We live and work in a service-centered economy, an economy dominated by industries that perform rather than produce. Seventy percent of the jobs and sixty percent of the GNP come from the service sector. Services are America’s most profitable export, the gold and the growth of the American economy. It is becoming obvious that as manufactured goods and products become more and more alike, it is the quality of the accompanying service that is the critical difference. Service is the business of business in America today.
The transformation from a marketplace focused on goods to one dominated by services is an industrial evolution that requires a parallel change in the way organizations are structured and—most importantly—managed. Successful service management may be the organizational challenge of the decade ahead. Organizations that master the delivery of high-quality, cost-effective service will be the winners. Managers who can manage the development and delivery of service will be the stars.
What does it mean to effectively manage customer service? Is it to manage the moments of truth? A “moment of truth” can be defined as any point at which a customer comes into contact with any aspect of your operation, and has a chance to form an impression of the quality of service you provide. There are thousands such moments every day, for every organization.
Effectively managing your organization’s moments of truth turns on three factors: understanding and staying close to your customer; articulating the service “package” and service delivery system; and creating genuine employee empowerment. It might be helpful to think about these factors in terms of a service triangle. At the top of the triangle is your organization’s service strategy; at the bottom right are the people in your organization; at the bottom left are your service systems. In the center of it all is the customer. The value of your service, the quality of your service, is continually being judged by your customers. Consideration of changing customer wants and needs is central to effective service management.
There is a basic point about service which needs to be made. Service is and must be everybody’s business: Everybody is in service. Get rid of the notion that service is something which is handled by a particular department. In those organizations where service is an obsession—places such as Marriott, IBM, McDonald’s, and Disney—service isn’t a function. It is the product, and customer satisfaction is the measure.
Think for a moment about what we associate with the word service—servant, servitude, servile. The connotations are overwhelmingly negative. In fact, in Old Industrial America, no self-respecting business school graduate would be caught dead working in a service business—save banking and finance. Times have changed and our attitudes need to change, too. Rather than placing you in a “one-down” position, delivering quality service places you in the “one-up” position. Managers at Federal Express, ServiceMaster, ARA Services, Wal-Mart, Super-Valu, Southland, and Dayton-Hudson know that service is big business. They also know that it is an intellectual challenge worthy of the most demanding management mind. Those who can accept this fact and get on with it will survive. Those who reject the obvious are in for a rough time.
Customer service is a new strategic tool, a positive force for increasing sales—and for reducing the cost of sales. Lou Gerstner, when he was CEO of American Travel Related Services, called the company’s obsession with quality customer service “my most strategic marketing weapon.” Economically, it pays to deliver quality service. Just look at the area of customer complaints. An unhappy customer will tell nine to ten people about his or her problem with you. One in eight will tell as many as twenty people! That means the potential loss of much more than that one unhappy customer. The average business only hears from about four percent of its unhappy customers. The sharp service organizations, however, encourage complaints. They know that an unhappy customer who is listened to, whatever the final outcome, is twice as likely to do business with you again as an unhappy customer who doesn’t complain or who is ignored. Of customers who complain, seventy percent will do business with you again if the complaint is resolved in their favor. If the complaint is resolved on the spot, that jumps to ninety-five percent.
Acting quickly to resolve customer complaints obviously pays. The complainer who is satisfied will tell five people about the problem he had with you, and about the satisfactory resolution. Customer loyalty is, in most cases, worth about ten times the price of any specific purchase! From that perspective, there is no excuse for not resolving the complaint in the customer’s favor. The customer may not always be right, but he or she is still the customer and the goal of the quality service organization must be to serve the customer.
A customer’s positive or negative experience with a complaint, expressed to the company or not, is only one of the many “moments of truth” which occur in organizations. Customers come to such moments with certain built-in expectations, expectations they have learned from past experience and from the organization’s own marketing and advertising. Customers “grade” companies based on whether those expectations are met, unmet, or exceeded. Organizations which simply meet customer expectations are in reality providing only mediocre service. For the service organization to survive and prosper, it must go one step better. It must exceed customer expectations, score above average on the customer’s report card. To do this, the organization must first have a thorough understanding of the customer, the center of the service triangle. You must know what the customer expects from the organization’s service and how the customer currently perceives the organization’s delivery of that service.
The service management concept must grow from the organization’s understanding of its customers. It must be a nontrivial statement of intent, of just what it is that the organization will be delivering to its customers. It must be a noticeable difference and have value in the customer’s eyes. In addition, it must be deliverable. A service concept which is unworkable will only lead to frustration for both customers and employees. To ensure that your organization’s service concept is deliverable, it is vitally important that your service delivery systems be both user- and employee-friendly. They must be designed with the organization’s service package in mind. In addition, they should encourage feedback from employees and from customers so that they can be self-correcting when they fail to meet customer expectations. Front-line people are usually well prepared to find ways to improve the systems they use every day.
The final factor in managing quality service is people. Employees must believe and understand that: “To the customer, you are the company.” No amount of research into customer wants and needs, no service concept or delivery system, will allow an organization to deliver quality service if the people within the organization are not also working toward this goal. The front-line people need to operate with a consistently high level of concern about, and attention to, the needs of the customer. They are, perhaps, the service organization’s most important asset. Yet, judged by the way most organizations treat them, front-line people are the least important people in the organization. In most organizations the front-line employee is the lowest paid, least trained, and most poorly screened individual in the organization.
It is remarkably common to find downright toxic people in critically important front-line contact jobs. People who lack the temperament, maturity, social skills, and tolerance for frequent human contact should never be in primary customer positions in the first place. Effective service people are rarely created through smile-training and empty slogans. Instead, organizations must begin to place a premium on attracting and rewarding employees who have a high level of maturity and social skill. Employee commitment revolves about one and only one issue—trust. Organizations which trust their employees to work with the customer’s needs and expectations always in mind are organizations which empower employees to fulfill those needs and expectations. The organization trusts that the employee will always use his or her best judgment before acting, and the employee trusts that the organization will not punish him or her for taking initiative and making, possibly, an error. In this way customers with special needs and peculiar problems can be seen as opportunities to showcase good service rather than as annoyances that point out the rigidity of the front-line person’s job.
It is important to realize that you have a service role in the organization even if you never see a customer. Jan Carlzon, president of Scandinavian Airlines System, points out that if you’re not serving the customer, you’d better be serving someone who is.
In any organization, people who have direct contact with the customer are primary service people. Secondary service contact people serve the customer unseen. Everybody else is service support. Most managers are service-support personnel. The manager’s responsibility is to help the primary and secondary service employees do their jobs in the best manner possible. As Bill Marriott, CEO of Marriott Corporation, explains, “My job is to motivate them, teach them, help them, and care about them.” The purpose of the organization is to provide support—support for the customer and the people who serve the customer. It has no other meaning or purpose.
When you stop to think about it, management is a service. And like all services, it must change to meet the demands of the marketplace. Just as the service person of today must work to meet customer needs and expectations, the manager of today must work to keep employees motivated and customer-focused. It is the ability of a manager to fulfill this double service role that is at the heart and soul of successful service management. It takes courage, stamina, and dedication to manage well—to be profitable and successful—in Service America.
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In this paper Ron Zemke describes the basics of an effective service-delivery system and succinctly makes his case for why service is important. Readers who want to know more are referred to his books Service America! (with Karl Albrecht; Homewood, IL: Dow Jones-Irwin, 1985) and The Service Edge (with Dick Schaaf; New York: NAL Books, 1990).
The implementation of a service orientation is, we think, an important innovation within America—one, thankfully, that any traveler in the States today can experience firsthand. But with this innovation comes change, and change, if it is to continue, requires support. The front-line people called upon to implement a customer-is-right policy must be supported by the organization. This should include clear statements of intent and unmistakable acts which show the organization is living by its words. In addition, the front line must be supported with the resources needed to meet high service standards, and people must be able to work “outside the box”—that is, they must be given the freedom to meet the unique needs of customers.
For their part, individuals must learn to tolerate the ambiguity demonstrated in each new “moment of truth” opportunity and to respond with a readiness to defer judgment. We agree with Zemke that it is easier for people to respond in this manner when a high level of trust exists in the organization. SSG and DAH.