By Lynn Thomas, J.D.

Moments of truth. Is that just a catchy phrase? Or is it another marketing gimmick? Actually, moments of truth (MOT) represent a simple and powerful tool to increase sales hit ratios.

Jan Carlzon is renowned for his use of moments of truth to achieve customer focus. He is the man who became president of the ailing SAS Airlines in 1981. In one year, he turned the organization around from losing $30 million to making $1 million. For many, he is in the ranks of Lee Iaccocca and Jack Welch. He credits the turnaround to moments of truth. Once Carlzon and SAS identified their customers' MOT, then they reorganized the airline to manage them flawlessly.

It all started when Carlzon began talking with passengers about their perceptions and conclusions about their trips on SAS. He discovered that when a typical passenger put down his/her tray and found on it a coffee stain that had been overlooked during the pre-flight cleanup of the plane, the passenger concluded that the airline was probably careless about its engine maintenance also. Armed with this belief, the passenger decided not to fly this unsafe airline.

Carlzon and his staff could not follow this logic. What did the coffee stains have to do with the maintenance of the engines? The team that cleans the trays is different from the one that maintains the engines. How did passengers conclude that there was a correlation between a coffee stain on a tray table and poorly maintained engines?

What Jan Carlzon discovered was that as human beings we take very specific experiences and generalize them throughout an organization. This is the power of first impressions. What he learned was that these specific experiences strongly influence individuals' decisions to purchase from, stay with or leave an organization. Irrational behavior? Most definitely! Does it happen all the time? Yes. Everyday to all businesses.

These are very specific experiences. Remember, it was not crumbs on the tray or a scrap of paper in the aisle, but a coffee stain on the tray.

So, where are your agency's coffee stains? Would you like to know? What specific experiences have your prospects and customers had that led them to conclude that your agency is not the type they want to handle their insurance needs?

In order to identify your customers' moments of truth, you need to have a heart-to-heart talk with yourself. First, are you really willing to invest the time and money to unearth the core of what your customers really want?

If so, then are you willing to reorganize your agency so that you can flawlessly deliver positive moments of truth to your customers and prospects?

The advantages and rewards are incalculable, but this is a tall order. FedEx is a great example. Why do many people who customarily use other overnight delivery services, pay a premium for FedEx when a particular package must arrive on time?

To find the answer, we must go back to when FedEx wasn't the best. FedEx didn't want to have true competitors. It wanted to have loyal customers who were willing to pay a premium for its services. The company executives realized that they needed to speak with many of its customers, particularly its most profitable customers ("A"s) and uncover their MOT. FedEx invested time and money in market research and successfully identified its customers' moments of truth.

FedEx happened to be very fortunate. Downright lucky. The research clearly proved it had one MOT that was five times more powerful than any of the other of its moments of truth. For any company, that is a dream come true. It would allow the company to really focus on one MOT and not have too many to integrate into its business.

What was this gold nugget of a MOT? The customers wanted "on time delivery." You might think this is obvious. But is it really that clear? Don't we also want the airbill to be easy to complete, the person at the 800 number to be knowledgeable, the pick-ups to be timely, the invoicing to be accurate, the packaging to be sturdy enough to protect the contents, the drop-off locations to be convenient, etc. We have many "wants" regarding our overnight delivery service. Although all of these were rated as "important," what the customers wanted above everything else was for their package to be delivered on time. Period.

Backed with this clear data, FedEx redesigned its delivery process, hiring and training of employees, warehouse, airplanes, airplane routes, procedures, etc., to have a primary focus: deliver packages on time! Period.

FedEx knew that if it could outperform its competitors in just this one area, it could charge a premium that its customers would willingly pay. The company executives were so convinced of the power of this MOT that when an employee hired a small airplane to deliver a package on time, they generously rewarded him. He was an example of an employee who jumped through hoops to do his job. That is what FedEx wanted. Employees who got it! Employees who understood what the customers really wanted.

Yet, imagine how these executives would have responded to the employee's hiring of the airplane if they had not identified their core MOT. This employee's efforts probably would have been deemed overly ambitious, inappropriate and costly. The only suitable action would be dismissal.

So, an additional benefit for a company that has identified its MOT is that it allows everyone in a company to know the "rules of the game." This in turn makes it easier for everyone to work together so everyone wins at the game!

Now, your agency. What are your agency's moments of truth? Are you willing to uncover them and then address them? There are many data gathering techniques and questions to successfully identify your customers' MOT. However, for now, let's keep it simple.

There are three main questions. They focus on your "A," "B" and "C" customers' decision-making process. You want to learn how they make their decisions. What do they value? How do they weigh one factor against another? What will change their mind? What or who influences them? This is the information that your agency needs to know to raise its sales rates. The three questions are:

1. Why did you decide to do business with us?

2. Why have you stayed?

3. Why would you or why did you leave?

Be wary of accepting a customer's first responses. They usually are more global than specific. Remember those coffee stains. They were not the passengers' first responses. So with your customer's first response, probe underneath. Ask three to four probing questions. That is the number that is usually necessary to uncover the nugget that is the MOT.

For instance, suppose your customer says that she decided to become a customer because your agent was very professional. That is too vague to be a MOT. What does she mean? Was there a little gray in the agent's hair or was the agent knowledgeable, or did he shake the customer's hand and smile or was the agent impeccably dressed? Without the probing questions, you will have responses but not the specific ones that amount to a MOT. You are in search of coffee stains--the one or two small items that are easily manageable and that made significant differences to your customers, or former customers.

Some suggested follow-up questions for customers who would respond "professional" could be: "Would you tell me what 'professional' means to you?"

Or, "What did the agent do that indicated to you that he/she was professional?" Continue asking questions that surface small elements of the customer's experience. Such as, "Tell me more about that." Or, "Do you remember the moment you decided to become our customer? If so, what did the agent say or do at the precise moment?" Some people may feel hesitant to ask probing questions of a customer. They are concerned that the customer will feel pushed or nit-picked. On the contrary, what I have found is that customers sense my genuine interest, easily answer questions and provide me with their MOT.

After you question your customers, you will have a large variety of responses. Keep the responses in the customer's own words. Do not substitute your words. For example, do not combine "friendly," "warm and open" and "amicable" into one category. Bear with the large number of responses. At some point, two or three reasons pop to the surface. It will be apparent.

These are the moments of truth. They form the key selling messages for each customer segment. You will find that the reasons are different for your "A," "B" and "C" customers in each of your market segments. The top two or three reasons why each customer segment decided to do business with your agency in turn become your agents' best screening questions for prospects. This is how the MOT assists your agency in increasing its sales hit ratio.

Since you want more "A"s, your agents need to focus their most concerted efforts on the prospects who are most likely to become an "A" customer.

Prospecting is time-consuming and expensive. The insurance industry has the highest customer acquisition costs of any industry. By identifying the prospects who are most likely to be an "A" customer, it is easy to focus the agent's time and resources to successfully attract the "A" prospects to your agency and hold acquisition costs to a minimum.

Agents need to memorize the reasons that each customer segment decided to do business with your agency. Then they need to formulate questions to ask the prospects so the agent can learn the relative importance of these reasons in the prospect's decision to become a customer. For instance, with one of my clients, its "A" customers' MOT was that the agent asked detailed questions about their risk management that no other agent had ever asked. A screening question would be, "To many of our clients, our in-depth knowledge and detailed questions about their risk management are of paramount importance. Is that true for you?"

At some point, the prospect will strongly agree with the set of reasons for one of the customer segments. At this point, the agent will know with a high degree of certainty that the prospect is an "A," "B" or "C." This will allow the agent to decide how best to utilize his/her time and the agency's resources to increase the sales hit ratios.

The moments of truth are a simple and easy way to identify your prospects' decision-making methods. With this information, prospecting becomes more fun and more rewarding. Your agents will have the information they need to prioritize and sort through the prospects in a quick and efficient manner.

It is not surprising that in this information age, the agencies with more information will win, and win big! *

The author

Lynn Thomas, J.D., is president of21st Century Management Consulting located in Waltham, Massachusetts, a firm specializing in customer loyalty and customer retention with a specialty in the insurance industry. In addition to her consulting work, Thomas has written for numerous publications and has been a speaker at hundreds of conventions.