Last week, I was blessed to take my family on a  Disney cruise. In addition to sun and sea, this gave me seven days to observe one of the best-run companies in the world, a company that puts customer experience at the top of every employee's priority list.

So what makes Disney so strong, with huge customer satisfaction and low churn? Why do waiters on a Disney cruise ship work so hard to make customers happy? Among the lessons I learned while watching cartoons: sustainable businesses prioritize customer retention over customer acquisition. That's what Disney does so well. 

1. Measure what matters.

Well-known management consultant Peter Drucker gave us the quote "what gets measured, gets managed," which is often interpreted to mean "measure what matters."  And what matters to Disney is exceeding customer expectations.

According to Be Our Guest: Perfecting the Art of Customer Servicethe cornerstone of the Disney approach is "exceeding expectations rather than simply satisfying them." At the Disney Institute (yes, that is a real thing), staff are indoctrinated with a philosophy that empowers them. It reads: "Excellent service does not simply come from a friendly transaction or helpful technology--it is the result of truly understanding your customer's expectations and putting the right guidelines and service standards in place to exceed them." 

This approach -- measuring customer satisfaction and responding accordingly -- results in more than 70 percent of first-time Disney visitors becoming return customers. But how does one take that top-line foundational principle and get more than 60,000 employees to adopt and deploy it daily? Walt Disney, like many influential entrepreneurs, implemented SMART goals.

2. Smart companies need SMART goals.

To follow the SMART method of goal setting, make sure your goals are:

1. Specific: Each goal must be clearly defined.
2. Measurable: Identify milestones and track your progress so you will know when you've succeeded. Measure your success in an objective way.
3. Attainable: Your goal has to be realistic and achievable; otherwise you'll be discouraged from the start.
4. Relevant: Your goal must fit with your business model.
5. Time-based: You need a defined and specific period of time to achieve your goal.



A good SMART goal might be, "By January 1 of the new year, I will have $1 million in the bank." A poor version of this goal would be, "I want to be rich." Step one is to align each employee's micro goals with the firm's macro principles (to exceed customer expectations). 

3. Plug the holes, then fill the bucket.

Now that you are measuring what matters using SMART goals, the next step is to make sure you have a seamless customer life cycle (attracting, selling, onboarding, retaining, etc.). Many firms get this wrong by focusing on acquisition instead of retention. 

Frank Sonnenberg is an award-winning author who is quoted as saying, "Plug the holes before filling the bucket." In this metaphor, the bucket is the customer life cycle or sales funnel. The holes represent areas where customers slip through and churn. You will get this wrong if you invest huge dollars in attracting new customers, but then spend little to support and retain them. 

Here are three ways that you can follow Disney's example to improve customer support:

1. Truly listen. Disney staff maintain eye contact with customers requesting support. They never interrupt. Only once the customer is done speaking do they respond -- first by acknowledging the issue and how it makes the customer feel, then by making suggestions.

2. Be responsive. Disney staff drop what they are doing and focus on solving the customers' problems. If that takes time, they check in with the customers, updating them regularly on the progress of the solution.

3. Empower staff. Disney appears to give their team a lot of discretion and latitude in solving customer problems. When my 4-year-old son, Edison, couldn't find a item on the dinner menu he wanted, our waiter went next door and got him a cheeseburger...from a different restaurant.

Disney gets customer service right, which is why lots of people on my ship were booking their next cruise before they even left the ship. Others in the same industry (and many other industries) don't. So what can Disney teach all entrepreneurs? Mostly that the way to increase profit is to maximize retention rates; the way to retain customers is through customer service that exceeds expectations; and to exceed expectations, your company needs SMART goals that reinforce its foundational principles. 

So what are your firm's SMART goals?  Are you spending as much on customer retention as you are on customer acquisition? If not, you need to be more like the Mouse House.

Published on: Mar 6, 2018