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Saturday, October 31, 2009

What am I being rewarded for, exactly?

Starbucks executes a lot of service aspects exceedingly well. Their rewards program is not one of them.

It’s too complex. Welcome, Green and Gold levels of differing benefits class customers on the basis of the number of “stars” they’ve earned. When the basis of reward recognition needs its own definition, they’re missing an opportunity to simplify the program dramatically.

It has benefits not valued by everyone. Two hours of free wi-fi is great for those that stay to do work, but a lot of people don’t – a fact recognized by the increasing number of drivethru locations. Likewise, free syrup and soy milk will be valued by some, but not by others.

It isn’t universally recognized. It’s recognized only if you use your registered Starbucks card, and only at participating locations in the U.S.

A loyalty program should be as simple as possible.

If a customer exhibits the purchase behavior, regardless of the circumstances of their purchase, they should get rewarded for their loyalty. Every time. With something they are certain to value.

Anything else creates confusion, makes the rewards program exclusionary and cheapens the loyalty aspect by caveating what behavior is recognized as loyalty.

Monday, October 26, 2009

Creating Relationship Bonds out of an Events Model

I get it that the music industry business model has changed, that the revenue streams and profits are more tied to live concerts than the direct sales of music in tangible product or data forms.

Still, not enough has been done to create a holistic experience in the new model. Concerts are still seen as standalone events, without linkage to each other, even though services like the iTunes Genius, Pandora and HD radio with iTunes tagging have made it easier than ever to expand the relationship listeners have with their favorite bands, similar bands, and bands their favorite bands like.

The concert promotions companies and ticket houses could take a cue from this and extend the relationship forward and backward to generate more interest.

How about every ticket to see a band gets a free song download of their music. Creates connections with the performers pre-event, aiding the event experience, and justifies those “convenience fees” customers are constantly up in arms about.

Better yet, how about a free download after the show, to a band similar to the one the concertgoer just saw, that, not by coincidence, will soon be performing live in the same city? Add in a small discount to that future show, and event promoters may just have begun developing relationships that extend beyond a single transaction.

Sunday, October 25, 2009

Front Line Hires: Expertise vs. Service Orientation

I’ve been going to the same gym for 6 years, and I find it strange that I don't know any of the personal trainers by now.

I see them working with clients all the time. I’m certain that they would be able to help me improve in the areas I want to, but they’ve never approached me, struck up a conversation, corrected my technique while walking by, anything.

If a trainer is like a fitness consultant, whose goal is to grow their client base and make more money for themselves and the gym, you think I’d have been approached, or even spoken to, at least once.

It could be that the gym has told its trainers only to interact with clients paying for training sessions. Perhaps these personal trainers were hired for their expertise in training, human kinetics, dietetics and the like, and simply aren’t service-oriented individuals.

Regardless, the result is the same. A positive interaction would have convinced me to use the services of a professional trainer by now. I have an unexpressed need going unfulfilled. The gym loses money by not filling it, and worse, risks me taking my business to another gym willing to provide it.

The athletic club market is fairly crowded in my area, and my gym is not winning the market share battle. I’ve tried the other gyms, and while the facilities are marginally better than the gym I go to, not one of them has had the service-oriented training staff I’m looking for.

It’s clear my gym is not going to invest in the facilities facelift to compete in the local market. Even if it did, facilities improvement is a commodity answer to a service problem. Much more effective would be using the time of the training staff more liberally to differentiate the gym on the basis of the front line service providers. It may require more staff or even different staff, but it would be entirely worth it.

Saturday, October 24, 2009

"How was school today?" is a Tough Question to Answer.

I caught a presentation by Dan Schawbel on Personal Branding.

Great topic, great speaker, great overall experience.

Judging success of service experiences is tough in general, but judging success in a learning environment may be the toughest of all.

Students, parents and banks pay vast sums of money to schools at all levels, despite the assurance of quality of the end result being based on more faith than measurable results.

Still, schools can point to established track records, standards and the academic credentials of the teachers as references. They reinforce experience quality through the admission-to-graduation progression, with grades, degrees & diplomas, and rite-of-passage ceremonies involving ridiculous costumes.

Evaluation of professional educational services is much harder, with a high degree of variability between the exceptional professional teacher and the too many marginally-credentialed presenters that poorly represent material that they’re not truly experts on.

Professional developmental education doesn’t have as much established history to lean on, but teachers like Dan Schawbel can still provide experiential cues that reinforce the value of the material.

Schawbel was set up for success with me before he ever entered the room, due to some postive interactions with another customer, BrainZooming’s Mike Brown, who in discussions before, during and after the Schawbel presentation enriched the material with his own extensive insight. Dan couldn't have known this, but it is enough to know that the experience of the audience will have an impact on each person in it.

Dan himself was an engaging speaker, but more, his presentation included concrete steps that, if taken would result in tangible near-term results. (He also walked his walk. After advising that you have to be willing to engage anyone, because one never knows who will hold the keys to your next phase of development, I tested his talk. A few hours later, Dan was my newest LinkedIn contact.)

It will still take time to evaluate success of the experience, but delivering applied practices that yield early physical evidence of results is a great step to validating the material and the teacher.

Thursday, October 22, 2009

Unexpected Demand for Health Care in Flu Season?

I spent 20 minutes on hold for the pediatric triage nurse this morning. When I asked how she was, she responded, “busy”. No doubt. Cold & flu season isn’t even in full swing yet, but doctors’ offices are full of the unwell.

She asked me some basic questions about my children’s symptoms, and then gave me the, “monitor and report back” response. Relieved that neither of my boys was in immediate danger, I grew annoyed with their management of the demand for their services.

Pediatric care practices are all over-capacity right now. But with H1N1 having been telegraphed for 6 months, increased demand was not unexpected. Still, this office relied on the standard processes that are in place 365 days a year.


Variability of demand, coupled with the fact that in any process involving human service, capacity is difficult to bring on- and take off-line, combine to make service operations difficult to manage at the best of times.

Still, they knew this was going to happen. Where was the proactive response?

The on-hold messaging indicates that the response process is first-in-first-out (FIFO), but is that the best when demand is outstripping capacity? You don’t have to be visibly fair to customers in a telephone queue, so why not prioritize even before the call gets answered?

How about changing the IVR to automate triage and engage the caller in provision of their own service?

In the case: one line for flu, one line for everything else.

The flu line could ask qualifying questions such as temperature range, duration, and additional symptoms that could be aggregated on a desktop system that would allow the triage nurses to prioritize before answering a line, and respond most quickly in critical cases. If a parent is really only looking for the comfort of having spoken with a professional, they can wait awhile.

Managing demand better allows caregivers the ability to keep the community more healthy. It also lets them serve more customers and take in more money.

Thankfully, the first message in the on-hold system indicates that if this is an emergency, hang up and call 911. At least it is unlikely that response is delayed to a serious health issue because of the mismanagement of demand.

Wednesday, October 21, 2009

Paper Covers Rock. Service Beats Sales.

Just finished having some work done on the outside of my house. I chronicled some of the provider selection process, but wanted to provide an update on how the family finally made our decision.

The significant factor that determined who we selected was how the companies presented themselves.

Those that lost, lost because they were selling a product.

They sent salespeople who came equipped with sample-filled valises. They handed out glossy brochures with pictures of showcase houses that looked nothing short of aspirational for our humble home. They spoke about vertical integration with their suppliers and made every effort to make their companies look as big as possible. They used jargon to try and make what they did sound more complex. They used high pressure, car-dealership tactics that suggested that if I didn’t fork over money on the spot, I would lose out on a dramatic discount. They were (mostly, but not always) more expensive, likely because of all the product support they needed to fund.

The company that won, won because they provide a service.

They sent a project manager / job foreman, who wanted to talk about the state of my house and the work it needed. They gave me a single quote, and guaranteed it. They offered referrals of homes they’d done in my neighborhood, and gave me their URL for research, rather than a brochure.

The time of the product-based approach, supported by high-pressure sales tactics, has come and gone.

People know enough, are wary enough and expect enough that they don’t want to be sold to.

They want to interact with someone who is legitimately interested in their situation, treats it as unique (even if it isn’t) and provides quality work product in return for their money. Only a person or company that views what they do as a service can fulfill that promise.

Sunday, October 18, 2009

Why Bother?

Tried to book an airline rewards flight lately?

My experience, spread over the last three days, has me ending my relationship with my otherwise preferred provider.

First, you need to get acquainted with the terms & conditions. This includes the standard blackout dates, limited seat availability, and a host of other rules designed to shift rewards travel to off-peak routes and dates, or to prevent you from successfully booking an awards reservation entirely.

Heaven help you if you are arranging travel for others, and want to share a trip with them. No one – not even Southwest – has the ability to combine an awards and non-awards booking in a single transaction. How difficult can it be to use the awards portion and leave a balance to be paid by credit card?

A terrific indicator of how likely you are to be satisfied with the encounter, the “awards travel tips” are, in order:
• Search alternate dates
• Search alternate times
• Search for alternate airports
• Search a different award level

In other words, don’t count on getting the time you want, the date you want, the city you want, for the price you want.

If this was an isolated incident on a single airline, I would chalk it up to poor customer service, ditch provider, and move on. Unfortunately, each rewards program is a virtual carbon copy of each other.

The unimaginative airline industry has mee-tooed their rewards offerings like they’ve mee-tooed every other aspect of their experience. (It always amazes me that they behave the way they do and complain about being commoditized by their customers.)

If the airlines are using rewards programs to develop a loyal customer base that could save themselves the effort and cost. Roll up the programs entirely, reinvest in making core operations work.

Saturday, October 17, 2009

The Environment is Part of the Experience

A business' physical environment can create expectations about the service about to be performed, facilitate the service exchange and differentiate one experience from its competitors. Most often, however, environment is treated as afterthought, or modeled after benchmarks that may not be appropriate.

Children’s Mercy Hospital uses the physical environment to help in giving world class care to children.

Operating in the most complex of service environments, Children’s Mercy understands that the customers – children in various states of health – are dramatically impacted by their physical environment.

The experience starts before a patient has passed through the doors, with an edifice that more resembles a giant playhouse than a hospital. Inside, the layout and internal architecture plays to the fancies of children while guiding patients toward caregiving interactions. “Down the hall, 3rd door on the left” is replaced by, “follow the balloons to the balloon elevators.” Floor patterns and wall murals resemble fantasy play areas, and most directional signs pertaining to children are kept at their height-of-eye.

The carefully scripted environment puts children at ease in a time where they may be scared or in pain - in itself making the effort well worth it. From a service providers’ point-of-view, the environment also puts patients into a more comfortable state regarding the complex and somewhat scary experience that awaits, creating, even in small children, a customer much more capable of fulfilling their role in highly personal interactions taking place.

CMH is a great example of what so many other organizations could do to make their physical environment a contributor to service success.

Thursday, October 15, 2009

The Cost of Lowering the Bar

We know satisfied customers leave. That the best way to keep a customer is to continuously delight them by exceeding their increasing service expectations in each interaction.

But rather than improving, I see companies using the current economic environment as an excuse to reduce the service quality in day-to-day interactions. It poses a danger to their bases of loyal customers and their brands.

In two months, I’ve arrived to an unmade room at a Fairmont, a Marriott, and the Flamingo Las Vegas. Because I’m a complainer, each hotel lost revenue in service recovery, but the greater loss comes from the reduction what they can expect in my lifetime value as a customer. They’re gambling that the reductions in service quality will go unnoticed or unpunished because their peers are doing the same. For the Harrah’s property in particular, they should know better.

Unfortunately for them, I also stayed at a Hyatt Place, a Hampton Inn, and a Kimpton hotel, all of which provided experiences completely in line with my expectations. Finding superior interactions at a lesser price means a lost wager for the three decreasing service at a time when my dollars are harder to come by for both of us.

These experiences are not unique in B2C services. I deal with B2B services and see the same corner cutting on critical service elements, even when companies know that dispassionate decision makers are measuring their performance on every transaction.

This economy will not last forever. When it ends, the choices we made to retain, reduce or improve service levels will be justly rewarded as we deserve.

Tuesday, October 13, 2009

In fact, I do want to see sausage being made.

I’ve been on a run of witnessing first hand the services being produced for me. Given the choice, I prefer to see the inner workings of the service experience rather than have them kept behind the curtain. It helps me be a high performing customer when I know how a service is produced, but mostly, it’s just cool to see professionals do what they’re good at.

Not every service environment is meant to be viewed in full, but opening the service operation to the eyes of the public can help create greater understanding of how the service works and the role customers play in service performance. It can also serve as a vivid demonstration of the value you bring.

Consider making the service employees more visible when:

- what you do is difficult.
- the service performers are talented. (compared to industry benchmarks or to customers performing the same task)
- your service requires customer input during production.
- the customer uses your work product post production.
- front line employees are part of the physical environment.
- your service process has traditionally been shrouded in mystery.

Many service businesses feature skilled performers completing complex tasks at a high level, yet these experiences are shielded from the customer's view in case something doesn't go quite right.

That thinking is usually too conservative.

Wherever possible, enjoy the benefit that comes with customers seeing firsthand the high level of work you do for them.

Thursday, October 8, 2009

Leaving Las Vegas.

After 4 days of conferences, I just left Las Vegas. I couldn’t be happier.

Las Vegas should be ideal for a person like me. It’s arguably the U.S. capital of service businesses, hosting experiences that range from the most luxurious to the most illicit. Service interactions are happening everywhere you look, 24 / 7.

My problem is, I don’t trust Las Vegas. And I don't think I'm alone on that.

Every transaction I initiated came with hidden service fees. Several governmental branches are investigating banks’ use of service fees, when truthfully, the service fees in Vegas are much more egregious. Took money out of an ATM: A fee to the ATM service provider, and a fee to the hotel it was located, in addition to the fees I pay to my bank. Paid for breakfast with debit card, and got a $0.50 service fee added. Took a taxi, with a card reader conveniently installed in the back seat, and paid by visa: $3.00 in extra fees.

It extends beyond payment for services, to the point that you feel that every interaction is being manipulated for you to unknowingly spend more that you intended. It’s justified by otherwise reputable companies with logic of “Hey, everyone else does it. Not doing it would be leaving money on the table.” As a result, I’m constantly on the lookout for the next service scam.

Las Vegas is having a tough time, no doubt. An absolutely epic housing bubble and an economic downturn rivaling some of the worst in the country.

It’s easy to say that tourism revenue is down because of the economy in the other 49 states and around the world. I wonder if people aren’t slowly becoming tired of being nickel & dimed by scams & service fees attached to otherwise legitimate interactions, and looking to destinations where they’re not constantly on guard for someone trying to slide in a few more dollars of charges, just for the privilege of using their services.

Trust is the absolutely most important element, the foundation, of a successful businesses. When your offering is intangible, and the only thing people are left with is the feeling they had after using you, it is absolutely crucial.

I think that Las Vegas has developed an trust issue. Travelers expect that they will be charged more for interactions with no additional value added. They expect to be on guard against being “taken”.

I think travelers, concumers really, are looking for more forthrightness in their interactions - that the value they recieve will be reflected in the value they pay for. I think as the economy comes back, people will be slower to return to a place where there money is a target from the moment they get off the plane.

Maybe it’s time to change the “What happens here, stays here.” slogan. It might not be as good for business as they think.

Thursday, October 1, 2009

Sometimes the carrot, sometimes the stick.

I commented earlier this week about the way Southwest Airlines understands the contribution customers can make to business productivity, and promotes that behavior in with incentives to make them more reliable as a service and more profitable as a business.

The online check-in process, asking customers to help clean up on late arriving flights, no fees for checked baggage, are all examples of this.

While these customer behavior modifications are often done using carrots in the form of rewards, today I experiences that they can also use the stick, when necessary, to suggest appropriate customer fulfillment of role.

I’ll preface it: I was not a good Southwest customer for today’s flight, starting with last night. I didn’t check-in online 24 hours ahead. I got busy this morning, and in fact, didn’t check-in until I arrived at the airport, 45 minutes before my scheduled departure.

I got the “C” boarding pass I had expected, but was surprised when the pass had no number. “Do you not give numbers to us delinquents in ‘C’?”, I asked the attendant who took my luggage. “Oh, that means that you’ll have to see the gate agent.” she replied. Faced with a new process, I was for the first time a little nervous about a Southwest flight.

At the gate, I learned that the last three boarding passes for every flight are printed without a number, so that the gate agent can inform late travelers about the merits of early online check-in, and that while not against the rules, counter check-in 45 minutes before a flight is frowned upon. They even went to the surprisingly honest extent of explaining that given the many flights that are oversold, Southwest likes to resolve the oversold situations as early as possible, and an early count allows them to do so.

Southwest works hard to make sure customers know their role in providing a quality service and contributing productivity while doing so. Usually, they use tangible rewards and monetary incentives to reinforce the behavior they desire. But it’s also refreshing to see them also reinforce the behavior by gently warning customers about what happens when they don’t participate fully as a Southwest customer.