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

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

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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?

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

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

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!

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!

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:

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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.

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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

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

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

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"

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.