John Goodman, Co-Founder & Vice Chairman of TARP Worldwide and Author

The Rich Niche Group blog interviews and enables you to hear directly from successful entrepreneurs, product managers, venture capitalists and others about the steps they took to grow their businesses/products and how they were able to create, penetrate, and/or dominate their niche.  This week we interview John Goodman.

Interviewee:  John Goodman, Vice Chairman and co-founder of TARP World­wide. 

Why Selected: As a pioneer in the science of quantifying, managing, and optimizing the customer experience, John (and his company TARP Worldwide) gives us the opportunity to glean a little bit of his knowledge on how a start-up, small business or any business can perfect their customer’s experience.  It is not often we have the chance to hear from someone running a company referred to by renowned author and consultant Tom Peters as “(TARP is) perhaps America’s premier customer service research firm.”  John is also an author, and in his new book Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty and Maximize Profits, he shows how successful companies use customer service as a “catalyst,…making the organization more proactive, accelerating responsiveness, and boosting its effectiveness.”  John also points out the financial impact good and/or bad/no customer service can have on an organization.

In the following interview, John takes us through how TARP got started and how the importance of moving customer service from a complaint department to one that can have a positive financial impact on your organization.  The key points you’ll take away include:

1.  The impact of great service on your financials is ten to twenty times the cost. 

2.  Many companies that hire a market research firm to conduct a study read their final reports then put them up on a shelf.  Find ways to make sure your clients use information and the advantages you bring to them.  This will lead to repeat business.

3.  When clients and prospects want to negotiate on price make sure you take out work/services/product accordingly.  Just reducing prices can lessen the perceived value of your offering. 

4.  In order to gain traction in a market dominated by one or few companies , look for ways you can out innovate them and find the one or two people at some of their clients who are the most unhappy and then deliver outstanding service to them.

What drove you to start TARP and how did you plan penetrating the market research niche clearly dominated by the big research houses? 

 TARP was started as a student group doing interesting client research – we were approached by someone in the government who wanted similar research done which then created positive word of mouth about our activities that got us a large contract from the White House Office of consumer Affairs (which no longer exists). We aimed to do government research on a sole source basis so we didn’t have to compete at the beginning. We had a unique enough product that we tended not to compete – we would only take contracts if we were the only company being considered.  Our advantage was that we were small enough that we could survive with low prices due to low overhead. We also had very motivated employees who could directly see the impact of their work on large companies.

 As a pioneer in the concept of tying customer’s dissatisfaction to company revenue, how was the concept initially received by clients and how did you overcome their hesitancy to try a new model?

 We didn’t stress the satisfaction aspects but rather the financial aspects – we said that the revenue implications of great service were ten to twenty times the cost implications. Further we quantified the word of mouth implications which were of great interest to CMOs. We aimed our pitch at the CFO and the CMO.

 What were the biggest obstacles you ran into at the different stages of TARP’s growth and how did you overcome them?

At the beginning it was awareness. We dealt with that by doing papers, publishing articles and giving workshops at conventions. The next challenge was scaling up and still retaining profitability. We made sure our clients actually used our findings rather than putting them on the shelf which often got us repeat engagements. Further, we carefully raised prices with happy clients and made sure we took work out if we had to lower the price to meet their available budget. Our third challenge was competition copying our methods, so we had to keep updating them and answering new questions. We got those enhancements and new questions by listening to our clients and understanding their current and emerging challenges. Obviously we made many mistakes along the way but executing each strategy even 50% gave us an advantage over most MR companies that are relatively static.

After a while TARP, became known as the Customer Experience Measurement niche leader. Once in that position, what did you set-up so that TARP stayed in that leadership position?  What were you doing different than others?

We set up a council of 8-10 clients who met twice a year to push us on the emerging issues. We also used what we learned in one industry and asked how it would apply in another. I have always said that what works for Motorola will often work for McDonalds.

In general, what piece of advice would you give to someone who is either starting a new company or getting ready to launch a new product which they are hoping to either create and/or penetrate a niche?

Get exposure and learn the market by giving speeches and writing articles – often with clients – don’t charge much but do small projects that allow you to learn from the customer and let the customer learn about you. Coauthoring articles with practitioners is great way to both learn and build relationships as well as getting exposure.

What are the key characteristics of companies that have been able to penetrate a niche, even niches dominated by another company?

Specialization with value added that takes the findings through to implementation. Most services have little impact – if you can push the client to use the results you go beyond the standard company that moves onto the next customer and seldom looks back.

When you think of companies that dominate a niche, who do you think of and what do you see them doing to keep that dominating spot?

They tend to be companies that created a new niche – Starbucks or even Chocolate Moose on L St downtown (Washington D.C.). The have wacky gifts and great service and have succeeded where most gift shops fold after a few years. Where else can you buy a Sigmund Freud action figure?

What are the biggest threats to losing that dominating position? I would assume these same threats would be the opportunities for those looking to penetrate a niche?

Getting comfortable and relatively successful. Stop getting critical feedback from customers. No news is not good news.

Finally, which companies come to mind who once held a niche dominating position and then lost them and why do you think they lost that position?

Companies that lost their position of dominance did so as a result of complacency, lack of consistent value and failure to continually innovate.