When Pal’s Sudden Service, a small fast-food chain in Tennessee, won the Baldrige Award in 2001, its president, Thom Crosby, suddenly realized that winning prohibited them from reapplying for five years. “I called up the head of the program and asked if we could decline the award and stay in the system. He didn’t want to hear that.”

Pal’s continues to conduct annual internal assessments because, as Crosby states, “I’m a real big believer.” Like other world-class companies, Pal’s benefits from asking and answering key questions that reveal how the organization works. The snapshot produced by this exercise becomes the engine for change, improvement, and success.

The questions explore all areas that are critical to an effective management system. Many of the questions have never been asked, which means many of the areas they address have never been evaluated. And therein lays their power.

A few years ago I asked these questions of senior leaders at an organization that dominated market share in its industry. One question in particular solicited a variety of responses. The question was: How do you determine key customer requirements and expectations?

Many of the leaders talked about how they interacted with their customers daily. Others mentioned customer surveys, complaints, and lost customer interviews, among other approaches. Nobody described a process. I asked how they used the information from these sources to determine customer requirements and they said they knew what their customers required because they talked to them every day. In other words, they had no process for determining customer requirements. When the resulting assessment pointed this out, the senior leaders heatedly debated the issue until the head of the organization agreed with its accuracy. A few months later they hired a market research firm to help them formally nail down those requirements.

Now consider how Pal’s answers that question. First, it describes of number of listening and learning posts for gathering information from its customers: telephone and mall interviews, drop-in and mail-in surveys, “Marketing by Wandering Around,” on-site interviews, and Web-based surveys. It feeds the information from these sources into an extensive marketing research process that includes what customers like or dislike about Pal’s and specific competitors and why they choose one restaurant as their favorite. It also evaluates competitor products and services, uses industry and competitive data to predict future trends in customer tastes, and analyzes sales data and customer input to rank their requirements and expectations. The Customer Focus Assessment Team analyzes all of the data to build customer relationships, while the Leadership Team uses the data evaluate and improve existing customer/market focus processes.

They began by using the data to identify customer requirements. They then translated these requirements into key business drivers for the company. Based on sound research and thoughtful analysis, Pal’s knows what its customers require and it knows what it must do to meet and exceed those requirements. That’s a firm foundation for any company.

To read more about knowing your customers, click on these articles:

• Be Careful How You Measure Customer Satisfaction
• Bottom-Line Value of Customer Engagement
• KEYSTONE: Customer Knowledge
• 9 Ways to Get Closer to Customers
• Ground Zero for Customer Service
• Customer Loyalty Myths

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