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Exceptional Service, Exceptional Profit

The Secrets of Building a Five-Star Customer Service Organization

The Big Idea

In Exceptional Service, Exceptional Profit,

Leonardo Inghilleri and Micah Solomon share a variety of techniques pioneered by leading
companies that have earned a loyal customer base, including:

• Providing exceptional service is the key to building customer loyalty, which can ensure the success
and survival of an enterprise regardless of external forces such as economic downturns and
technological change. • Rather than merely reacting to customer requests, organizations should
strive to provide anticipatory service by tracking customer preferences and frequenting their own
facilities to understand what customer’s experience. • A response to a service failure and the
openings and closings of transactions are the most crucial emotional moments in customer service.

Companies can distinguish themselves from the competition by building web sites that offer valuable
information in both long and short form to meet general needs, and features such as chat buttons,
toll-free numbers, email buttons, and options for the disabled for a more personalized experience.

Customer loyalty will help bring both strategic and financial value

SATISFACTION GUARANTEED

Customer satisfaction a prerequisite to establishing loyalty. Although satisfied customers are still at
risk of being wooed away by a competitor, they will believe a business offers a reasonable product or
service and, if asked, offer a positive assessment. The first element of customer satisfaction is a
perfect product, designed to be as defect-free as possible, and supported by a supply of staff and
provisions that can maintain perfection in the face of absenteeism, service issues, and other
foreseeable boundaries.

Second, the product must be delivered by caring people. For example, a customer might experience
the perfection of an on-time, comfortable flight, but a curt and impolite ticket agent may adversely
affect that person’s satisfaction. Third, the perfect product must also be delivered in a timely fashion,
especially as the definition of “on-time” is getting shorter and shorter. If a service takes longer than
the time anticipated, the provider should communicate this ahead of time so customers can reset
their expectations.

The final element of customer satisfaction is an effective problem resolution process. A breakdown in
service or product quality can lead to an emotional moment that can make or break the relationship
with a customer. Although avoiding such problems is the ideal, an effective recovery can restore and
even strengthen a customer’s confidence in a business’s capabilities.

WORDS COUNT
Language is the underpinning of all components of customer satisfaction, from describing the
product to handling service failures. We suggest that companies adopt a distinctive style of speech,
not just for consistency of service but also to promote collaborative pride. For example, the Ritz-
Carlton trains staff to use polite phrases such as “My pleasure,” “Right away,” and “Certainly,” and
forbids “okay,” “hey,” and other less formal terms. The Ritz style is so successful that it is imitated
throughout the industry.

The language a company adopts should take into account what works best with customers as well as
what might turn them away from a product, and the level of formality in which the company
operates. Once these phrases are worked out, a lexicon or language handbook should be developed.
The language must put customers at ease and not come across as condescending or coercive. For
example, instead of the negative-sounding “You owe…,” , “Our records show a balance of…”

Staff should focus on their language during the most crucial moments in their conversations with
customers. Their hellos and goodbyes should be warm and personal and dialogue about service
failures should be handled with grace. Negative nonverbal cues such as looking at the computer
screen instead of the customer can hamper communication, and giving directions without making
the effort to show customers how to find their destination can also be unsettling. All phone calls
should be answered before the third ring. Screening calls can alienate people; if necessary, callers
should be referred to the appropriate staff as quickly and courteously as possible.

As more and more interactions take place over the Internet, businesses should strive to come across
as more personal. Customers should be able to reply to mass emails, all emails should contain a
salutation, and live chat staff people should be named and expected to communicate with
participants as warmly as they would in a face-to-face encounter.

A CAREFUL AND THOUGHTFUL RECOVERY

Although in a perfect world there would be no service failures, handing them the right way can lead
to customer loyalty. The first step is the delivery of a sincere and personal apology that makes the
customer feel as though he is being listened to and valued, and that the staff person is on his side.
We recommend avoiding condescending statements such as, “If what you say is correct,” and
stretching out apologies until the anger is diffused and customers express that they understand that
the failure is not the staff person’s fault. Questions such as, “Did you plug it in?” can be insulting to a
customer if asked too early.

The second step to recovery involves going over the complaint with the customer, which fosters a
feeling of collaboration in fixing the problem. The third step is to “fix the problem and then follow
up,” which may mean replacing the service or product. Because of the inconvenience the problem
has caused, offering something extra might alleviate the customer’s sense of injustice; this could be
an upgrade or additional service, or the opportunity to provide valuable feedback to help the
company improve its product or practices. The three-pronged approach to following up includes:

1. The immediate, in which the staff person who fixes the problem checks in with the customer

2. The internal, involving making other staff aware of the service failure so that they can learn from
the experience or keep it in mind when dealing with the same customer, and
3. The wrap-up, in which the staff person calls or sends a handwritten note at the end of the
recovery.

The recovery process is not complete without the fourth step: the deposition, or documenting the
problem in detail. The information should be entered into an incidents box, problem log, or verbal
report which gathers data that can be further analyzed to pinpoint patterns that can lead to
identifying the underlying causes for repeated service failures.

While not every staff person should be equally involved in customer service or trained in the same
specialties, all employees need to be able to handle customer complaints. Staff members who are
empowered to resolve issues themselves or drop what they are doing to find the right person who
can resolve the issue will help diffuse complaints. Also, sales reps should be encouraged to offer
something extra even if the person they approach is already a customer, in order to make up for their
inconvenience

SYSTEMATIC NOTING AND SHARING

Excellent customer service is the result of custom fitting. In order to provide individualized
experiences, all of a company’s employees need to use and continually update a tracking system that
contains information about customers and their preferences. outline seven key principles for building
such a system:

1. “Keep Your Systems Simple:” The KYSS approach ensures that a company’s staff is not bogged
down by too many details and difficult-to find data.

2. Anything important to the customer belongs in the system: Categories such as roles, goals, and
preferences can keep staff apprised of what the customer shows interest or takes pride in, as well the
best time of day for contact. Other types of information to have on hand include missteps from prior
transactions, current problems, any product/services references made by the customer, input from
surveys or comment cards, known personal ties to the establishment, number of purchases and
visits, notation if the customer has been “difficult,” and personal facts about marital status and
number of children.

3. The information needs to be available in real time: Being able to recognize customers when they
enter the place of business and addressing them in their preferred manner decreases the risk of
alienating them.

4. Preferences can change: It is a safer bet to ask customers to confirm a preference before delivering
it based on a prior assumption.

5. Moods can change, so track them: Noting the changes in customers’ level of enjoyment over the
course of their experiences can help pinpoint what can be done to improve their mood.

6. Avoid a wooden delivery: Customers should be greeted and handled with enthusiasm, not with
their names mispronounced or inserted in an artificial-sounding script.

7. Use technology in a clever, not creepy manner: Avoid using intrusive questioning in online forms,
make certain questions optional, or explain the reasons for asking them.
Clerks and other staff need to exercise caution; unless it is necessary for doing business, asking the
wrong questions or revealing the wrong knowledge can be an off-putting invasion of privacy.

THINK LIKE A CUSTOMER

One of the best ways for companies to determine the effectiveness of their services is to have
employees frequent their own services and facilities to get a sense of what the customer is
experiencing. For example, a person dining alone may feel more comfortable if offered reading
material. Building procedural anticipation “requires managerial vision, judgment, and persistence.
But it brings you closer to achieving customer loyalty.”

(Mistakes, Rework, Breakdowns, Inefficiencies, and Variations in work process). Each word in the
acronym stands for a possible cause of a defective situation that needs to be addressed immediately.
It is important to find all of the reasons for a problem, such as late room service, and alert the
appropriate people who can attend to them. Employees who are responsible for defects should
never be attacked. There is a greater chance of discovering faults within an underlying process if they
feel comfortable enough to reveal issues,.

manufacturing based systems and controls found at companies such as Xerox and FedEx because
they help locate and reduce waste. Toyota’s Taiichi Ohno has identified seven examples of waste that
can be addressed to improve service and increase value: unnecessary transport, excess inventory,
excess and non-ergonomic motion, waiting, overproduction/production ahead of demand,
inappropriate processing, and defects.

Service-focused teams might have reservations about such systems because they feel that
anticipating customers’ needs ahead of time cannot be achieved without excess inventory, and going
to extra lengths to satisfy the customer may not be the most efficient use of time. However,
companies can still strive to be efficient behind the scenes, using such

methods as improving food preparation in kitchens or streamlining customer choices in online

systems. Before instituting any streamlining plan, it is important to assess the value of the
component to the customer. Many people cannot pinpoint what aspect of their experience made it
positive, and some form emotional attachments to specific customer service rituals that they do not
realize they missed until after they are gone.

Internet businesses often have the advantage of being able to provide anticipatory service by using
software algorithms. For example, Netflix can use the rental history of both the customer and others
who have made similar choices to offer recommendations for further orders. Because the
information used is not too personal, Netflix can provide this service without crossing the line into
creepiness.

Surveys can help businesses understand the viewpoints of their customers. In-house three-to-seven-
question mini-surveys are more likely to yield a high participation rate than those that are taken
home. In-depth surveys will provide the most useful information if designed and administered
carefully. A specialized survey service can help companies craft meaningful questions and build in
free-form text fields for customers to articulate novel responses.

RECRUIT AND RETAIN THE RIGHT PEOPLE

personality traits play a more important role than job-specific experience when it comes to finding
the right staff to interact with customers. Their top five desirable traits are:

1. Genuine personal warmth 2. An optimistic attitude 3. A team orientation

4. Conscientiousness in carrying out work 5. Empathic skill, or the ability to understand what
customers are going through and interact with them accordingly

Employers should maintain high standards in hiring, as one inferior employee can slow down or
compromise the service other employees are delivering. Consistency in the recruitment and
selection process will help employers develop personnel benchmarking. It is also useful to compare
new applicants to the best current employees to see if their skills match up.

Sending new employees off to be shown the ropes by just any co-worker will not ensure that the
right tone is set on Day One. Instead, the CEO or other leader can instill the core customer service
principles, values, and beliefs, and explain the employee’s important role in carrying out the
company’s mission. When new team members walk into the company, they should be provided with
all the tools and computer access needed to do the job and be greeted with an attractive orientation
setting and materials.

A well-planned training curriculum balances the priorities of providing anticipatory service with
respecting the customer’s protective bubble, the unseeable sanctuary in which the customer expects
to not be disturbed. stress five principles:

1. Service starts at the moment the customer comes in contact with the staff person. A warm
greeting must include eye contact and a smile.

2. Learn to read the subtle verbal and non-verbal messages the customer is delivering. For example,
if the customer maintains eye contact, it usually means that they are hoping to be asked if they need
assistance.

3. Adjust to the pace of the customer. Some customers may be on a leisurely vacation while others
are more stressed for time.

4. The bubble is the sanctuary of the guest. The timing of attending to a customer depends more on
the customer’s schedule than on the server’s to-do list.

5. Closing the sanctuary door--or not. If customers do not need service, the staff person should
recognize this, thank them graciously, and leave them alone.

In order to reinforce the company’s service model and support employees, managers should hold
daily standup meetings focusing on a single aspect of service, allowing everyone to join in the
discussion.

A VISIONARY, SUPPORTIVE GUIDE

An organization’s service production capability can be compromised before the day begins; for
example, an employee could bring his preoccupation with an issue outside of work to the job.
Leaders need to master the tools of constant reconnection with workers in order to keep them
engaged with the organization. Inghilleri and Solomon outline what they consider to be the five most
important characteristics of a strong leader:

1. Vision: envisioning the organization’s future and direction and communicating it clearly to others.

2. Alignment: simplifying complex or abstract ideas into a single, more accessible idea to focus the
company’s efforts.

3. Standard Setting: establishing, implementing, and enforcing consistent, effective performance

standards.

4. Support: providing workers with the training and resources necessary to perform their tasks
effectively.

5. Motivation, recognition, and reward: encouraging employees to succeed, and celebrating and
rewarding their achievements.

Moral leaders regard their employees as people, and whenever possible include them in decision-
making. They support employees’ involvement in areas of the company outside of their assignment
as well as with their families and communities.

THE PRICE OF VALUE

Companies should not have to spend all of their revenue building customer loyalty, but some invest
more in resources to ensure an excellent experience. For example, ESF summer camps in
Pennsylvania and Connecticut hire older and more experienced counselors and offer a lower staff-
tocamper ratio than the average camp, and the investment has paid off. Positive parental word-of-
mouth has made it possible for the company to expand. Other benefits of making those types of
investments include fewer turnovers among staff and clients, lower insurance rates, and a decreased
chance of negligence lawsuits.

few caveats. First, companies should watch out for “lily gilding,” or offering customers a fancy feature
or service that may not interest them. Second, what customers expect or receive across the industry
should also be considered, and much can be learned from shopping the competition and surveying
customers about the competition, as long these activities are done anonymously.

Third, in considering the equation “Value = Personal Benefit minus Cost and Inconvenience,”
businesses have to consider what the Personal Benefit would be to their target market. While Wal-
Mart may be all about low prices, Nordstrom customers expect higher quality and more personal
service and are willing to pay more for it. However, some customers are sophisticated enough to
recognize overpricing. Finally, nickel and diming can turn off customers; as the successful car dealer
Carl Sewell asserts, if a friend would not charge for a service, neither should the business.

MASTER THE INTERNET TOOL

With its broad reach, the Internet holds an enormous potential for many customer-oriented
enterprises. However, those who choose this avenue of service need to prepare to execute it
correctly and in ways that honor each customer’s individuality. A disgruntled customer’s complaints
can lead to a public relations fiasco. Therefore, Inghilleri and Solomon recommend that companies
make themselves easy to reach, respond promptly to public complaints, and authorize an
appropriate leader or other staff person to make those responses. If there are evangelists—loyal
customers who will publicly endorse or defend a company—asking them to add their positive
opinion to the forum can help control damage. Trolling, or having staff pose as customers, can
backfire and should be avoided.

Individualization can be built into a web portal in several ways. Even though most sites feature
Frequently Asked Question lists that take care of many customers efficiently, there must be an option
to receive more assistance if someone’s answer to “Did this answer your question?” is “no.” To deal
with differences in attention spans and the amount of time customers can spend, customers can
access a “short copy,” or brief description of the product or service, with an option to “learn more.”

However, with most companies capable of supplying these self-service features, businesses need to
build in more opportunities to distinguish themselves online, such as:

• Build in options throughout the site for personal interactions, including live chat buttons, a toll-free
service number, and an “urgent email” button. • Keep accessibility and sensitivity in mind when
designing the site. Choose layouts that can be understood and navigated by customers of all ages and
computer proficiencies, and add “alt” tags to graphic elements, so they can be read by a text reader.
• Design the self-service elements to be engaging to users. Depending on the product or service and
the audience, animations, sounds, or other fun features can be built in to keep users at the site. •
When automated responses are needed, craft them to be personable and, if appropriate, funny.
Friendly and lighthearted approaches to communicating about shipments or other notifications can
leave customers with a positive impression about a company and its employees.

DIFFERENT ONLINE PATHS TO CUSTOMER LOYALTY

The online merchant Amazon.com is a master of what refer to as the “repetition strategy;” basic
services are offered repeatedly to eliminate friction from the customer experience. For example, a
customer’s credit card and address information is stored, enabling “one click” purchasing. The order
is delivered faster because it is sent directly to UPS or another shipper, and Amazon can recommend
more relevant products based on customer rankings. However, most other companies cannot take
advantage of Amazon’s ability to attract high-volume shipping contracts with leading carriers or offer
high salaries to attract talented programmers and security experts to stay on top of technical issues.

A more typical business would take a different approach. For example, a rug-cleaning company could
create an informational presence by offering online advice, as long as it does not overtly advertise
the company’s products or services. Also, the web site could use the short copy/long copy model to
introduce visitors to the company’s approach, history, technology, and staff. Computer-driven
modeling can allow potential customers to compute an estimated cost of services without having to
register with the site, and contact the company via a web form. These courteous approaches allow
customers to interact conveniently and without personal intrusion.

THE POWER OF BEGINNINGS AND ENDINGS

Research on memory has shown that what comes at the beginning and the end is remembered the
most. This is true not only for a grocery shopping list but also for interactions with customers. In
many businesses, the warm greetings and heartfelt farewells from the front desk receptionist are
crucial points of contact; showing recognition and appreciation for repeat customers enhances the
experience. Phone calls should not be rushed. “A proper telephone answering sequence includes an
appreciative greeting, a clear introduction, and a sincere offer of assistance, indicate, and ends with
“a personalized farewell and a warm invitation to return.”

To be more inviting to disabled customers, businesses must consider providing more than a
wheelchair ramp. Outfitting doors with “universal access” handles and making them lightly weighted
can accommodate a wider range of physical challenges. On the company web site, captchas, letters
or numbers presented in image form that users are required to retype in an effort to screen out
hackers, should be avoided unless necessary to facilitate access by the visually impaired, and both
phone and email customer service outlets should be made available. Also, as customers of all levels
of ability use Google or other search engines, results may direct them to any part of a company’s
site, so each page should contain point-of-entry features such as the name of the proprietor, tour
buttons, contact information, and other appropriate links.

Before moving to a proper closing with a customer, the final question should be, “Is there anything
else I can do for you?” However, a “no” answer should not serve as the end of the transaction.
Whenever possible or appropriate, staff should customize the closing by using the customer’s name
and language reflecting prior knowledge, inviting the customer to return, offering a parting gift, and
sending a follow-up note. The warm feelings and gratitude of these final gestures should encourage
customers to come back again and again.