| Businesses large and small want happy customers, | | | | tremendous insight into why seemingly bad business |
| happy employees and happy vendors. Regardless of | | | | news results in good while seemingly good business |
| whether a multinational corporation or a "Mom & | | | | news can become a full fledged business disaster. To |
| Pop" store, enthusiastic supporters are a marketing | | | | calculate Tolerance, first calculate Hazard and Risk. |
| asset while a single outraged person is a liability. | | | | Hazard = Impact + Vulnerability |
| Studies have shown that the average "satisfied | | | | Risk = Probability x Hazard |
| customer" refers five people while the average | | | | = Probability x (Impact + Vulnerability) |
| "dissatisfied customer" finds 11 people to chase away. | | | | Having previously calculated Outrage and now having |
| Businesses and whole industries spend huge sums of | | | | quantitative Risk, Tolerance is simply calculated, |
| money meeting customer expectations and even | | | | noting that if Outrage is a negative number, the |
| larger sums of money raising those expectations | | | | positive number (absolute value) is used to calculate |
| further. It is a never ending chase and if you lose, | | | | Tolerance. |
| twice as many people will hear from the disappointed | | | | Tolerance = (Risk)|Outrage| |
| than ever heard from the content. | | | | Therefore Tolerance (anger or enthusiasm) equals |
| The key then is to manage the factors that | | | | Risk raised to the power of Outrage. |
| determine the satisfaction of customers, employees | | | | Choosing Epidemic Enthusiasm |
| and vendors with their experiences interacting with a | | | | A look at two classic historical business examples |
| business. | | | | demonstrates how accurate and powerful the PIVOT |
| Let Your World PIVOT Around Them! | | | | model is for influencing public and individual sentiment. |
| When people are born, they believe that they are | | | | McNeil Pharmaceuticals is the textbook example of |
| the center of the universe. As children grow and | | | | risk communications after the cyanide contamination |
| mature into adulthood, they slowly learn that the | | | | of their Tylenol product. Applying the PIVOT model, |
| world does not revolve around them. Businesses | | | | the probability of dying from a contaminated pill |
| seek as part of their customer service approach to | | | | 100% and the impact if such an event occurred and |
| make customers feel that again the world revolves | | | | the vulnerability were both high thus each scoring 3 |
| around them. Rather than reverting to childhood, a | | | | points. Calculating for Hazard and Risk yields a Hazard |
| business seeking enthusiastic supporters should make | | | | score of 6 with a Risk score of 6. The Expectation |
| the experience PIVOT around them. | | | | of the general public was also high (3 points) as there |
| The PIVOT model provides a simple mathematical | | | | had never before been a significant problem with a |
| approach to understanding and even predicting the | | | | McNeil product. |
| societal and individual response to an experience. The | | | | When the company responded by publicly |
| PIVOT model is another lesson learned from the | | | | withdrawing the product from the market and |
| disaster field office. PIVOT stands for: | | | | pledging to not return to store shelves until safety |
| P = Probability | | | | could be assured, Satisfaction was moderate (2 |
| I = Impact | | | | points). But, when McNeil made good on their |
| V = Vulnerability | | | | promises, Satisfaction was high (3 points). Outrage, |
| O = Outrage | | | | which could have crippled the company's return to |
| T = Tolerance | | | | the marketplace, was effectively reduced to zero. |
| Each component of the PIVOT model places a | | | | When Outrage is zero (Expectation = Satisfaction), |
| numerical value on the factors that determine the | | | | the Tolerance score always equal to 1. |
| response to the experience a business provides. It is | | | | (Mathematically, any number raised to the power of |
| a predictor of "Customer Satisfaction." To apply the | | | | zero equals 1). |
| PIVOT model each component must be understood. | | | | The textbook contrast to McNeil / Tylenol is New |
| Probability | | | | Coke / Classic Coke. The Coca-Cola Company |
| Probability = The likelihood of an experience occurring | | | | dominated the cola market for decades when |
| (0% to 100%) | | | | market research began to show that Pepsi cola was |
| Drawn from traditional risk management and actuarial | | | | eroding a small percentage of Coke's market share. |
| sciences, the probability of an experience or event | | | | In a carefully researched and planned effort to regain |
| occurring is a value based on the historical frequency | | | | that small market share loss, the Coca-Cola Company |
| of an experience or event occurring. Most simply, | | | | reformulated Coca-Cola. Again applying the PIVOT |
| probability is the number of times an experience or | | | | model, the probability of bringing the new product to |
| event occurs divided by the total number of possible | | | | market was 100%, but market research and focus |
| experience and events. | | | | groups had found that the Impact would be minimal |
| Impact | | | | (1 point) although the Vulnerability to the Impact |
| Impact = The impact of an experience (positive or | | | | moderate (2 points). Calculating or Hazard and Risk |
| negative) on a scale 0 to 3 | | | | yields a Hazard score of 3 and a Risk score of 3. |
| (0 = No Impact; 1 = Minimal Impact; 2 = Moderate | | | | When the new formulation arrived on store shelves, |
| Impact; 3 = Significant Impact) | | | | Expectation was high (3 points), but Satisfaction with |
| It is often said that no event or experience is | | | | the new formula was nonexistent (0 points). The |
| without impact, but assigning a value to the degree | | | | Tolerance score of 27 predicts what followed. |
| of impact is often complicated. The PIVOT model | | | | Consumers began to hoard "old Coke" and picket |
| deals with response to an experience or event and is | | | | against "New Coke." Re-examining the anticipated |
| inherently subjective, thus Impact is a subjective | | | | Impact and Vulnerability shows that loyalty to the |
| measure based on past occurrences of the | | | | taste of the "old Coke" formula meant that the both |
| experience or event. | | | | Impact and Vulnerability were actually each 3 points, |
| Vulnerability | | | | thus Hazard was 6, Risk was 6 and Tolerance was |
| Vulnerability = The susceptibility to the impact on a | | | | 216 (highest possible score). Despite the |
| scale 0 to 3 | | | | reintroduction of "old Coke" as "Classic Coke," it was |
| (0 = None; 1 = Minimal; 2 = Moderate; 3 = Significant) | | | | years before the Satisfaction score rose and the |
| Like Impact, Vulnerability is a historically based, | | | | Tolerance score exponentially fell. |
| subjective measure of the susceptibility to the | | | | When Outrage is a positive number (Expectation |
| Impact. Obviously, if something has occurred | | | | > Satisfaction), the Tolerance score is a reflection |
| previously but had not Impact, the Vulnerability is | | | | of the Anger (negative image) felt towards the |
| zero; however, when an Impact has occurred in the | | | | business. |
| past, people have an inherent and subjective sense | | | | But this is not the end of the New Coke / Classic |
| of Vulnerability which can be subjectively measured. | | | | Coke story. An unintended, but not unexpected |
| Outrage | | | | beneficiary of the Coca-Cola Company's misstep was |
| Outrage = The perception of the experience on a | | | | Pepsi cola. Regardless of the success or failure of the |
| scale -3 to 3 | | | | new Coca-Cola formulation, the probability of the |
| Outrage was first identified as a component of risk | | | | product making to store shelves was 100%. Had |
| communications by Paul Sandman, PhD. In his model, | | | | Coca-Cola's market research been correct, the |
| Sandman identified two factors that influenced and | | | | Impact on Pepsi cola would have been high (3 points) |
| predicted the need for risk communications in the | | | | and as the number two product in the marketplace, |
| event of a business debacle, Hazard & Outrage. | | | | Pepsi's vulnerability was also high (3 points). Pepsi cola |
| Sandman found that while a high perceived Hazard | | | | had a lot riding on Coke's reformulation with a Hazard |
| necessitates risk communication, low Outrage | | | | score of 6 and a Risk score of 6. |
| mitigated that need while high Outrage necessitated | | | | When "New Coke" disappointed Coke consumers, |
| risk communication even with a low perceived Hazard. | | | | Pepsi consumers were heartened by the fact that |
| Sandman never quantitated the level of Outrage, but | | | | Pepsi was NOT being reformulated. The Expectation |
| in the PIVOT model, Outrage is a calculated value. | | | | for a change in flavor was nonexistent (0 points) |
| Calculation of Outrage requires an understanding of | | | | while Satisfaction remained high (3 points). For Pepsi |
| two additional values, Expectation and Satisfaction. | | | | cola, the Outrage score was negative (-3) yielding a |
| Expectation = Perception of what reality SHOULD BE | | | | Tolerance score of 216, but unlike Coca-Cola |
| on a scale 0 to 3 | | | | customers, Pepsi customers were predictably |
| (0 = None; 1 = Minimal; 2 = Moderate; 3 = High) | | | | enthusiastic about their preferred product. Same |
| Satisfaction = Perception of what reality ACTUALLY | | | | event, same reality, different outcome based on |
| IS on a scale 0 to 3 | | | | perspective and expectation. |
| (0 = None; 1 = Minimal; 2 = Moderate; 3 = High) | | | | When Outrage is a negative number (Satisfaction |
| Understanding Expectation and Satisfaction, Outrage | | | | > Expectation), the Tolerance score is a reflection |
| can be calculated: | | | | of the Enthusiasm (positive image) felt towards the |
| Outrage = Expectation - Satisfaction | | | | business. |
| The interesting result of calculating Outrage is the | | | | Manage What is Manageable |
| insight this provides. Since Expectation is the | | | | Ultimately, Probability, Impact, Vulnerability, Perception |
| perception of what reality should be and Satisfaction | | | | and Reality cannot be changed. Of all the factors that |
| is the perception of what reality actually is, and given | | | | determine public and individual sentiment and predict |
| that a business cannot change people's perception, | | | | anger verses enthusiasm, Expectation is the only |
| Outrage is actually the difference between | | | | factor that can be changed before and to a lesser |
| Expectation and REALITY. | | | | degree during an event or experience. Thus if |
| Tolerance | | | | Expectation can be preemptively made to matched |
| Tolerance = The sentiment regarding the experience | | | | reality, Outrage is changed. Through expectation |
| or event. | | | | management, Anger is downgraded to Concern; |
| Tolerance is the measure degree of Enthusiasm or | | | | Concern is converted to Opportunity; and |
| Anger in response to an experience or event and like | | | | Opportunity is upgraded to Enthusiasm. |
| the calculation of Outrage, calculating Tolerance gives | | | | |