The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Is 'Expectation Effect'?

A customer's perception of quality relies on expectations and performance. After a purchase is made, the performance of the offering must surpass the expectations for the customer to be satisfied.

If performance is better than expectations, the perception of the offering will be high. Do whatever you can to provide something that unexpectedly delights your customers.

Josh Kaufman Explains The 'Expectation Effect'

Zappos has perfected the art of selling shoes online.

Selling shoes over the Internet is a tough business — customers can’t try them on, and no one wants to be stuck with shoes they don’t like and will never wear. To compensate, Zappos applies classic Risk Reversal to every order—they offer free shipping and free no-questions-asked returns if you don’t like the products you order. Those two policies eliminate the risk of making a bad purchase, so customers are more willing to try them out.

That’s not, however, the reason Zappos has developed such a solid Reputation in this market. The secret lies in an unexpected benefit the company doesn’t advertise.

When you order from Zappos, it’s very likely that you’ll receive a pleasant surprise: your shoes will arrive the next day, several days ahead of schedule.

Zappos could easily advertise “free expedited shipping,” but they don’t — the surprise is far more valuable.

A customer’s perception of quality relies on two criteria: expectations and performance. You can characterize this relationship in the form of a quasi-equation, which I call the Expectation Effect:

Quality = Performance - Expectations

Customer expectations have to be high enough for a customer to purchase from you in the first place. After the purchase is made, however, the performance of the offering must surpass the customer’s expectations in order for them to be satisfied.

If performance is better than expectations, the customer’s perception of quality will be high. If performance is lower than expectations, the perception of quality will be low—no matter how good the offer is in absolute terms.

Apple’s first-generation iPhone was a massive success—customers expected something good, and they received a device that delivered benefits beyond their expectations. Apple’s second-generation iPhone, the 3G, wasn’t as well-received — pre-launch expectations were so high that there was almost no way the company could surpass them, and a few glitches in the roll-out process quickly took center stage.

The iPhone 3G was a better phone in the absolute—it was faster, had several new features, more memory, and a lower price. To many customers, however, it didn’t feel better — Apple failed to deliver on their expectations, and the company’s reputation suffered.

The best way to consistently surpass expectations is to give your customers an unexpected bonus in addition to the value they expect. The purpose of the Value-Delivery process is to ensure your customers are happy and satisfied, and the best way to ensure customer satisfaction is to at least meets the customer’s expectations, surpassing them whenever you possibly can.

Do whatever you can do to provide something that unexpectedly delights your customers. Zappos’ free upgraded shipping is more valuable as a surprise — if it were part of the deal, it would lose its emotional punch.

When you perform well above your customers' expectations, they’ll be satisfied with the experience.

Questions About The 'Expectation Effect'


"Never promise more than you can perform."

Publilius Syrus, first-century B.C. Syrian aphorist


From Chapter 4:

Value Delivery


https://personalmba.com/expectation-effect/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

More about Josh Kaufman →