Thursday, May 1, 2014

Supplier-Customer perceptual mismatch

File under Mismatched Perceptions: The Class of 2014 Is Filled With Cockeyed Optimists -- Is Their Positivity Misplaced? by J. Maureen Henderson

On the supply side of the equation, University Provosts think they are doing a pretty darn good job preparing their students for the real world of work.
56% of those who participated in an Inside Higher Ed survey claimed that their institutions were “very effective” at preparing students for the labor market and another 40% said they were “somewhat effective.”
So, 96% believe they are somewhat effective or very effective in preparing their students for the real world. As an aside, I would be very interested to know the identity of those 4% of institutions that believe they are not preparing their students well. A commendable and unexpected level of honest self-assessment.

Now for the demand side, the institutions that have to take the products of a university education and make them into productive citizens: businesses. What do they think about the quality of students?
A recent Gallup-Lumina survey found that a scant 11% of employers strongly agreed that educational institutions were graduating students with the skills and competencies their particular business required and a further 17% strongly disagreed with that statement.
Going to the original report, it turns out that only 34% agree or strongly agree that "Higher education institutions in this country are graduating students with the skills and competencies that MY business needs."

So providers are 96% confident in the quality and desirability of their product whereas consumers only express a 34% confidence. That's a pretty significant mismatch in perceptions.

It reminds me of an incident years ago, circa 1985, one of my very first consulting projects. I was interviewing executives at one of the regional Bell Operating Companies, recently spun off from AT&T as part of the deregulation of the 1980s. There was a new technology entering the market that seemed to pose a competitive threat to the telephone company and I was trying to ascertain both the executive awareness of the threat and their preparedness to address it.

In response to my questions, they indicated that they were aware but that they had little concern.
Question: Why aren't you concerned about this competitive threat?
Answer: Because our customers are so satisfied with the quality of our service.
Q: How do you know they are satisfied?
A: We survey X% of our customers after they interact with our personnel to determine if they were satisfied with the service we provided.
Q: What are the results?
A: Between 85-97% satisfied depending on the district. The Division average is 94.5% satisfied.
Q: How detailed are your customer satisfaction questions? How many questions are there?
A: One. "Are you satisfied with the service you received?"
No questions about customer price sensitivity, no exploration of what the customer expectations might be, no discussion about ranges of customer satisfaction. Just, "Were you satisfied."

The risk was obvious to an outsider. Your customers have never had a choice. They don't know to expect anything but what you have always provided. Simply knowing that customers are 94.5% satisfied with what you have always done in the past tells you nothing about how those same customers might respond if a competitor comes in with a service that is better, that is cheaper, that is provided more conveniently.

In that particular case, I was unable to convince the executives that their measurements were insufficient to reveal their level of risk. A risk that was brought to life by multi-year declines in service orders and revenue as new competitors did indeed come in with better, cheaper, and more convenient services which those 94.5% satisfied customers found more alluring.

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