I wrote this post for Jeffrey Baumgartner and it was posted in his 103 report on 7/3/2013
Mid February 2013, CEO of Maker’s Mark, Rob Samuels was preparing to reverse the biggest marketing blunder in the history of this company. Their decision to water down their bourbon from 45% alcohol content to 42% alcohol content was not received well by the market. This resulted in a backlash from their loyal customer base and gave competitors an opportunity to attack them.
Over the past few years, Maker’s Mark Bourbon had seen a surge in demand which has led to shortfall in supplies. It takes six years for the bourbon to age, making it difficult to for Maker’s Mark to increase supply in response to the demand. They worried that their loyal customer base would switch to other brands when they would be hit by supply shortages. Hence Maker’s Mark was left with no choice but to water down the alcohol content to meet the demand. They estimated that this action would increase the supplies by 6%, which would make a lot of happy customers.
Well the mistake they made is that they misread the customer experience needs of their target segment. Their customers enjoyed the high quality bourbon they got from them and were not willing to trade that to fix supply shortages.
In fact this is a story of many successful companies. They become successful by delivering good customer experience. But once they get there, they lose touch with their customers and hence open doors for others to out innovate and deliver better customer experience. This has been the focus on my research for the past few years and I have published a book on the topic of customer experience driven innovation, titled “Shift: Innovation That Disrupts Markets, Topples Giants and Makes You #1”. My research found that customer experience needs across many different industries can be described by nine factors, which are Requirements, Price, Convenience, Availability, Service/Support, Quality, Fashion, Social Responsibility and Brand (download detailed explanation of this framework here, or watch 4 min video about this framework here). Customers demand best-in-class experience across three to five factors on this framework, and offer their business in return to companies that deliver such experience. Most of the customers just care about their experience and are seldom loyal to a company. And when a company makes decisions that deteriorate their experience, they take up arms and make noise.
This is exactly what happened in the case of Maker’s Mark bourbon. Any whiskey that is bottled over 80 proof is considered to be Bourbon. By reducing the alcohol content down to 42%, Maker’s Mark was cutting down the proof to 84. This will still make it Bourbon, but it would reduce the quality of the drink for customers who are used to 90 proof whiskeys. Hence this decision was considered as a downgrade from the best-in-class customer experience its customers received on “Quality” factor to improve the experience they received on “Availability” factor. This was not acceptable to its customers and hence the company had to reverse its decision. Had they known their customers better, they would not have made this decision and be surprised by the customer reaction.
Companies should stop being surprised by their customers, as often this is not good news. Rather they should understand their customer experience needs and focus on innovating to deliver better experience. The nine factor customer experience framework helps you understand customer experience needs and minimizes surprises. There are many examples of companies that have innovated to deliver better customer experience, minimized surprises from the customers and have managed to shift the market in their favor. Much of this is covered in my book.
How does your company work on minimizing surprises from the customers? Would a structured framework help you minimize such surprises?