Delivering "Perfect Service"

Success of Fast Food Restaurants Starts With How Customers Order Their Food

2010-12-06T10:04:00.001-08:00

A few years ago, I took my operations management team on a field trip in downtown Hartford, Connecticut. The destination? Fast food restaurants. The purpose? To experience how process design impacts customer experience, and ultimately the success of the establishment.

Our first stop: McDonalds. The five of us crammed into a tight crowded area, spreading out into separate lines in front of a register. The five order takers were busily moving their specific lines as fast as they could, but large complicated orders were clogging up the line, slowing the pace. While the order was being filled, people milled in front of the register waiting. And when the food arrived, people would grab napkins, stirrers and straws from containers at the register. The result: A crowded mess and unhappy customers.

Lesson learned: In that location, McDonalds probably did 75% of its overall business during lunch, yet it was clear that the lobby was just not big enough. The separate lines for each register, the lack of space for waiting customers, and the fulfillment of napkins at the same place made the purchase experience completely problematic.

Our next stop: Wendy's. When we entered the restaurant, there was a feeling of order...a single line organized with rope barriers guiding people. When a register opened, the next person in line moved to that spot. When the single line became long, a Wendy's person came out and took orders for each person in line, giving them a slip of paper to hand to the register clerk for faster ordering and payment. Once an order was given, the customer shifted to the side where condiments and napkins were available, making plenty of room for the next customer. Once the order was ready, the customer was called, and the food was given. The result: a fast and responsive system.

Lesson learned: Given that orders are not uniform, the Wendy's line systen eliminated the unlucky line selection from the process. As well, the ordering and the fulfillment process were separated so as to keep the flow moving. Lastly, when the line queued up during rush hour, Wendy's employees came out from behind the counter to take "pre-orders" so that when the customer made it to the register, the transaction was sped up dramatically.

Our last stop: Sbarro's Italian. This food setup is cafeteria-style, in that customers take a tray and single file move their way through the selections. Seeing and smelling the food was a lot different than just ordering from a board. HYowever, the speed of this process was totally dependent upon the orders of the people in front of you. If you just wanted a slice of pizza and a fountain drink, the speed of your order may be a minute if the line is short, but 10 minutes if the person in front of you ordered four calzones. The result: the potential for extreme delay.

Lesson learned: Single queues with variable service times may be the easiest of all processes to set up, but have the real potential to clog up. Here you are only as fast as the slowest order.

My View:

Commitment to service is more than just enthusiastic employees and encouraging posters. Sometimes the commitment is also in the thoughtful design of the service delivery itself.

These three restaurants were within a block of each other, competing for basically the same clientele...the business employee. The criteria--good food in quick delivery--was the same for all three. Yet, each designed its delivery differently...and according to my operation management team, with different results.

Wendy's clearly understood and designed its process to deliver. Its single line system with different areas for ordering and pickup sped up the process. Its contingency plan to take pre-orders enabled the process not to get bogged down the volumes increased.

McDonalds was poorly designed, from process to lobby space. The entire experience left the customer wanting better.

And Sbarro's restaurant, while showcasing its food, created a potential for severe bottlenecks, especially for those ordering quick items. When a slice and a Coke take 15 minutes to order, no matter how good the food is, the customer will be unhappy.

When a company makes the commitment to deliver permium service, understanding how it is delivered and the impact on satisfaction is critical. Then the company can design its processes to deliver. This is one of the themes within "Perfect Service."

Get Rid Of Automated Voice Response Systems; Let Call Center Reps Service Your Customers!

2010-11-05T07:30:00.000-07:00

Bill Taylor, co-founder of FastCompany Magazine, recently blogged about a particular customer experience that we all face--and we all hate. That of the Automated Call Centers or Voice Response Systems. These are the mazes of telephonic options callers are forced to navigate in order to either get an answer to their query or to talk to a customer service representative.

Everyone hates them. To read his blog article:

http://blogs.hbr.org/taylor/2010/11/press_3_if_automation_is_makin.html

Despite efforts to make them "human-like" or friendly, their function continues to be to try to filter away all unnecessary calls that humans are required to take. Despite their universal distaste, there is not a company in the land that does not utilize the technology. Why? The cost of an automated call is pennies compared with the dollars it takes for a human response.

Taylor believes we have it all wrong. Instead of thinking about call centers as expenses to be minimized, leading to more automation efforts, he thinks businesses should view them as business centers that are there to enhance the business through service.

"It's worth noting that some of the most successful, advanced, cutting-edge consumer brands I've gotten to know over the last few years explicitly reject the idea that that customer service is a cost to be cut rather than an strategic advantage to be honed," Taylor writes.

My View:

For years, the Automated Voice Response system has been used for two purposes: 1. To route calls to the correct location, and 2. To answer routine questions in a fast and efficient manner.

With the advent of convenient centralized toll-free 1-800 numbers, companies need to be able to get callers to their needed departments. This need still exists.

However, the second purpose, to deliver routine information, has become obsolete as the Internet is clearly a superior choice for users. Therefore, account balances, transaction statuses, trade instructions, and more are no longer needed on the telephone system. In fact, they are now negative in that call tree menus are way too long and impact customer satisfaction. My wife just called the State Department of Consumer Protection for a business matter and endured nine levels of menus before she was able to speak to the correct person. Frustrating, even though she got the answer she wanted very quickly from the person.

Moreover, Taylor and others argue that a personal conversation is an asset rather than an expense. I wholeheartedly agree. Call center customer service representatives give companies the ability to:

--reinforce the Customer Service experience through caring, expertise and efficient handling of the call;
--identify opportunities for up-selling or cross-selling the company's other offerings;
--identify issues that a customer has with the company's services or products before they leave for the competition;
--collect data about customers' satisfaction with service or product that can be used for future enhancements.

Call centers can be the best asset a company has for satisfaction, retention and growth. Why companies continue to invest in technology to prevent that conversation from happening is short-sighted.

Great At Delivering Service? The Best Strategy Is To Tell Everyone About It!

2010-10-29T06:21:00.000-07:00

This morning I commented on a blog from the Harvard Business Review about "Understanding Customer Experience" written by Adam Richardson. He tries to define what Customer Experience is as well as to document steps to design the experience. He cites the usual suspects when describing companies that get it right--Zappos, Southwest Air, Google, etc.

This list got me thinking. Why do we always go to these companies when listing great service providers? How do companies break through to be viewed as "legendary?" I have cited Zappos, and yet I have never bought a pair of shoes from them. I have purchased numerous items from Amazon.com (Zappos new parent) and have been very impressed with them, but they rarely make the same list. Why?

Here is my comment:

Adam--

I think part of the reason that Zappos, Southwest and others are consistently cited as being prime examples of delivering premier customer experience is because the companies themselves tell you that they are. It is part of their image campaign that starts at the top and cascades down the organization. Even our mentioning those companies enhances their image.

One company I worked for years ago improved its customer satisfaction scores on an industry survey by writing a timely letter to its customers reminding them of the great job our firm was doing for them. In short, we gave them the words that they then echoed on the survey. The result--improved scores.

Companies that "full body commit" to their strategy and service image are more likely to gain this reputation. Have I had the same bad experiences flying Southwest as I have had at Delta? Sure. But I give Southwest the benefit of the doubt for a bad experience or two because I am bombarded with messages telling me they are great.

I would encourage any company that commits internally to designing a premier customer experience (which is vitally important) to spend as much time thinking through the external portrayal of their services. And then to aggressively play offense. If you keep telling me that you are the best, I might believe it, and maybe even tell my friends.

--Christopher W. Myers

My View

You can read the blog here:

http://blogs.hbr.org/cs/2010/10/understanding_customer_experie.html

I think, in addition to providing great service, these companies also market themselves as service champions. When you go on the Zappos website, there are dozens of reminders that are in your face telling you about their great service. From awards to customer testimonials to bumper stickers saying "I heart Zappos.com." They tell you they are great, and then we believe them.

Then bloggers and business writers and academians pick up the torch and run with it, citing the extraordinary service.

When companies decide to make the journey to becoming a premier service provider, and commit to designing a uniquely satisfying customer experience, they also need to commit to an aggressive campaign to tell everyone about it. That is almost as important as delivering the experience.

Customer Experience Comes From Focus--Here Is One Company That Is Headed For Problems

2010-10-28T08:12:00.001-07:00

Here is a customer service effort that is doomed to fail. Here is the project's obituary.
--------

I was performing a competitive analysis recently on a large mutual insurance company, and came across these paragraphs in its 2009 annual report:

CREATING AN EVEN MORE CUSTOMER-FOCUSED ENTERPRISE

For many of our customers, “service” and “ease of doing business” have become key differentiators and qualities they’ve come to expect in a business relationship. During the past year, we conducted a frank assessment of how (the Company) stacked up in delivering these qualities and concluded that we can do better.

As a result, we implemented a company-wide Operational Excellence Program aimed at assuring that we achieve continuous improvement across the enterprise to enhance service and ease of doing business, while also empowering employees and eliminating wasteful activities.

Our goal is to provide the best possible experience for our customers and to operate as efficiently as possible so that we can provide the highest quality product at the lowest possible price and pass the efficiencies to our policyholders in the form of dividends.

The initial paragraph, written by the company's chairman, speaks about how the firm must strengthen its customer focus in order to maintain competitiveness. It appears that analysis shows it has fallen behind.

The problem begins in the second paragraph when the company's customer service focus begins to smell a bit like a productivity mission. I have observed many "Operational Excellence Programs" and none of them have been centered around improving the customer experience. By the end of the sentence we are introduced to the dual nature of the program--improve service and eliminate waste.

The last paragraph completely muddles the mission by stating that the goal is to provide the "highest quality product for the lowest possible price." And then to pass the financial rewards of all of this new-found efficiency onto policyholders in the form of dividends. Sigh.....

What began as a focused mission to improve customer service instead became an unfocused mess of enhancing products, eliminating waste, and, oh yes, improving service. Since the savings from this program will be passed onto policyholders, there is no question that victory will be declared as costs are slashed, and that customer satisfaction will remain at competitive disadvantage.

My View

This effort will undoubtedly fail. It is doomed from the start. The reason: a lack of focused commitment.

I have written before about a company's need to decide how it will compete, and then fully commit to that course. It is about a "full-body" effort to be the best at some aspect of its competitive landscape, and then to take advantage of that leadership to grow and profit.

It is clear that this Insurance Company is concerned that it is falling behind in its Customer Service standing. Is this bad? Only if the company is competing against other insurance companies on the basis of Service Excellence.

But what is also implied is that the company has cost concerns. Is this bad? It is, again, if the Insurance Company competes based on price and cost. Given the price wars going on in the insurance marketplace, this could be a big concern.

I am the first to believe that improving Customer Service should lead to lower overall costs over time. But to a company to want to be a competitive leader in service, cost leadership should not be the focus.

Even calling your Service Improvement Project an "Operational Excellence Program" is so internally focused that it is laughable. The project should be named "The Customer-Is-The-Center-Of-Our-Life Way of Doing Business."

Instead, the strategy should be to delight your customers so they stay at higher premiums and bring in more customers through unsolicited referenceability. It is not a short-term project that will yield efficiencies that will be available to pay out as dividends. It should be a revamping of the way of doing business. If there are any wasteful practices discovered, the funds should be reinvested in enhancing the service infrastructure to develop differentiable and lasting service leadership. Only when the business effort is successful should policyholders be paid.

That is, if the company really even cares to improve its service. My suspicion is that this is a cost cutting effort in the guise of customer service. I will be watching this company now from a different perspective.

Perfect Service Magic Comes From Wowing Current Customers

2010-08-11T06:12:00.001-07:00

Not Related But A Funny Advertisement About Service

I am spending some time in Wisconsin these days, and I noticed an interesting phenomenon on the radio. At least 80% of the advertisements for local businesses promoted their high levels of service, their moneyback guarantees, and their industry rankings for satisfaction. All types of businesses were advertised: health insurance, roofers, car dealerships, and security firms. And most tried to position themselves as the market's service leader.

I am of two minds about this:

1. I think it is great that companies believe selling service satisfaction is a viable competitive weapon. They are counting on a sizable segment of the population to positively respond to the idea that being satisfied with the service is more important than having the lowest price or the most progressive features.

2. I worry that promotion of premium service is not over-hyped to the point of numbness. And that this is viewed as a way to get new customers, and then under-delivered. It reminds me that 80% of companies in a recent survey said they wanted to use the customer experience as a competitive differentiator, yet only 40% had any type of formal service program in place.

I hope that these offers are truly well thought out, and that when customers are attracted to the offering, the company can deliver on the promise. After all, saying you have the best service is easy to do, but much harder to deliver.

My View

While advertising for new customers is important, Perfect Service programs focus on your existing customer.

By delivering a premier experience to that customer, an asset is created that continues to grow. The customer will stay with you, buy more from you, and serve as a reference for future sales.

The customer experience is designed based on a model for a "perfect" or ideal transaction. All aspects of the delivery of that perfect transaction are measured and improved upon. The feedback is frequent and instantaneous.

Satisfaction is unconditionally guaranteed.

Client satisfaction success stories are trumpeted throughout the organization.

Only then can a company confidently go to the marketplace and tout its services. And the experience will match the promotion.

SuperGuarantees and Angie's List Are Changing How Consumers Make "Perfect" Choices

2010-07-27T06:44:00.000-07:00

At its core, Perfect Service is based on delighting customers through guaranteed offerings. These customers will then stay with you, buy more from you, and help attract others to you. A formula for success and growth.

One of the most important elements for establishing a "Perfect Service" program is to establish and boldly promote a "Perfect Guarantee." This one act sends a message to potential customers, as well as current clients, that your company is serious about providing satisfaction.

Another element is for your customers to promote their happiness with your services. Companies need to get creative in how they get the word out.

I am seeing a lot of work being done in both of these areas, and while I believe they are not fully developed, the trend is a good one:

SuperGuarantee Designation

Consider the Phone Directory....in recent years, these businesses have been a major victim of technology advancements with online and mobile data replacing the hefty phone book. When I need a phone number, I no longer even think about using the book or even the Phone Directory's website. I can go direct to the provider's website or query my search engine for a listing of providers. If most people this this way, why would businesses advertise in Phone Directories any more?

Lately, I have begun seeing advertisements from the Yellow Pages about a new program called the "SuperGuarantee." In short, if a consumer registers with the SuperGuarantee service and selects a service provider from the Yellow Pages listings that has a "SuperGuarantee Shield" designation, the work is guaranteed. If work is not completed satisfactorily, the service will mediate the conflict and, if still not satisfied, will pay the consumer $500 for the trouble. (Obviously lots of terms and conditions apply, but the concept is clear.)

For businesses, the SuperGuarantee "Shield" is given to companies who meet advertisement criteria of the Yellow Pages. There is no review of services, no adhering to specific business practices, etc. You pay for the advertisement, and you get the Shield at no extra charge. The Shield means that the SuperGuarantee company will guarantee the work, not the service company.

Collecting Service Reviews

Another service that is also growing is one called "Angie's List," where members can access "thousands of unbiased reports and reviews abouth service companies in your area." Again, the concept is simple: consumers report their experiences and members can review these experiences before buying a service. Should there be a problem with the service, Angie's List members also have access to a "conflict resolution team" that will try to settle the dispute.

The only way for a company to be listed is to have performed a service, and have that service experience reported and rated by a member. Companies, however, are permitted to advertise discounts to members, but only if they have an A or B rating.

While there are no guarantees offered, the collection of unbiased reports assist consumers in making the right choices.

My View

When selecting service providers, consumers are constantly looking for ways to sift through all of the information available to pick the right provider. Horror stories abound about the impact of bad decisions.

Both the Yellow Pages SuperGuarantee and the unbiased reporting from
Angie's List attempt to help the consumer with this selection. Both are unique
in their approach, trying to add value to what is perceived as a high risk
transaction.

SuperGuarantee spotlights service providers with its "Shield," offers provider conflict resolution services, and offers a financial guarantee if the experience fails. But service providers get listed if they advertise in the directory, not if they provide premier service--this lack of screening is a problem.

Angie's List delivers user-generated reviews on service providers, offers provider conflict resolution services, and has some membership benefits like discounts to services reviewed. But the consumer is powerless should the provider not perform, other than the power of a bad review in Angie's List. I am not sure this is enough of a deterrent.

I believe, however, that both services are on the right track. Consumers need help to wade through the potential providers of service, and both get partially the way there. Perhaps, each company can take their service a step further:

SuperGuarantee needs to establish a filtering mechanism so that only companies that provide excellent service be permitted to advertise a Shield. The right to advertise the Shield is a premium and should be earned.
Angie's List should consider awarding its top companies its own version of the "Shield" to designate top providers according to its members. Then perhaps if members select companies with the "Angie Shield," Angie's List will guarantee or insure satisfaction with the work. That would make the user feedback a meaningful metric rather than just anecdotes.

I like the number of ways this area is evolving. The spotlight needs to shine brightly on companies providing top service. Keep going!

Huh? Did I Read This Right? CIGNA HealthCare Wins Customer Service Delivery Award Through Focus on Helpful and Easy Interactions!

2010-07-12T06:52:00.000-07:00

Gartner Group recently announced the awarding of its Outstanding Customer Service Delivery award for 2010 to CIGNA HealthCare. This follows its 2009 award to CIGNA for Outstanding Customer Service Strategy.

Huh? Outstanding Customer Service Award to a HealthCare Company? Isn't this the same industry that for years has been viewed as the poster child of customer abuse and mistrust? Isn't this the same company that had a nickname amongst doctors and patients as "CIG-NO."

In previous posts, I have often said that if one healthcare company can break from the pack based on a service strategy, it would help transform the industry.

It appears that something significant has indeed been launched at CIGNA and, according to Gartner, has begun to take root. I took a look at CIGNA's website and found just how simple and aspirational its new mission is:

The Mission:

To help individuals enrolled in CIGNA plans achieve their health goals with helpful information, trusted support and excellent service.

To do that we must: communicate simply, consistently, and in ways they find personally relevant, compelling and easy to understand.

Every interaction must be helpful
Every interaction must be easy

The Plan:

If we:
•Make interactions with us positive, productive, and seamless
•Provide helpful information that’s understandable and easy to obtain
•Do this repeatedly and reliably

People will:
•Trust us
•Come to us so we can help them
•Fully use their benefits
•Take better care of their health

And if this happens, the cost of health care will be lower for all.

I like it.

I like big goals, and there is none larger than the goal of lowering the cost of health care for all.

I like simple plans that are easy to understand, and this one points out that "if we do this, then people will do that...."

I like fact-based approaches that outline what the company has to do in order to accomplish the mission. CIGNA's website points out that, among other things, it has:

eliminated what frustrates--if you want a human, you get one, 24/7

redesigned explanation of benefits brochure

redesigned new and simple enrollment guides

My View

CIGNA's efforts are to be applauded, For now, it appears that it is truly focusing on many of the features that matter to customers. Should it continue along this path, we believe what may emerge is a company that is approaches its business differently than others in the benefits industry.

As a former CIGNA employee, I find this a refreshing focus in that the company for years has found itself mired in an expensive technology and re-engineering debacle that cost the company dearly in customer goodwill, client focus, and employee morale.

The caution I put out there is questioning how deep this commitment to Customer Experience may be. As Bill Hogg recently wrote in his blog "Customer Service That Astonishes," companies need to become a premier customer service company in its strategy and culture, rather than having Customer Service as a tactic that sits alongside all other tactics in the corporate tool box.

I look forward to seeing more progress from CIGNA, and other HealthCare companies that must follow suit. This is how we will see leadership in transforming a troubled industry.

After The Win, Companies Need To Deliver "A Perfect Conversion"

2010-06-29T06:13:00.000-07:00

Your company has worked for weeks and months on positioning your services exactly the way you want. The client has given the right signals that it values your service proposition, and thinks your approach is intriquing. There seems to be a connection forming between the decision-makers and the sales team.

And then you get the word....you have won the big sale! Congratulations. Time to brew the pot of coffee...the real work begins.

Now comes a critical stage in the relationship...the Implementation or Conversion process. This stage is the first time your company moves from typical sales hype to reality of having to deliver what you sold. In many instances, this is a sobering time in the deal for both parties, one that Perfect Service companies need to critically analyze and design.

Bruce Temkin, in a recent blog post, describes this as the "Engagement Phase," the underappreciated stage between Point of Sale and Service. He believes that during this stage instead of worrying about collecting the proceeds from the sale, companies should focus on getting their customers satisfied. http://www.customerexperiencematters.wordpress.com/

The longer the transition period, more risk, and opportunity, a company has to reinforce its value proposition. Companies take this transition stage way too lightly.

My View

Many industries, particularly those delivering outsourcing services, experience long periods between sales and ongoing service. Typically, this stage is viewed as a technical experience as the service provider is taking its new client's detailed requirements and translating them into service capabilities. We are in the weeds here.

To perform this phase, most companies deploy a dedicated conversion or implementation team to the transaction. This team is staffed with Project Managers, Business Requirement Analysts, Technical Analysts, and other members of the Project Teams

To collect client requirements, there is a lot of client interaction and documentation, often with face-to-face meetings. Any confusion or details that are unclear are addressed here by this team.

In short, the conversion process is an intense learning experience, with frequent client interaction.

And once the conversion is completed and services are now live, the client is transferred to the Relationship Manager and the ongoing service organization. Several things can be improved with this typical arrangement:

1. Most of early relationship building is done with Conversion Team, not ongoing Service Team. The early meetings are where first impressions are created. While probably personable, the Project Manager's chief talent is most likely structure, detail clarity, and adherence to schedules.

2. Most client learning is experienced by Conversion Team, and although details are likely documented, the "soft" learnings are not as well as the conversations leading to specific decisions. As a result, client particulars must be "re-learned" by the service team.

3. There is often a lack of continuity in commitments made from sales to conversion to ongoing. This is understandable given that each group has its own objective. Unfortunately, that objective is rarely the same.

As Temkin describes: the main objective of Sales, Conversion and Ongoing Service should be the satisfaction of the client, not just the achievement of a departmental goal. Companies that recognize this will review their conversion processes with a different eye:

--Involving Client Service staff during the conversion process;
--Training Project Managers on the tenets of delivering satisfaction rather than merely the execution of the project;
--Identification and resolution of client dissatisfiers early in the Conversion process, rather than waiting for them during service delivery.

In Re-Engineering The Corporation, the classic business book, a view presented is that Conversion is just an extension of the sales process. That makes some sense, since business requirements and offerings are collected during the sales process and are used for implementating that business.

Instead, I offer the following thought: that Sales and Conversion are just the first part of the Service Process, and need to be as thoughtfully designed.

Obama Speech May Have Gone Over Head Of Many In Televised Audience -- That's Okay!

2010-06-17T05:10:00.000-07:00

Saw this news item about President Obama's recent televised speech about the Gulf Oil Crisis:

(CNN) -- President Obama's speech on the gulf oil disaster may have gone over the heads of many in his audience, according to an analysis of the 18-minute talk released Wednesday.

Tuesday night's speech from the Oval Office of the White House was written to a 9.8 grade level, said Paul J.J. Payack, president of Global Language Monitor. The Austin, Texas-based company analyzes and catalogues trends in word usage and word choice and their impact on culture.

Though the president used slightly less than four sentences per paragraph, his 19.8 words per sentence "added some difficulty for his target audience," Payack said.

In order to clearly convey your message, one must always keep in mind your target audience and the tone of the message you are trying to communicate. It is inconceivable that President Obama's staff did not purposely craft and deliver this speech as intended.

My View

Without opining on the state of American education, general guidance is to craft important messages at a 6th grade level. And without expressing a view on clearly divisive politics, I believe President Obama purposely took a different tact.

Why? I think that the Gulf Oil Crisis is a serious and complicated issue, one that requires careful description, planning, and messaging. The President needed to communicate to multiple audiences in an even-handed, yet compassionate way. While BP is an obvious villain in this episode, it is also a necessary partner in the fix, both in terms of capping the "spewing" oil and in funding the cleanup.

The President knows that using flip or overly simplistic antagonistic rhetoric will not remedy the situation any faster. The day following the speech, Obama met with BP officials and secured $20 billion for a recovery fund.

It is expected that citizens impacted by this disaster are angered. Those directly representing them must also express outrage. This outrage can be easily described in language concepts that are simple, emotional, and elementary.

However, when the senior leader speaks during difficult times, he or she must always be mindful of the exponential impact of his or her words on those listening. Those words must be consistent, factual, empathetic, but solution-based and hopeful.

To do this, President Obama stepped up the level of communication in his speech. He sounded like he understood the complicated issue, tried to put it in perspective with examples of other disasters, and was working all angles to minimize its impact. I think there has to be some comfort that the leader is in charge, even if the message sounded more professorial than preacher.

Senior leaders must understand their audiences, but should not simply communicate in simple terms. Rather, thinking through the intended outcome, and then crafting an appropriate message and medium is preferred.

Delta: Sometimes The Quality Of Service Is About The Art of Recovery

2010-06-16T04:43:00.000-07:00

In a private moment after a particularly tense meeting with an important client, the senior manager at the client wrapped his arm around my shoulder and said, "Sometimes the quality of service is about the art of recovery." That lesson stuck with me throughout my career, and I was reminded of it recently while reading a letter from Delta Airlines this week.

In short, the letter apologized for a recent unpleasant flight experience when my bag was left behind (made even more frustrating since I had to pay $25 to check the bag in the first place.) The letter announced that I was going to be awarded 1,500 frequent flyer miles for my troubles.

Last week, I received a similar letter from Delta Airlines awarding me 1,000 frequent flyer miles for a cancelled flight.

Despite the inconveniences from the delays and the baggage mishap, I did not walk away from those incidents at the time with a poor feeling about Delta, rather sensing it was just my time to have problems that are common on all airlines. During the delay, Delta updated passengers with honest and relatively accurate progress reports, and ultimately we reached our deistination. When my bag did not show up, the clerk methodically and efficiently recorded my information and the next morning my bag was delivered to my hotel, as promised.

So while the letters and frequent flyer bonus miles were more symbolic than substantial, they were recognition that something went awry, and Delta management noticed. I like that.

My View

It is an unfortunate fact of business and life that things will go wrong. Using that long ago observation about recovery, Perfect Service identifies these as opportunities to demonstrate superior service.

One of the Perfect Service building blocks, that of "Perfect Improvement," is that customer service people must be empowered to "fix the situation" while the organization reviews the problem to determine root causes and ways to prevent it in the future. Customer service people do not wait until the problem is solved, but rather, do their best to make the impact of the current problem minimal.

Customers should feel like the error is not a usual event, and that the
service provider takes this specific situation very seriously. My counsel is to
make the company or person feel like you are "over responding" to an unusual
situation.

My son was recently receiving baseball lessons from a pitching coach to help him control where his pitches were going. After throwing a bad pitch, my son would think he was a wild pitcher. The coach said that when a pitch is wild, the pitcher should think that this is an unusual situation, and that the next pitch will be back to normal. That mindset alone gave him confidence, even when things go wrong.

At the airport, my expectation is that flight delays and baggage problems are normal events. What Delta did was to remind me that, at least to this company, the situation was being viewed critically, and they were sorry. This reaction makes me think that perhaps my situation was not normal, and that Delta was going to figure out how to make sure it doesn't happen again.

Of course, if it does happen again, and I get a third and fourth letter, then my conclusion is that Delta is using these apologies as the primary means of recovery, rather than improving the process. And that would be bad.

Don't Commoditize Your Services; Taking The Weather Out Of The Weather Channel

2010-06-03T05:21:00.000-07:00

I've read in many business publications that the number one job of the senior executive in any company is to keep products and services from commoditizing. That is, to keep away from competing on generic characteristics that ultimately ends up a price war and depressed margins.

When we speak about Delivering Perfect Service, it is with the aim to carve out a niche in the marketplace by offering services at a level that is decidedly different and superior than other competitors. For those customers that value permier service, price will be a secondary consideration. The mission for the service company then is to continue to improve and focus along that specialty...to invest in differentiation.

A news item caught my eye that speaks to curious decision-making from management at The Weather Channel. http://news.yahoo.com/s/ap/20100524/ap_on_bi_ge/us_dish_weather_channel_1

It appears that The Weather Channel, previously THE authority on all things weather, has opened up its programming to movies and other general entertainment offerings. We have watched this slippery slope into the entertainment realm for several years as the channel has packaged many weather-related documentaries for its viewers. But the move into general-topic movies has created friction with cable and satellite carriers who view The Weather Channel as a public service channel, particularly for local weather warnings.

The move follows a trend amongst other specialized television channels in recent years to stray from their original purpose. MTV rarely plays music anymore. The History Channel, A&E, Science Channel, Discovery Channel all have added content such as specialized reality shows like Deadliest Catch on The Discovery Channel, Ice Road Truckers on The History Channel, Hoarders on A&E. These are entertaining shows, but what does Ice Road Truckers have to do with history? And don't get me started on Jon & Kate on The Learning Channel.

So why do it? The answer is simple....specialized programming is attractive to a select audience. General programming is attractive to a wider audience. The thought is that a smaller share of a larger audience is potentially more lucrative than a larger share of a smaller audience.

For years, The Weather Channel honed its weather-based programming, creating a ubiquitous brand and service for viewers across the country.

But is that about to change? Will we no longer see weather on The Weather Channel?

My View

It is a curious, but common phenomenon. Management looks at the market and realizes that there are many opportunities beyond the borders of its offering. By altering its features, marketing differently, perhaps even changing pricing, companies move into new territory.

The problem is that the value proposition that vaulted the company into its leadership position in the specialty niche may be compromised. The specialty offering may soon be overtaken by competitors, and soon is no longer special.

I have seen it time and again in the benefits marketplace. Competitors serving small companies decide to focus in the large company space; companies that offer a specific product now expand to offer a full-service suite; companies that offer a premier service begin to offer scaled-down versions of the product that are less expensive. And so on.

The end result: the companies gain a few marginal wins, but I have never seen significant marketshare gain for these companies. In the meantime, the focus on the primary specialized business is lessened, and as a result so is the company's differentiation.

The Weather Channel runs the risk of becoming a marginal general programming channel, instead of the valued premier content provider that it was previously.

Before management strays into other markets and generalize their products, they would be advised to think through their current unique competitive positioning and exhaust ways to extract value and keep their products worth the premium dollar their customers are spending.

Can A Company "Evolve" Into Premier Service Provider? Yes, But Few Make It!

2010-05-28T06:26:00.000-07:00

A critical question has been bouncing around my brain for the last week or so, and that is:

Can a company truly transform itself into a premier service organization, or must the company be "born" with that as its central mission?

It is easy to find examples of companies that make service excellence "the" key competitive dimension--think Zappos, Ritz, and JetBlue. But the question is whether these companies began ascendancy as premier organizations, or were transformed into premier organizations as a result of changes to a failed business strategy.

Bruce Temkin of the Temkin Group talks about Customer Experience maturity in a recent post in his blog Customer Experience Matters. http://experiencematters.wordpress.com/2010/05/19/how-voice-of-the-customer-programs-evolve/ He cites four stages of company evolution:

Collectors--company focuses on getting the right data.
Analyzers--company focuses on uncovering insights from the data.
Collaborators--data insights are used to help departments understand issues, help continuous improvement efforts.
Transformers--data insights are linked into most departments operations and strategy.

Bruce estimates that 40% of companies trying to create a premier customer experience are in the Collector stage, 40% are in the Analyzer stage, 18% are Collaborating, and only 2% are actually Transforming.

What does this say? It says that although many companies are indicating they want to invest in delivering premier customer service, few are getting any benefit from their efforts. Only 20% are getting the customer's voice into their decision making, and only 1 in 50 companies are actually making the customer central to their operations and strategy.

Since there are companies that are truly Customer-centric in their approach, this begs the question: did these companies follow the steps that Temkin outlines, or did they grow up already transformed. Can companies evolve?

My View:

Ouch! This data further confirms my belief that senior management in many companies are saying the words (80% of companies say they want to compete based on superior customer experiences) but are not doing what is necessary to get there. This strategic positioning runs the risk of being a "thing"--something all companies have to say because it is fashionable to do so--rather than a substantive business initiative.

Many companies that are the benchmarks for premier service have benefitted in terms of marketshare from that positioning, and have grown profitably as a result. Without knowing the companies Temkin has listed in the 2%, my bet is that many of them have grown up as "transformers."

Does this mean that if your company is in the middle of the service experience pack today that it cannot differentiate itself in the future? Not at all. But the executive "rubber meets the road" work begins when the company has gathered data and gained insight. The executive needs to make critical organizational changes that features that data, improves customer experience based on that data, and makes business priorities using the voice of the customer. In short, the executive needs to believe in the strategy and the data, and drive the company.

Without that, the company will never evolve and reach tranformative stages. Most will not. Enlightened and focused companies can.

My View: Net Promoter Is A Stat On A Scoreboard, But To Improve You Need More

2010-05-10T08:33:00.001-07:00

My View:

In my last post, we reviewed the Net Promoter score and methodology, as well as some criticisms.

I believe that Net Promoter Score is a useful indicator as to how a company is satisfying its customers. The end.

Not very satisfying is it?

Sort of like hearing the score of the ballgame with no details--you know who won, but do not get any context that makes the game richer as a fan. Was it a good game? Did your team play well? How did your favorite player do?

As a manager, the score may be a measure of success, but did the team perform according to plan? Did winning the one game use up all of the players' energies so that they will not be in position to win future games? Did players perform as expected, or did it take heroics from one player in order to win?

As a player, the score would certainly not be enough to know how well you personally did. Did you make any mistakes? Did you miss any signs or not follow the coach's instruction? Did you take advantage of other team's mistakes?

While the Net Performer Score tells companies whether or not they performed well, it does not give a company enough information to do anything to improve their performance in the future. It doesn't tell management whether the company is performing well compared to the competitition, and whether that performance is improving over time.

--------

I just watched a web lecture by Frances Frei from Harvard University speaking to a group of managers about Customer Service. One item from her excellent presentation that stood out is that great companies "relentlessly pursue problems." She believes that most organizations do not treat people who expose problems as heros, and if problems never surface, companies cannot improve.

Net Performer Score does not identify problems, does not tell management how each service attribute that is critical to success is performing, does not give any root cause for the satisfaction or dissatisfaction.

It is a score. Yankees 4 - Red Sox 3.

If you want to improve your company's service performance, you must go beyond the scoreboard.

Net Promoter Score Methodology Is Popular But Has Many Vocal Critics

2010-04-28T05:45:00.000-07:00

Measuring customer satisfaction is a critical yet surprisingly complex endeavor for a company that wants to deliver "Perfect Service." It is the process that measures accomplishment in acheiving vision-critical goals, while fueling improvement initiatives in priority areas.

Obviously, asking customers how satisfied they are with a recent transaction is the most basic question of all, but for it to be truly meaningful, the question(s) itself must be just right....simple and specific.

One measurement technique, Net Promoter, has become increasingly popular over the past few years. According to its website, Net Promoter was developed by Satmetrix, Bain & Company, and Fred Reichheld, and the concept was first popularized through Reichheld's book "The Ultimate Question." The link to the site is http://www.netpromoter.com/np/index.jsp

In short, Net Promoter "is based on the fundamental perspective that every company's customers can be divided into three categories: Promoters, Passives, and Detractors.

By asking one simple question — How likely is it that you would recommend [Company X] to a friend or colleague? — you can track these groups and get a clear measure of your company's performance through its customers' eyes.

Customers respond on a 0-to-10 point rating scale and are categorized as follows:

---Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
---Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
---Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

To calculate your company's Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors."

For example, if a company's survey results found that out of 100 surveys, 50% scored 9-10, and 30% were 7-8, and the remaining 20% were 0-6, then the company's Net Promoter Score would be 30. The higher the score, the better. A negative score indicates real trouble. (Almost every Healthcare company scored a negative NPS, with CIGNA scoring a low -30.)

Companies use this score to determine, on a relative basis, how well they are satisfying their customers. It is a simple, easy-to-understand, method. Customer Satisfaction surveys around the world now include this one question.

However, the score methodology has numerous critics, citing flaws in its approach and lack of depth of information.

Barry Dalton, in a recent post from his blog "Customer Service Stories...And Other Posts", declared "there seems to still be an increasing number of customer service practitioners talking about NPS and staking a significant portion of their customer service time and resources on collecting it. At the same time, oversimplification of the concept is epidemic, creating a clouded view of the company's performance vis-a-vis the customer's perception." http://custservicestories.blogspot.com/2010/04/ultimate-question.html#comments

His main criticism is that the information gathered from this question is too generic to be meaningful. He believes that surveys should evaluate the specific interaction that took place, and not the intended bahavior (the recommendation to friend or colleague) after the fact.

Taking the critique a step further, Ron Shevlin, posted a scathing comment on Dalton's blog:

Net Promoter Score is the biggest bunch of snake oil to come to the world of management in 25 years. There's so much wrong with the metric, it would take a couple of hours to just begin to list the reasons.

Shevlin goes into detail on his objections with the score in his blog "Marketing Whims." http://marketingroi.wordpress.com/2007/01/11/stop-measuring-your-net-promoter-score/

In his post, he lists the reasons why companies should stop using Net Promoter Score in their surveys:

Doesn’t help explain WHY a customer would recommend the firm.
Measures intention, not behavior.
Doesn’t capture inherent consumer differences.
Can incent undesirable behavior.
Uses funds better deployed elsewhere

"It’s been said that you can’t manage what you don’t measure. But a metric that doesn’t help you manage isn’t worth measuring. And the Net Promoter Score is a measure that doesn’t help you manage."

Next Post: My View On Net Promoter Score

Important Lessons In Collecting Satisfaction Feedback--Purchasing A Used Car From CarMax

2010-04-27T06:15:00.000-07:00

After looking at the prices of larger, well-equipped new cars at local dealerships, my wife and I decided it made sense to check out CarMax, where we thought we could find what we wanted at a reasonable price.

Of course, we were nervous about buying used...I always think I am being taken advantage of whenever I am buying a car. The end result is typically an expensive nice car with expensive extra features I don't want and expensive warranties I don't need.....but at least we have a nice car. With a used car, I'm not even sure we'll get that!

So three weeks later, we are driving home in our newly-purchased auto from CarMax. (Yes, I bought the warranty....but the car price was fixed so I knew I wasn't paying more than anyone else...).

My wife was happy that she is now driving a nice car, and I was happy that I didn't have to pay a new car price for the "luxury" vehicle. I was also intrigued by the business model at CarMax and was overall pleased by the process that didn't make me feel like prey waiting to be pounced on by carnivorous salesmen.

So now it is several weeks later, and the CarMax Customer Satisfaction Survey arrives in the mail. When my wife and I sit at the kitchen table this morning to evaluate, I begin to understand that we view the experience very differently. And rating CarMax was not going to be easy.

What Is Being Evaluated?

CarMax's stated mission is to sell "great quality cars at low prices with exceptional customer service." To achieve that goal, the survey states that our "honest assessment" of the buying experience was needed. On the survey is our name, our salesman's name, and some coding presumably tracking back to the purchase...so nothing anonymous here. Also of note is that the survey is from CarMax itself, and not a third party like Dalbar.

My approach to the survey is to evaluate the "buying experience," using past miserable transactions as my benchmark. In that regard, I found the experience positive.

My wife's approach is to evaluate her satisfaction with "the car" as her primary satisfaction criterium, presumably using a problem-free new car as her benchmark. Since her car has been in the shop for a week fixing things we did not see on the lot, she is finding the experience problematic.

Both are legitimate approaches, based on the customer's expectations and definitions of satisfaction. And both viewpoints must be addressed for CarMax to achieve its stated mission.

The CarMax Survey

The CarMax mission can be broken down into three parts: great quality cars, low prices, exceptional customer service. Presumably, satisfaction must be evaluated across all three categories. Of course, CarMax may view the three categories with unequal weighting, such as focusing mostly on "exceptional customer service." If they did, they might be missing something important!

CarMax's survey starts with Satisfaction and Loyalty questions, including the ubiquitous "How likely is it that you would recommend CarMax to a friend or colleague?"

The survey then dissects the buying experience:

Greeting at the Store
Wait List
Selecting A Vehicle
Product Knowledge
Communication Skills
Appraisal Process (in case I wanted to sell my car to CarMax)
Competitive Performance (versus other dealerships)
Business Office/Paperwork

Then the survey veers into gathering information about how we became aware of CarMax and our shopping process and past experiences with CarMax, none of which evaluate our experience.

The survey, using a quantitative bubble answer format, leaves no room for explanation. In its instructions, however, the respondent is told he or she may use a separate piece of paper or log onto the website.

Clearly, CarMax has a business formula that is carefuly crafted in its mission statement: great quality cars at low prices with exceptional customer service. I am wondering, however, whether the survey will capture what it is looking for? No survey questions asked about our satisfaction with the vehicle we bought. Only one question asked about the price, and that only in relation to other dealers.

Our response to the survey?

Experience with sales process--Very positive (5 out of 5).
Will we recommend CarMax?--Not at all likely (1 out of 11).
We we buy from CarMax in future?--Not at all likely (1 out of 11).

My View

CarMax has identified the right buttons to push for a great buying experience. Its mission is simple and clear: great cars, low prices, exceptional customer experience. But all of these elements must be working in order for the customer to be truly satisfied. If one of these traits goes awry, then the whole experience is sour.

It appears that CarMax has focused its attention on its service, and has done a great job at making used cars sales a "less risky" and more "professional" transaction. Clearly the sales process has been carefully scripted and choreographed, and its survey asks for evaluation of each step. Good job here.

But it also appears that the other two elements of its mission (price and quality of car) may need additional attention. The best way to understand this is to ask. And CarMax missed the opportunity in its survey.

CarMax customer experience analysts will scratch their heads when they read our survey. It will say:

You did everything great BUT we are not satisfied nor loyal.

And they will not know why.

Can Healthcare Insurance Companies Transform Their Poor Image? CIGNA Is Going To Try!

2010-04-19T08:46:00.000-07:00

There is no question that the Health Benefits, Insurance and Delivery industries are in major flux...increasingly expensive and seemingly not making anyone happy.

For example:

My health plan with United Healthcare simply can't get my dependents right. I have twin sons and the insurance company struggles with their having the same birthday. I also have a junior Christopher and we are constantly letting them know we are not the same person, which was a real problem when we both had the H1N1 flu and needed medicine. Just silly administrative nonsense that gets in the way of a bigger discussion.

Much in the same way that my son tried to order a "Hi C" from the drive-thru at McDonalds and instead received an "Iced T." A nuisance, but almost understandable.

Apparently Health Insurance Companies are beginning to wake up and understand that they have to address this high pay-low service reputation or their very existence may be in jeopardy. For example, CIGNA has enbarked on a mission to improve the clarity of its communications, as one step in its overall service transformation.

According to Linda Ireland, co-owner and partner of Aveus LLC, a global strategy and operational change firm, CIGNA set up a Customer Experience team whose mission is:

To help individuals enrolled in CIGNA plans achieve their health goals with helpful information, trusted support and excellent service. To do that we must: communicate simply, consistently, and in ways they find personally relevant, compelling and easy to understand.

In her blog, Customer Experience For Profit, she writes:

What I like so much about the CIGNA approach is that
they’ve articulated why they’re changing, what the plan is, and what’s been done
so far. I like that the changes they’re working on should strengthen their
experience while improving financial performance – fewer questions and problems
will drive down the cost to serve customers. And I imagine there was
some candid fact sharing in the conversation that triggered this effort, about
how they got to where they are.

You can read the full text of her work at http://www.ceforprofit.com/2010/03/will-cigna-free-its-customers-of-insurance-ese/

My View

The CIGNA focus on its service experience seems to come at a good time. Not only is the industry on an unsustainable path, but its performance has opened the door to government intervention.

CIGNA's Net Performance Scores (NPS), a measure of satisfaction (more on that measuring technique in other posts), is very low.

In late March, 2010, Satmetrix released its annual Industry Benchmark survey. According to the press release, Blue Cross Blue Shield of Illinois was the only health insurance company profiled with a positive NPS, scoring 5% in a sector with an average of negative 13%. CIGNA ranked last among major health insurers with an NPS of negative 28%. Full reports are available for purchase on http://www.satmetrix.com/and http://www.netpromoter.com/. A summary of the press release can be read at :http://www.customerthink.com/news/satmetrix_releases_net_promoter_benchmarks_for_customer_loyalty
A negative score means that more people rate their satisfaction poorly than acceptable. In an industry of major dissatisfaction, CIGNA ranked the worst.

I hope the efforts that CIGNA is undertaking are truly meaningful, not only for their millions of insured, but also to establish a new benchmark for the industry. As a former employee of this company, I hope it works.

This is one industry that can use Perfect Service.

Return on Satisfaction: Experts Struggle With Establishing Financial Metrics

2010-04-16T08:27:00.000-07:00

There is a lot of thinking going on regarding establishing a financial Return on Satisfaction metric for companies looking to invest to improve customer service. While returns are tangible for productivity (expense) and features (sales), companies struggle to find the right metric that captures improving satisfaction.

In John Oswald's Buzz Tank blog, he captures the research that companies that deliver satisfaction are also more profitable. http://www.buzz-tank.com/2010/02/11/on-measuring-the-return-on-customer-experience/

Within the comments section is a challenge by Don Peppers, a principal at Peppers and Rogers, about taking these economic concepts down to the project level. These comments are below:

Financial success that seems to be correlated with better customer experience at a company is certainly welcome news, but it hardly helps a marketing executive during a debate with other executives at the firm about how much investment a company should make in which kinds of experience-improving services. It has become fairly easy to “prove” that good customer experiences have some kind of impact on a company’s results, but Martha Rogers and I have always been struck by the fact that all these indicators are inherently non-financial metrics. Using these kinds of indicators, you still can’t actually quantify the financial benefit of, say, investing an extra $25 million in contact center training, or installing software and re-engineering a system for $50 million, in order to do a better job of treating different customers differently more effectively.
And, if your marketing exec says, well if we want a good customer experience then we should just DO these kinds of things, then our question is: What if the cost is $100 million? Or $500 million? See the problem? At some point a balance has to be struck, but where? Simply saying that CXP leaders tend to have better financial results than CXP laggards won’t solve the hard problem of resource allocation. To solve this problem you need a metric for the benefits of customer-experience-management that can be converted to dollars and cents.
----------------------------------
Peppers and Rogers have developed a Return on Customer metric that uses many of the same principles as the Return on Satifaction metric in the Perfect Service construct. I will study the Return on Customer metric and determine its benefits/shortcomings for the financial/benefits industries.
My View
My comments on Buzz Tank blog in response to Don Pepper's post is as follows> (Shortened for convenience of readers....for full post, link is posted above)
Don/John:
I think the ultimate question for Customer Service specialists is the exact question you pose: how can I calculate a Return on Investment for ncreasing the satisfaction of customers. Ultimately, to improve experiences, a company must invest capital, and that capital must have return. As you state, in the macro, it all makes sense, but how about the micro…in the world of competing priorities…how do you get a customer satisfaction project funded? Productivity projects promise reduced expenses, feature enhancement projects promise increased sales and revenue. But what about satisfaction?
I have worked on this problem in the past and developed an ROI metric for translating increased satisfaction into financial return. While developed for financial and benefits servicing markets, I think it works in concept for others.
In short, for those clients impacted:
–Probability of retention of the prevent value of current profit margins
--Probability of additional sales to that customer at the present value of current profit margins
–Probability of additional sales from referrals from that customer at the present value of current profit margins
The return on the requested investment is how many levels of satisfaction will be increased through the execution of a specific project.
One can quickly see how the math sorts itself out. By determining the clients impacted, the improvement in satisfaction metric from a 3 to a 4 will result in financial gain for the company. The more clients impacted, the better the financial return.

Customer Service Starts With Caring

2010-04-15T06:30:00.000-07:00

"Perfect Sales " Process: Finding Those Prospects Who Already Want Your Service

2010-04-13T06:16:00.001-07:00

Part 2--Targeting Potential "Perfect Service" Disciples

As president of your company, you have already focused the company to differentiate using a premier service approach. You have implemented many of the tenets of "Perfect Service," have begun delighting your current customers, and beginning to focus on profitable growth.

Remember, the magic "Perfect Service" success formula: Satisfied customers will stay with you at premium prices, buy more services when appropriate, and serve as enthusiastic references for new customers. The sales idea, then, is to find more customers who will act as disciples for your success.

You have now segmented your market into three sets of buyers:

Low Cost Buyers
Rich Features Buyers
Premium Service Buyers

Customers who value your key proposition--Premium Service--will appreciate the unique nuances of your offering, and be willing to pay higher fees. Your growth strategy should be to dominate the Premium Service segment, while working to grow that segment overall. Larger slice of a growing pie, so to speak.

There are a few categories of potential customers upon which a sales organization may target. For expediency, I will call them all "Service Prospects.":

Prospects who value your service proposition and are willing to buy from you;
Prospects who value your service proposition but don't know you exist;
Prospects who don't know if they value your service proposition but know who you are;
Prospects who don't know if they value your service proposition and don't know you exist;
Prospects who don't value premium service but know who you are;
Prospects who don't value premium service and don't know you exist.

An effective sales effort needs to quickly determine into which of these categories a prospect falls. Depending upon sales situations and service offered, once the category is determined, sales efforts must be targeted and proportional. Selling a service requires intimate understanding of the prospects specific needs, so the correct solution/service may be offered. Cost of sales effort is likely to be high, and also requires a high close rate. This requires time and resources, and must be focused on those prospects that already value what your company offers.

The prospects you should see out include:

Prospects who value your service offering, and who already know you;
Prospects who value your service offering, and who don't know you;
Prospects who are unsure about the value of service, but who know you;
Prospects who are unsure about the value of service, and don't know you.

Once identified, it is not useful to pursue those customers who do not value your service proposition. You will spend a lot of time convincing them that service matters, and will likely entice them with lower pricing for service that they will not value over the long run. They will never be "Perfect Service" disciples. Therefore, do not pursue:

Prospects who do not value service, but who know you;
Prospects who do not value service, and don't know you.

It may seem elementary, but few companies are so focused on their competencies that they are willing to cede potential sales on the grounds that the sales efforts will be wasteful, and the subsequent relationship will never be totally fruitful.

My View:

Targeting the right customers is an essential first step for the "Perfect Service" organization. Creating customized service solutions requires time and effort to understand each potential customer's situation, needs, and desires. (More on that process in future posts.) So it is critical that there is a high probability for a successful sale.

How does a firm determine the prospect's buying criteria? It is not cookie cutter, but there are a few indicators:

How is the prospect currently being served, and from whom? This is often an indication of past buying criteria, as well as an understanding of the service the prospect is currently experiencing.

Why is the prospect undertaking the search? Oft times, it is merely a due diligence search required by a purchasing department. Other times, this question uncovers a dissatisfaction with current service. If the dissatisfaction is with price, it is strong indication of a commodity shopper...but not always. Price dissatisfaction could also be a prospect currently paying for service not valued.

Why is the prospect willing to talk to us? Somehow, the prospect is communicating with your company. If you called, then they took the call. If they called, there is something they want to know. Either way, the prospect is most likely willing to learn, either about your service proposition, or about your company.

By identifying the type of buyer, a sales organization can now get to work on finding service solutions for this company's unqiue issues. This is where "Perfect Service" is first demonstrated.

Designing A Customer-Centric Store: Thoughts About Best Buy

2010-04-12T11:58:00.000-07:00

A Harvard Business Review blog entry http://blogs.hbr.org/hbsfaculty/2010/04/inside-best-buys-customer-cent.html describes how the electronics store Best Buy has seriously focused on designing its stores around the customer. Working on research about electronics purchasers, store management found that most buyers were women, and that women bought differently than men. They designed solution for women buyers. For example:

women care about installation; men think they can do it themselves. Best Buy bought Geek Squad and packaged installation with all purchases.

women care about bundles, like plugs and wire accessories; men think of these items as discrete purchases. Best Buy arranges its stores so accessories are conveniently located with the electronics.

women often shop with children; men mostly solo. Best Buy has play areas in each store so Mom can get some quiet shopping time.

From shopping assistants greeting customers to selling solutions rather than products, Best Buy has transformed its experience in a way that has enabled it to survive the recent economic downturn in good shape.

The key to Best Buy's insight? It is the commitment of management to declare that to remain relevant in today's electronics marketplace, Best Buy needed to see the world throught he customer's eyes. Author Ranjay Gulati describes:

"Becoming customer-centric means looking at an enterprise from the outside-in rather than the inside-out — that is, through the lens of the customer rather than the producer. It's about understanding what problems customers face in their lives and then providing mutually advantageous solutions.

"It's the approach Best Buy took and it's a key reason why the company has survived in the tumultuous consumer-electronics marketplace, while Circuit City is gone. Best Buy took the time to understand who its customers are and what they need and then started selling solutions instead of products."

My View

As we examine the role that Perfect Service design plays in creating a successful sales process, it is useful to look at companies who have done so. Best Buy decided to take a traditionally price and features sales process and turn it into a needs and solutions process. It even targeted a specific buyer to make the experience even more specific!

The wisdom to do this is bold...and rare in business these days. Awareness is only part of the equation, since even with the knowledge, most managers do not commit to transform! States the writer:

"Even when a company and its employees try to make sense of what they are hearing from their customers, they often find themselves immobilized by their own organizational architecture — the internal "silos" that inevitably grow around specific units and functions.

"I hasten to add that there is nothing intrinsically wrong with silos. Division of labor, specialization, and departmental responsibility are necessities in any operation. But most firms today are still structured around product and geography. They have excellent perspectives on what they make and where they distribute and sell it, but poor views of customers and their problems. And these inadequate sight lines impede coordinated action toward solving these problems."

It appears that most companies desire to deliver a premium customer experience, some may even organize to gain insight as to what that experience entails. But too few actually do what is necessary to deliver that experience as a matter of competitive differentiation.

My comment on the HBR Blog:

"Great insight into a company that is taking its delivery of customer experience seriously. I took particular note of the comment that "it would be hard to find a CEO who would tell you that his or her firm isn't customer-centric already. And that's exactly where mass delusion begins for most companies."

"I have also found that many companies want to think of themselves this way, but do not have the nerve to walk away from any part of the market in order to focus on this perspective. So these campanies become pretty good at the customer experience, pretty competitive when pricing their products, and fast followers when it comes to product/service features. In short, they are pretty good companies on their way to long-term extinction.

"For companies to stay relevant and viable (read non-commodity), they must decide their market, and fully fill that market's needs in some dimension. For Best Buy, it may be service; for Apple, it may be product; for WalMart, it may be price. But in the end, management must decide and act."

Question: Are Sales And Great Service Really The Same Thing? Isn't It All About Meeting Needs?

2010-04-08T06:00:00.001-07:00

PART 1

I've been questioned recently about the sales process, and have been thinking a lot about the similarities and differences between Sales and Perfect Service. That is, when a company designs its practices to deliver premier services, what does this practice do for the sales process?

Quality expert Joseph Juran observed, "There should be no reason our familiar principles of quality and process engineering would not work in the sales process." Juran was speaking mostly about efficiency and error-reduction, and many of his metrics are about productivity. But if we substitute the words "Perfect Service" , I believe we can get to a similar conclusion:

"There should be no reason our principles of "Delivering Perfect Service" would not work in the sale process." Further, for those companies who embark on designing a premier service offering, I would emphatically state that it is a requirement to align service and sales practices. One step even further, premier service and sales practices are the same thing!

Sales Training books identify specific steps or stages in a sales process. These generally include the following elements. I am going to group these into three broader categories:

Prospecting
Initial Contact
Application of Initial Fit Criteria

Consultative Approaches
Sales Lead
Need Identification
Proposal

Closing
Negotiation
Closing Deal Transaction

In my next few posts, I am going to examine some of these characteristics.

Hampton Inn Gets Its Guarantee Right, And Customers And Staff Know It!

2010-04-05T05:57:00.000-07:00

The Hampton Inn, a mid-priced, value national chain of hotels, is obviously trying to be thought of as a "satisfaction leader." When you stay at one of their locations, they are going out of their way to make you feel comfortable, with free hot breakfast, or even a breakfast bag for those who don't have the time to sit down and eat, free high-speed internet service, and comfy, fluffy pillows, mattresses and blankets. It is clear from all of the signage and messaging, they want you to enjoy your experience.

But it is the guarantee that separates Hampton from the pack:

100% Hampton Guarantee

Read Our Lips:

100% satisfaction or you don't pay. When it comes to guaranteeing your satisfaction, we're much more than lip service. Since 1989 we've offering the 100% Satisfaction Guarantee to each of our guests: Friendly service, clean rooms, friendly service, every time. If you are not satisfied, we don't expect you to pay. Real value from your friends at Hampton.

Think about this. This is not about the cheapest room or the plushest amenities. This is about pure satisfaction, against a presumed Perfect Hotel Service model. One can only imagine the satisfaction categories that are being measured: clean comfortable room, convenient breakfast, basics like breakfast and internet included in price, friendly desk people.

Also think about this. The employees at each Hampton Inn know what is important, and knows the consequence of failing to perform. It is as clear as can be for staff and customers.

My View

My parents and their friends are from the car-trip generation where everyone piles in the vehicles and drive to vacation spots or to family who live out-of-state. They have recommended Hampton Inn to me for years, mostly because it is a good room at a good value and you get free breakfast. It is not a resort or a destination hotel, but they feel it is a good one or two-day transit experience.

I took a look at TripAdvisor (http://www.tripadvisor.com/) to see how travelers write about their experiences. It is one thing to say you want to service customers, it is another to deliver it in a way that customers want to talk about it.

Bartlesville, Oklahoma:
I like Hampton Inns, because you know what to expect, and almost all of them adhere to at least a certain minimum standard of cleanliness and comfort. The Hampton Inn in Bartlesville, however, is one of the best Hamptons I've ever stayed in. I think it is a fairly new facility - maybe 4 or 5 years old, but it has been very well maintained. The pool, breakfast room and common areas are all very clean and neat. The rooms are spotless and the staff are very friendly and helpful. I rate this one as excellent, because they deliver in every category of what this type of hotel strives to deliver. Like all Hamptons, it is not a luxurious, full-amenity hotel, but is a nice, reasonably-priced road hotel, that delivers great value for the price paid. It wouldn't stack up favorably against a well-run luxury hotel (in any category except price), but then it doesn't try to, so I give them an "excellent" rating, for being very good at what they are trying to be.

Quite simply, Hampton Inn is an example of a company that has figured out the path to excellence. Can your company be as clear in its mission, its priorities, and its commitment?

"The Appeals Practice"--A Growing Yet Short-Sighted Approach To Customer Service

2010-04-01T06:20:00.000-07:00

My last post discussed two personal incidents that pointed out service lessons:

--don't just strive to be better than the competition; strive for perfection;
--service your customers always, not just when they threaten to leave.

The second "lesson" triggered some additional thinking about what seems to be a growing model of customer service, one that I will formally label "The Appeal Practice." This is the intentional business design to maximize the financial outcomes of the firm through excessive fees and reduced service, while enabling a "white gloves" team to do whatever possible to satisfy complaining customers.

In a recent Harvard Business Review blog, Peter Bregman (CEO of Bregman Partners, a global management consulting firm) discusses his recent poor service experience with his exclusive NYC health club. http://blogs.hbr.org/bregman/2009/10/the-price-of-a-poor-experience.html The lack of service to this member was clearly unacceptable. But what caught my eye was what happened next:

"A few weeks after I was refused entry into my gym, I canceled my membership. The way my situation had been handled put the gym, in my mind, in a category of cheaper gyms. The fees I was paying were no longer worth it to me. Once I canceled my membership, I received tremendous customer service — apologizing, putting me in touch with the general manager, offering to freeze my membership for another month without charge so I could think about it — but it was too late. I was already gone."

The health club business model (and Poland Springs in my earlier example) was betting that it could charge high fees, minimize service, and then recover enough to retain its business. In Peter Bregman's case, they lost. In my Poland Springs case, they may still have me as a customer, but likely it won't be for long.

My View

The "Appeal Practice" service model is as follows:

--Promise financial deals, exclusive image, and exemplary service to entice potential customers to purchase your product/service;

--After initial deal expires, deliver veneer of promised features/service while maximizing financials from client base through extra fees and streamlined service offerings;

--Most customers, once committed to the service/purchase, will not take the time to challenge, and the company will achieve short-term finacial success;

--For those customers who do challenge, provide extraordinary service and financial deals to retain them.

This practice is common, and growing. It is not, however, how companies that want to compete on delivering premier service should be designed. There is a lack of respect and trust between customer and company that makes this fail.

I commented on Peter Bregman's blog as follows:
---------------------
Peter--

I recently experienced (and wrote about) an interesting phenomenon that I believe is becoming common practice. I call this "The Appeal Practice." http://deliveringperfectservice.blogspot.com/2010/03/yesterday-i-had-two-experiences-that.html

"The Appeal Practice" is based on the model that a company can push outrageous financial practices (ie, raising fees, charging penalties, a la carte selling of basics, etc.) or deliver unresponsive services (automated services, denial of health insurance or prescription coverage, etc.)to maximize short-term financial outcomes.

Many customers will just go along with the offering, figuring the switching costs or time wasted in challenging is not worth the effort. These companies depend on those the passivity of customers for their practice to work.

However, to limit any potential negative impact, "The Appeal Practice" companies design elaborate safety nets to catch any customer who DOES have issue, or who wishes to terminate the relationship. As in the case of your Health Club, when you expressed a desire to leave, suddenly the service red carpet is being rolled out, including fees waived and new permissions granted.

This practice, which is increasingly being used by Credit Card companies and banks (for annual fees and late payment penalties), health insurance companies (for initially denying claims), hotels loyalty programs(for designating elite status), is spreading.

The result? The "passive" consumer is being served poorly and paying more for that service than the "complaining" customer.

The "Appeal Practice" maximizes short-term financial outcomes, yet clearly erodes any loyalty a customer may have for the company he or she deals with.
------------------------------
Companies that deploy these types of service models are not interested in competing based on service, but rather are more interesting in the perpetuating a fraudulent relationship with their customers for as long as they can get away with it.

Lessons In Service: Strive For Perfection, Don't Screw Your Customers

2010-03-31T05:34:00.000-07:00

Yesterday, I had two experiences that triggered some thoughts about what companies have in mind when they act.
--------------------------------
First--

Watching television with my wife and a commercial appears for "Simply Orange" orange juice. The advertisement was clearly emphasizing the freshness and goodness of the product, features of a typical "product focused" sale. What caught my eye was the "Orange Back Guarantee."

According to the product's website:

"If, after tasting, you don’t agree that Simply Orange orange juice tastes as fresh as biting into a juicy orange, you may make a claim under the Orange Back Guarantee.....On a 3”x 5” card, state why you think Simply Orange orange juice does not taste as fresh as biting into a juicy orange in 50 characters or less.."

What do you get back? A free bag of the competition.....ORANGES!

I have been focusing a lot recently on guarantees, and how they make a market statement as well as focus an organization to deliver. So what does this guarantee do for the product? Well, it clearly caught our attention, more for being unique than anything else. Second, without tasting the product, my mind assumes it is a premium offering....why else would they guarantee such a thing. Third, it was not a true comparative offer, such as "we are guaranteed better than the other brands," yet it tried to position itself that way by comparing its taste to the ultimate competitor...the orange itself...against "the perfect competitor!"

My View:

The commercial worked for us. If you asked consumers to describe the "perfect orange juice," they would likely say that it should taste like freshly squeezed oranges. So Simply Orange guarantees its product is the "perfect orange juice," not that it tastes better than its competitors. I like that.

When trying to differentiate based on a premium offering, companies should look ahead toward perfection rather than simply staying ahead of competitors. Perhaps that's one of the reasons the Health Insurance industry, with its low service reputation, lacks a breakout service competitor...in their minds, it is okay to just beat competitors; they feel they don't have to strive for perfection.

Wrong.

------------------------
Second--

Poland Springs delivers bottled water to our house. Each month, we get a bill in the mail for about $40, which I am usually diligent in paying. A year ago, I noticed that a "Fuel Surcharge" had been added to the bill for about $2.50. I didn't pay too much attention to that since the cost of fuel had been going up dramatically. But I did notice that when the price of fuel went down, the surcharge remained. Well, unfortunately, last month I was two days late in paying my now $42.50 bill, and I see an additional $15 late payment fee. Now my bill is $57.50.

I was furious. So I called Poland Springs to cancel my delivery service. Between a Fuel Surcharge and now Financial Penalties, getting water to our home was getting expensive and complicated. Not worth it....

The Call Center representative transferred my call to a trained specialist who obviously handled all discontinuances. Noting my long tenure with with Delivery Service, she immediately offered to waive the Financial Penalty. As well, when I queried about the Fuel Surcharge, she said she couldn't remove the surcharge, but would discount my water 50% this month which would be the equivalent of about 9 months of fuel surcharge. So my bill goes from $57.50 to about $25.

Mission accomplished. I stayed. But I am not happy.

My View

There is an ugly business practice out there that I refer to as "The Appeal Process":

---Squeeze and underserve your customers and hope customers don't notice;
---Focus on recovery for those customers who do notice.

Like many companies, Poland Springs has set up a game of pushing the revenue envelope as far as it can (adding fees and penalties) to supplement its commodity product offering. For some companies, the money made on penalties, interest, and other charges can rival that of the product or service itself. (One has to question at this point what business these companies are in...is Poland Springs a bottled water company or a financial company?)

But Poland Springs understands that it can only push the envelope so far, and it tries to catch fall out during a recovery process. In the time of a 5 minute phone call and without my asking, the discontinuance specialist waived the penalty and discounted my water 50%. I am staying with the service, but am now wary of the company.

A company that wants to distinguish itself in service must not put its customers in such a predicament. By offering deals only to those who complain, or who know how to play the game, a company is creating a trust gap. I am not going to feel good about a service provider if I have to read and understand all of the small print just to not be taken advantage. Examples abound:

Health Care Insurers--deny coverage or prescription at first, but will accept if appeals are made. Model hopes insured people will not appeal.

Banks/Credit Companies--charge fees for everything but are willing to drop them if challenged or if accounts are threatened to be closed.

Everything Travel--the guy next to me on a vacation flight has paid half for his seat and hotel room because he knew how to work the process.

The true premier service provider would not have forced me to go through the humiliating process of threatening to stop my service before offering me the discount. If I was truly valued for my tenure, the discount or penalty waiving should have been automatic. Now that would have been impressive. I would have felt special rather than cheap.

Good Lessons here!

How Do You Know If You Are Truly Satisfying Your Customers?

2010-03-30T05:53:00.000-07:00

How do you tell if you are truly satisfying your customers? It is a very difficult question, one that many companies struggle to answer. In his excellent blog "Buzz Tank" http://www.buzz-tank.com/ John Oswald describes the dilemma:

A lot of the companies that I work with measure their customer experience by measures that wouldn’t really make sense to a customer. Things like First Call Resolution, Right First Time, Cycle Time and so on. Great measures (sometimes) but not terribly meaningful from a customer point of view.

If these common measurements are not the right measurements, then what should we measure?

It could be as simple as what Frederick F. Reichheld suggests in his book "Ultimate Question." Here he believes the answer to one question is a key measure: Would you recommend this company to a friend? The question has interesting implications, but ultimately requires additional queries to find out "Why" or Why Not?" to make the responses actionable.

But is it okay to be directionally correct with your questions? I think that companies that strive to be service leaders must be more precise in their satisfaction measurements. The data that is gathered is not just for "scoreboard" purposes, but also to drive analysis and improvement. Not having good fuel for this entire process is like saying that your car will be okay as long as you put liquid in the gas tank. The better the fuel/data, the better the car/organization will run!

My View

I took the time to comment on the Buzz-Tank blog about measurements, and the quest for "Perfect Knowledge." In that response, I state that I believe that by establishing the "Perfect Guarantee," companies are forced to get to the core of what satisifies customers. One technique of doing that is for customers to describe the "Perfect Service Provider." All efforts--measurement and improvement--can be geared toward that goal.

The response is below:

John--

In my own design, called “Perfect Service,” I believe that discovering what is really important to the customer is so critical that it must almost be forced on the company delivering the service.

Therefore, I advocate using a very strong and material guarantee of customer satisfaction as the rallying point for customer and delivery alike. No sense answering the phone quickly if the conversation is not satisfying, even if you have complied with the letter of a service agreement.

Once you have established the “metric” of customer satisfaction, then the company must discover what is meaningful for that client. Another technique I use is to survey potential and current clients and ask them to describe the “perfect” provider. They will use characteristics that are meaningful to them, not production metrics that are meaningful to the service operation.

By setting up measurement systems and continual improvement processes, you are prioritizing based on a customer satisfaction target. Of course, if you don’t get it right, you end up paying on the guarantee.

Good stuff.

"Customer Experience" In All Industries Needs Same Process As Service Companies

2010-03-29T06:15:00.000-07:00

When I study lists of companies that claim to want to differentiate competitively based on customer experience, I am heartened to see companies that I wouldn't have associated with "services" beginning to focus on the customer. Retail stores, computer companies, telephone companies, car dealers, are all sounding like pure service organizations these days. Clearly, the "purchase" experience or the "usage" experience, or even the "disposal" experience, are all important when thinking through satisfaction.

"When the customer is centric to the company's design, changes throughout the company happen!"

For example, in the retail world, some of the steps a shopper walks through in a store will add up to a good or bad customer experience. From Bruce Temkin at Forrester Research, http://experiencematters.wordpress.com/2010/03/29/walgreens-rolls-out-customer-centric-retailing/ many of these stores are now focusing on each opportunity and redesigning stores to accomodate. Steps include:

Wayfinding: From walking into the store until you find the right area
Browsing: Comparing multiple products within a category
Studying: Evaluating an individual product or products
Getting Help: Finding answers to questions along the way

So some stores are changing shelf heights and widening aisles, limiting variety of each item, providing more information about choices, and training clerks to be more informed. All in the name of improving the customer experience.

My View

The new thinking about "Customer Experience" can be useful when designing an overall premium service offering.

For those companies, such as retail stores, who depend upon sales of tangible goods, premium customer experience will lead to location loyalty and more sales of those goods. When the customer is centric to that company's design, changes throughout the company happen. For that retail store, reduced inventory means less dollars spent on idle merchandise and more focus on developing knowledgeable staff.

Most interestingly will be how these companies gain insight as to how well these changes are satisfying their customers. And then what process is used to continually improve these experiences.

This becomes even more critical when "service" is the good that is sold. Therefore, how the service is offered, delivered, consumed, and evaluated, must be designed in a way that satisfies the customer.

Companies That Service Their Customers Well Are Happy Companies...Like Zappos

2010-03-28T04:33:00.000-07:00

Success Magazine has named Zappos CEO its 2009 Achiever of the Year, using the subtitle: Zappos CEO Tony Hsieh elevated customer experience to a new level

While this online shoe and accessory retailer has grown extraordinarily over the past five years and recently sold to Amazon, it is Hsieh's comments about delivering customer service that I find refreshing.

"The thing we realized this year that sort of ties everything together is that customer service is about making customers happy, and the culture is about making employees happy. So, really, we're about trying to deliver happiness, whether it's to customers or employees, and we apply that same philosophy to vendors as well."

It is refreshing to hear things like "create fun and a little weirdness" or "deliver wow through customer service." These are a part of Zappos's Core Values. Love that.

At one of my companies, we instituted "Wow Wednesday" when we celebrated the week's service victories...handing out magnets to be displayed on metal shelves like arrowheads on college football helmets--gold if a client recongized you, silver if a colleague recognized you. Every month, the division got together to count magnets and celebrate.

My View

When companies strive to compete by delivering superior service, they must transform their entire organization to embrace it.

You can't just perform customer service, you must be a customer service company.

It is very difficult for executives to accomplish, particularly in larger companies where each division may find itself in different competitive arenas. But it is clear that in order to be the best, the entire company's focus--from management to phone reps, from the technology department to the finance staff--has to be about delivering service.

Critical as well is having the inspirational leader like Hsieh leading the charge. This cannot be a mid-level initiative.

Can Zappos continue to prosper as a premier customer experience provider within a much larger Amazon? Time will tell, but the foundation is there.

Getting Started: What's The First Thing Your Company Should Do? Guarantee It!

2010-03-26T05:00:00.000-07:00

My advice for companies looking to begin the journey toward premier service differentiation is to think boldly. Companies that dominate some niche of an industry should not be a secret. The marketplace needs to know what company is the best at customer service.

As important, is that your company's employees needs something to rally around that is clear, aspirational, and material.

So clear thought must be given to a statement that will rise above all others. One statement I have designed is the "Unconditional Satisfaction Guarantee." We have called this the "Perfect Guarantee." This guarantee boldly states that if you are unsatisfied with any aspect of our service for any reason, you do not have to pay until you are.

While there may be other statements you can make, such as the free service trial or the offer to pay for conversion to your product, the Perfect Guarantee is a bold statement of confidence that your service will please.

In his book, "Extraordinary Guarantees," Christopher Hart writes about a small building company that undertakes the strongest guarantee in its industry.

He writes: "The guarantee program did far more than attract customers. Since the inception of the program, the company has streamlined its operations, slashing costs and improving service....by offering to provide even slightly inconvenienced customers with compensation of significant value, the company was risking its own bottom line to make a statement about its commitment to satisfying the customer."

This company took a bold step by offering the guarantee in the first place. It is a statement to current and prospective customers that if you are looking for a firm that cares about service, here is one that is serious. Of course, the key is then to deliver on that promise.

But it is also a statement to the organization that you are serious about customer service. And that failure to satisfy now comes with a pricetag!

My View

When companies look for service partners with which to do business, they want the partner to have some skin in the game. The guarantee does just that.....it puts the two companies in business together.

But it is more than just a marketing ploy or financial gamble. The Perfect Guarantee statement is transformative.

Companies are now forced to understand what is important to their customer, and then get it right. No longer can companies hide behind legal agreements about levels of quality or average speed of answer in call centers. They must understand each client's buttons, and then deliver.

The analogy that can be used here is the simple garden hose. To find where the leaks are in a garden hose, all you have to do is cap the end of the hose and turn on the water. Before long, any leaks along the way will be obvious. The Perfect Guarantee serves as the cap, and any problems in service delivery will be exposed and be painful.

So the first thing I recommend companies do when embarking on this trek is to boldly put a stake in the ground, or cap on the hose, and that will force the organization to act. The rest is plumbing.

To Deliver The Best Customer Experience, Must Commit To Do Business Differently!

2010-03-25T07:34:00.000-07:00

I am still floored by the following statistics from Forrester Research:

80% of executives believe that their company competes on its "customer experience."
Only 11% have a formal process to assess and improve that experience.

For those executives reading this blog entry, I am sure you recognise the issue since many of your companies are counted here. I recently commented on this in a recent posting: http://deliveringperfectservice.blogspot.com/2010/03/businesses-need-perfect-service.html

As result, it is indeed a crowded noisy competitive marketplace, with organizations all over claiming to have the best service experience in the industry. But as we see from this research, most are claiming it, but are doing nothing other than telling stories, to deliver it.

The following is a copy of the first post for my blog that emphasizes the point:

-----------------------------------
Commit To Delivering "Perfect Service"

This blog is targeted to management within Service Delivery companies who truly want to be able to say "Our company delivers the best service in the industry!" and then deliver on that promise. Sadly, I have found that most companies will say the words--even put it is some sort of company values or vision statement--but then never commit to deliver.

It is not enough to say it; a company must be it.

"Perfect Service" is an approach to managing a Service Delivery company that transforms the focus of the company to totally satisfying the customer. And when a company begins that journey, magical things begin to happen:

--Customers begin to openly communicate with you;
--Satisfaction ratings begin to soar;
--Sales presentations begin to focus on tangible evidence of satisfaction;
--Conversations are less about cost and fees;
--Employee evaluations become simpler;
--And incredibly, costs to operate go down!

Over time, "Perfect Service" will retain and attract more customers--at lower overall cost and at premium fees.

--------------------------------

My View

My boss once challenged me to recommend an approach that did not merely talk about customer service, but transformed the entire company's customer service design into a premier customer experience engine.

My warning was straightforward: "To be viewed as the best, you can't do it the same way as everyone else....it is not a question of simply out-executing our competitors. The nuances will be lost in the conversation. To be the best, you have to do it differently, and be bold in your approach. It is a full body commitment."

Perfect Service was the result. And I am still convinced the principles of Perfect Knowledge, Perfect Improvement, and the Perfect Guarantee, can be the bedrock for other firms embarking on that same journey.

Bad Survey Process Can Lead To Results Manipulation, Not Improved Satisfaction

2010-03-23T05:33:00.000-07:00

Recently I was reading satisfaction survey results from Plan Sponsor Magazine, one of the "must read" periodicals in the Retirement Benefits industry. Every year, Plan Sponsor publishes an annual survey of customer satisfaction of providers of retirement service. Service Providers are given scores and "trophy" cups for top marks. These scores are highly publicized in the Retirement industry, with top scorers using them in their sales and marketing literature. Conversely, poor results have to be explained in sales presentations and client meetings.

All in all, a useful annual satisfaction benchmark.....right? Well, not exactly.

When one reviews the results, you are struck by the top scorers. They are not the firms one would expect, not the companies who are generally viewed by experts as the leaders in service. Also, in the categories one would expect certain companies to excel in, scores are lower than other competitors.

So what is going on here? Read about the methodology, and you can figure out what is happening. From Plan Sponsor's website (bold emphasis is mine):

Between late June and late August 2009, approximately 35,000 survey questionnaires were sent to defined contribution (DC) plan sponsors from the PLANSPONSOR magazine database, as well as to client lists supplied by DC providers; 5,635 total usable responses were received by the close of the survey on September 1, 2009.....Quartiles for participant services and sponsor services were calculated in each asset category in which a provider qualified for a rating. The score for participant services in each provider’s listing comprises the cumulative average of 13 categories, and sponsor services comprises 10 categories. The percentage score next to the quartile for each provider in each asset category represents the cumulative score out of 100%. For example, an average score of 6.82 out of a possible 7.00 for participant services in the small market would translate to 97.4%.

There are a couple of problems with this methodology, and an astute few companies who understand the process are taking advantage.

1. There is an appearance of randomness to the surveys but that is not the case. Surveys are sent out to both magazine subscribers (the names of which Plan Sponsor communicates to providers) and lists of other sponsors supplied by the providers themselves.

It is not hard to understand how this can be manipulated. By directly targeting communications to those providers receiving surveys, providers can somewhat sway results. Since the subscription base likely doesn't change much over the years, the pool of respondents is pretty much known.

Where the providers can truly impact the results is in providing Plan Sponsor survey names and addresses of clients. What clients do you think providers are supplying? Only happy clients, of course! And those clients can also be the target of communications alerting them to the survey, so they are more likely to respond.

Those providers that don't work the survey in this way are at a complete disadvantage. Those that do get better scores.

2. The aggregate category ratings, on a scale from 1 to 7, are then turned into a "score." This score is then ranked with other firms from high to low, and then categorized into quartiles. The major problem with this is that it does nothing to tell you how well the provider is satisfying the customer. If all scores are in the 90% satisfaction range, they will still be sorted into quartiles, giving the impression that the 3rd and 4th quartile are failing, when they are mostly satisfying.

3. When compiling overall scores, each category is weighed similarly. There is no attempt to determine the "value" of the category to the company or the industry as a whole. For example, if the key reason to select a provider is for their consulting capabilities, there is no way to give that category additional weight, resulting in an average score that may not represent the company's true feeling about their service provider.

It is telling that one of the "satisfaction leaders" in the survey is also a cost leader in the industry. This is counter-intuitive since the level of services provided is clearly not at the par of other providers. However, if companies don't expect premium service, they will be completely satisfied with adequate service, as long as it comes with a low pricetag. Think satisfaction of WalMart loyal customers versus Bloomingdales customers.

My View

Plan Sponsor Magazine surveys are very important in the Retirement industry. Yet the methodology is not tight enough to use as a measure of true satisfaction....cannot be viewed as Perfect Knowledge. Companies need to determine other ways to secure objective data that provide real insight; they need to understand what is important to their clients, measure how they are doing in those areas, and improve those results.

Is there an indictment of those firms who understand the Plan Sponsor process, and takes advantage of it to improve their standing? No way. They are smart companies who are seeking out any advantage they can get.

But are they also the companies who satisfy their customers best, as Plan Sponsor declares? There are enough holes in the process to clearly doubt that conclusion.

Health Insurance Companies Need To Pay Attention To Service

2010-03-16T11:52:00.000-07:00

A recent study showed that Healthcare Benefit providers were scored as the industry with the worst satisfaction record for the third straight year. Average satisfaction scores were a mere 51%, the same as the previous year.

You can find a summary of the report and the individual companies surveyed in the link http://www.forrester.com/rb/Research/customer_experience_index_2010_health_insurance_plans/q/id/56386/t/2

My response to the survey follows.

My View

In the financial benefits industry, I used to tell my troops:

“When customers feel good about your service, they will engage more. When they engage more, they make better decisions. When they make better decisions, they will have more money at retirement. So by providing excellent service on each phonecall, people will have a better retirement.”

But also: “when people have more money in their accounts, our company also makes more money.” So there are only winners!

The healthcare industry needs to understand that providing good service leads to more engaged people. This leads to healthier choices. This leads to fewer future claims. This leads to more profits.

If the providers of health insurance do not get this dynamic, they will never see the sense in providing good service.

The Opportunity

There is no larger challenge that to turn the customer experience in the healthcare industry to the positive. There are no winners here, but the industry is begging some firm to step out and set a standard.

Local Business Gets It Right! Giving Top Service At Premium Prices

2010-03-15T05:12:00.000-07:00

My son swam this weekend at Wesleyan University in a state competition. Near the pool is a small establishment named the "Neon Deli," a small business obviously catering to the local college population.

This swim meet is for kids (8-18) from all around the state, and for three days the rafters were filled with parents and grandparents, while the pool deck was covered with all sorts of swimmers and coaches and officials. Probably a thousand total people.

After each day's session, my son needed a sandwich--a simple ham and cheese on a roll.

On Day One, I notice the "Welcome Swimmers" sign on the door, and despite the dozens of people streaming in and out of the door at any moment, the proprietor at the register asked my son what stroke he swam (breastroke) and how he did (very well).

On Day Two, the proprietor asked my son how his breastroke went...he remembered!

On Day Three, by the time he got to the counter to order his sandwich (the line was six deep), his sandwich was already made....the sandwich maker remembered! And then she took the time to tell an old-fashined joke about sandwiches

While my son will likely remember this meet for a very long time, he is already telling his friends about his deli experience.

My View:

In an age when McDonald's cannot get a simple order correct (we experience a 50% failure rate whenever we order a "double hamburger, ketchup only"), here is a proprietor who obviously cares about his customers, and his establishment becomes legendary on the swimming circuit.

What did it take? Nothing but the leader showing his staff what is important (caring about his customers....), permitting his staff the leverage to act on that caring (making the sandwich ahead of time), and being aware of the extraordinary event going on from normal business (swim meet with lots of hungry people during normally slow weekend at college).

Did I even notice that I probably paid twice the amount that it would have cost me elsewhere?

Nope.

Did I care that all this chatting took a couple of extra minutes?

Nope.

Successful business?

You bet.

Businesses Need "Perfect Service"

2010-03-11T08:37:00.000-08:00

I was forced to take a few months off from blogging in order to work on a number of consulting assignments (that unfortunately were more strategic and M&A related than focused on service delivery). Yet, even after just a couple of months, I find a growing gap between companies that say they want to excel in service and those who are transforming their firms to do it!

Another of a series of excellent reports from Forrester Research illustrates this point:

The Good News

90% of respondents think that customer experience is very important or critical to their 2010 strategy.
80% want to use customer experience as a form of differentiation.

The Bad News

Only 11% have a very disciplined approach to the customer experience.
Only 62% even have some form of "Voice of the Customer" program in place.
Lack of "customer experience strategy" was cited as the number one issue.

The link to Bruce Temkin's blog is http://experiencematters.wordpress.com/2010/02/26/the-state-of-customer-experience-2010/.

My View

Having talked to senior management throughout many service industries about their competitive strategies, many believe that differentiating based on service is a viable strategy. After all, there are usually clearly identifiable competitors who are winning at price competitiveness or feature-rich product competitiveness. It feels like the only competitive space left is the ambiguous premier service segment.

It takes great discipline to align your company's vision, strategy and tactics to become a leader in any segment. In the Mutual Fund world, Vanguard's approach is perfectly aligned with its strategy for being a cost leader. Fidelity, on the other hand, has great product and technological features that it markets brilliantly. Both companies are built to succeed in that space.

Yet when it comes to the service space, all competitors claim victory. Price competitors can show the lowest prices; product competitors can show rich features and performance. Service competitors show a list of happy competitors. The troublesome aspect to this is that all companies in this industry have a list of happy competitors...premier service providers as well as Vanguard and Fidelity. Why? Because they are delivering on the promise they made to their customers....and customer bought them for that promise.

So having a "Differentiated Strategy" based on service has to be different than other competitors, both in design and delivery. It must align all aspects of the company, not just the operations or call centers. And it must yield results that are demonstrably different and better than others who dabble.

The Opportunity

With so many companies thinking and promoting service in their marketing literature, a company that is able to truly design and execute a premier customer experience will be able to find a receptive audience. I believe that "Perfect Service" approach is a great first step toward winning.

New "Loyalty Metric" Tries To Change The Conversation But Adds Nothing New

2009-06-10T09:05:00.000-07:00

Last week, an article caught my eye claims that exceeding customer expectations (which 89% of executives believe creates positive impact to business results) actually has little effect on bottom line. Rather, that service interactions are four-times more likely to result in a negative outcome than a positive one.

The authors, the Corporate Executive Board’s Customer Contact Council, believes that exceeding customer expectation results in virtually no gain in customer loyalty. Further, that service and support centers have little stake in building customer loyalty at all. The Council believes that instead of Customer Satisfaction, one should ask a single question to determine the Customer Effort Score, a proprietary metric. This metric, the authors believe, more accurately measures the customer's reaction to a service event, by measuring the customer's effort during the event.

My View:

My reaction here is pretty blunt. I think this research is garbage, from professional and personal experience. Somehow this magic question (that the Council doesn't reveal presumably unless you buy the research) will unlock the driver of dissatisfaction. Good answers yield good results; bad answers get bad results.

I believe companies that position themselves as premier service organizations need to establish ways to measure all drivers of satisfaction...finding "Perfect Knowledge" of their customers needs. Effort put forth by the customer can be just one measure. If a company delivers well across all drivers, then the customer is loyal--resulting in retention, references for others, and cross-sell opportunities. If you fall flat on that one measure, the customer will be unhappy.

Personal example today: two of my home computers had to have some work done, and the settings for the wireless network were deleted. I called my cable operator that also maintains our internet access and told them my issue. He said he would walk me through the process. So instead of fixing it on his end, he walked me through the multi-step process and within 10 minutes both computers were operational. My effort--full participation which I wasn't expecting. My satisfaction? Complete.

At the end of the day, service providers need to understand their customers needs, deliver to those needs, measure how they are doing meeting those needs, and fix anything that is broken. The result from exceeding customer expectations is a multiplier of benefit...customers stay, tell others, and buy more!

To link to my response to the posting on another blog, go to http://experiencematters.wordpress.com/2009/05/29/meeting-expectations-is-not-the-goal/

Healthcare Company Objectives: To Be Prettiest Pig On The Truck

2009-06-08T11:17:00.000-07:00

A bit of disturbing research was recently published by Forrester showing that customer satisfaction of the health plan industry is poor and heading lower. Should that surprise anyone? No...not with prices rising, co-pays and deductibles increasing, and coverages more restrictive than ever. Here are some of the results from the Forrester research from Bruce Temkin in his blog "Customer Experience Matters":

In Forrester’s 2008 Customer Experience Index (CxPi), we ranked 113 companies across 12 industries. I recently published a snapshot of the health plan industry looking at the results from the eight plans on the list (Aetna, Anthem (BCBS), CIGNA, Kaiser, Medicaid, Medicare, TriCare, and United Healthcare). Here’s some of what we found:

--Experiences are “very poor” and getting worse. As a group, the eight health plans ended up with a “very poor” rating of 51%; the lowest score of any of the 12 industries we examined. Making matters worse, the industry dropped three percentage points from the 2007 CxPi results.

--Kaiser led the pack. With an “okay” score of 70%, Kaiser led all health plans. All of the other plans ended up with ratings of either “poor” or “very poor.”

--Medicaid is as bad as it gets. With a terrible rating of 38%, Medicaid was the lowest scoring plan. It also ended up in next to last place across all 113 organizations in our rankings.

--Only Kaiser improved. When we compared the 2008 results with those from 2007, only Kaiser showed an improvement. CIGNA and Medicaid, on the other hand, declined the most.
Some big shifts in CxPi components. There were five double-digit changes in the scores for the three underlying elements of the CxPi: Kaiser’s improvement in being easy to work with and enjoyability, Anthem’s decline in enjoyability, and both CIGNA’s and Medicaid’s drop in being easy to work with.

My view:

The Health Benefit industry is headed toward a cliff, with people paying a lot of money and not feeling like they are getting the service they are paying for. There are lots of reasons for dissatisfaction, many of which are not related to the service itself, but many are--such as the "easy to work with" category."

Service has not been a priority for these firms in the past. Controlling costs has been. I have heard management at healthcare companies say that their goal is to provide service that is just good enough, but not great, thinking it will be too expensive to provide service that makes clients/employees happy. The phrase "prettiest pig on the trust" describes their goal...not a lofty objective.

Further, health plans are viewed as marquee benefits for companies. Can you imagine spending millions on a "benefit" that no one is happy with? Companies will soon see that the money spent is not worth the aggravation, and look for other ways to provide coverage...like cheaper Consumer Directed Health Plans....or no coverage at all.

That is, unless a company, like Kaiser, steps up and shows you can provide service at a satisfactory way, and make the case that it benefits the company to have good service for its helathplans. There is clear opportunity for health benefit companies to step up here....and differentiate based on service....Perfect Service!

Customer Service Reputation Can Be Tarnished/Enhanced In So Many Ways

2009-06-03T08:58:00.000-07:00

I have been reading a couple of items recently about the customer service delivery of several companies written by users of the services--

First the good: Apple

Karn Bulsuk in his Full Speed Ahead blog http://karnbulsuk.blogspot.com/2009/05/lessons-from-apple-on-customer-service.html has written about his experiences with his new I-Touch which when ordered was special delivered to him ahead of promised date, and when it broke unexpectedly overseas, he was able to get it fixed with no questions asked. He was very impressed and summarized his experiences--

Apple has shown us that good customer service involves:

Under promise and over deliver: Apple told me 3-4 days, but managed to get it done in less that time, which was a pleasant surprise because I didn’t expect it to be done so soon.
Accepting the product as defective, without arguing with the customer or making them feel if you are cross-examining them.
Have conveniently located offices, and design them well to make sure your customer feels comfortable.
Listen to your customers: if you say something will happen or you will do something, make it happen.
Smile.

Seems pretty basic, but now Karn's experience will be told to thousands of others. The result: Apple's reputation will continue to shine and people will continue to pay premium dollars for its products.

Now the bad: Nationwide

It appears that for whatever reason--purely for information or for sales lead generation--people ask questions on networking sites about experiences with different companies. The responses tend to be negative, since it is human nature to complain rather than to praise.

On LinkedIn, the networking site for businesspeople, a recent question was posted in one of the group discussion sections:

401k Platform Provider Issues: Who is having problems in the 401k market place ?
401k Platform Providers have issues from time to time. Whether its poor service, dropping or changing product lines, client neglect, or raising fees, employers can get poor treatment and seek to find a new 401k platform provider. Has anyone come accross a pattern of plan outflow from a particular 401k provider ?

There is no question about the intent of the questioner...who happens to be a broker from SmithBarney...although his motives are not clearly stated. He is prospecting.

In the first day of the question, he has three leads with more undoubtedly coming. Here is one response:

I find the Nationwide call center to be extremely unhelpful. I have heard they are taking steps to change it, but I've had many complaints from clients and participants.

Ouch...while the broker has gotten a lead, Nationwide has gotten a blackeye. Left unresponded, the perception from readers is that Nationwide delivers inferior service.

There are other examples which I will post upcoming....

My View: Companies that compete on services for competitive differentiation should care about what people are saying about their services, and deliver in such a way that leads to unsolicited compliments. Further, companies should encourage their clients to talk. And if one hears about any issues, companies need to address them forcefully. Nationwide management should address the comment with the LinkedIn poster directly (take care of the situation) and then post a rebuttal. This will muddy the "unanimous" feeling of the complaint while the company determines the root cause of the call center issue.

Great Read About Customer Satisfaction

2009-05-26T07:55:00.000-07:00

Bruce Temkin from "Customer Experience Matters" blog recently hit a milestone with his 366th blog post. He summarized many of his recent posts in a recent article. This is one of my favorite blogs to read because Bruce takes the research he and Forrester gather and publishes his views about them. While not directly related to the Benefits Business, many of the lessons are universal.

Here are some snippets that I selected from Temkin's summary:

The maturing of customer experience. Forrester’s second annual Customer Experience Index that rated 113 organizations across 12 industries showed that there’s a lot of opportunity to improve. This also showed up when consumers rated Web, phone, and in-person interactions in Experiences That Satisfy Consumers, 2009, The good news is that customer experience management is definitely maturing which I highlighted in the following posts: Customer Experience Grows Up, Six Trends Reshape Voice Of The Customer Programs, and The State Of Customer Experience.

Customer experience correlates to loyalty. In Customer Experience Correlates To Loyalty, I found that customer experience correlates to three key elements of loyalty: willingness to repurchase, reluctance to switch, and likelihood to recommend. And the correlations got even stronger since 2007. I dug a bit deeper into the data in More Info On Customer Experience And Loyalty.

Building a customer-centric culture. Culture is a key ingredient for good customer experience — so I introduced the 6 C’s Of Customer-Centric DNA. And it’s also why I told execs that they need to Invest In Culture As A Corporate Asset. Other posts that looked at culture included: The Cultures Of Best Buy, Google, GE, And Semco, WL Gore Succeeds Without Employees, At Four Seasons, Customer Experience Is Everyone’s Business, and Execs Need To Focus More On Culture.

Managing through the recession. I’ve been writing a lot about how to manage in a recession. Here are some of the key posts in this period: Recession Strategies From IDEO And Potatoes, Jeff Immelt On Managing In A Downturn, Turn Hard Times Into Goat Stew, Recession Leadership: Be Real, Communicate, And Look Ahead, Retail Execs Discuss Leading In A Recession, Learn From Home Depot And Macy’s, But Not Office Depot, and Lessons From Condoms And Canned Goods.

Customer service is a critical experience. In Don’t Confuse Customer Service With Customer Experience, I made the point that customer service represents a critical set of customer experiences. That became crystal clear from consumer responses in Customer Service Trumps Price. Who’s doing well? Look at Customer Service Champs From BusinessWeek.

The Apple/Windows customer experience battle. As part of my Customer Experience Index research, I publish snapshots on the results in 12 industries. It turned out that my PC industry snapshotcaused quite a stir. It was picked up by major news outlets, a ton of bloggers, and drove many comments on my blog. I felt the need to clarify my view in another post about the results. Apple even created a Mac ad that referenced the results.

I encourage my readers to check out Bruce's blog regularly!

Companies Must Organize Differently to Deliver "Perfect Improvement"

2009-05-15T08:31:00.001-07:00

When a typical company decides to undertake a "quality improvement" program, it creates "quality improvement teams" with members from different functional areas. The team members belong to the QITs in addition to their real job...which hasn't changed. Program progress, if any, is made outside of the true business. Often, these programs collapse of their own weight since people's "real" jobs will take priority.

In the "Perfect Service" approach, "Perfect Improvement" is imbedded into everyone's jobs. One of the taglines my team has used is: Perfect Service--The Way We Do Business.

So what is the best way to organize? I believe a three-way attack of satsifaction data is the best method.

--First, the Client Service team is responsible for improving that client's satisfaction. Each time their client's data arrives, the team must look at the results for satisfaction levels. When levels are less than stellar, the team is responsible for "fixing the situation," ie, assuring the issue is investigated, analyzed, and resolved for that client. Even if the problem is wider than just that client, the client team is responsible for insulating their client from future impact, until the overall "problem is solved."

--Second, the Operations Team responsible for each transaction that is measured is responsible for improving the satisfaction with their respective services. Whenever a client survey arrives for their service transaction, the Operations Team needs to understand the details of the result, and combine it with the results of other clients. The Operations Team is then responsible for "solving the problem." By reviewing their transactions across clients, this team is able to prioritize improvement efforts based on impact to overall client satisfaction.

--Third, Key Satisfaction Teams are organized to review and improve satisfaction scores of specific Key Success Factors (KSFs). Similar to the Operations Team, these teams are responsible for reviewing data across clients and transactions for their specific KSF. This team is then able to prioritize improvement efforts based on impact to overall client satisfaction.

This three-way or "cubed" review and analysis of data allows management to invest in those areas that will have the largest return on investment (in terms of satisfaction). Meanwhile, while business management is investing here, Client Service leadership is making sure the client is made happy right away.

Both Client Service teams and Operations teams are attacking the deficient results as part of their job, and evaluated based on their ability to move the satisfaction needle.

"The Role of Emotions In Buying Health Insurance"

2009-05-13T09:55:00.000-07:00

Another expert has opined about the service experience in making health insurance decisions. McKinsey, in its latest quarterly newsletter, points out that a focus on customer satisfaction will drive customers to you. Here is the link to their website, but the research requires a premium membership: http://www.mckinseyquarterly.com/Health_Care/
Strategy_Analysis/The_role_of_emotions_in_buying_health_insurance_2352

The role of emotions in buying health insurance
Consumers shopping for health insurance today face more choice, complexity, and financial exposure than ever before. In an increasingly uncertain world, what they are really seeking is peace of mind in their choices. Insurers that address the emotional needs and biases embedded in the typical consumer’s behavior will be successful in creating and distributing effective products, earning the consumers’ trust, providing a more satisfying shopping experience, and, ultimately, helping consumers better manage their health.

Further, McKinsey points out that 140 million Americans have discretion in the purchase of health insurance, representing more than $750 billion in premiums. The key point of the research is that while companies view health insurance as an "expense" issue, consumers select based on "peace of mind."

My View
Service providers have an opportunity to step in, understand what will drive peace of mind, and then focus on delivering that service perfectly. I am not sure whether insurance companies will ever be viewed as the honest broker in the information/service delivery, but intermediary service providers can. And there is a lot of opportunity to take marketshare and find profitability in doing it well.

Retirement/Benefits Markets Suffering From Lack Of "Perfect Service"

2009-05-13T07:41:00.000-07:00

There have been a number of articles in Plansponsor.com recently with implications about competitive positioning in the Retirement/Benefits marketspace. In each, I believe there are indications of a lack of overall servicing as well as opportunities to step up and dominate the space. To see these and other articles about the benefits market, link to http://www.plansponsor.com/.

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From Plansponsor.com on May 8: Interest in Integrated Service (TRO, TBO)Running Out of Steam
While cost savings and efficiency remain the most important reasons sponsors give for bundling (DC and DB plans) in 2008 (mentioned as the most important reason for bundling by 39% and 17% of sponsors, respectively), other key reasons vary by a plan’s bundled status. For example, fully bundled plans place great value on having a single point of contact, while semi-bundled plans place much greater emphasis on the opportunity to improve participant services, according to the report.

As a group, bundled plan sponsors question the ability of providers to deliver a consistent service experience across the bundled offering. Consider that bundled plan sponsors report considerably lower satisfaction levels with their DB providers in 2008 (63% vs. 77% in 2005), but higher satisfaction levels with their DC providers (85% vs. 77% in 2005). Intermediaries echo these sentiments, as only 13% believe that service quality is consistent across components of a bundled package.

From Pionline.com on May 12: Fewer DB execs looking to bundled providers
Fewer defined benefit plan sponsors are looking to outsource some or all of their plans to bundled service providers, according to a Chatham Partners survey.

My View:
This is a classic case of a failed value proposition due to a lack of execution. For years, there has been the promise of integrating retirement plans (DB and DC into TRO), then integrating all benefits (TBO), and then all Human Resource functions (HRO), and then all business service functions (BPO).

There is no question that companies want the simplicity and efficiency of a single-destination service provider. However, as these integrated solutions were sold, the services providers simply did not deliver an adequate product. The result is a blot on the entire concept.

The Opportunity:
Service providers that can fulfill the broken promise of excellent integrated servicing to companies and their employees stand to take significant share of the marketplace. I firmly believe that had companies focused their delivery on employee satisfaction, with the full commitment of a "Perfect Service" infrastructure, benefits integration would be the norm and those firms would be dominating the space.

-------------------

From PlanSponsor.com on May 12: Economic Crisis Accelerates Move To Consumer-Driven Health Plans
A recent study conducted by Workscape, Inc. and the Human Capital Institute (HCI) indicates that in the midst of the economic crisis...some employers are taking measures to mitigate increasing health care costs. Forty-four percent (44%) said they offer at least one high-deductible healthcare plan or consumer-driven healthcare plan (CDHP) to their employees.

My View:
The shift toward a consumer-driven healthcare plan model is inevitable (unless President Obama steps in with a massive overhaul). Shifting more of the "choice" burden to the employee, however, requires education, communication, and counseling/advising services that are just not there. Without access to vital information, employees will be unable to make critical choices that protect their health and wealth in the short-term and in particular the long-term. We have seen this pattern in the 401k plan where financial education and advisory/counseling services have evolved to meet the need...over 20 years!

The Opportunity:
Retirement and benefits companies can carve out an important niche by focusing on the needs of the employee of companies with HSAs and CDHPs. By servicing these employees in an extraordinary way, service providers will enable their company customers to responsibily achieve the utilization and then the savings these plans offer. Opportunity is there for the taking.

----------------------------

From PlanSponsor.com on May 12: Employees Need More Health Plan Information/Services
The 2009 UBA Employer Benefit Perspectives Survey found 81% of employers felt their employees were aware of health cost crisis and emerging trends. The survey also found 77% of employers strongly agree that employees need tools to help them choose the most appropriate plan option for them. Nearly 74% felt that the employer should provide education on health care costs and ways to manage those costs, including 68% who say employees should be given hospital/physician cost and quality info.

My View:
Employers are spelling out the types of service that will make their health plans successful. Not surprising, the views are about the services surrounding the plans, not the plans themselves. As above, the trends toward consumer decision-making is clear, but the information/tools are not available.

The Opportunity:
Understanding the client service need, and then filling it completely, is a way to effectively compete. There are those competitors who will design the plans with the best features, coverages, options; there are competitors who will compete with the lowest prices. I firmly believe there is ample room for a benefits provider to compete with services targeting employees who need help planning for and using their benefits optimally.

---------------------------

These examples show that companies that deliver extraordinary service, and develop a system that focuses on improvement of that service, can fill market holes. I believe it only takes a commitment and then a full-body resolve to develop this competitive advantage. And there is lucrative marketshare to be taken.

Brand Based On Extraordinary Service

2009-05-11T11:23:00.000-07:00

There are few companies out there who are able to state unequivocably that they are the premier provider of services in their particular market. A lot of companies would like to position that way, but few are able to transform their reputation.

Several excellent blogs focus on "branding" and how companies can position themselves to be identified singularly.

"Customer Experience Matters" by Bruce Temkin at Forrester Research is an excellent source for all matters service. In a recent post "Is It Time For An Unconventional Strategy?" he points out how even small players in a marketplace can beat larger competitors by focusing on a niche. Here is the link....http://experiencematters.wordpress.com/

My Point: By focusing on extraordinary customer service, a company can win against the marketplace. But first the company must fully commit to owning the niche. Anything less not be enough to compete against other firms with more resources and power. That's why "Perfect Service" should be a roadmap for competitive advantage,

"Perfect Knowledge"--The Data Lives! (Part 2)

2009-05-05T05:24:00.000-07:00

As I mentioned in previous posts, the client satisfaction data is the blood or the fuel that circulates through the system, firing up activity. (Sorry for the mixed metaphors....) I cannot stress this enough: the data tells you how you are doing, tells you where you need to work, and tells you if you are making any improvement.

Asking To Be Criticized

Getting that data is so important that companies need to ask for feedback often, and thank customers for providing the feedback...especially if it is bad! Most companies will shy away from receiving bad news, acting almost personally hurt if a customer tells them they are not satisfied.

Your customers must understand that part of the service "contract" you have with them is that they will provide you with their "truth" so you can improve it. If you do not get that truth, the whole service process will break down.

We should "invite" criticism. We reward customers who respond to surveys...no matter what they indicate. We celebrate a partner customer who feeds us the fuel for our service engine. Maybe we even award a customer with a certificate the points out a flaw in our process. Companies that desire top-tier service must open the floodgates of client evaluation.

When The Data Is Received

There are several tactical steps that must take place once a client response is collected:

1. Must acknowledge the receipt of the feedback. Since most likely the feedback is via internet or email, a thank you note should be sent immediately. In the message is the reinforcement about the importance of the survey and the next steps that will follow.

2. If the survey result is less than stellar (I used any score less than a 4 or 5 rating on any question on 5 point scale), a followup contact is made with the client. The purpose of the call is to seek more "context" on the score. This detail is carefully documented since it will be used by other teams for future root cause analyses. If the survey result is a "3 rating," this contact will be made by the "relationship or client manager" and the service manager responsible for the type of transaction.

3. Should the response on the survey be a 2 or 1 rating, senior management will attend the call. This is important because it indicates the seriousness to the client and team of the urgency the company has in understanding and resolving the issue.

4. The client manager commits to the customer that a formalized report will be created, with actions outlined, and presented to the client in the near future.

The result of this activity is that some aspect of service did not meet the client expectation, the service provider asked for and received this feedback in realtime, the service team quickly contacted the client for more information, and a commitment was made to present solutions quickly that will prevent a reoccurance.

This process alone will show your client your company is serious about satisfaction. Few, if any, of your competitors are going this far. But your company has just started because you have an asset that no other company possesses...realtime, detailed satisfaction data that you can use to focus everything you do.

Next Post: Perfect Improvement

"Perfect Knowledge"--Fuel For The Service Business (Part 1)

2009-05-01T07:38:00.000-07:00

I am continually amazed by companies who say they value client relationships, but rarely measure (or measure annually at best) the levels of satisfaction of their customers. Further, when results come in, the reaction is predictable: if high, then the management team has done a great job; if low, the survey methodology needs fixing. In most instances, the client teams are told to work harder to satisfy the customer. Work harder...and then we hope to see improvement next year.

Predictably, these actions don't result in systemic improvement; instead random relationship events drive the results.

Companies that strive to be the best servicers in their markets must:

1. understand what aspects of service is important to their clients;
2. measure realtime how they are doing in meeting these important expectations;
3. establish a process to improve results, using the data as the most important "truth."

Understanding What Is Important To Clients

Top Service Providers should strive to achieve perfection. That is, they should want to fulfill their clients' definition of "the perfect service partner." When that is acheived, clients will stay at profitable prices (retention), they will tell others (references), and they will buy more (cross-sell). That is the magic formula.

But first, we must understand how customers define "perfection."

One method that I have used is simply to ask clients to define "The Perfect Service Partner." We are not interested at this point in how well we are measuring up to that standard, but to understand the categories upon which we need to be measured.

Survey techniques vary here--from answers to open questions to clients selectioning answers from lists. By having clients select those attributes that are important, and then weighting those selections versus one another, the result is a list of categories that we can use to measure our performance.

For example, the list will likely include:

Timely deliverables
Accurate processing
Low cost

But the list may also include:

Human contact available when I need them;
Expertise in topics;
Relationship manager knows my business/empathetic;
Any issues will be addressed immediately;
Professional.

Your company is not just evaluated on getting the job done, but is also being measured on how easy you are to work with, how reliable you are in extraordinary situations, how expert you are in handling each client's unique issues. Processing timeliness and accuracy is the commodity. Premium service is delivered person-to-person and the top service providers understand that and measure it.

With these categories, you should have an idea of what is expected. If you are delivering against these 10-12 categories in every interaction with your customer, you are likely doing very well. We call these categories Key Satisfaction Factors (KSFs).

Measure Satisfaction Often and Timely

For each client interaction, your desire is for the client to evaluate how well you did. There, however, is a practical limit to the granularity of this approach since throwing surveys at clients every day may get tedious and become an issue in and of itself. It is a good idea to discuss this approach with the client, and determining the frequency of survey that suits them.

How you survey will depend on your company's capabilities, but top firms focus on:

ease of distribution
ease of completion
ease of collection
ease of access to data

My team developed an email distribution of survey notices with a secured link to a survey page on the web. Simply by clicking on the link, the client is able to access the survey. The questions are simple to answer with a single click and when completed the data is automatically collected into our survey database for review. An email is generated to client service team alerting them to the completed survey.

The questions are easy to understand and complete:

For this transaction, was the information delivered within our committed timeframe?
5--Yes, perfectly
4--Yes, but slower than we want
3--Mostly
2--No, the information was late
1--We are still waiting

For this transaction, were we available to answer any questions if needed?
5--Always
4--Mostly
3--Sometimes
2--Infrequently
1--Never

An important point which will be discussed in the next Post is that analyzing data requires consistent questions across transactions and across time. Therefore, the wording of the survey is important.

Next Post: Analyzing The Data

Perfect Service--Creating Return on Satisfaction Metric

2009-04-30T05:02:00.000-07:00

In a typical company, decisions are made through the daily push and pull of today's priorities. What drives these priorities? A lost sale, an itchy CFO, a budget commitment gone wrong, a competitor's press release.....just about anything. As I watch priotization processes at various companies, I am amazed at the lack of connection to a strategy or commitment to make tough decisions of what not to fund. A company committed to "Perfect Service" has a clear filter upon which to prioritize--the customer's voice.

By using client satisfaction as the key determinant for prioritization, the approach becomes straightforward: invest in activities that will make the client happier. The higher the impact on client satisfaction, the more priority the investment should get.

This is a key point: Satisfaction needs to be quantifiable and translated into new Return on Investment (ROI) measures. Traditionally, ROI has focused on impact on Productivity (how much cost eliminated) or impact on Sales (how much additional revenue). These commitments to improve return are understandable and assignable to the requestor of the funds. Client Satisfaction is often harder to quanitify...how much return does a company get with an increase in happiness? The answer is "Plenty" and the challenge is to prove it.

There has been a lot of good work on Client Loyalty that we can use to create this Satisfaction ROI metric. I am going to borrow from some of that work (and will reference the author if someone will remind me...)

Using a Client Loyalty scale of 1-5, we can assign values to each level of loyalty:

Score 5--Client is not only very satisfied with your services, but is also making decisions to expand the relationship when given the opportunity. Solid reference. Retention is assured.

Score 4--Client is very satisfied with your services, but has not yet expanded relationship. Solid reference. Retention is assured.

Score 3--Client is ambivalent about your services, and likely not buying any more at this time. Unlikely reference. Retention over the long term is questionable.

Score 2--Client is unhappy with services, and is definitely not buying any more. Retention is unlikely over the long term.

Score 1--Client is publicly unhappy and threatening. Not only is retention not likely, but client is going out of way to let others know of their displeasure.

Clearly moving a client up the metric scale is important, particularly when client retention can be impacted. However, if a company only uses client retention as the main gauge, it will focus on the wrong customers for priority--the clients with 1s and 2s. In actuality, companies with the most loyal and profitabile customers focus on those with 4s and 5s, since they are the keys to growth. The amount of time and spend to bring a 1-rated client to even a 3-rating is considerably higher than bringing a 3-rating to a 4 or 5-rating.

As a company becomes more sophisticated with these measures, the ROI can be calculated for each satisfaction rating.

For example, a 5-rated client will:
--generate profit streams for the next 3 years at 100% certainty;
--serve as a positive reference for at least 3 winning sales bids that will create streams of profitability;
--buy additional product adding 25% to revenue streams.

It is not hard to see how this client has a huge impact on current and future earnings and growth, and its importance is a multiplier against current earnings streams alone.

Another example, a 3-rated client will:
--generate profit streams for the next three years at 75% certainty;
--not serve as a reference;
--not buy additional product.

This client, while important, is not as critical to the company's future as the 5-rated client. The key strategy here is to focus on increasing satisfaction to become 5-rated. The investment here will yield significant return.

Last example, a 1-rated client will:
--generate reduced profit streams for the next three years at 10% certainty;
--not serve as a reference, and take opportunity to negatively impact sales;
--not buy additional product.

The investment in this turnaround will be painful, most likely will fail, and the return even by moving it two levels to a 3-rating will not be enough to offset the cost. Astute companies will identify these clients and resign them so as to focus on more profitable opportunities.

Building Blocks For "Perfect Service"

2009-04-29T11:27:00.000-07:00

To satisfy your customer, you can't just hope it will happen...you have to do something differently! I love the title of the best-selling sales book "Hope Is Not A Strategy." The same holds true for customer service. Companies often say customers are important, and then try to incent employees to make it happen. Motivation is just part of the equation. The key point here is that a company must be designed to deliver superior service and not just to lean on employees to perform extraordinarily.

"Perfect Service" has three main building blocks:

1. Perfect Knowledge--It is critical to know how your customers are feeling about each contact or transaction performed on their behalf. By collecting information on the actionable details, you receive early warning signals when things are not going right. This data becomes the lifeblood of your organization, driving most decisions and evaluations within the company.

2. Perfect Improvement--The data is received and reviewed by several teams: client teams, operations teams, and "key success teams." The company's success is driven by improvement in these metrics, so when a poor review is received, action is swift by fixing the client situations (short-term) while you are solving systemic problems (long-term). Accountability for improvement is clear. Prioritization for service improvement is based on a "return on satisfaction" metric.

3. Perfect Guarantee--The ultimate statement of commitment is the 100% Unconditional Guarantee. What can you say to a guarantee that states: If you are unhappy with our services for any reason, you pay what you think the services are worth. To invoke the guarantee, simply call the president of the company. It doesn't get any clearer than that.

These building blocks are powerful tools designed to change how a company does business. An organization that uses these tools cannot help but pay attention to things that matter to the client.

Next posts will drive into details for each building block.

Commit To Delivering "Perfect Service"

2009-04-29T11:02:00.000-07:00

This blog is targeted to management within Service Delivery companies who truly want to be able to say "Our company delivers the best service in the industry!" and then deliver on that promise. Sadly, I have found that most companies will say the words--even put it is some sort of company values or vision statement--but then never commit to deliver. It is not enough to say it; a company must be it.

"Perfect Service" is an approach to managing a Service Delivery company that transforms the focus of the company to totally satisfying the customer. And when a company begins that journey, magical things begin to happen:

--Customers begin to openly communicate with you;
--Satisfaction ratings begin to soar;
--Sales presentations begin to focus on tangible evidence of satisfaction;
--Conversations are less about cost and fees;
--Employee evaluations become simpler;
--And incredibly, costs to operate go down!

Over time, "Perfect Service" will retain and attract more customers--at lower overall cost and at premium fees.

The next few posts will walk you through the elements of "Perfect Service."