Wednesday, December 28, 2011

Defense of Usury

I was referred to Bentham's work as a reference on the topic of lending and interest: "Defense of Usury" is a series of letters, written presumably to a person [or persons] opposed to the notion of charging interest, at least beyond some arbitrary level, on borrowed monies. As such, it doesn't explore the topic fully or systematically, but there is quite a bit of food for thought.

The idea of usury is seldom considered today. While there are still laws on the books that set a maximum rate of interest, they are very liberal in what they allow, and vary from state to state, such that a financial services firm can simply move its nominal headquarters to the state that allows them to charge as much as they please.

And there is quite some consumer grumbling about it, but most individuals are informed enough to dismiss it: those that grumble the loudest are those who are charged the most, and they are charged the most due to either a bad history of managing their personal finances or lack of proof of a positive history - which, to any objective third party, seems justified in most circumstances.

Given the current financial crisis, caused by political pressure (or facilitation) on financial institutions to extend loans to unqualified borrowers at extremely low rates, public sentiment is, if anything, in favor of charging higher interest rates or denying credit altogether to those who are unable to repay. But the winds of politics are ever-changing and, perhaps a few years or decades after the present crisis, sentiment will again turn to demanding ready credit at low rates to anyone who has a pulse, and the cycle will repeat as it has throughout history.

But returning to Bentham, his defense of usury covers a broad swath of topics related to both consumer and commercial lending: allowing parties to negotiate terms to their own liking, the compounding of interest, the inability of high interest rates to discourage reckless behavior, and the like.

All of this could, perhaps, be shaped into a work that is more structured and systematic than a series of letters - but even such as it is, it provides a good survey of topics related to credit, and provides a reasonable explanation of the necessity of interest.

Saturday, December 24, 2011

Sweeteners, Bribes, and Lagniappes

I got into a theoretical discussion about the "little extras" that sellers give to buyers, the rationale behind the tactic, and whether it is moral or effective to do so. The present not is jotting down some points - I don't expect there's a meaningful structure or direction:

Basic Classification

There is a distinction to be made based on when and how the bonus is given to the buyer.

If the gift is offered prior to settling the exchange or agreeing on terms, it can be regarded as a sweetener - as in "sweetening the deal" to get the buyer to accept it. The sweetener is clearly a negotiating tactic, geared toward making the buyer more inclined to accept the deal that is offered.

A bribe is also given prior to the exchange, but the difference is that the sweetener is subject to open discussion and is not granted if the negotiations are unsuccessful. A bribe is granted without overt reference to the deal - and as such is meant to covertly ingratiate the buyer to the seller, to make the buyer feel he "owes" the seller something (agreement to the deal), even if the seller ostensibly denies this (which is expected).

A lagniappe is differentiated from both bribe and sweetener in that it is granted to the buyer after a deal has been accepted, and the buyer had no expectation that he would receive anything "extra" at the time the deal was struck.

Ethical Considerations

The lagniappe is likely the most ethically sound of the three. Because the buyer was unaware of it during the negotiation process, it cannot reasonably be said to have corrupted his objectivity in the negotiations. Even if the buyer expected the lagniappe for some reason, such as having heard from others that the seller is in the habit of giving them, it is the buyer's own expectations that have corrupted him, not anything done by the seller - which likely falls into the category of "foolish" rather than "unethical" behavior.

The sweetener also seems ethically acceptable. Because it is married to the negotiation, the buyer has the ability to consider it, as well as the ability to insist that the seller set the sweetener aside and resume negotiations for the merchandise that is the primary objective. That is, the buyer consciously and purposefully allows the inclusion of the sweetener, no differently that including or excluding any item from the exchange.

The bribe is clearly unacceptable, as a one-sided tactic that is intended to ingratiate the buyer to the seller and apply psychological pressure to accept a deal that might have otherwise been acceptable.

Naturally, this last bit was subject to some conjecture, but in the discussion, those who felt that a gift before a deal was acceptable were unable to provide a satisfactory rationale. "Just being nice," "It's a custom," and "It's a thank-you for taking the time to negotiate, even if a deal is not struck" seem disingenuous and just-because.

I can go so far as to say that if it isn't the seller's intent to skew negotiations in his favor, than it is not intentionally unethical behavior - but because we can never really know a person's intentions, and all will claim the most innocent of motives if asked, I don't expect that can be objectively substantiated - and the act of offering a bribe is inherently unethical, regardless of the purported intent.

Fiduciary Responsibility

All three forms of gift seem a bit more dubious when the situation is one in which the buyer is negotiating a purchase for his employer, rather than a personal purchase.

Where the negotiator seeks to obtain a lagniappe, sweetener, or bribe for himself, in the process of a business negotiation, it's clearly in violation of ethics. Even if he gains the most beneficial deal for his employer among the options available, it smells odd.

For the lagniappe, specifically, intent is important. If a vendor gives an unexpected personal gift to the negotiator after a deal is struck, it's likely not an ethical problem (though it may have the appearance of having been so) - but if the negotiator expected the gift, it takes on more of the quality of a bribe.

Where the negotiator gains a lagniappe or sweetener for his employer (he does not keep it for himself), I don't see an ethical concern. Because the negotiator gained something for his employer rather than for himself, he has not violated his fiduciary responsibility.

In terms of bribery, it seems to me that a bribe that is offered that benefits the employer is less likely to corrupt the judgment of the negotiator than a bribe that is given for the negotiator's personal benefit. The psychological "hook" of the bribe is reciprocation - because you have done something for me, I feel that must do something for you. The hook isn't set by doing something for someone else (because I did something for your company, you are personally responsible for reciprocating.) So while I'm still apprehensive, I am less so in this specific situation.

Lessons for the Seller

The consideration so far is focused on the motivation of the buyer, as was the discussion, but it has some implications for the seller.

Fundamentally, the question of ethics pertains to motivations - and while we can never truly understand the motivation of another person, we are (or should be) entirely clear on our own. We know whether our intent was to show gratitude to a person with whom we do business, or to use overt methods to make a deal seem more appealing, or to subvert the judgment of the other party. We know whether our intentions were ethically sound.

However, we must consider the perspective and situation of the buyer: if our actions have the scent of subversion, or if the buyer will suffer from the appearance that they were involved in an unethical exchange, we have likely damaged both their reputation and our own in the process, and poisoned the relationship.

As such, I would conclude for the time that:
  • A lagniappe is always safe when given to a retail buyer (purchasing for their own consumption) and is safe when we sell to a commercial buyer (who purchases for their employer). The only time it seems shady is if the lagniappe is given to a commercial buyer that benefits the person rather than their firm - it could have the appearance of an ethical violation, not that it actually is.
  • A sweetener is also safe when dealing with the retail buyer. It is also safe when dealing with a commercial buyer if the sweetener benefits the employer rather than the buyer. However, if the sweetener benefits the commercial buyer as an individual rather than his employer, it is unsafe.
  • A bribe is unsafe when dealing with a retail buyer, and unsafe when dealing with a commercial buyer if the bribe benefits the buyer rather than their employer. Where the bribe benefits the employer but not the buyer, it is not as questionable, though I can't go so far as to say it is completely safe.

Tuesday, December 20, 2011

Technology Merely Facilitates

If you give an illiterate a typewriter, he can't write a novel. He can't write a sentence, and if he manages to bang out a string of characters that happen to spell out a word, it's by random chance. If you set up a Facebook page for a socially inept brand, it doesn't become able to develop and maintain positive relationships. If it happens to gain even one additional sale, it's by random chance.

This problem stems from an overabundance of faith that technology, alone, grants competence - that a person or an organization who is completely unable to do something will be somehow transformed into an expert if the technology that experts use competently is made available to them.

When a person (or a company) is good at something, they can do it with a bare minimum of tools. Some of the most powerful, eloquent, and graceful phrases in the English language were scratched down on parchment with a feather. Those who wrote them didn't need a word-processor - though if they had one, chances are they would have at least been more prolific.

When a person (or a company) is not good at something, the most wondrous technology cannot grant them the abilities they lack. And this is the reason many companies remaon inept at using social media, and often do themselves more harm than good when they attempt to use it to connect with customers, prospects, candidates, and the public. That most companies have social media presences that range from the pathetic to the offensive demonstrates the magnitude of the problem.

This is likely the stem of the problem, but not its root. With time and effort, skills can be learned and some level of proficiency developed. But even before that can happen, there must be the desire to succeed. And that's where the problem begins: companies want to leverage social media to achieve financial results, but they don't really want to be good at social media - in the same way that they want money, lots of it and as often as possible, but many don't really want to serve the customer or provide genuine value in order to earn their patronage and loyalty.

And in that sense, it becomes clear that technology is not the savior of a firm that has poor customer loyalty. The problem is more in the culture of the organization - the real culture, as evidenced by their behavior, as opposed to the lofty language of their mission statements and the clever phrases they print in their marketing materials.

If a company genuinely desires to have a good relationships with customers, chances are that it already does. The adoption of social media will merely enable them to build relationships with their customers online exactly as they do in person, in print, and over the phone - and their efforts in the social channels will amplify their success.

If a company does not genuinely desire good relationships, but is parasitic and manipulative, chances are they have alienated their customers. The adoption of social media will merely enable them to affect people online exactly as they do in person, in print, and over the phone - and their efforts in the social channels will amplify their failure.

Friday, December 16, 2011

Appearance and Reality of Quality

The holiday season means end-of-year celebration banquets at many firms, and the experience of such an event discloses much about a firm: particularly, the contrast between the look and feel of quality that speaks volumes about the company’s own consideration of quality. Unfortunately, this is very often unflattering.

Having been to a number of these events over the years, I can say it’s not unique to one firm, and moreover I have the perception that it appeals to a great many firms who mean well, but fail on execution.

Plus one Minus Four

On the positive side, a company that provides a banquet at all is at least making an effort, which stands in stark contrast to the many that don’t. And when you first enter the banquet hall, it’s clear that the organizer has made an effort to impress, or to show appreciation of, the individuals who are invited: you immediately see the cloth napkins and metal silverware, the elegant centerpieces and d├ęcor of the banquet hall, and it’s clear that the company wants to give the impression of hosting an elegant event.

But then you are seated and you pick up the napkin, and notice its weight and texture: it is a cloth napkin, but the material is coarse and cheap. The flatware, likewise, has the appearance of quality, and is metal rather than plastic – but it is lightweight and flimsy. Literally everything you encounter is superficially upscale. And as much as you want to be impressed, you end up disappointed.

The appearance of quality is offset by the reality of the situation, as you have to wonder which of the following is true:
  • The company cannot afford to deliver genuine quality, but is striving create the impression that it can
  • The company could afford to deliver quality, but does not have a clue as to what “quality” actually means, and is incapable of delivering it in spite of a genuine desire to do so
  • The company can afford it, and knows how to do it, but has chosen not to provide it for this particular audience, because they think it would be pearls before swine - that the people in attendance would not recognize quality.
  • The company can afford it, knows how to do it, thinks that attendees would recognize it, but wishes to demonstrate that they do not deserve it.
Because it is a cultural taboo to express disfavor to someone who has gone out of their way to do something nice for you, even if it is unsatisfactory, chances are that the companies that host the event do not get negative feedback from the attendees. A polite person will say “thank you” and a fawning sycophant will offer high praise to curry favor – but in reality, they likely recognize the fact that your best efforts are not up to par, and have formed their own conclusion as to the reason why.

Do Employees Matter?

Even though many firms pay lip-service to valuing their employees, there remains a strong cultural tradition from ages past, in which there is a clear separation between the nobles and the peasants, the officers and the enlisted, the management and the workers – in which the former is considered to be a better class of person than the latter. And in this regard, as in so many others, there is often a schism between words and actions – the latter of which, as the saying goes, speaks louder.

Keeping to the example of celebratory meals, there is often a stark contrast between the kind of place an executive will take an important client for a business lunch and the kind of place the same executive will take an employee for a congratulatory lunch – the latter being less upscale than the former, which belies their true opinion of the status of the guest.

Or better still, consider that many firms have separate events for management and employees, where there are stark differences in quality. An executive event is held off-site in an upscale restaurant, country club, or hotel banquet room. An employee event involves gathering in a conference room with sandwiches brought in from the local supermarket’s deli counter.

In that regard, it’s clear that to some companies, employees really do not matter. They will claim (words) that a person who has given twenty years of service to the firm is a valued employee, but when their unit manager takes them out to lunch (actions) to celebrate the anniversary, the choice of venue suggests the same desire to undertake a superficial effort to create an false impression.

There are many who would defend such a decision, and who consider an executive who is overly generous in his treatment of his people to have a character flaw, in the same nature as a master who is kind to his slaves is a weak man. I can't subscribe to this point of view.

Do Customers Matter?

Ultimately, relationships are important, and those who recognize this make every effort to be attentive to relationships in all regards: whether it is with an employee, a vendor, or a customer.

It is not unusual for companies that have events to invite some of their key vendors and customers to socialize with the employees. On one hand, it agrees to the cultural value of egalitarianism to see everyone, of every rank and status, treated just the same. But on the other hand, consider that everyone is treated to the same coarse napkins and cheap flatware.

You can even go to the extreme of events that are customer-only. Not all firms treat customers very well, and there is also stark contrast in what is offered to a prospective customer whose future business the firm wishes to win, and an existing customer whose future business the firm has largely taken for granted. Even in this instance, the same principle applies.

The Rest of the Time

And finally, what about the rest of the time? There is again a contrast between the few occasions in which a firm undertakes an atypical effort to make a positive impression, and the rest of the time – the way that a customer will be treated on a day-to-day basis, in the course of regular business.

I’ve heard it remarked that the worst vendors throw the best parties and give the best holiday gifts. And while I’m not quite cynical enough to accept that as a general rule, I do believe that it wouldn’t be said at all if there were not some shred of truth to it. It would likely be more accurate to say that when a company gets quality right on special occasions, it’s no guarantee that they will get it right the rest of the time.

A vendor that provides high quality service will often also treat customers to high-quality perks – because they want everything that they do to convey their genuine commitment to quality. The fact that vendors who are not as committed to quality will sometimes imitate this as a method of deception should not be cause to disparage the genuine intent of others.

Likewise, a company that treats its employees or customers well may be devoted to quality in all of its relations. But again, some companies treat some of their relationships with greater care than others. It may be argued whether it is rightly so – but it cannot be argued that it is the behavior of a firm that truly values its people, its vendors, and its customers well.

Back to the Point

As usual, it’s been a long ramble that has taken me off the course I had intended to follow: the discrepancy between the appearance and reality of quality.

I had meant for this to be a meditation on the importance of getting the details right – making sure that the reality and appearance are not out of joint – but it took me in a different direction. That seems to happen quite often.

Monday, December 12, 2011

Better Equipment at Home

One particularly odd thing in era of technology is that employees seem to take work home with them fairly often because the equipment they have is more capable than the equipment their employer provides. I don't expect it is unique or unprecedented, and that there are various professions, going back centuries, where workers have brought their own tools to the workplace because what their employer furnished was not fit for the job, but it confounds reason that it should ever be so.

Yet when it comes to computers, particularly for those provided to design staff, it's common to hear someone remark that they will need to finish a job overnight or during the weekend because they have better equipment at home. Many employers do not provide adequate equipment, and most them forbid "unauthorized" equipment in the workplace - and make it very difficult to get authorization - but the latter is an entirely different problem.

I can think of only two places where I worked that the computer I had been provided by the company was better than that which I had at home for my own use. In fairness, I did freelance work in those days and needed a better system than the average "user" had - but given that I was doing the same kind of work for a smattering of small clients as I did at the office and was willing to purchase adequate equipment for the job on my own budget, perhaps that's even more damning?

The first of these companies was an Internet division stood up in a larger company during the early days of the medium (pre-1995), which threw massive amounts of capital at their green-field venture. In that place, the pendulum had swung so far in the opposite direction that UNIX systems that cost as much as a new car, and not a cheap model at all, were gathering dust in the offices of workers who didn't need that level of power. My sense is that many companies fear this will be the case if they provide high-end equipment to their workers: it won't be used, no ROI, waste of budget ... and unusual situations such as this likely provide a convenient example when making a case to set the bar very low.

The second company was a nonprofit organization where I worked in a department headed by an executive who fully embraced scientific management (per Frederick Taylor) and as such he truly believed, and was able to convince his superiors, that the quality of work depended on the quality of the equipment (among other factors - for example, he was also a proponent of training, which is an entirely separate train of thought, but it would follow the same track). Just as Taylor's coal-miners were highly efficient when they used shovels that were well-designed for the purpose and sturdy enough not to break, so is a designer or knowledge worker more efficient when he has a workstation that is well-designed for the purpose and does not crash, freeze, or lag often.

The exceptions considered, now turn to the typical situation, in which companies provide their designers the very same computers they provide to their accountants and clerical workers, albeit loaded with slightly different software. It's no more the "right tool for the job" than would be a coal-shoveler handed a garden spade with a slightly longer handle, and the effects are just as detrimental to quality and efficiency.

"Quality" of design work is much more difficult to define, even more so to convince someone else to disagree with your definition - but the frequency with which designers need to do work at home, using their own equipment, is primarily motivated by the desire to do quality work, and a plain indication that the equipment in the workplace is insufficient to do so.

Efficiency, however, is much easier to demonstrate in quantifiable terms: it deals with time, which is easily translated to money. It would likely be a conservative estimate to suggest that 30 minutes a day of each designer's time is wasted, either in waiting for a workstation to process a command (a sign of insufficient memory or processor speed) or to have to do a task "the hard way" because the company-issued software isn't capable of doing what they want conveniently. Multiply 30 minutes per day times a fully-loaded labor cost of $50 an hour (also conservative), times about 200 work days per year (ditto), and you arrive at $6,250 per year, times the three-year lifespan of a workstation, and the result is $18,750.

The argument in favor of purchasing cheap equipment is immediate cost-savings: if you have to purchase a thousand computers, the difference between a $1,500 model and a $4,000 model is $2,500, which multiplies to $2.5 million for a thousand workers. This is a significant cost-savings that the purchasing department can smugly claim is an achievement. But as a consequence, if the cheap computers waste only half an hour a day of the users' time, those costs are also multiplied by the thousand users - so the $2.5 million saved on the immediate purchase results in an $18.75 million loss in productivity. Clearly, that's nothing to be smug about.

This leads to a diversion on a favored topic of mine: the tendency of the corporate world to focus on short-term benefits to the detriment of long-term performance. I'll let it go at a mention without going into detail, as I've recently considered this very issue. I'll also avoid the side-trip to the topic of employee morale, the difficulty workers encounter on a day-to-day struggling with poor equipment and the disdainful reaction they get when they ask for anything better, but that too is a concern. And the topic of quality has already been carefully side-stepped, though the quality of the product results from the quality of the work, which results at least in part from the quality of the tools, the net effect of which is a poorer customer experience.

My sense, however, is that the topics I have avoided are even more detrimental to the long-term performance of a firm than the one topic I expect most decision-makers would understand: efficient use of funds, for the long-term impact on product quality, customer loyalty, and employee morale are likely far more detrimental than a few million dollars in savings. But I'll leave it at that.

Thursday, December 8, 2011

Lombard Street

While it was written more than a century ago, Walter Bagehot's description of the British money market in Lombard Street, which accounts for the causes of the financial crises of his own time, is an interesting read in light of the financial crises of the present day: we appear to have roughly the same system, and face roughly the same problems, and for roughly the same reasons.

The qualifier of "roughly" is necessary to account for certain differences in the two systems: In current-day America, there is considerably more credit used by considerably more people than in nineteenth-century Britain, we lack a valid commodity base for our currency, and the like - but much of these details seem incidental in light of the larger similarities: a central bank that maintains the reserves of all other banks, as well as the banks and government accounts of foreign nation, and the problem of maintaining a reserve that meets the apprehension minimum of an increasingly fickle and timorous consumer market.

And, as was concluded one and a half centuries ago, we deal with a problematic system that is so widely supported in spite of its failts that the only recourse is to make the best of it, such as it is, and work within it, such as we can.

Friday, December 2, 2011

The Back of the House

Retail firms place a great deal of emphasis on the "front of the house," as they (rightly) believe it to be the primary driver of the customer experience, specifically the customer's perception of the service, hence the customer's opinion of the brand. But at the same time, they neglect a significant portion of the customer experience because they assume it to be the "back of the house," invisible to customers and inconsequential to customer experience and brand loyalty - and on that account, they could not be more wrong.

This notion occurred to me as a consequence of a couple bits of conversation: the first was a conversation about a fairly upscale in which the bathrooms were disgusting and the second about the filthy conditions of an employee break room in a restaurant. As I considered what I had heard, it occurred to me that there are a staggering number of instances in which the back-of-house experience is sorely neglected, and likely done as a conscious choice to neglect rather than a mere oversight. And while the venue was brick-and-mortar retail, my sense is that some of this can be translated to the online user experience as well.

That said, here's the ramble ... I'm going to stick to the example of a restaurant, and consider components of experience that are typically neglected.

Core Product or Service

I'd completely skipped over this component, likely taking it for granted that firms that deliver a product or service make the quality of their core product or service a top priority, and had to come back to it later because I realized this assumption cannot be taken for granted.

Using the example of a restaurant, there are many places that serve food where the food itself is given very little attention. Some excellent examples of less-than-excellent product quality are in airport restaurants, or institutional food service (companies that provide meals in prisons, schools, and office complexes), or in most QSRs (fast food joints) where fast, cheap, or convenient is given precedence over quality and the customer is expected to settle for a poor product because they are just grabbing a quick bite.

Even in those instances, there is some modicum of quality, though sorely and purposefully neglected, or customers would not patronize them at all, or leave without eating the slop that is on offer.

I won't dwell on this component overmuch: there's much to be said on the matter but my present focus is on items other than the core product or service.

Primary components of the experience

This category of neglect includes elements or components that the customer can be fully expected to encounter during the course of their interaction with the firm in the course of the service experience.

Using the example of the restaurant, the food is likely given great attention - but the customer will also notice the plate on which it is served and the flatware they handle while eating it, the other elements placed on the table, the decor of the dining room, the attire and attitude of the server, and other elements while they are "enjoying" the main attraction of the cuisine.

Perhaps the management of such a restaurant considers these elements to be of little importance and a waste of budget to do anything to improve them: but the customer who is served food on a chipped plate, must eat it with a bent fork, season it with a clogged salt shaker, their eyes constantly drawn to the stain on a paper-tent tabletop promotion, served by a surly waiter in a threadbare uniform, on a rickety chair at a wobbly table, in a dining room with grungy cinderblock walls, etc. will likely be so distracted by the "unimportant" components of the experience that the quality of the cuisine will not matter.

From personal experience, I've had some very satisfactory meals in very shabby places. In some instances, the quality was such that I went back, sometimes repeatedly, to these shabby little places. Perhaps that disproves my hypothesis, but it's also worth mentioning that I never brought my wife to these places, never suggested to friends or acquaintances, and if I ever happened to mention them or had them mentioned to me, it was never without a disclaimer about the poor quality of everything but the food.

I wouldn't go so far as to say that the neglect of the primary components of experience is a frequent occurrence, or that most restaurants completely neglect such things, but it is at least widespread and is a strong differentiator between a good restaurant and a bad one.

Secondary components of the experience

This category of neglect relates to components that a customer does not "have to" experience in the delivery and consumption of the core product, but which they might encounter.

Using the example of the restaurant, there are parts of the facility the customer might encounter that they don't necessarily "need" to encounter while taking a meal: the waiting area, the lavatory, areas they might pass through on their way to and from the table, etc.

My sense is that the importance of a clean and well-appointed bathroom in a restaurant operation is so widely recognized that it doesn't require much elaboration - though admittedly I've been in a few where the message had not been heard or had been entirely ignored - and it would suffice to say that the same importance should be attached to every area the diner might venture and every staff member the diner might encounter during the course of their visit.

And granted, this being even further removed from the act of consuming the product, there is even greater tendency of a manager to take a so-what attitude toward it - but just as with the plates and flatware, they are parts of the overall customer experience that can detract from, and even undermine, the experience a business intends to deliver by its attention to elements that it considers to be more important.

Tertiary components (outside of experience)

This category applies to the brand exposure that occurs outside of the experience, either by happenstance or intention.

One component of this, related to the brick-and-mortar establishment, is literally the back of the house - that is, the back of the building, visible from outside.

This is fairly easily dismissed by the notion that people don't see the back of the building - which is really more along the lines of struggling to maintain the ridiculous opinion that it is utterly invisible. There are roads behind and beside restaurants where people will see the back of the building. If there is a high-rise apartment or office building behind the place, everyone who lives and works there will see it at some point, recognize it is the back of the restaurant, and the brand association is made to the appearance and condition of the loading dock, dumpster, and other things that the firm wishes to keep discreetly out of view.

I recall one instance where someone mentioned to me that they wouldn't eat at a place because they could see the back of it from their office window, and had a vivid collection of one summer day when they left a few cases of product - mayonnaise, eggs, and the like - setting out on the dock for several hours. Hearing that, I was a bit aghast: I had eaten at this place before, but never again after hearing that account.

The notion that "nobody ever sees it" is even less tenable when you consider the number of restaurants who offer overflow parking in the back. The (smaller number of) customers who can get a space in front may never see the back of the place, but the (larger number of) customers who have to park in the back will notice it, and walk right past it. Or consider a QSR with a drive-through window, where anyone who uses that service will see the back of the place, while sitting in their car and waiting in line, and who likely have the time to pay close attention to it.

The literal back of the house is an area that is likely to be sorely and intentionally neglected - hosing off the filth and putting a fresh coat of paint of things that were dismissed as invisible to the customer is likely regarded as a complete waste of budget - but it will matter, and it will become part of the perception of the brand.

Components of the non-customer experience

The "non-customer experience" pertains to people who are generally dismissed as unimportant by the business because they are not considered to be customers, and it's therefore reckoned that the experience they have interacting with a firm does not matter.

The most obvious subset of the "non-customer" group are the employees of a firm. Aside of the firm's treatment of its own people (a topic which can fill volumes), the impression employees have of a firm leaks out, and they have a great deal of influence with others who regard them as having the inside scoop on a business.

To go to the example of restaurants, it's not unusual to hear from an employee, or a "friend of a friend" of one, about the unsavory conditions in the areas of a restaurant that are off-limits to customers. And when word gets around that the people that work at a restaurant refuse to eat there, it's thoroughly damning to the impression others take.

Granted, food is a very sensitive topic, and people are particularly squeamish about it - so perhaps the example of a restaurant seems skewed. But the same applies to any retail operation: a clerk at a department store refuses to shop there, a salesman at an auto dealership chooses another brand of vehicle, etc. This is a clear vote of "no confidence" by the people who are most familiar with the brand, and whose job it is to deliver the customer experience, and a clear warning to anyone else.

To a lesser degree, the same can be said of other non-customers who are brought into the back of the house to do business with the firm: vendors who work on equipment, salesmen, job applicants, delivery persons, and anyone who passes through a door to a location customers are not permitted often see a very different image of the business than the carefully manicured front-of-house that customers see.

It's also worth noting that a person is not always a non-customer. They may be interacting with the firm in the role of an employee, partner, or vendor at the moment, but they might, and should, visit the establishment as a customer at a different time, unless something about their experience as a non-customer soured them on the brand.


This has gone on for longer than I intended, but I have the sense that it's barely scratched the surface of the components of a business that are very often ignored, to the detriment of customer experience and the perception of the brand.

And at the risk of making an overlong ramble even longer and more rambling, it stands to reason that the ideas that have been discussed in terms of a brick-and-mortar retail experience also apply to other kinds of customer experience of virtually any firm, and in virtually any channel.