearted in the task of serving customers, there are at least 200 eager competitors waiting for just that chance to take those customers away from you.

Is everyone in your organization committed to serving your customers with the very best products and services in your market? Have you imbued them with an intense desire to be “best in class?”

Do You Want to Be Best in Class?

Akio Toyoda did. He’s the great grandson of Toyota Motor founder Kiichiro Toyoda, who in the 1930s created an automotive spin-off from his father’s company that manufactured automated looms for Japan’s weaving industry. In one of its first great acts of customer-centricity, the company held a contest in 1936 for a new logo. Literally translated, “Toyoda” means “fertile rice paddies,” not a particularly exciting name for a new car company. By changing the spelling to Toyota—which can be drawn in Japanese katakana in eight strokes (for good luck)—the company distanced itself from its old-world past.

After years of mediocre quality, Toyota became one of the best product quality stories in the world. The company learned to do everything right. It segmented its markets brilliantly, creating entirely different brands with radically fresh styling and marketing for each and every category, from the edgy and youthful Scion to the luxury performance of the Lexus. Only two car companies appear on the BusinessWeek/J. D. Powers list of Customer Service Champs in 2010: Lexus, which was No. 7 (behind Nordstrom), and Jaguar, which was No. 16 behind Charles Schwab. (The parent company of Lexus is, of course, Toyota.)

Toyota took huge risks with its Prius hybrid car, betting on innovation against enormous resistance in the automotive industry. Toyota has been so far ahead of competitors that other global automakers like Ford Motor today license Toyota’s green technology to drive their “American-made” cars.

An Expensive Lesson

“I learned a lot,” Akio Toyoda told reporters and U.S. senators at the heated Washington, DC, hearings called in 2010 to investigate Toyota’s devastating quality problems. “We will really do what we can from now [on] to transform to the kind of company that will have people saying they can trust in our transparency and our customer focus.”

He acknowledged that his company put growth ahead of safety—and failed to listen closely to consumer complaints as the company grew to No. 1 in market share. The U.S. government has attributed thirty-four deaths to alleged sudden acceleration in Toyota vehicles between 2000 and the spring of 2010 (the time of this writing), and Toyota has recalled about 6 million cars in the United States alone.

The slow response cost them dearly, and the Toyota brand may take years to recover. But here’s the silver lining: Toyota’s huge investment in quality for so many decades built an enormous bank of goodwill. In March 2010, in the midst of the recalls, Toyota sales jumped 42 percent. That’s how important a reputation for quality is!

No One Escapes Poor Quality Products

Most automakers have suffered similar episodes in their history. Just a week after the U.S. Senate hearings on Toyota, Nissan Motor recalled 540,000 cars over faulty brake pedal issues that may also affect the fuel gauge. Soon after, Hyundai Motor of South Korea recalled 515 Tucson SUVs for a defect in safety devices related to air bags.

Then a week later, General Motors Co. recalled 1.3 million Chevrolet and Pontiac compact cars sold in the United States, Canada, and Mexico to fix power steering motors that can fail.

The terrible irony is that most companies are capable of better quality. They know how to build quality products or provide great service. At the very same time that GM lost its throne as No. 1 automaker in the world and fell into bankruptcy, the company still made a great car—the Cadillac! Too bad the rest of GM’s products didn’t meet that standard.

It wasn’t long ago that premium automakers Mercedes, Jaguar, BMW, and Audi suffered a highly public disgrace for quality problems. These quality crises forced each of them to refocus on customers. And it worked. All of these companies have reinvented themselves to regain their status among the most admired brands. It’s an expensive way to learn a lesson about how your customer defines quality.

What Price Means for a Great Product

The flip side of quality—in good or bad economic times—is usually price. Because price arises as an issue early in almost every sale of importance, many businesspeople feel that it is ultimately the determining factor. They believe therefore the price must always be massaged, reduced, spread out, or mitigated in some way.

But price is seldom the real reason for buying or not buying anything. If price was the critical factor, only the lowest priced items in any industry would have the greatest market share. Toyota would have never become the No. 1 automaker in the world. The automaker is a master of low-cost production, but never plans to charge the lowest prices.

The small percentage of goods that are sold solely on the basis of price are called commodities. A commodity is defined in this context as a product that is “undifferentiated.” You’ll see them listed in the newspaper in the commodities market: Steel ingots are steel ingots. Texas sweet low-sulfur crude oil is Texas sweet crude, period. The only way to distinguish among undifferentiated products containing identical ingredients and the same weight or volume is on the basis of price.

Your Product or Service Is Not a Commodity

The good news is that nothing you sell is a commodity. Everything you sell is different or special in some way. Your job is to identify your particular area of excellence, and if you don’t have one, to develop one as fast as you can. If your product is available elsewhere, you can achieve a reputation for excellence by the way you sell and service it. You can find ways to make your customer feel special and better than any of your competitors do. You must refuse to allow your product to be reduced to a commodity, sold solely on the basis of price.

Take steel, for example. You would think that steel is steel, and usually it is, unless you find a clever solution that adds value for customers in ways that set you apart.

Solutions, Not Products

Stockholm-based SSAB has done exactly that. SSAB is one of the world’s leading steel producers, and perhaps the most profitable, because it produces steel that is not a commodity.

There’s always great value and margins in solving problems for customers rather than just selling them products. You might think it’s a cliché that you must sell “solutions” not “products,” but it’s true only if your solutions actually add value. SSAB takes the risk to invest in R & D with its customers, forming customer/partner alliances to build prototypes of products using special types of high-strength, low-weight steel. One truck SSAB built can carry almost twice the payload and burn less gas. The result is that customers discover not all steel is created equal: Steel from SSAB can increase their productivity and save them money on energy costs at the same time.

Not surprisingly, when your product solves your customers’ problems better than anything else offered by your competition, those customers are willing to pay more for it.

The No. 2 Competitor Is Always Hungrier

“We often find that it is the second- or third-tier player—who is anxious to become number one—who is the most willing to partner with us and innovate,” said SSAB CEO Olof Faxander. “The number two or three player in any industry is almost always hungrier than the market leader.

“Let that be a lesson to those of you who might become complacent,” he warned. SSAB’s strategy has generated substantial growth in market share and higher revenues, despite tough and determined national and international competition. The company wasn’t injured in the downturn like commodity companies and today has industry-leading profitability over competitors.

Differentiate or Die

How about leather? That’s not a hot, high-tech, well-differentiated product category, is it? But one Mexican company became a very successful and profitable manufacturer when it changed the way it looked at the business and how it was serving its customers.

“We used to make commodity leather products,” said Hector Cuadra, cofounder of Cuadra Boots in central Mexico. But when yet another financial crisis devaluated the peso once again, many companies were flushed down the drain along with the economy.

At the same time, new lower cost competitors in China and India emerged, and so Mexico lost its natural advantage in low-cost labor. The Cuadra brothers, Hector and Francisco, decided they no longer had a choice to remain a commodity business. They would have to change to survive or grow.

The problem was there was no way to beat Asia on price alone. “We realized that the only way to win was to add value to the leather goods in a new way, to differentiate it,” Hector said. They already specialized in exotic leathers. But that wasn’t enough.

Deliver Quality First, Then Price

In 1991, the Cuadra brothers started to compete on the basis of quality craftsmanship. They would model their business after the best boots that sold in the toniest European and American boutiques. They would create the highest fashion, most glamorous, handmade leather boots in the market.

In the process, they struggled to create a new mission, much like Japanese manufacturers did decades ago. They had to “change the image of quality you might think of when the label said Hecho en Mexico,” he explained. They were obsessed with quality. They had to teach boot and shoe buyers about the quality they could deliver and “prove we had the best leather designers and craftsmen right here.” It wasn’t easy.

Quality Obsession

If they could deliver the quality, then they had a chance to beat European and other global competitors on price at the high end of the market.

It took several years of hard work, but the strategy eventually worked brilliantly and catapulted Cuadra to among the top leaders in the leather business worldwide. Hollywood celebrities now wear Cuadra boots to the Academy Awards. And Guanajuato, the historic community where the company is based, has become one of the largest and most fashionable shoemaking centers in the modern world.

The Four Little Secrets to Innovation

There were four essential lessons in product quality and innovation that the Cuadra brothers and others like them had to learn before mega-success was possible. We call these lessons dirty little secrets, because they aren’t the politically correct advice you’ll get in most MBA programs. They are downright counterintuitive.

1. Don’t follow the leader. Cuadra Boots discovered through trial and error that fashion was too fickle and too ever-changing to allow them simply to undercut the price of the best Italian designers with a knockoff product. They had to have their own designs to give the product a unique character and appeal to the wealthiest customers.

“Sure, it’s risky to design your own products,” Hector said. “But it’s riskier not to. You have to have your own personality. If you just copy the leader, then you’re always giving control over to him for pricing, distribution, and marketing.” You can follow the leader and he will take you right over a cliff! You have to break out with your own designs that work for your customers.

2. Create exclusivity. Lower end, everyday products—whether work shoes or stuff at the hardware or supermarket—need to be in stock and on the shelf or else you won’t get the sale.

But some higher end products can benefit greatly from scarcity and lower volumes to keep margins high. Whether it’s an exclusive watch, credit card, or first-class airline seat, people don’t want to think it’s available for everyone else. And customers will pay more for rare and exclusive products.

One of the world’s most successful niche toy businesses is American Girl, which contributed $463 million in sales to its owner Mattel last year. The company strategically annoys customers by selectively taking specific $100 dolls off the market for a time to increase the doll’s value. Brand-new “discontinued” dolls sell for $249 on Amazon and eBay.

The trick is to understand the subtleties of what quality and value mean to your customer. This definition is constantly changing, and you must change with it. This takes guts and a willingness to get it wrong before you get it right. The goal must be to align the product or service so that it is precisely suitable for that particular customer segment, no matter how lowbrow or snobby. It’s got to match the tastes and tone of your customer.

3. Keep in continuous customer contact. Cuadra Boots opened retail stores to generate sales, but the brothers found it also let them keep a closer pulse on the whims of their clients. They could see which shoes sold and why, minute by minute. They could experience how their customers felt about which fashions worked or didn’t. To keep costs lower, they needed to test designs as quickly as possible. While retail stores were a risky addition to their business, they provided revenues and an extraordinary learning lab. Fortunately, they have been quite profitable on their own.

Cuadra has become one of the fastest growing and most successful boot makers in the world. What is surprising, however, is how many design experiments are necessary for Cuadra to create the big winners in the global marketplace.

How many failures do you think it takes to find a winner? Would you say one out of four? Do half of all experiments fail? Well, it’s much worse. And that leads us to dirty little secret number four …

4. Testing takes you from good to great. To succeed, Cuadra found that only 100 out of 1,000 products make the cut with customers in their stores. That’s a brutal statistic for an innovative company. Their odds are one in ten. But that ratio of success to failure took Cuadra from good to the best in the world in its market niche.

Why Small Firms Beat Big Businesses

Would you be considered a professional player if you hit only a third of the hardballs you were pitched? In baseball, yes, you’d be in the major leagues. But not in the business world. Would your boss tolerate two failures out of three attempts to develop new products or services or new ways to sell them? Not usually.

How many companies do you know that would actually tolerate that many failures? Would you personally be willing to risk failure 90 percent of the time in order to finally create a huge success?

This is why small start-ups and entrepreneurs beat big companies every day. This is why most game-changing products or services come from outside the big companies. Face it, small firms should not have a chance against big, well-financed competition, but they win in business every day. The large firms have more money, people, resources, prestige, bigger brands, better distribution channels, greater market share of customers, and a reputation to go with it. But the large companies prefer to play it safe, to avoid career-damaging failure and financial write-offs. They avoid experimentation.

Everybody loves to talk about innovation. It’s the sexiest topic in business, but it takes more courage than most people realize. Most firms don’t tolerate or support failure and never will.

Are You Willing to Do Whatever It Takes?

During Jack Welch’s tenure at GE, one of his teams created the long-life lightbulb. Initially, it was a flop in the marketplace, although today it’s a big success. It was too early. Did Jack fire everyone? No, he had a party in which he handed out free gifts to the team and gave the highest performers plum new assignments. It was a noble failure.

The big question for you is: Are you willing to do whatever it takes to deliver a great product? Do you have the courage to support your team with many experiments, many of which will fail? How do you treat them when things don’t work out as planned? Do you humiliate or honor them when they swing and miss? Do they get fired or promoted?

Risk Is Less Risky Than the Status Quo

When you’re the underdog, you have no choice but to take risks. As an entrepreneur, you take risks when you have no other option than to swing for the fences in customer service. When failure is not an option, you have to take more risk, not less. The paradox is that you must fail more often—in fact, it’s safer to experiment as much as possible because you are more likely to find the right answer for customers.

“Great companies take risks, but they don’t just take any risks. The risks you take must be clearly on behalf of your customer. Your only job is to make your customer successful,” said Faxander of steel company SSAB. While price will always be important, even a steel producer can charge more than competitors and make a bigger profit margin if, and only if, the product helps the customer become outrageously successful or makes them feel great.

Four Product Factors Shaping Customer Expectations

There are four factors attached to any product or service that determine customer satisfaction:

1. The generic or basic product. This factor is defined simply as what you sell and what the customer gets when he buys it from you. For example, you go into an auto dealership and buy a car. You purchase a computer or new server for your business. You go to a store and purchase an article of clothing. These are straightforward and simple customer activities. They are clear and easy to describe.

2. The expected product. This is where the customer service equation starts to become tricky. The expected product is unwritten. It does not appear in brochures or sales materials. But failure to deliver on these unwritten customer expectations will cause dissatisfaction and, often, the loss of the customer completely.

There are decades of research on the role of expectations in determining attitudes and behaviors. Most negative emotions seem to be triggered as the result of frustrated expectations. The person expected something to happen, or to receive something, and was disappointed.

Everyone has had the experience of going to a restaurant and being seated and then waiting for fifteen minutes before a waiter comes to the table. It was never written down anywhere that a waiter would come to the table promptly after you were seated, but you definitely expected prompt and friendly service.

Imagine ordering dinner in an expensive restaurant. The waiter goes away and comes back with your dinner beautifully laid out on the plate. But then he drops the plates in front of you with a clunk and walks away without comment. How would you feel?

The point is this: Each customer has certain expectations, spoken and unspoken, conscious and unconscious, which you must be clear about and which you must meet in every customer interaction. People expect that someone will answer the phone within two or three rings. People expect that the company they are dealing with will be polite, friendly, and responsive.

People expect that a business establishment will be clean, orderly, and well laid out. People expect many things, both reasonable and unreasonable, and their level of satisfaction is largely determined by whether those expectations are met. You must be clear about what they are, and strive to meet them every time.

3. The augmented product. This third factor in customer service refers to the additional actions that you can take, or services that you can deliver, that go beyond expectations. They are extra. They are more than the customer thought she was paying for.

It is in the area of creating the augmented product or service that you achieve meaningful competitive advantage in customer service. This is one of the most important areas of innovation in building a successful business. You must be continually looking for little ways to improve the customer experience in ways that were unexpected.

Here is the rub. Once you augment a product and offer something that is beyond the expectations of the customer, it soon becomes a part of the expected product. Once the customer expects to receive the augmented aspect of your product or service, your failure to deliver it consistently and dependably will trigger a negative reaction on the part of your customer.

Not only that, if you come up with an innovative way of increasing customer satisfaction by augmenting your product or service, your competitors will quickly notice it and duplicate it themselves. It will only give you an advantage for a short period of time.

4. The potential product. The potential product or service is only limited by your imagination. It refers to anything that you can do to make the customer service more enjoyable. Your job is to continually think of ways, large and small, that you can satisfy your customer even more, and that will differentiate you from your competition, at least for a while. Again, this is a moving target. You can never let up or relax.

Make It Easy to Buy, Easy to Use, and Free of Risk

One of the most important attributes that makes a product or service great (and justifies the higher price) is trouble-free ownership. In our highly complex society, with so many products or services that can have problems, the assurance and guarantee of hassle-free ownership increases the perceived value of the product or service offering.

By making it easy to buy your product or service, by providing a guarantee, or by making it feel less costly with small down payments, low interest rates, delayed billing, and other options, you can charge more and sell more than your competitors with less desirable terms and conditions.

When we asked George Zimmer of the Men’s Wearhouse where he thought of his famous slogan, “I guarantee it,” he said it was Business 101. The most basic principle in delighting customers is to remove all risk from the sale.

Offering refunds to unhappy customers is as old as selling itself. Most high-end service companies have followed Nordstrom’s lead with its unconditional money-back guarantees of satisfaction. Nordstrom sells expensive products to up-market consumers and seldom compromises or cuts prices. But it offers a sweeping guarantee of satisfaction. You can take back any product purchased from any Nordstrom store anywhere at any time, and get a full refund, no questions asked.

Ask for Customer Feedback

Fred Reichheld of Bain & Company, in his 2006 book The Ultimate Question, has made one of the most important breakthroughs in customer service and business success in the last few decades.

Based on years of work with thousands of customers and dozens of companies, Reichheld found that there is one measure that is more predictive of future business success than any other single measure. He calls it the ultimate question: “Would you recommend us to others?”

This is so simple and yet so powerful that it should be the organizing principle of all marketing, selling, and customer relationships. Ask your customers, on a regular basis, preferably after every interaction, this one question: “Based on your experience with us, on a scale of one to ten, would you recommend us to others?”

Then, whatever score you receive, if it is less than a ten, you immediately follow up by asking: “What would we have to do to earn a ten from you?”

Customers Will Tell You

The good news is that many customers will usually tell you exactly what they believe you need to know to get a higher grade. And if you do what your customers say, and then go back to your customers and report to them that you have made the changes they suggested, they will be both delighted and amazed. They will become customer advocates. They will tell other people about your conversation and how you reacted to their suggestion. They will create within other people a desire to have the same experience by dealing with your company and buying your products or services.

Reichheld’s research shows how companies can develop what he calls an “NPS, a net promoter score.” This score is calculated by deducting those customers that give you a rating from one to eight from those who give you a rating from nine to ten, and calculating the percentage of customers in each category. Most companies initially find they have a low NPS. They also find that, by continually asking customers how they can improve their scores, and then acting on those suggestions, their scores move higher and higher.

As a company’s NPS increases, so do its sales, profitability, and repeat business. The most successful and profitable companies in every industry turn out to be exactly those companies that have the highest net promoter scores.

So, continually ask your recent customers for their feedback in terms of rating your product or service, and then implement their suggestions and report back to them. You’ll get better and better business results, faster and faster, and soon begin triggering the words, “This is a great product!”

Feed-Forward Instead of Feedback

Most customers don’t want to criticize you or disparage your product or service. They don’t want to have a confrontation. Here’s a better way to frame the question: Ask your customer to tell you how you could improve your product or service “in the future” for the customer. When you do that, customers are liberated from getting into an argument with you and can instead focus on positive things that you can do to make them happier “next time.” You can’t change what happened in the past anyway. But you can change what you should do next time.”

Many companies and businesspeople do not want to ask these questions. They are uncomfortable with the possible answers. As a result, they prefer to guess at their levels of customer satisfaction or dissatisfaction and are often wrong in their conclusions.

The very best companies, those businesses that start at the bottom and rise to the top of their markets, continually ask their customers for feed-forward, in every way possible. They phone them, visit them, bring them together in focus groups, have them fill out questionnaires and postcards, and continually seek input and ideas from their customers that they can use to make their products and services even better in the future.

It Is Never One Thing

What’s missing from this equation is that customers, as a rule, don’t consciously know everything you need to do to improve your product of service. One of the reasons is because there is seldom just one feature or benefit that instantly creates customer happiness. It is usually many things.

That’s why it is important not just to do surveys, but actually create an ongoing conversation with your customers. For years, consumer research expert Howard Moskowitz would be asked by name-brand companies like Pepsi and Prego which flavor would be “best” or what “one thing” would excite customers. He was famous for predicting people’s tastes on everything from toothpaste to presidential candidates.

Yet his customers would often be disappointed to hear Moskowitz insist, “There isn’t just one thing that works for a customer. If you think of one universal solution, there isn’t one. And there is no one ‘best’ product for everyone; there are only the best products for the right customer groups,” he said.

Because they were hoping for one answer, his clients would be dumbfounded or upset by his remarks. But what Moskowitz was telling them changed the world of retailing forever. Three decades ago there was just one type of mustard or mouthwash on the shelf. Thanks to Moskowitz’s research, there are now a dozen “most popular” flavors of each of your favorite brands from your favorite companies. There’s not one flavor of Coke or Pepsi; there are dozens.

The Spaghetti Sauce Revelation

Author Malcolm Gladwell is a great admirer of Moskowitz. He often speaks about Moskowitz’s epiphany on Prego spaghetti sauce.

After in-depth consumer tests, it turned out that consumers had at least three major taste preferences: plain, spicy, and chunky. Consumers could not tell you on a survey that they wanted one type of spaghetti sauce, nor could they come up with the word chunky. But they had these three preferences, and Moskowitz didn’t learn that until he personally watched consumers make dozens of different home recipes in their kitchens.

“If you ask people to tell you what coffee they like, most will lie to you,” Gladwell has mused. They’ll say they want rich, dark full-flavored brew. Moskowitz knows that less than a quarter of the population likes it strong. The vast majority drink Starbucks sweet, weak, milky coffees, from mochas to mistos. People often don’t tell the truth on a survey if they don’t think it’s cool or politically correct. But you won’t know this until you watch people use your product.

Join Your Customer’s R & D Department

The easiest way to figure out what products will sell best is to become an insider in your customer’s R & D department. Whether you make sports cars, spaghetti sauce, or steel, resolve to develop the sort of “customer intimacy” that enables you to understand what your clients need and love at a deep level. What product or service will make your customer successful? That’s the key to product quality and differentiation that will grow your profitability.

Ask customers what they would buy again and why, but then go out and see what actually works for them. Get in the kitchen and test as many new recipes as you can with your customer until you find the right answer. Dedicate yourself and every person in your organization to know your customers better than anyone else so that you are never a commodity business.

Customer Intimacy = Profitability

What do your customers really want and need? What can you do in every customer interaction to trigger the words you want to hear: “This is a great product” or “This is a great service” or “This is a great company.”

Whatever it is, put your whole heart into doing it consistently, every single time, shoulder-to-shoulder with your customer. When you do, you will sell more, grow faster, and earn higher profits than ever before.