CODS

What does it mean to be truly customer obsessed? In this episode Avnish Bajaj (Founder & MD, Matrix Partners India) talks about how CODS (Customer Obsession, Delight & Satisfaction) is instrumental in taking your company to the next level. Ritz Carlton, Amazon, Trader Joe’s, Netflix and Treebo hotels are some of the companies that invest deeply in customer obsession, and are actual brand ambassadors of CODS. Listen in to know more

Salonie: Hi and welcome to Matrix Moments. This is Salonie. And I am here with Avnish Bajaj, Founder & Managing Director, Matrix Partners India. Today’s episode is about CODS, customer obsession, delight, and satisfaction, and the role that this plays in taking your startup to the next level.

So, CODS is essentially obsession, delight, and satisfaction all designed around the customer. Avnish, all three of these sound like they mean the same thing. Can you define and outline what the key differentiator between each is? And, if you have ever come across a brand or a company that you think that would be the brand ambassador of CODS, what would that be?

Avnish: Sure. Thank you for having me back, Salonie. Good to be back. Look, I think - you mentioned startup in the preamble, I think this just religion. It is more about how one interfaces with customers. And, it applies across business, across stages. But let me ask you this, when are you satisfied with something?

Salonie: When I get what I expect.

Avnish: When are you delighted by something?

Salonie: When something unexpected sort of…

Avnish: There’s an element of surprise. When are you obsessed with something? Now that you are married, we can…

Salonie: When am I obsessed? That takes a lot. I don’t know.

Avnish: I think the point is we are all customers. And we are all human beings. And a customer is a human being. And all the feelings that you just talked about is what this is about. Satisfaction, I got what I expected. Things didn’t really go wrong. Delight, wow, something new happened. So that wow factor comes in. There is an element of surprise in delight.

Obsession, you can’t stop think about something else. It is something that we all know what that means. You go to bed thinking about it. You wake up in the morning - not necessarily healthy, but in this context, it’s meant to be taken in a healthy light. So, I think these things are very different. How they impact an organization

Talking about companies, I still remember when I was at HBS, there was this course called Service Management. And, they go through a bunch different company. It’s an excellent book which I would recommend we should give a link to Book . And, I think around that time or maybe before that, I had stayed at the Ritz-Carlton. And I remember asking for a newspaper. I remember asking for a particular type of pillow. May have been two or three references.

Next time, I was in a different part of the world, not different part of the U.S. Different part of the world and I checked-in. And there was a note on my pillow which welcomed me back, which is very normal in most hotels. And remember this is 90s. So, this was a bit hutt ke so to speak. And it said, we have put your pillow and your newspaper request is taken. Oh, yeah, and the third was what time I prefer breakfast. And they said, this is the time of your breakfast, this is your option, but we don’t want to be presumptuous, you can change it and here’s this. So that is true delight, but that level of delight comes from obsession in my view.

Delight can happen in one off. So, if I had to define it, I would say obsession of an organization that is obsessed about its customers, delights them all the time versus a one-off experience that happens here and there. So, I think that’s how I would…

Salonie: But do you think that this something - can CODS be a measured or benchmarked against? And if it can be, then what metrics should companies sort of monitor on track?

Avnish: It absolutely can. And there are a bunch of metrics, I want to throw them out and I think it’s going to be useful to define each of them so that it’s helpful for the listeners. And then, we will call out certain nuances. And by the way, all of this is available on Google. And I would encourage the listeners to actually Google some of this.

So first is CSAT, which is customer satisfaction score. Second is NPS, which is net promoter score. Now interestingly, companies use this interchangeably. These are very different things and we will come to that.

Then there is Cohorts which again people can look up the definition. But from a particular vintage of users, how much repeat do you get. And then, there is repeat rates. Now again, companies tend to confuse these too. A Cohort from a particular vintage of users let’s say from January 2018, the users I got, how many of them are there in February ‘19. Repeat is in February ‘19, what percentage of people had transacted with me before, which means the sum total of everything.

You can have good looking repeats with poor cohorts which is less healthy than if you had great cohorts. And the reason it depends on how business is growing, when you acquired users. But therefore, if I had to prioritize metrics, first of all, cohorts and repeat rates are after the fact. So, they are trailing indicators. CSAT one could argue is a leading indicator. If you have transacted with somebody, you ask them their satisfaction score. But guess what? It depends on when, where, and how you measure these things.

So, the other day I was transacting on an ecommerce site - and we all transact on an ecommerce sites. We went and - I finished my payment experience and it asked me, both the CSAT and the NPS. So, CSAT net net is how satisfied were you. It was a scale of 1 to 5. NPS is how is likely are you to recommend. Now, guess what? It’s an ecommerce transaction. I haven’t received my product. Now, I actually thought the site - so what am I rating? Am I rating the product I am going to receive? Am I rating how easy was my website experience? Am I rating the delivery experience? So, this is a very confused. The data - this is where you have to separate signal and noise.

A lot of what you would see out of a score like that is pure noise because the most important part of an ecommerce experience is the entire end-to-end fulfillment experience. So therefore, like I said where, when, and how you measure these things is very important. There is a company of ours Treebo - and I believe that this is a known metric, but I had not heard it until I heard from them. And it’s called disaster ratio. And it is essentially saying that the consistency of user experience is a strong driver of delight.

So, here they are a hotel chain, so for them they measure what percentage of the time is the user experience outside of a particular range and they call it a disaster ratio. Wi-Fi didn’t work or check-in was wrong whatever it is. And I think they are the best in the country probably at measuring and monitoring and delivering to it. And my understanding is it is sub 2%. So, these are various metrics.

I will tell you if I was running a company, I would be measuring all of these, of course. I would rely a lot like I said who is measuring and when. So, I am big believer in mystery shopping. And I am a big believer in third parties. So, I would have third party driven mystery shopping and really be measuring these scores as a combination of what we are getting internally on the website from our users as well as from our mystery shopping agency which also can give you qualitative feedback on what is happening. And I believe in measuring this very frequently. I think one should do it I mean at the worst quarterly. Ideally, at least twice a quarter in my view. And of course, some of this in today’s day and age is realtime.

One should monitor all the social media, Twitter. But, remember one thing and again it’s separating signal and noise and this on the opposite side. Complainers tend to complain more. So often you will see more negative stuff on social media. So, your actual reality may be better which is why I am saying this is a science. It is not an art. This is nothing to be reinvented. There is enough literature. We can share probably a couple of links if we have. And I think an organization that invests in this early is going to set itself up really well like someone like an Amazon which is ultimate example of customer obsession.

Salonie: But how would you set this in your organization early? So, in terms of like if you were internally engineer CODS wherein every function or division is designed around customer delight, how would you go about doing that?

Avnish: So, like I said, amongst CODS, I am a believer in obsession. I believe CODS is more of a decreasing order of priority. If you are obsessed, you will delight consistently. If you delight, you will automatically satisfy, right? So, I would say at a very minimum companies have CS departments, Customer Service Department, that’s for satisfaction. I think if I had to start a company again and kudos to Jeff Bezos of how he has done it from day one. I think people should read case studies on Amazon.

From day one, there is this famous incident where first of all you get delight by empowering the employees. Employees at the front level, at the customer-facing level, have to be empowered to make decisions. Obviously, there are going to be a lot of guidelines around it. But, the empowerment for a truly customer-obsessed organization is to let them break the guidelines. Tell them you can use your judgment.

By the way, only empowered employees and happy employees can have happy customers. So, sometimes companies don’t realize how important it is and the strong correlation with employee happiness and customer delight. And Southwest Airlines is a great example of that in the U.S. where the employees used to have this happy index and they would be always bubbly and cheerful. And they built a brand with that.

Same with Trader Joe’s by the way, which is another case study. So, I think there are bunch of case studies people can go through. So, Satisfaction, Customer Service Department. Delight empowered and happy employees. Obsession, founder down, CEO down. The companies that are obsessed about customer experience, their founders and CEOs spend time in the field with customers, if not weekly, at least monthly. And Bezos still does that.

There is this famous story both on empowerment and on spending time in the field where there was this supposedly and I think it’s written about somewhere. There was this old lady or middle aged or old lady who was sending stuff back to Amazon after reading it, and it was obvious because the book will always be open, and it was torn and this and that or whatever. And these were the days when Bezos himself would be sitting. So, you can’t setup obsession culture without being obsessed yourself.

So, Bezos was sitting in the trenches and he just said, keep taking the returns. And at one point somehow, they sent her a gift of being a repeat user and this and that and she kind of confessed on her own. There is some such story, right? So, the point is how obsessed Bezos himself was. And I would say we call ourselves founders first. Our customers are our founders. And, I think if you think about it, if I said it or if you said it, we wouldn’t really get there. You know that Matrix as an organization is obsessed about it. How our front office interacts with our founders. We know that we are putting the founders first. So, we are trying to apply some of these principles in our own business.

My final point as a closing remark is people often consider the customer - again it’s generally a customer service function or even customer obsession, delight, they think it costs money. Not doing it, costs money because when you are obsessed and when your customers are coming back, you have acquired them once, if they are going to - they are there to give you repeat business. Only you can screw it up. So, I think thinking of it as a cost center is a big mistake companies make. This is the best profit center a company can ever have.

Salonie: Okay. Thanks, Avnish. Thank you for listening. And you can find the transcribed version of this podcast on matrixpartners.in. You can also follow us on Twitter and LinkedIn for more updates.