Tag: customer service

Walking the floor

Getting out of the office and seeing what your customers and staff are doing is a neglected management fundamental.

“He walks the site three times a day,” said awed contractors about a construction project manager – who we’ll call Rob – that I encountered as a cadet Engineer in the building industry. Getting out of his site office and seeing what was going on made sure dodgy contractors or inexperienced trainees like me couldn’t slow down his projects.

Slate Magazine’s story of how the Wendy’s hamburger chain changed the US fast food industry recalls how Rob would successfully run his projects and the importance of hands on management.

Jim Near was recruited as president by his friend and Wendy’s founder Dave Thomas to get the business on track after over-extending in the mid 1980s. Slate says of Jim’s hands-on management style;

Near liked to stalk through the dining areas of his stores examining people’s trays. If customers were leaving fries, he’d go harass the fryers: Were they serving the potatoes too hot? Too cold? Not using enough shortening? And he would sit in his car in the parking lot, surveilling the activity at the drive-thru window.

That obsession sounds like Steve Jobs and its no-coincidence; Jobs, Jim Near and Rob the project manager gave a damn about the product that was being delivered. Rather than sitting in an office obsessing over paperwork and meeting artificial KPIs, these effective leaders got out and saw what the realities were in their business.

Probably the best example of this “management by walking the floor” ethos was Bob Ansett who built up the Australian Budget Rent-A-Car business in the 1970s. Every senior manager was required to spend a couple of days a month working on one of Budget’s rental desk dealing with customers.

That policy forced Budget’s executives to understand the business, just as Jim Near was described as ““a ketchup-in-his-veins type of guy” through working at every level in the fast food industry.

One of the many conceits in modern management is the idea that everything – from building high rise towers, running car rental companies or operating a hamburger chain – is like selling soap. This philosophy ignores that every industry has its own characteristics and even selling soap has its own unique challenges in different markets.

It’s easy to think everything works as described in a 1980s business school textbook when you have artificially constructed KPIs and layers of managers to deflect responsibility.

Over the last quarter of the Twentieth Century we saw customer service become disdained in the Corporatist business culture which favours accountants and lawyers as managers who rely on marketing people and lobbyists to protect them from the reality that they aren’t really very good at running their companies.

Now that era has come to an end and the times now suit those who listen to customers and the marketplace. Walking the floor and paying attention to what the public are saying about us on new media are competitive advantages.

While the corporatists lobby their friends in government for subsidies and protection, entrepreneurs and genuine business builders like Dave Thomas, Jim Near, Steve Jobs and Bob Ansett have the opportunity to seize the markets that are being neglected.

There’s never been an excuse for not listening to the customer and today it’s more important than ever.

Your customers are smarter than you

Steve Blank and Mark Suster talk about start ups and customer service

“I’m a serial entrepreneur which means I failed with one company at a time” says Steve Blank in a terrific interview with Mark Suster.

Both Steve and Mark are experienced entrepreneurs conversation is one of these raps between two experienced and intelligent individuals where the questions are as smart as the answers.

One of the key take aways from the interview is that our customers are smarter than us. If they aren’t buying from us, they know something we don’t.

Whether we’re talking about startups or big business, listening to the customer is the core thing we have to be doing and everything else is noise.

Shifting to a better return

Will rewarding passionate workers solve American business’ poor return on assets.

As part of Deloitte’s Building the Lucky Country series, the consulting firm had a briefing last week from John Hagel, co-chairman of Deloitte’s Silicon Valley Centre for the Edge, to discuss how industries are responding to shifts in the workplace and their markets.

John’s thesis is that businesses can be broadly split into into three groups; infrastructure, product innovation and customer relationship business which he covers in his Shift Index that looks at how industries are being affected by digital technologies.

Infrastructure businesses are high volume, transactional services like call centres, logistics and utilities companies.

The product innovators are those who develop new products, get them to market quickly and accelerating adoption of those goods.

Customer relationship businesses focus on understanding their clients and using that knowledge to add value.

Each of these business models require different mindsets and because most large companies try to do all three, they manage to do none well.

One of the results of this is a lousy Return On Assets, which Hagel says have fallen in the United States to one-third of the levels of 1965 and he doesn’t see this improving as the ‘competitive intensity’ of US markets increases.

A big feature of this decline in overall ROA is how the best performers have travelled compared to the laggards with the ‘winners’ barely maintaining their returns while the ‘losers’ are seeing their results declining dramatically.

How Hagel sees the solution to this poor performance is through rewarding creative and passionate workers better.

Firms have untapped opportunities to reverse their declining performance by embracing pull. To accomplish this, firms must develop and encourage passionate workers at every level of the organization.

Additionally, companies must tap into knowledge flows and expand the use of powerful tools, such as social software to solve operational/product problems more efficiently and effectively as well as to discover emerging opportunities.

If Hagel is right, it’s the businesses who want to micro-manage their workers while stifling innovation, initiative and creativity in their businesses who will be the great losers in this next decade as we move to the next phase of the ‘Big Shift’ where knowledge flows improve business performance.

Starting the process of dealing with these shifts involves understand what the DNA of your business really is; if it is a transactional infrastructure business then management needs to acknowledge this and not kid itself about being in customer relationships.

There are weakness in John Hagel’s proposition – one being that businesses can be easily pigeonholed into three categories.

Apple is a good example of this where a company that is clearly product focused has also shown it can be customer orientated with the success of the Apple Stores.

There’s also the question of why are there only three categories? In the breakdown the immediate thought is that there are businesses that don’t fit in any of these boxes. Legacy airlines or struggling motor manufacturers are good examples.

Despite the criticism, John and the Center For The Edge have some good points about the future of business and it’s something we’ll explore more over the next few weeks.

Management by fear

Dictatorial managers are killing organisations in an era which rewards openness.

The sad story of the passing of Bea, the Golden Retriever who died while in the care of United Airlines portrays a fundamental problem in many organisations’ managements – the rule of fear by middle managers.

A telling part of Bea’s sad tale is how her owner Maggie Rizer was treated when she went to collect her two dogs from United,

When we arrived in San Francisco to pick up our dogs we drove to the dark cargo terminal and on arrival in the hanger were told simply, “one of them is dead” by the emotionless worker who seemed more interested in his text messages.  It took thirty minutes for a supervisor to come to tell us, “it was the two year old.”  Subsequently we requested that our dog be returned to us and were told that she had been delivered to a local vet for an autopsy. Whatever thread of trust remained between us and United broke and we then insisted that she be returned to us for our own autopsy by our trusted veterinarian, Shann Ikezawa, DVM from Bishop Ranch Veterinary Center. Over the next two hours the supervisor’s lie unraveled as it became clear that Bea was right behind a closed door the whole time and he had been discussing how to handle the potential liability with his boss who had left and sticking to the divert and stall tactic that they had been taught. Eventually Bea was returned and we drove her to the vet at midnight.

The ‘divert and stall’ tactic took over two hours for Maggie and her partner to get around.

When I recently flew United I saw a similar attitude from the cabin crew, their lack of initiative and beaten attitude was noticeable. As I said in the post;

Overall the cabin crew seem tired and beaten, while they aren’t rude or unpleasant one wonders if they have all received too many stern memos from management about being friendly to customers.

Those stern memos have a corrosive effect on a business where every employee worries more about being sanctioned for breaking a rule or directive rather than helping customers.

Eventually the entire organisation becomes risk adverse and focused on protecting staff, or management’s, interests rather than looking after those of customers, shareholders or taxpayers.

Too many organisations are like this, where the staff are motivated by staying out of trouble rather than helping and adding value to their customers.

Making staff fear you is one way to run a company, or a nation, but ultimately those who are scared of the leaders lose all initiative and the empire collapses because every decision has to be sent to head office as the minions are scared to do anything that will be bring the Imperial Displeasure down upon their hapless heads.

From ancient Rome to the Soviet Union empires have fallen because of this, in today’s private sector companies that run on fear are ultimately doomed, including the ones who can tap into government subsidies to kick the can down the road. Even public sector agencies where this attitude reigns will change when the chill winds of austerity blow through their corridors.

One staff member taking a little bit of initiative probably would have saved Bea the golden retriever. One supervisor taking responsibility and helping Maggie Rizer would have avoided the PR disaster United now have.

In an economy that’s radically changing, inflexibility and slow decision making are possibly the worst possible traits an organisation can have. It’s time for dictatorial managers, along with control freak politicians and their public service directors, to let the reigns go on their staff.

Owning the customer

Is it possible to own the customer?

During the tech boom of the late 1990s the early wave of web developers had a business model that required locking customers into a relationship.

Having spent thousands of dollars for designing and building a website, a business then found they would have to spend hundreds of dollars every time they wanted to make even a minor change.

While that model didn’t work out for web designers as new tools appeared that made it easy for customers to look after their own sites, it’s still the ambition of many businesses to ‘own’ as much of the customer as possible.

Department store credit cards, supermarket petrol cards and airline frequent flier programs are all examples of how big businesses try to lock their customers into their ecosystem.

Possibly the dumbest, and most counterproductive all, are the media companies with policies of not linking outside their own websites. The idea is to keep readers on their sites but in reality it damages their own credibility and betrays their lack of understanding how the web works.

The airlines too have discovered the risks in trying to ‘own’ their customers as their devaluing frequent flier programs has irritated and disillusioned their most loyal clients.

Many businesses, particularly banks and telcos, try to tie you up into knots of contractual obligations with reams of terms and conditions. All of this is an attempt to make the customer a slave to their business.

Outside of having a legally protected monopoly, you can’t ‘own’ a customer – the customer has to grant the favour of doing business with them.

They’ll only do business with you if they trust that you’ll do the right thing by your promises; whether it’s delivering the cheapest product, the best service or quickest delivery. The moment their trust begins to slip, you risk losing their business.

Executives who talk of the concept of owning the customer are either working in organisations with little competition or those steeped in 1980s management practices. If you hear them talking like that, it might be best to take your business, and investments, elsewhere.

Owning customers didn’t work for the web designers of the early 2000s and it won’t work for businesses in other sectors. The only way to ensure most of your clients keep coming back is to deliver on what you’ve promised them.

Empathy and the genius salesman

Apple’s Genius training manual shows the importance of empathy and investing in staff.

One of Apple’s great successes has been in delivering services through its stores. Tech site Gizmodo managed to get a peak at Apple’s training manual for their in-store ‘Genius’ technicians.

A word that keeps popping up in the manual is ’empathy’ – as Gizmodo says;

The term “empathy” is repeated ad nauseum in the Genius manual. It is the salesman sine qua non at the Apple Store, encouraging Geniuses to “walk a mile in someone else’s shoes,”

While the Gizmodo writers and many of the site’s readers seem surprised or cynical about this, it’s not surprising for anyone who’s worked in sales or tech support, and the Apple Store Geniuses are doing both.

Empathizing with the customer or caller gives them confidence and builds trust. For someone in sales, listening and emphasizing is how one finds out what the customer really want. On the support desk, putting yourself in the customer’s position makes it easier to diagnose the problem.

That empathy a real return on investment – US Apple Stores earn 17 times more per square foot than the average retail store. The next most profitable retailer is Tiffany & Co who only boast have the revenue.

What Apple again show is that training matters. Every surly computer store assistant, every grumpy flight attendant or bored call centre worker can, with the right training and incentives, be just as effective as an Apple Store genius.

Sadly too many businesses, particularly retailers, see training as a cost and their employees as naughty children. Those businesses have a serious problem.

Without empathy – the ability to put yourself in your customers’ shoes – your business is working with a distinct disadvantage.

Creating a service mindset

How tough is it for a business to change it’s customer service focus?

In the Foreign Correspondent report that inspired yesterday’s post about the start up community angel Investor Raval Navikant said  “you don’t need customer service anymore, you have Twitter.”

While it’s refreshing to hear that Twitter is now rightly seen as a customer service channel rather than a marketing tool, it’s worrying that startup businesses still have such a low opinion of supporting their users.

This is the mindset for the web2.0, social and cloud computing communities – that user support can be done though Frequently Asked Questions (FAQs), user forums or an anonymous email address that might get read once in a while. It’s the self-help model of helping your users and it’s the biggest weakness of online services.

A worry for these businesses is that big organisations now beginning to remember the importance of customers. What has traditionally been small business’ advantage is  being eroded.

At an Australian Computer Society Foundation lunch in Sydney yesterday Testra Corporation’s diector of Products and IT Enablement, Jenny Woods described how her company is moving to a more service centric culture.

While this isn’t simple in a company the size of Telstra, a task made harder by the telco industry’s customer hostility, it’s certainly a process that’s underway.

There’s a long way to go for Telstra. Along with that traditional telco antipathy towards their customers, they are big company with plenty of silos and aligning management KPIs so the temptation isn’t simply to gouge customers for short term profit is a big change.

Changing that ‘soak the customer’ mindset is the biggest challenge in making companies like Telstra service centric and that means management at all levels have to buy into the process.

Without that senior and middle management commitment, customer support will just be seen as the poor relation to other divisions and will be outsourced to the lowest cost provider at the first opportunity.

Part of that change to a service mindset is in trusting your staff. Jenny described how Telstra abandoned scripts for their home Internet customers and told the support agents they could use their initiative – as a result customer satisfaction went up, problems were solved faster and the number of modem returns slumped.

“The people who do the work, know how to do the work” says Jenny and it’s good that Telstra’s management is recognising the skills in their workforce.

Much of that anti-service culture we see in large organisations is because management don’t respect the skills, experience and knowledge of their workers. Instead they’re treated as naughty children who can be slapped into line with a stern memo.

Today’s economy doesn’t favour businesses and managements who think like that, the organisations that will do well this Century those who are flexible, value their staffs’ skills and have managers who see their role as more than micro-managing their silos.

It also means delivering a product you’re proud to support. If you won’t support your products, then your customers will go to a competitor who looks after their clients.

We fell into a trap into thinking customer service didn’t matter during the late Twentieth Century, it was always a myth and now we have to deliver.

Losing the hospitality battle

Are smaller hospitality businesses falling behind big hotel chains?

Travel review site Tripadvisor released its 2012 Industry Index examining the 25,000 responses from hotels around the world and 1,000 Australian hospitality businesses who took part in the survey.

The index covers a wide range of areas of how the hospitality industry is dealing with connected customers, the web and how hotels are dealing with the relative performances of markets in Europe, North America and Asia.

A disturbing part of the survey was how many smaller businesses are falling behind their bigger competitors with less than half of Australian Bed & Breakfasts agreeing the statement that an “ability to book via my property’s website on a mobile device is ‘very important,” while 70% of hotels agreed.

The failure of smaller properties to engage online is borne out anecdotally as well, at a recent business breakfast a B&B owner – whose main business was furniture retailing – moaned about the negative TripAdvisor reviews his place had.

When it was suggested he might want to engage with the unhappy customers, the proprietor threw his hands up and said “our solicitor told us that it was too expensive to sue.” He wouldn’t accept that the dissatisfied guests might have a legitimate complaint that should be addressed.

At the same time larger hotel chains have full time teams monitoring comments on Tripadvisor, Facebook and other online forums, fixing problems that are being mentioned and then telling the world they have resolved the issue.

There’s a good reason for this. Ask someone planning a major holiday and you’ll find almost all of them are reading reviews on sites like Tripadvisor, Fodors or Lonely Planet’s Thorn Tree before booking accommodation or flights.

While many of the hotel management responses are boilerplate – repeated replies like “Thank you for your review and we appreciate you taking the time to share with us your experience as we are always pleased to receive feedback from our valued guests” is not what social media or customer service is – at least there is a perception that senior management is listening.

At many establishments senior management really is listening, a country manager of one of the world’s biggest chains describes how his three person team sends him a report each day of any complaints being listed online. These are checked out and any systemic problems they find such as surly front of house staff, poor housekeeping or incorrect billings are addressed immediately.

Having a direct line to happy or dissatisfied customers is one of the major benefits social media offers businesses. That smaller hotels aren’t doing this while their multinational competitors indicates the independent sectors of the hospitality industry are falling behind the majors.

The furniture shop owner with a B&B investment illustrated the problem, not only was he not engaging with dissatisfied customers on TripAdvisor, he had no idea whether his businesses were listed on Google Places, Facebook or any other online listing service – “my wife does that” was his dismissive answer.

Possibly the most overused quote in modern business is ice hockey star Wayne Gretzky’s “skate to where the puck is going to be, not where it has been”. Those smaller hospitality businesses not taking the mobile web, review sites or social media seriously aren’t even in the skating rink in today’s game.

There’s a lot more interesting ideas in the TripAdvisor report that should have any hospitality thinking about how customer service and marketing are evolving in a connected society. It’s worth a read.

Outsourcing the service economy

The forces that shrank our manufacturing economy are now affecting the service industries.

Through the 1970s and 80s we accepted manufacturing industries moving jobs offshore because those jobs were done by working class, blue collar workers and the future lay in white collar, middle class service industries.

As a consequence of moving manufacturing offshore, the US, British and Australian economies became more service based. The thought in the 1980s was that while goods could be made in Taiwan, the ‘knowledge industries’ couldn’t be.

Then the Internet came along.

A panel on The Future of Outsourcing convened by the Indian Institute of Technologies Association of Australia last night discussed some of these issues.

Now the service industries are being offshored, at first it was the low skilled service jobs like call centres but it didn’t take long for higher value work – such as paralegal, medical transcription and of course IT services – to follow.

The belief that white collar jobs couldn’t be taken over by cheaper foreign labour has been proved wrong.

It isn’t just those working in the call centres or IT departments of telcos and big banks that are being affected, those small businesses in support industries like secretarial services or design are finding their clients are moving offshore too.

What’s interesting with all of this is how long the executive classes can resist being outsourced. Indian and Chinese managers work for harder for less than their US, British or Australian colleagues and in many cases are better educated.

One can only wonder how long the partners of major consulting business can hold the line as well, these guys – the vast majority are men – have done very nicely charging first world rates while increasingly paying developing world rates.

Already Indian outsourcing companies, including at least two sitting on that Sydney panel, have set up their own consulting arms that cut out the expensive middle men. Without the overheads flashy offices and big packages for entitled partners, they’ll have a pretty competitive offering.

While we can cry for the high paid management consultants and executives who are increasingly threatened by these changes, the Anglo-Saxon economies have a real problem as service industries move offshore.

In Australia, the Bureau of Statistic’s 100 Years of Change in Australian Industry tracks how the nation’s industries have changed – in the 1950s Australian manufacturing peaked just shy of 30% of the workforce, by 2000 it had shrunk to 11% while service industries were doubled from around 25% to 50% of the economy.

While it’s unlikely we’d see the service sector workforce shrink by 2/3rd over the next fifty years, there’s a good chance incomes will fall in these industries unless we start to invest in education and skills which allow Australia to stake a place in the global economy.

One of the key takeaways from the Future of Outsourcing event was that this change is happening regardless of what we think is a fair wage for our work. It’s something our government and business leaders need to start considering.

Hanging on the telephone

Is there a digital divide appearing in customer support services.

Ever tried to call an online company about a problem? As the New York Times explains, it’s often hard to find the telephone number, let alone someone to answer your call.

The NY Times article worries a new type of digital divide is appearing between those happy to do business using email or social media and those who who demand to speak to someone.

In reality, the truth is more subtle than just generational differences – it’s about the web2.0 service-free business model where few, if any, resources are spent on customer support. The idea is the an assistance can be given out on “self service” basis through a website or, better still, crowdsourced on a user forum where the customers work together to figure out solutions themselves.

For many of the web based cloud computing and social media businesses, this model is essential to their survival. If you were to add a customer support department answering telephones, the viability of the business would collapse.

While it’s uncertain if that business model is sustainable for many of these web based companies, it’s interesting to ponder how many phone calls most businesses could avoid by having relevant information on their website.

It’s worthwhile looking at call logs and asking your staff what are the most common questions to your business. Answering those on the company web site might mean happier customers and fewer staff distractions.

For some businesses, letting customers discuss issues in an online company forum might be a way of crowdsourcing support and giving ideas for future products or service improvements.

Rather than leaving customers and staff hanging on the phone, having relevant and helpful information on the website saves everybody time and money.

Feeling the currents

Customer service means listening to clients, we have the tools to do it.

Internet and marketing everyman Seth Godin makes an interesting point on his blog post Silencing The Bell Doesn’t Put Out The Fire.

Seth’s point is that satisfying vocal complainers doesn’t address underlying problems in the business and cites the Dell Hell saga of Jeff Jarvis as an example of where load complaints were a symptom of a much deeper issue within the business.

For Dell, this had been the choice to focus on the low value, high volume market segments. To compete there it meant cheap components and selling to comparatively uneducated, price sensitive consumers.

Compounding that decision was Dell’s decision to partly address the inevitable cost pressures they had put themselves under by outsourcing their support lines to truly dire, lowest price providers.

As a consequence of abandoning its service culture, Dell rapidly gained a reputation as being unreliable and unhelpful. One only has to look at the Dell Hell comments on Jeff’s original posts to see how damaged Dell’s name was.

I encountered Dell’s shocking support during that period first hand in PC Rescue, one customer asked me to troubleshoot her Dell PDA after their support line had reduced her to tears.

Very quickly I discovered why, the installation software supplied by Dell didn’t work properly – testing was obviously another victim of budget cuts – and the tech support people were working with an early version.

We managed to fix the problem without the “help” of Dell’s helpdesk and the client swore never again to buy Dell. She’s now a happy Apple customer who is a happy to pay a slightly higher sticker price for a better product and service.

The real concern was that during this period Dell’s management were oblivious to the problems they were suffering in the marketplace, they were meeting their KPIs and appeared to be growing sales while the business itself was about to go over a cliff.

Dell’s management could have recognised this had they chosen to, the company had plenty of market intelligence, customers surveys and their support logs to tell them they had a problem. It wasn’t in their interests to do so.

Today every business has those tools to monitor what customers are saying about them. Google Alerts, Facebook and – if you’re in hospitality – Tripadvisor, Yelp or Eatability.

With social media it’s easy for the bad message to get out; it’s also easy for management or owners to watch out for problems.

Dell only survived the Dell Hell experience because they were big and well capitalised, no smaller business could have survived similar damage done to their reputation.

Smaller businesses don’t have the luxury of ignoring their customers until the screams become too loud.

Customer service gods

After years of neglect, customer service now matters again.

“Treat your customer service people like gods,” says online business advisor Todd Alexander.

One of the conceits of the 1980s business model was that customer service, like training and capital investment, is an expense that should be driven down at all costs.

In corporations, government departments and politics those who dealt directly with the customers, taxpayers or voters were seen to be the low level, low status employees who could be outsourced at the first possible opportunity.

That was great when markets were growing and there was an abundance of low hanging fruit to be plucked from the marketplace.

Now that customers are cash strapped and margins are falling, keeping customers happy becomes more important.

A statistic often quoted is that acquiring a new customer costs five times more than keeping an existing one, that difference may be exaggerated but it’s not far from the truth.

Those departing customers can do great damage to the business as well.

In the 1980s customers had little recourse apart from taking their business elsewhere. Often they didn’t have that choice in sectors where duopolies reign.

Now customers can vent their frustrations to the world on the web or through social media and there’s no hiding from the loss of reputation.

What’s more, many of the businesses that relied upon picking the low hanging fruit of a growing economy, high immigration or increasing consumer debt to find more customers through the last thirty years now find the rules of changed.

Customer service now matters.

Any management that considers customer service to be low status is a dinosaur and will soon be following them.

It’s a good time to be disrupting comfortable business models.