How Many Customers Did You Lose Today?

Rita McGrath  blogs.hbr.org Dec. 7, 2011

My theme this month appears to be tone deafness among business designers. Cue Bank of America!
But genuinely, one of the most vexing dilemmas for senior executives is being plugged in to what is actually going on in the front lines of their business. It's all too easy to miss critically important customer experience information when one is engaging in the day-to-day grind that constitutes an executive's job. All the same, not being attuned to the way your business is perceived by customers can lead to a lot of damage.
Here's a recent example. My husband and I were traveling from Edinburgh to London, where we were to attend the Thinkers50 gala dinner, on a Monday in November. Our train was due to depart in 15 minutes, and my husband was anxious for a coffee. Aha! Conveniently located next to Track 2 was a Café Nero, one of the more ubiquitous brands of coffee shop that grew up in the wake of Starbucks' enviable success. I was given the task of watching the luggage; he went to get coffee.
Here's where it gets interesting. From my vantage point just opposite the entrance, I was able to observe customers coming and going. I was fascinated to see how many of them came and went — without buying anything — because they took one look at how long the line was and abandoned their coffee mission then and there. Intrigued, I started to count. Fully 3 people looked at the line and bailed on the thought of purchasing for every 1 person who actually made a purchase. Imagine — the café would have increased its business by 300% if everybody who thought they might like a coffee had been converted into a coffee buyer. And this is at a train station, where people risk missing a train if they stand around!
My guess is that these lost sales won't even be picked up in a corporate database. After all, how do you identify the dissatisfaction of people who were potential customers but ended up not being customers at all? How do you measure a non-event that should have been a sale?
I'm not picking on Café Nero, particularly, or the friendly people behind the counter. The business issue, however, is that their potential business was more than cut in half — in fact, cut by 75% — because they missed the obvious about buying coffee at a high-end café in a train station. This sort of thing happens over and over again because business designers miss one or more of customers' critical decision triggers. The companies that can fix this have the potential to create real profits by designing better, more complete customer experiences.
So, here's the challenge — how do you get the people who make strategy and resource allocation decisions to deeply understand what is actually happening on the front lines of their business?

Columbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship. Her latest book is Discovery-Driven Growth (2009).