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Is Your Customer Service World-Class?

Friday, June 1, 2007

Is Your Customer Service World-Class?World-class customer service isn't just a buzz phrase—it produces real results such as increased profit margins and super-loyal customers. Contributing editor Sharon Bopp recently discussed this topic with Chip Bell, customer service consultant, speaker and co- author of the newly released, "Managing Knock Your Socks Off Customer Service (2nd Edition)."

Q. Why is "knock your socks off" customer service so important?

A. One of the most powerful statistics (related to customer service) is the ratio between the cost of acquiring and keeping customers. Depending on the industry, acquiring a new customer could run 8 to 10 times what it costs to keep one. New customers have to be "trained" and served, while existing customers know how to do things in your store. So the smart money says, "Instead of getting new customers, why not spend more energy on keeping the ones you have?" Also, the longer customers stay with you, the greater their worth to you. Not only are they cheaper to service, ...but your relationships deepen and they buy more from you and are more likely to be store advocates who become extensions of your sales effort.

Q. You talk about having a "service vision." Could you elaborate?

A. A service vision is an effort to say what "signature experience" retailers want their customers to have consistently. It helps you stay focused on what you're trying to create. A service vision is less about aspirations and more about what you actually "see." Disney, Starbucks and Ritz Carlton have great service, but don't [look or feel] like one another. Disney's service vision is to make you feel like a child again. Their staff goes through their parks and finds ways to create magic, like the housekeeper who moves the toys around in your hotel room while you're gone. You might think the Ritz Carlton would be stuffy, but you encounter employees who are noticeably warm. It's elegance without being standoffish. Ritz Carlton spends a lot of time making sure employees know how to say "Certainly" and "My pleasure," not "OK" and "You're welcome."

Ask yourself if [your service vision] is a signature experience that will be valued by the target market coming in your store. For example, an independent retailer might want to attract those in their 50s and 60s who have leisure time and are looking for eclectic items not found elsewhere. If the products were about nostalgia, the store's sound, sight and smell should all fit that. [Use] movie posters and music that customers would have seen and heard when they were teens. This would make customers feel like "I'm home. This is me." The service vision needs to be something that employees would be proud of. It should be written for employees, so that customers just experience the effect of it.

Q. How can great customer service lead to higher profit margins?

A. Statistics show, on average, that if service is noticeably great, you could charge 15% more [for merchandise]. The classic example is Nordstrom. We all know we could get an item for 15% less in another store and that we're paying a premium. But people [pay Nordstrom prices] because they know they're going to be treated well.

More and more, we're finding that the customer is more interested in value than solely in price. These are the little service extras like gift wrapping, a friendly staff and the way the experience feels. Look at Starbucks. A lot of people pay $3 for a cup of Starbucks coffee, but would they put 16 quarters in the office vending machine for the [same] coffee? The whole Starbucks experience includes the aroma and music. The stores are not huge, Wal-Mart size. They are small in square footage. If I owned a gift shop, I would say "How can I do Starbucks in my store?" I may not be able to sell product that compares with the high quality of their coffee, but why not use the same tone and feeling? This doesn't mean copying Starbucks, but paying attention to them.

Q. How can retailers deepen customer relationships and, as you say, get to know customers "intimately"?

A. An intimate relationship goes beyond the superficial, beyond the customer's immediate needs. It might be that the last time a customer was in the store she was talking about her son going to school at an art institute. You see an article on the institute, so, the next time she's in the store, you hand it to her and tell her you saved it for her. That tells her that you care about her as a person, not just as a customer. She will think, "If she paid attention to that, then she must also be paying attention to the things I want to buy." It may not be a logical perception, but it's that customer's perception. And, as we all know, perception is reality for customers. Most people who go in a small shop like the difference (in customer service) that they get there. Unless you have gotten signals otherwise, they have already created the permission for – and are comfortable with—that intimacy.

Q. What other customer service hallmarks "make their mark on the minds and hearts of customers"?

A. The first one is the degree to which you demonstrate that you understand the customer. Customers' needs and expectations are changing all the time. Every time they have a great experience [at one business], they generalize that experience to everyone. That means that [other businesses are also] creating customer experiences for yours! "Experience creators" such as Disney, Southwest Airlines and FedEx raise the bar. When people are treated friendly at Disney, they expect everybody to treat them that way.

The second hallmark is the way you "protect" customers. This means that you pay attention to basics and do your core requirements extremely well. For small retailers, core requirements are providing quality product, not wasting customers' time and being accessible when customers need accessibility. If you open your shop 10 minutes late and someone is standing at the door, you have missed a core requirement. Dealings have to be done fairly and with a sense of integrity. All this builds trust and loyalty. A reminder: Sometimes we get so caught up in all the sparkly things we can add that we forget that in the end the value added extras only count for the customer if we have taken care of the core requirements.

[But] sparkle is also an important hallmark. It's about surprising customers, giving them something unique and extra, something that brightens their day. It's like Cracker Jacks with the surprise inside! These services make your store distinct and different. For example, I was in a shop recently where there was a big bowl of multicolored M&Ms at the checkout counter. There were little cups there and a big serving spoon to dip in the bowl. To be effective, the little sparkly things you do should be simple. If you do something expensive, people will wonder about what you charge them [for store items].

Q. Could you please discuss the processes that independent retailers can use to manage customer service levels?

A. You can get feedback about your customers' experiences. You and your employees are the "scouts on the frontline" in your store. You're picking up "face to face" and "ear to ear" information and intelligence on your customers. This information can be different from week to weekand you need to know what it is. It might mean sitting down with your employees for 15 minutes every week, where they come prepared to report on what they heard from customers, what customers asked about or what products you didn't have that customers wanted.

The empowerment process is another example. It's about how you provide employees with authority to make decisions on behalf of your customers. Your front line won't have to check with their manager [on every occasion]. Empowerment needs training because empowered ignorance is anarchy. You want employees to have the competence and maturity to make decisions—and that comes from training. For example, a major hotelier empowers its housekeepers to spend up to $2,000 without checking with anyone to make sure customers leave happy. [The hotel] trained their housekeepers to make smart decisions, to think like an owner and to know when to make that kind of offer.

[Let's say that] someone is checking out and is very upset because a significant other had a panic attack after seeing a roach in the bathroom. The housekeeper would understand that the last thing the hotel management would want to hear on the streets was someone saying there are roaches in their rooms. The housekeeper might say she regretted the incident, that the hotel works hard to make sure there are no insects and wouldn't want them to pay for their stay. So, the bill would be "comp-ed," up to $2,000.

Small retailers might also take time every week with their employees to play "what if," or to pretend in a simulated way how to handle situations. Through that kind of mentoring, employees learn principles, how to think through actions and consequences, and to make decisions.

Note: You can reach Bell at (214) 522-5777, or To purchase a copy of the book, log on to or

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