Chapter 1

 Customer Service: A Many Splendored Thing

News Item: Washington, D.C.—Lt. Gen. Joe N. Ballard, Chief of Engineers, announced the implementation of the plan released earlier this year to restructure the U.S. Army Corps of Engineers into eight divisions. “The new structure of the Corps will ensure continued customer service,” said Gen. Ballard.

Wait a second. “Continued customer service” . . . at the Army Corps of Engineers? (“Good day, ma’am. Please forgive the intrusion. See, we need to raise just a bit of dust, and we beg your pardon for that slightly inconvenient noise while we blast that darn dam and reroute the river. Appreciate your kindly understanding. Would you mind terribly if, on our way out, we plant a few petunias and pansies? It’s our pleasure to serve. By the way, sure would appreciate your filling out this customer satisfaction survey. We really do want to be your earth modifiers of choice! Y’all have a nice day now, hear?”)

What’s going on here? Welcome to the New Age of Customer Service. Everyone has jumped on the customer service bandwagon. (By the way, Gen. Ballard’s press release mentions that the new plan “optimizes support to military forces, minimizes district realignments, and maintains geographical balance.” In other words . . . you know, better customer service.)

Customer Service. You know what that is, right?

Define It

Try this little experiment. Ask five people to define “customer service.”

Don’t be surprised if you get 20 different answers! Customer service could be . . .

• Receiving a quick, friendly greeting in a retail store.
• Getting the balance on your heating bill straightened-out.
• Having the repair technician show up at your business to fix your copier just an hour after you called for service.
• Ordering flowers for your Mom’s birthday, on your computer, at 3 in the morning, for delivery later that day.
• Spending more than 24 seconds with your doctor, who’s caring and not abrupt; and not having to wait 90 minutes surrounded by old, tattered, germ-covered magazines in the waiting room for the privilege.
• Calling a vendor to order materials and getting the price, delivery, and credit details worked out all in one call.
• Experiencing a no-hassle exchange for that goofy tie you received as a gift.
• Talking with someone who actually understands the problem you’re having with your software—and getting an immediate answer that actually solves your problem right then and there.
• Calling a store and having a nice, helpful person tell you if they carry such-and-such an item, and whether they have it in stock.
• Encountering a helpful salesperson who takes the time to ask what features you think the product should have to meet your needs.

These are all examples of what people describe as customer service. And to be sure, customer service is all of these things and more.

But Don’t Confine It

In some companies the term customer service has a very restrictive definition. To them, customer service is a specific department dedicated to one or a few tasks. Those tasks might include one or more of the following:

• Quoting prices to customers
• Entering customer orders into a computer

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   Word to the Wise
  Your organization’s constituencies are all the people served by it. They could include the owners, stockholders, employees, customers, joint venture partners, members of the community, government officials, and even suppliers. Constituents are your company’s very important people, no matter who or where they are.

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• Telling customers the status of their orders
• Explaining an invoice
• Dispatching a truck to pick up or deliver something
• Resolving billing questions
• Investigating or approving credit
• Collecting overdue bills
• Repairing malfunctioning products made by the company

While these are all customer service functions that may be best handled by a customer service department, we have a broader concept in mind. In this and the next few chapters, we’re going to describe customer service as an objective for your company that is so vitally important to its success that it goes beyond the traditional customer service department. In fact, it even goes beyond the traditional idea of what constitutes a customer.

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 Tales from the Real World
Don once worked with a colleague responsible for hundreds of sales people who referred to their employer’s customer service department as the “sales prevention department.” The sales folks kept “trying to get the business” but ran into a brick wall erected by the customer service department. The customer service department dutifully enforced some terribly rigid (and probably unreasonable) company rules, making it difficult to please more customers and make more sales.

 

Eventually, under intense competitive pressure, a major restructuring aligned the sales, credit, and customer service groups toward common purposes. They, along with technical support, all began working together to please more customers—and make more sales. The upshot: sales, customer satisfaction, and employee satisfaction all increased.

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To us, customer service is everything your company does—and everything it doesn’t do—to create Personally Pleasing Memorable Interactions (or PPMI) with the company’s many different constituencies. We coined this catchy little mouthful to capture the essence of great service: Truly great service pleases a customer according to his or her individual preferences—so much so that the customer feels special and remembers the interaction with the company. And wants to come back for more again and again.

Human to Human

Customer service injects humanity into a business transaction. There are two vital components to every interaction you have with a customer:

1. The purchase or transaction
2. The relationship

Good customer service always builds the relationship and completes the transaction. As you will see, it also is the relationship that often builds more sales.

Every business interaction involves the twin dimensions of business: the transaction and the relationship.

Copyright © 1997 by Don Blohowiak

Customer: Far Beyond “Buyer”

When you think of customer service as encompassing all the activities that can create Personally Pleasing Memorable Interactions (PPMI) with many different very important people, you certainly include the work done by traditional, more narrowly-defined customer service departments. Yet, for those departments to be most effective in their dealings with customers, a broader idea of what customer service is needs to take hold in the organization.

Let’s dissect the term customer service.

Customer, as the dictionary defines it, translates into buyer. And while buyers are mighty important, heck, let’s say absolutely indispensable, to your company’s success, how you treat your buyers depends largely on how your company treats lots of other important people (like you and your fellow employees, for instance).

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 Tales from the Real World
Gordon Bethune, Chairman and CEO of Continental Airlines, knows what it takes to transform a company from the brink of bankruptcy to being an industry leader. In 1993, Continental came out of bankruptcy protection. Just three years later, Continental was named Airline of the Year by Air Transport World for being in the top three of all four Department of Transportation customer satisfaction measures—on time performance, baggage handling, fewest customer complaints, and fewest involuntary denied boardings. When you ask Bethune or any of his employees how they accomplished this feat, you hear the unanimous answer that both the employees and customers were treated as valued stakeholders in Continental’s overall success.

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When you think of your company’s customers as including many more people beyond those who simply buy from your company, three interesting things result:

1. You make delivering great customer service the responsibility of many more people beyond those in the customer service department.

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    At Your Service
   Thinking of customer service as giving good service merely to buyers is extremely limiting. An organization tends to give much better service to buyers when it serves well all the people who are important to it.

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2. Your company tends to give better service to many more people.
3. Far more people begin to think of your company and talk about it as one that really cares and provides really great service. And that should encourage more people to buy from you.

Service: Far Beyond “May I Help You?”

You don’t need to read this or any other book to know that good service starts with politeness and a helpful attitude. You should also understand that politeness and a helpful attitude do not equal good service.

Everyone who comes in contact with your company wants to be treated nicely, fairly, and promptly. But truly good service is more than that.

Good service is:

• Getting help, getting a problem solved—competently with no hassle, no run-around, and no delay
• Dealing with people who know their stuff
• Dealing with people who are authorized to provide information, right a wrong, or make things happen for a customer without passing the buck or begging permission

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   Quote, Unquote
  Service is based on foundations that are so basic it’s almost ridiculous, and yet even though it’s simple, when it comes to consistently providing high levels of hospitality, it’s easier said than done.
  —Holly Stiel, former concierge in a fancy San Francisco hotel and author of Ultimate Service

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• Being treated in the way that the customer wants, which usually means with respect, a quick response, and an appreciation for the customer’s position
• Anticipating a customer’s needs and wants
• Ending a transaction or interaction so that the customer feels better than before it began

Each of these many points deserves more explanation, and you will find the details throughout this book. For our purposes now, understand that providing good service means a lot more than muttering, “Have a nice day,” to your customers. It means giving your employees the information, the authority, and the capacity to serve your customers as well as humanly possible. It means undertaking a very big job.

Great Expectations

Let’s say you had a magic wand you could wave over your entire organization. (That would be a big wand, eh?) You wave the wand and poof! Everyone everywhere suddenly starts giving all your firm’s constituents good service as defined earlier.

You still have a problem.

So what’s the problem? Giving good service is not good enough in our service economy.

• All companies—service companies and manufacturing companies, even government agencies and not-for-profit organizations—are striving to provide excellent service to the people they serve.
• Consumers of every description—and that includes your customers and other constituents—are being exposed to lots of service from many, many service providers.

And all those organizations are trying to distinguish themselves by the quality of their service. That means organizations now compete on the basis of service. So customers—spoiled by all that service—can tell in a microsecond the difference between outstanding service and good, mediocre, or bad service.

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 Tales from the Real World
There’s a sign you can commonly find in places like print shops and auto repair garages that says, “Speed. Quality. Price. Pick any two.”

 

Sure, that’s supposed to be a joke. (Didn’t you laugh?) But today the joke’s on those of us who would presume to win business from a demanding public. Now, we not only need to fulfill that happy trinity of customer demands—speed, quality, and price—but the market also demands that we provide those other characteristics along with a healthy serving of knowledgeable, custom-tailored, friendly service! Without question, the competitive battle will go to those companies that perform admirably in all four dimensions of customer value.

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To compete on service today—and that’s what you’ve got to do—you need to be really, really, really good at it.

There is a clear relationship between the level of service and customer loyalty (as measured by repeat business and profits).

The higher the level of service you deliver, the more your customers want to do business with you, and the higher your profits are likely to be.

Hierarchy of Service

Copyright © 1997 by Don Blohowiak

When your customers feel that your company exists to serve them and their uniquely personal needs, your company is on its way to realizing the competitive advantage we call The Service Difference.

And the Cure . . .

It’s a lot less stressful for customers to do business with a supplier they know and love than to keep seeking out alternatives. Still, customers can be awfully fickle. You want them to give you their business time after time, to appreciate all that you do for them, to show a smidgen of loyalty.

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 Quote, Unquote
Companies are gauging their progress not just by return on assets, but also by the happy return of customers.
—Executive Issues, The Wharton School

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Dream on. It’s not happening. A silent, deadly disease is sweeping every segment of the economy: Defectionitis. A malady marked by the quiet, unassuming defection of customers who stealthily take their business from you and give it to somebody else. And there’s a simple reason for this epidemic. Customers see no reason not to shop around to save a few cents here, a few bucks there, or to enjoy a little added convenience.

Defectionitis is a serious, infectious disease that can be quickly terminal for your organization unless it’s immediately treated with massive doses of industrial-strength customer focus at all levels of your organization.

Customer focus therapy cures ailing sales and profits by mobilizing your business to do everything it can to encourage customers to come back and spend more money with you time after time.

Do you want to do business with a customer:

Did you answer b? Very good! That investment in your education is paying off handsomely.

Repeats Repeats Repeats

It takes a lot of investment in promotion, product design, operations, and lots of other stuff to attract and be ready to serve a new customer. Then, when you actually attract a new customer, you may have to educate him or her about your products, sales, and business policies. You may have to do a credit check, set up a new account for the new customer, create a new file with a new label just for that new customer (ugh), and gather lots of information about that customer in order to provide them with the service they expect.

Add up all that effort, and you can see that adding a new customer to your business can take quite an investment in time, money, and energy. Business experts who study this kind of thing figure that it costs something like five times more to serve a new customer than a repeat customer.

Here are two very important truths about why creating repeat customers through outstanding service is worth the trouble:

1. It costs your business a heck of a lot less to serve repeat customers—those who already know what you offer and like buying from you—than what it costs to chase a whole bunch of strangers and try to convince them to spend their money with you.
2. Steady repeat customers generate far more profit for you than customers who buy from you just once or just once in a while.

Repeat = Lower Expense

Most organizations spend much of their time and energy acquiring new customers. They advertise. They promote deep discount sales. They run contests for their sales people to land new accounts. They spend lots of time, energy, and money trying to convince someone to make a single purchase. Certainly, a business can grow by adding new customers. But it might be much more profitable by spending more energy encouraging existing customers to buy again and again and again.

Here’s why. Existing customers already know your company. They have an idea of what it stands for. They have sampled the quality of its merchandise. So it should cost far less—maybe even nothing—to encourage satisfied customers (you did satisfy them, didn’t you?) to return time and again. To cajole great masses of the uninitiated to try your company for the first time costs far more. They don’t know about your business and they certainly don’t care about it. So in order to get their attention and motivate them to give you a try, you often need to buy ads, send countless mailings, offer steep discounts, and increase sales compensation.

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 Watch It!
While it takes considerable effort to win a customer for life, it is pitifully, effortlessly easy to lose a customer for life. You cannot overstate the importance of this with every employee whose work impacts on customers.

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Would you rather spend $10 on ads, mailings, special discounts and the like to attract a new customer for their first $50 purchase, or 50¢ to mail a customized reminder letter to your repeat customer who may well make two or three additional $50 purchases with nothing more expensive than some heartfelt words of encouragement and appreciation?

Repeat = Revenue

An associate of Don’s goes every morning to the same convenience store for a large coffee. He spends about a dollar on it. To the clerk completing the transaction on any given morning, this is a $1 customer.

But this same customer also makes a habit of returning at lunch and buying a prepared sandwich, a soda, and a snack for the afternoon. About a $6 transaction. Sometimes he brings his friends in the store and they each spend a few dollars for lunch, too. Then, on his way home at night, he often stops at the store for another cup of coffee and maybe picks up a half-gallon of milk. So in an average week, this “$1 cup of coffee customer” actually spends somewhere around $30 to $50 in that convenience store, not to mention whatever his buddies spend on their lunches.

So in an average year, this $1 transaction guy is actually visiting the store two or three times a day, about four days out of the week, and dropping upwards of $1,500 per year! Imagine if this same customer continues to return day after day, year after year for as long as he lives in the area (like 15 or 20 or more years). That $1 cup of coffee customer may be worth some 20 grand to that store.

If you owned that store, wouldn’t you want each of your employees to understand that each $1 customer could represent a whole lot more potential revenue. And wouldn’t you want to make sure that no $1 customer, potentially worth 20 grand to you, was ever driven away forever by a sour cup of coffee or a sour employee?

And while the products and the numbers are different for your business, isn’t the principle of creating a repeat customer equally true—and important—for your business?

Repeat Calculation

What’s a repeat customer worth? $______________________________

Do you give up? Well, don’t—because you really should know the value of creating a customer for life. Fortunately, it’s easy to calculate.

Lifetime Value calculation.

Business experts who study this kind of thing have determined that if you keep something like just five percent of your customers who otherwise would take their repeat purchases to the competition, you can double your profits. Whoa!

From Their Mouths to Your Wallet

When you were looking for a reliable, honest auto mechanic, how did you find him? Before you went into that restaurant you recently tried, how did you know that it served great food? If you’re like most everyone on the planet, you wanted to lower your risk of a big ugly surprise so you asked people you trust to refer you to a business they trust.

We all rely on our friends and associates to recommend going—or not going—to a particular business. Marketers call this friend-to-friend endorsement of a business “word-of-mouth advertising.” It is the most powerful form of advertising. It is also the most difficult to create.

Whether you do a great job for your customers or a rotten job, people are going to talk about your business. Unfortunately, because we humans seem to feel negative emotions more intensely than positive ones, we’re more inclined to tell more of our friends about bad experiences with a business than positive ones. Admit it, you do that, don’t you?

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 Quote, Unquote
One word of praise from a satisfied customer is worth a thousand words of product description.
—Jeffery Gitomer, Business Marketing Services, Charlotte, NC

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Understand this: Customers believe their own experience. You can’t make them believe that your company is wonderful when they just felt like they were treated mediocre or rotten by it.

So, to get positive word-of-mouth going for your business, especially from your demanding customers in this service-based economy, you’ve got to do a really outstanding job. For everyone. Consistently.

And when you do, you build a great reputation. That takes time. But it forges a bond with your customers and prospective customers in a way that no slick advertising campaign, and no promotional coupon ever could.

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 At Your Service
Customers have come to expect good service. So they tend not to notice or appreciate merely competent service. To get them talking about your business and recommending it to all their friends and associates, you need to do an outstanding job. The answer is to consistently create enjoyable experiences so that people want to tell all their personal contacts about how great your company is.

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The good news is that because there are so many different businesses chasing after your customers’ money, people want to know who they can trust. So people are going to be talking about you.

Create a free sales force for your business—an army of delighted customers who tell everyone they know how good your company is to do business with. That’s a great antidote to Defectionitis.