This Month’s Article – Why Killer Service is a Bottom Line Changer.
There is only one Boss- the Customer. And he can fire everyone else in the company, from the chairman down – simply by spending his money somewhere else. Remember – Your employer does not pay your wages…your customers do!
And the customer doesn’t care about you. They care about them. Tell them something interesting and treat them the way they expect to be treated or they will go away.
In 1993, Espirit Founder, John Bell, said:
“Today, service is not an issue, without great service you are out of business.”
There is an increasing emphasis on providing good service, whether in restaurants, retail stores or elsewhere, mainly because today’s consumers will accept nothing less. But giving “good” service is like giving “value. You will never develop heart share by giving people what they are already entitled to. Your customer care must be over and above their expectations.
And the customers’ expectations are increasing. Despite the huge emphasis on customer service over the past 10 years, the Harvard Business Review shows that customer satisfaction rates in the U.S. are at an all time low and complaints and boycotts are rapidly rising. Why? Because customer expectations have increased and customers are harder to satisfy. Customer expectations have doubled in two years. Research suggests that more than 60% of service is not only not awesome it is actually below acceptable!
In most industries, people want to deal with people. Many companies have made the mistake of taking people out of the business process with answering machines, multiple prompts, on-line generic answers to questions and so on.
One of the primary reasons for the extremely high failure rate of the dot com business is the lack of customer service and human interaction. We’ll discuss this later on this tape.
Why Good Service is Good Business
Evidence is strong that high customer satisfaction provides high loyalty, staff satisfaction, strong growth and positive financial results. Research at Service Intelligence in the US shows customer service to be 4 times more important than price.
Despite the fact that 92% of CEO’s believe customer service is critical to differentiate their key products and services, 70% report difficulty in aligning their business around customers.
Let me ask you a couple of questions:
- Have you been delighted, excited or overwhelmed by ‘a great customer service experience in the last 12 months?
- Has your company given a customer ‘a great customer service experience’ lately?
Unfortunately, most people answer no to both questions. Do you do any better? Ask yourself these questions:
- Can every person in your company explain how they add value to the customer?
- Is your customer focus only applicable to sales and service people?
- Are your internal values the same as your external values?
- Do your performance measures encourage great service and long-term relationships?
- Do you regard your people as a key source of differentiation from your competitors?
If you didn’t answer yes to all 5 questions, you also have some work to do.
Too many businesses have been slow to realize that it is not their product, brand awareness, their advertising or the price of their product or service that will drive sales. Everyone else can offer each of those also. People appreciate the quality of the relationship with you long after they have forgotten the price and the product.
In the US, 21% of customers leave banks because of poor service, nearly double the number that leave because of interest rates, 27% of women don’t return to a hair salon because of bad service, yet only 13% leave because of a bad haircut and while 67% of patrons don’t return to a restaurant because of bad service, only 18% don’t return because of the poor quality food. While 13% of people consider price to be the most important issue in most purchases, 87% don’t. The driver of 4 out of every 5 sales today is not advertising, price or product, it is word of mouth. Word of mouth occurs as a result of the equity you have built up with the customer.
The successful on-line businesses have focused on highly personalized ME mail and not email and introduced human communication to their sites by combining with traditional call centers like the rapid growth companies Netdialog and Webline.
One of the most successful on-line retailers is Lands End with Lands End Live which makes Internet a personal experience. eService is much more powerful when it allows customers to leave the electronic world and reenter the human world.
Research shows that once people get to the third prompt in a telephone or internet transaction, over 58% of them will not return to that business in the future.
An Achieve Global Study showed that reintroducing people into on-line communication through call centers increases customer satisfaction by 59% and improves customer loyalty by 44%.
Today, Internet businesses must personalize and make a connection with customers with streaming media. You can use streaming media to personally guide customers through your site. You can facilitate orders while entertaining them.
With streaming media, customers can get to know the people behind the counter; you can introduce them to the service manager. You can tell people about yourself and your business and explain things like, Checkout, Store Directory and Return Policy, you can provide Instructional Video and audio for example on things like assembly, installation and safety features.
A powerful example of how human interaction improves traditional business is with service contracts for appliances etc. Renewal rates for maintenance contracts are much lower if the customer has never called for support. Simply by providing more phone contact during the course of the contract, renewal rates increase.
In other words, whether you are in a traditional or on-line business your future survival and success depends entirely on the rapport you build with your customers, the way you treat them in terms of assistance, service, provision of information, ease of buying, your corporate citizenship, excellent follow up, rapid response and solution to problems.
Most companies are still primarily concerned with the product and price and consequently haven’t focused sufficiently on ways to dramatically improve their level of service. Why is it so difficult to give good service? When I am speaking to corporations about this they always concur that service is really critical to success. Yet when I ask how many have a budget for staff training in customer service or any other form of added value, the answer is extremely few.
The reality is that in today’s highly competitive market the customer service playing field is leveling off and anyone not receiving the highest level of quality and service will buy their product or obtain their service elsewhere. Today we need a pro-active dedicated approach to attracting customers.
What is it that customers want?
The CRM Research conducted by Zeithaml, Berry and Parasuraman showed that the most important things to customers are:
- Reliability – delivery of promises
- Responsiveness – willingness to help, time on hold, speed of response.
- Assurance – inspiring trust & confidence, technical knowledge, communication skill.
- Empathy – treating customers as individuals.
- Tangibles – service, price, delivery etc.
Awesome customer service is not only the key to word of mouth drawing 4 out of 5 new customers, it is critical to retaining existing clients.
Why is it so important to keep existing customers?
- It costs 5 times more to get a new customer than retain an existing one.
- Do you have a budget in time or money for existing clients or is it all in advertising for new clients?
- Existing customers who use your services or product are quick to spot problems or to suggest beneficial changes.
- Existing customers are easier to attract back, are easier to satisfy and are walking advertisements for your business.
- Loyal customers will pay higher prices, therefore producing higher profitability.
- Loyal, repeat customers reduce the marketing and solicitation cost per customer.
You need to also consider Future Customer Value.
The average customer spend over the next decade in a supermarket is more than $50,000, on Motor Vehicles is $120,000, in restaurants $25,000, on clothing $9000.
Since each one of your customers will tell up to 10 others about your fantastic service, then that customer is worth 10 times the amount they directly spend with you. In a dry cleaner for example, a customer who spends $30.00 per week and is an advocate is worth $15,000 to your business.
Do you really want to argue with them over whether a lost shirt was worth $50.00 or $75.00?
Providing awesome customer service is also great business. The PIMS study of 3000 companies showed custom service leaders in any category can charge 9%-13% more for the same product or service. Perceived service leaders also grow twice as fast as their competition and improve market share by up to 6% per annum compared with a 2% loss for poor performance businesses with a return on sales 12% higher than the average.
Business today cannot underestimate the significance of loyalty! First Direct in the United Kingdom set up a 24 hour banking system which focused on precisely what customers want, speed, convenience, great service and value for money. They have the highest rate of customer satisfaction in the British Financial Services Industry with 38% of new customers being referred from existing customers. It is extremely difficult to attack their customer base.
Let me give you a couple of examples that happened to me recently:
I phoned a motor dealership to enquire about leasing a new vehicle for one of our team. I was greeted by a recorded message that said, “thank you for calling, currently all our operators are busy but we appreciate your business, please hold for a moment, your call is important to us.”
Sure! The next dealership got my business.
One of the most competitive businesses in the world right now is telecommunications. We had a problem with our office phones so we placed several calls to the company and did not receive a call back. Finally we got onto an operator who got really aggressive and said “How am I supposed to know what your problem is, I’m 1500 miles away.” Then we got disconnected.
I have since found out that there is pressure on call centers to keep to a statistical average time for dealing with enquiries. Consequently, up to 20% of calls get transferred and either cut off or transferred back to the end of the line so the averages can be met.
There are many companies, who fully understand the importance of providing the customer great service. For example,
James Whenk, President of Jiffy Lube, created a Vice President of Customers.” “We’re not going to build this company by servicing cars, we’re going to build it by servicing customers”.
Snap-On Tools became a mighty brand by giving extraordinary service.
Snap-On sells to 1.25 million cars, truck, mechanics worldwide.
In this technology age of on-line servicing, Snap-On has 6,000 dealers who visit each one of their 300 customers each every week. Each van carries $100,000 worth of merchandise, from 75-cent spark plugs to a $40,000 diagnostic system.
Snap-On charges premium prices, 10% more than competitors, never discounts, and have never deviated from their premium brand.
Most of their mechanic clients spend $30, 000 on Snap-On tools in their career which the dealers encourage customers to pay off bit by bit…with no plan…. and no interest!
Snap-On spends no money on advertising.
The Snap-On vehicles are 90% computerized and half the product it sells has a hardware component! To address the new technology, Snap-On put 300 training vehicles on the road which visit customer sites at the request of dealers. Dealers check their laptops at each customer to see what products they already have and what they may have expressed interest in on the last visit.
With a high focus on exceptional customer service, Snap-On generates some $2 billion a year in sales, maintains a 60% market share and 10% net profit.
Another example is Quick Park Inc., who operate a number of parking stations in the US. They took into account complaints that leaving the parking station took too much time and acted on customer’s suggestions. Listening to customers not only satisfied other customers but saved Quick Park over $500.000 per annum.
How to Develop Great Customer Service
There are two aspects to customer care, one is providing Awesome service and the second is to ‘add value’ to every interaction with the customer. Added value is the subject of a separate tape in this series.
The key to the provision of Killer service lies in the quality of your companies’ people management. A recent 10-year study by Sheffield University in England demonstrated that people management is 3 times as important as research and development in improving productivity and profitability and six times more important than business strategy. For successful management, a high EQ, a measure of self-awareness, self-control, motivational ability, empathy and social skills was more than twice as important as intellectual skills.
The first step in developing an excellent customer service culture is to hire the right people.
One of my favorite sayings is that “ it is easier to change people, than it is to change people.” Don’t employ your team on hard skills, qualifications and experience; hire them for their smile, customer skills and attitude. You can teach technical skills. If you have to teach people to smile and be nice to internal and external customers, you have chosen the wrong people. Hire people who like people, people who are empathetic. The best customer service is delivered by people who see things as the customer sees it, not how the company sees it.
Service champions are as important with internal customers as they are with external ones.
Coupled with a good environment and a shared vision, great internal customer relations increase enthusiasm and morale, which in turn influences external customers.
If any of your personnel do not have a great service attitude, replace them before the cancer spreads.
Many businesses believe the only people that need to have great customer skills are those on the front line. However, take our business as an example,
Our clients not only speak with me, they also speak with a number of other people in the company throughout the course of a project. Members of our team, irrespective of their role, must project the same enthusiasm for the client that I do. And they do, because that is part of our company culture. If you look at your own business, you may be surprised at how many of your team come in contact with the customer. Do they all share your customer values? If not, your business is at risk.
In the past five years a large number of companies have restructured and the jobs that have been lost are those in middle management. One of the major reasons for this change in the management structure is the realization that more attention must be paid to the customer. Everything begins and ends with the customer, not with management. Customers must be an intrinsic focus of the company. Every action must add value to the customer. Everyone must focus on customer benefits. Work with customers. Empower staff to address customer issues. It doesn’t matter whether they are in research and development, in sales, a manager, marketer, receptionist or delivery driver.
There are two types of customers in any organization, internal and external.
Lets look at improving relations with internal customers first.
There is a direct correlation between the environment in which the staff member operates and the service that is given to fellow internal team members or the external customer.
To maximize the level of service our team members provide, we must do three things:
Firstly we must create an environment that encourages high morale and enthusiasm.
This relates both to the corporate culture and the physical environment. With regard to corporate culture, there are two sides of this to take into account. There is:
a) Hard – this is the product, service, price etc.
b) Soft – the emotional experience, customer relationships, ambiance etc.
Both must be managed and integrated.
When it comes to the physical environment, many companies have been very progressive.
British Airways has a new premises which is a glass structure built around a cobblestone street complete with coffee shops, stereos, jukeboxes, beer gardens and barbeque areas.
In our office building in Los Angeles there are companies which have included ‘recreation space’ for employees with music and pool rooms and an increasing number of companies with 100 plus employees are installing ‘Starbucks’ style coffee shops dispensing free lattes and cappuccinos during the day and converting to an after work bar in the evening.
Secondly, we must involve our employees in the company and empower them to make decisions. We must ensure that all members of our team understand the vision and the direction of the company. We must also share information, not just provide it on a ‘need to know basis’. Employees who share vision and feel like stakeholders will care more, be more enthusiastic and will give more to customers.
It is the employees’ attitude to the job that makes it interesting, not the job itself. I recall the story about 2 bricklayers working on St. Paul’s Cathedral in London. When asked what they did, one said he was a bricklayer. The other replied that he was helping Sir Christopher Wren build a great Cathedral.
When President Clinton was touring NASA he stopped to talk to a janitor. The janitor told the President he was proud to be part of the team putting men in space.
People with this type of attitude go the extra mile!
Listening to your employees and empowering them by giving them greater direction and autonomy elevates self-esteem and produces excellent results. Empower the person who is best able to make the decision on the customers needs. If the front line personnel constantly face criticism for things beyond their control they get disillusioned. This leads to apathy, increased turnover and cost.
Victa lawn mowers had 3 quality inspectors but still had severe quality control problems. The 3 inspectors sacked and the 30 existing employees were empowered to inspect the work up to their point in the process. This resulted in significant increases in quality, reduction of rejects and decreased absenteeism.
You can also improve your employees self esteem by doing little things like calling staff ‘Customer Consultants” rather than “shop assistants”.
Thirdly, we must reward members of our team as meaningful contributors, not just doers. We need to link performance management and rewards to learning, innovation, business process, customer service and satisfaction and financial performance.
Sears Department Store introduced a cultural change into their company with employee bonuses and incentives. One third of the bonus was based on the employee attitude, 1/3 from customer measurements and 1/3 from traditional financial measures. Other companies provide incentives for a host of initiatives including customer service seminars, or providing innovative ideas.
It is also important to reward staff for their effort at hectic times by providing additional staff discounts, gift vouchers or perhaps movie tickets.
It is important to realize that developing great customer service in your organization is not as simple as holding a seminar and saying this is how it is done. Before you can begin training there must be a culture change. Training without culture change and a genuine example set by the executives will be met with cynicism and distrust.
Creating a set of customer service rules for your organization is nowhere near as effective as leading by example. The service ethic needs to be instilled from senior management down. It must be standardized into the culture and these standards must be non negotiable. We must use positive and empowering language. We must avoid negatives. This establishes a set of core values in the business that benchmarks everyone’s performance. These corporate core values bring out the best in the employees’ personal core values. You need to change a work ethic into a cause! When staff admire and respect management they will emulate them.
Employers need to set an example by doing whatever needs to be done. You can’t lead by command or a thick rulebook. Effective leadership is only by example and by building core values. Where these values mirror that of the employees, you will enjoy success.
Empowerment of employees involves risk. Any business needs need managers who don’t feel threatened by a loss of control. The more their talents come to the fore and the more empowerment the individuals feel, the more accumulative power goes back to the leader who gets the glory of a well motivated team.
You must define where the company is going, why and what you are doing to get there.
One of the reasons people like Richard Branson are so admired by their staff is because he will work as a cabin steward or as a baggage handler. He listens to his employees and understands their roles and challenges.
Don Cathy, the CEO of Chick-Fil-A restaurants picks up new personnel at 8:00 am. for a full day of driving around explaining the history of the company, pointing out the first store etc. At the end of the day he takes them to his home for dinner. He employs 80 new people each year!
It is not about rote learning- it is not as simple as step 1. Smile, Step 2. Would you like fries with that?
When we look at our employees SEPA level, a measure of how they feel about themselves, their self-esteem and personal attitude it is often very low. It is reflected in the ‘poor me’ syndrome, it is called learned helplessness! The American psychologist Dr. Martin Sellinghan, in his book “Learned Optimism” says 75% of the people in the world are graduates of ‘learned helplessness’ and pessimism. You need to consistently treat staff how you want them to treat customers.
The problem is that most people who go to a training session get hyped then immediately revert back to their old ways. To be effective we must continue training and lead by example.
People are not born optimistic or pessimistic, they learn it over a long period of time. It is a habit that must be reprogrammed. It can take years to change a culture.
How Do We Know What the Customer Really Wants and Expects.
Great customer service is not something that we act…we have to internalize, live it, believe it and deliver it! We must really believe it and unconditionally deliver it.
To provide great customer service we need to constantly exceed customer’s expectations.
So how do we know what the customer wants? Through research.
In a competitive environment, high quality customer research is essential to get the competitive edge.
Your research needs to be very thorough.
Firstly, establish your research objectives. Identify needs, expectations and perceptions of service and customers motivators and inhibitors.
It is important to note that the key to delivering customer service understands what the customer perceives as an acceptable level of service and what they perceive as value.
Quite often, we find that customers perceive something that you regard as excellent service or added value as standard. At the same time you may be supplying something that your customers don’t need, expect or appreciate and an alternative would be more effective. Don’t waste time or money on what the customer sees as unnecessary.
Understanding customer perceptions can also be a great advantage to a business. There is a famous story about Stu Leonard who owns the Stu Leonard supermarket chain in the United States. Stu was always very close to his customers and his staff and held weekly breakfast meetings with randomly selected customers. At one of these breakfasts, one woman said the fish would be better if it was fresh. It was actually delivered fresh everyday but they cut it, packed it in wrapped styrofoam boxes. As an experiment they put 50% of the fish in the styrofoam packs and 50% was laid out on beds of ice. Sales of the fish laid out on the ice went through the roof. So for Stu, listening to a totally incorrect perception by one customer more than doubled their sales of fresh fish.
You need to conduct multi point research. Research all of the contact points with your customers. For example, if looking at your delivery performance, question the people taking the orders, the people making the deliveries and also talk to customers and examine customer complaints.
Again taking deliveries as the subject, just a few years ago people were happy to know what day the product was being delivered. Now they want to know a specific time on a day that is convenient to them.
You must obtain independent feedback, things like 1-800 numbers, focus groups, mystery shoppers or Customer Service surveys. What is important is not what you think or what I think, its what the customer thinks. Ask yourself: “are we meeting customer expectations or are we missing the mark?”
The feedback provides a link between your actions and the customer’s reaction to those actions.
As part of your research, you should also conduct a customer audit.
For example, in retail you would review staff performance, store operation, housekeeping and customer service.
With staff, you might review their knowledge, attitude, uniform, phone service, how they greet customers and their communication ability.
You would review the store. Look at the appearance, temperature, ambiance, procedures, service etc.
Housekeeping would include the sales area, windows, lights, dressing rooms, rest rooms etc.
The customer service audit includes every element of your customer contact including gift certificates, wrapping, delivery, information provision, VIP service, parking, water, coffee, phones, baby facilities, children’s services, waiting area, even coffee table and magazines.
When the audit of your business is concluded you should do a similar audit of your competitors.
Once we get the information, what do we do with it?
It is not information to attack the front line staff with. They are simply reflecting the company culture and the views of the management. You must begin with discussions with everyone involved in the process.
You collectively need to determine what was learned from the research, and how you can improve.
For example, American Express measures processing time for applicant’s billings and customer enquiries. Surveys evaluate how effectively specific providers deliver service to specific customers. Customers provide data on competence, courtesy and the knowledge of the companies representatives.
The more sophisticated your research, the more effective your reaction to the results will be.
The aim is not just to produce satisfied customers. Research shows that 62% of all customers who are satisfied with a product or service do not repurchase from their original source.
Today you cannot just satisfy customers if you want to survive in this increasingly competitive environment. You have to knock their socks off!
So why do satisfied customers not come back?
Customer service is the most measured index in business after net profit but more often than not the measurements are insufficient.
We need to measure more than customer satisfaction. We need to assess the customers experience in terms of emotions such as love, anger, excitement and joy. ‘Dissatisfied customer’ is a narrow definition, the customer may have thought “I wanted to tell them off, throw the set out the window, how dare they treat me like that.” This is more than a dissatisfied customer and needs to be treated differently. Often we want more than to be satisfied, we want to be exhilarated. If the experience is not good, the let down is greater!
Many stores promote that they have enhanced the customer’s experience. For example, immediate service, no waiting, so when things go wrong, it is not just dissatisfaction, it may be anger, disappointment, frustration or maybe disgust.
Therefore, ascertaining whether a customer is satisfied or not is a very poor indicator of loyalty or customer retention.
The more intense the customers experience either good or bad, the more likely they are to recall and recount it for a long time!
The top 6 emotions generated by customer service are:
1) Anger (30%)
2) Happy (21%)
3) Frustrated (21%)
4) Annoyed (13%)
5) Disappointed (10%)
6) Satisfied (10%)
Dissatisfaction is used by only 1% of people to describe their feelings.
It is interesting that of the 6 emotions most frequently used to describe customer service, four of the six, accounting for 74% of all responses, are negative.
What we must realize that ‘Happy’ is a memorable response, ‘Satisfied’ is not!
Complaints are an Asset, not a Liability
If customer service on the average is well below the awesome level required to maximize success and customer satisfaction rates are at an all time low, why aren’t more companies acting on the complaints they receive and really lifting their game?
As strange as it seems, many companies do not get many complaints, however that does not mean their customers or potential customers are satisfied.
Often the number of complaints is more a measure of how easy it is to make complaints, and how welcome complaints are, than a measure of customer satisfaction. Low complaint numbers does not mean high satisfaction. The Harvard Business Review study concludes that one of the surest signs of deteriorating customer relations is a lack of complaints.
A recent Harper Magazine survey showed that only 4% of customers with a problem complain.
The 96%, who don’t complain, simply don’t come back!
So why don’t the 96% of unhappy customers complain?
- Waste of time, believe nothing will change.
- Fear of retaliation
Even if you make it easy most people won’t complain. Often we don’t complain because we worry what might happen. Think about how we refer to people who complain, we call them fussy, whiners, hard to please, pain in the butt, unappreciative and so on.
Many people perceive a complaint as an ‘attack’ and respond accordingly. It is natural.
Surprisingly, even with a serious problem with a product or service, only 1 in 4 will complain to the business.
However, while people don’t complain to the business, they tell other people or worse, they post it on the Internet. Harpers Magazine showed that each unhappy customer tells 22 people. Therefore 1 complaint represents 600 people told negative reports about your business. More importantly, the story gets constantly exaggerated.
Over 70% of Fortune 500 companies have a negative site set up by a disgruntled customer and www.complaints.com is a constantly growing site.
Where customer service training is valuable for your staff is in the area of handling complaints and the various emotions a customer might express.
There is only one way to address a personal complaint.
-Use the person’s name
-Say thank you for bringing the problem to your attention
-Explain why you appreciate the advice
-Apologize for the problem
-Undertake to do something about it immediately
-Obtain all the information; make sure you understand the problem
-Find out what the customer wants
-Create a positive solution, overcompensate
-Check the customers satisfaction with the solution
Then take steps to prevent it occurring again.
When someone complains about your product or service, all is not lost.
Seventy (70%) percent of complaining customers will buy from you again if you resolve a problem in their favor. Ninety five percent (95%) of complaining customers will buy from you if you resolve a problem on the spot.
70% of customers are satisfied if 1 person handles their problem. This figure drops to 61% when 2 people are involved.
The interesting thing about complaints when handled correctly and fixed immediately, is that they lead to a positive spin being put on what could have been a very negative story. This approach actually leads to a much more loyal customer than one who has never had a problem.
If you have internal problems, don’t bother the customer with them. They don’t care. They are paying you good money for what they get. They expect you to solve your own problems. That is part of what they are paying for!
Diners Club regards complaints as so important that they have a committee with their Managing Director as its Chairperson. They review all written complaints and praise received. They then identify the problem and all conflicts are resolved within 24 hours.
So now our staff are well trained in providing great customer service and we are expert at handling complaints, the next step is a customer review.
Despite the obvious benefits in profitability and cost savings of putting the customer first, only 1 business in 12 regularly monitors current customer satisfaction.
To improve customer service in your business, you need to take the following steps.
- Review your client base and rank your customers. Not only in terms of total spending but in ease of doing business and the cost to serve them.
- Segment your customers. But don’t do it by demographics, do it by behavior patterns.
- Get rid of clients who don’t fit customer profile or who buy from you solely based on price, but do it nicely. Avoid negative word of mouth.
- Listen to your customers and give them precisely what they want. Then on an ongoing basis keep them on fully appraised of order status, both production and delivery. Advise them of progress on any repairs. An excellent idea is to form an advisory board of your best customers.
- Put yourself in your customer’s shoes, make a trip to their business, and get to really understand their needs and pressures. Your role is to make them look good to their customers. You need to focus on ensuring that your customer’s customers are delighted.
- You may choose to reward better customers with a priority system but advise all your customers of how it works.
- Ensure that your entire team is customer focused.
- Prevent any breakdown in customer relations if a product moves from one department to another.
- Fix any problems fast, and then compensate the client. For example, if you are late for a briefing perhaps the client doesn’t pay. Make sure you go that extra mile.
Successful customer management is just four steps. Selection of the right customers, acquiring that customer, retaining them and increasing the value of the relationship.
One of keys to achieving great customer service is a complete understands of what your customers want and value. Once you have clearly determined that, ensure you always exceed their expectations.
The restaurant chain “Thank God it’s Friday” has a fabulous motto, “Promise Good, Deliver Great”. It is very important not to over promise. Unfulfilled promises lose business. Disneyland has substantial lines for every attraction and they put signs at various points along the line advising how long you have to wait. At the 30-minute point they put a 40-minute sign. People are then pleased that they got to the attraction ten minutes early rather than be angry about the time they did wait. My car dealer always gives me an estimate that is $50 to $150 less than the bill. I am always pleasantly surprised at how much money I save.
It doesn’t cost much for the Matre’d or the waiter to farewell every customer at the door and open the door as they leave, to the customer, it shows appreciation.
At my apartment in Sydney, I have 24 hrs. valet parking, they collect children from school, carry in your shopping, have room service, door to door laundry, apartment cleaning, they pick up and deliver dry cleaning, get you tickets to shows, book flights, wash cars and much more.
Why would you live somewhere else?
In the US, often catalog stores will send you a range of colors, styles, and sizes, keep the ones you want and send the rest back. How annoying is it when you put your car in for service and the mechanics change (or even reprogram) your car radio? You get it back and it blasts in your ear.
Another key to great customer service is to listen to your customer. We have two ears and one mouth for a very good reason.
Staff needs to be taught to “chat with customers” and listen clearly to the response rather than try to pressure them into a sale. Most people are more afraid of being sold than of the consequences of buying the wrong item.
A Japanese company called “Kumari” manned an auto show, and obtained 211 qualified leads compared with only 25 for the companies dealers. The reason is that conventional auto sales methods put people off. The “chat approach” encourages discussion of the customer’s requirements more openly, they will tell you the competition they are considering and other information that can help close the sale. The Kumari people asked questions and explored answers. They also answered questions directly without any sales pitch.
Today, more and more customers want information. They don’t mind being led, but don’t like being sold.
Continue to Innovate
No matter how good you think your customer service is, you must continue to improve.
Customer attitudes also change over time. What was once perceived as added value may now be expected.
In 1996, Levis’ had 31% of the worlds jeans market, worth billions of dollars. But they were not in tune with their customers and when jeans went baggy their market share fell from 31% to 14%. Wrigley’s had 90% of the chewing gum market until their competitors introduced sugarless gum. Wrigley’s market share fell from 90% to 33%. The 1980’s IBM was regarded as the service leader. In the mid 80’s they focused on technology and lost 50% of their market value.
Today for example, retailers have to reduce check out time to compete with on-line retailers. New innovations include scanners that check the whole basket instantly instead of one item at a time and radio signal smart packaging. This type of change is occurring in every industry. Are you prepared for the possible changes in your business?
It is important that you don’t provide a product or a service that you think your customers want. The only person who can tell you what they really want is the customer. In the mid 90’s McDonalds introduced McLean, the healthy lower fat hamburger. It was a disaster. The people who go to McDonalds are not concerned about being healthy! Some banks have spent a fortune cutting waiting times from 5 to 3 minutes. Customers didn’t notice the difference. The same investment would have kept banks open an extra hour on Saturday which customers would have really appreciated.
In 1997 at $20 billion retailer Coles Myer, computer management was increasing prices, reducing staff, pushing suppliers to the limit in order to improve profits through efficiency. But customers were upset and the chain was going backwards. CEO Dennis Eck, asked the staff how to fix the problem. Over 80% said they would “go back to selling what customers wanted”. Coles had computers dictating store ranges by the profit each generated, not consumer preferences. Eck set out to give customers wanted on a store-by-store basis. A store in Epping with a large Macedonian population, stocked foods popular to that culture, and the staff were bilingual. As a result, earnings increased 15% in 12 months. Today, the new policy is range, price, service and store environment.
Examine every possible encounter with a customer to determine how you can provide exactly what they want and make the experience better. There are plenty of opportunities from the phone call, finding a parking space, the wait at reception, the availability of information and so on.
You must also remember that being great 99% of the time is not good enough today. If airlines had a 99% success rate over 5000 people would be killed in accidents every day, there would be 25 million faulty pharmacy prescriptions a year and millions of pieces of mail would not be delivered.
The delivery of great service also fits in with one of the other keystones of successful business today, the Risk Reversal.
Some supermarkets give you everything in your basket free if you wait more than 5 minutes in line, hotels give free breakfasts if not within 5 minutes of appointed time, if your car is not washed 100% to your satisfaction, it is washed again. One hospital in the US even offers 25% off your hospital bill if you are not admitted in 20 minutes.
You should always be trying to come up with new ways to improve your customer service. Progressive motor vehicle insurance is a great example.
The Progressive Corporation became the fifth biggest insurance company in U.S. almost overnight through the introduction of an exceptional service policy.
The company set up an “immediate response” program. They arrive at an accident within 30 minutes, console the drivers, inspect the circumstances, and assess the damage. The Progressive representative then gets out the laptop and printer, determines the assessment and issues the driver a check, right there on the spot.
Their 24 hour a day, response within 30 minutes, immediate settlement policy differentiates them from every other company who has been doing same thing for years. They are running circles around the opposition.
A study by the 300 companies in the insurance business in the United States said a 1% increase in premiums would lead to a 10% drop in business. They were price focused. Progressive proved that service and quality are both more important to over 80% of consumers than price.
This policy has also been excellent for Progressive’s bottom line. Their quick response saves money on lot charges and car rental fees. There is also less staff and handling required. There has been a major improvement in customer morale; the company has good relations with both parties in an accident, which leads to less lawsuits and lawyers fees. Because they are on the spot there is less chance to inflate the bill or fake injury. This is important because up to 30% of most insurance payouts are fraud. Not only is the program a great marketing tool it has enabled both a decrease in rates and an increase in profits.
To sum up, awesome customer service is simply great business. It increases loyalty, profits, decreases costs, motivates staff, improves morale and increases customer feedback, which keeps you at the cutting edge of change. It also builds your brand equity, which dramatically increases word of mouth, which accounts for 4 out of every 5 sales.
Jan Carlzon, CEO of Scandinavian Airlines said it best. “Instead of seeing a customer in every individual, look for the individual in every customer”.