Apparently, it's the contract.

Verizon Wireless is defending the implementation of a $350 “early termination” fee for customers who purchase smartphones and switch service providers before the end of the agreement, explaining that the fee covers the costs and the risks of providing high speed internet.

I understand their perspective. All wireless providers have dramatically reduced the cost of phones and other devices to attract customers and get entice them to sign long-term service agreements. The service philosophy in play is that the cost to serve an existing customer is dramatically less than the cost to acquire a new one, and with a contract, they can count on users as a reliable stream. They get frustrated when this strategy is short-circuited by customers who aren’t as loyal as they would hope, leaving the provider without penalty for a better deal, better service or both.

Instead of customer behavior that needs adjusting through penalty, perhaps it is their retention model that needs correction. Rather than using contractual verbiage and fiscal penalty to retain customers, why not use outstanding service supported by compelling products to make people want to stay?

The strategy of holding a consumer to a contract is tough to enforce at the best of times, and it’s difficult to start charging for something that previously came free.

More suspect is the logic that justifies signing a client to a contract for service and holding them to their obligation not to defect, while not performing their own end of the agreement to provide a quality service. Effective service agreements (and client relationships) tend to work in both directions. If the company isn’t providing service levels customers expected when they entered into the service agreement, customer defection should be facilitated, rather than restricted.

If their ad claims are accurate, Verizon would have little to worry about.

Where is our Gift-Giving Pandora?

Gift cards have increased popularity as a holiday shopping alternative because they improve satisfaction on both ends of the vast majority of gift-giving experiences.

Immensely portable or even virtual, they reduce a giver’s search costs to almost zero. More importantly, they allow the giver to fulfill their desire (or social requirement) to give a gift while relieving them of the increased anxiety over having potentially given a bad gift, or even a suboptimal gift, as it transfers most of the burden of choice to the receiver.

Gift cards improve the satisfaction on the receiver end as they provide the receiver some personal choice over the gift, while allowing them an additional pleasurable service experience as they engage in shopping with treating themselves as the goal.

Traditionalists see gift cards as impersonal, which, to some extent, they are, but they're used so frequently because in a majority of cases, traditional gift giving is an inefficient activity requiring scads of time and providing suboptimal satisfaction results.

Before I’m chastised for that last sentence let me defend that I know it’s the thought that counts. But why can’t the thought and the result be equally exceptional?

Where is our Pandora for giftgiving? We can’t be far away. Between facebook updates, Foursquare mentions, tweets, LinkedIn networks, contacts and reading lists, Amazon and other sites’ compiled wishlists, we’re aggregating enough data points on ourselves to create a personal preference profile that will spit out timely, relevant gift choices and link people to a retail experience to obtain them. The music genome project attempted to “capture the essence of music at the fundamental level" using about 400 basic attributes to describe songs and an algorithm to organize them. I love Pandora because it takes what I know and suggests similar relevant material – some of which I know and some I don’t.

Surely we’re at the stage where there are enough data points on each of us in the social networking, online and offline retailing spheres to compile our personal preferences and do the same.

The Most Wonderful(ly Exhausting) Time of the Year

The holidays are busy for service businesses. People spend more time out of their homes rushing between appointments and finishing to-do lists. Engaging more frequently in retail experiences, but also in other service that support their schedules and social calendars – haircuts, dry cleaning and babysitting for holiday events, coffee & restaurants for refueling on the go, air travel – the list goes on.

It surprises me there aren’t more services designed specifically for the mega-event the holidays have become, catering to weary people as they as they get busier and have to contend with too many activities, too little time, and throngs of additional traffic everywhere they go.

My gym nursery has a “drop & shop” service for parents that need to shop for gifts away from the inquisitive eyes of their kids. Personally, I envision scores of 4-year-olds already hopped up on holiday candy turning into a Lord of The Flies re-enactment, but this is exactly the sort of service that I’m talking about to give just a little time and space to someone at the busiest time of the year.

Most malls & major department stores have a gift wrapping service, but how about a porter (a gift valet?) to shuttle purchases to my car as I make them. Extending the delivery angle, a service that takes my shopping from multiple places and aggregates a delivery at my home? (if ever a viable grocery delivery business were to launch, the holidays would provide the delivery density needed more than any other time.) How about a personal holiday concierge that acts as back office support for the holiday project, arranging schedules, picking up groceries & drycleaning, and acting as a temporary domestic personal assistant?

Perhaps this is just wishful thinking from someone caught in the same time trap we all face this time of year. Businesses do well during the holidays as people increase their use product and service companies alike, but is there an opportunity to make the time & effort of consumption easier on people as they engage in the production of the major domestic event of the year?

What your self-service technology says about your business.

An automated call directory experience from a company with which I’m about to begin a business relationship:

Press 1 to speak with someone in sales
Press 2 to for customer support
Press 3 to leave a message
Press 4 to dial your party by name.
Press 5 for the operator

So…you’re most interested in selling me something. If I’m not willing to be sold today and I don’t have a service problem, you’d prefer I leave a message for someone to get back with me.

Every touchpoint sets customer expectations for the service they receive. They indicate to customers, suppliers and partner what the organization is focused on and point towards their overall quality as a business.

Without ever having had a business interaction, this company told me they were more interested in taking my money than serving me, would rather I leave a message than conduct a live service interaction.

If they’re exceptional, they might recover, but the expectation has been set. For now, I’m just glad I’m not paying the bill on this one.

A service-recovered customer tells how many people?

Imagine you screwed up your most important business day of the year by shutting your customers out of your store at the time their demand was at its highest. That’s what Cyber Monday is to retailers, and that’s what outdoor apparel retailer MooseJaw did yesterday, when its “5X Rewards” promotion brought the entire site down.

Effective service recovery acts quickly, admits the mistake and acknowledges the appropriate level of consumer hardship, and presents a fair resolution to fix the problem. Going a step beyond is the company that makes a customer a little more than whole for their troubles.

Here’s MooseJaw CEO Harvey Kanter hitting all three. I didn't shop MooseJaw yesterday, but I'm in their database, and I got the email.

At Moosejaw, we're committed to making shopping as much fun as backpacking the Chilkoot trail or playing red rover. This morning, we didn't live up to that commitment when our site went down due to problems caused by our 5X Rewards Promo and high traffic volume.

Long story short, we've fixed the issue by removing the promo code. Now anyone who checks out WITHOUT entering a promo code will get the 5 Times Rewards Points when we process the order. The deal is still good until midnight PST, so if you missed it earlier today, there's still time.

Love the madness,
Harvey Kanter, CEO
Moosejaw

The paradox in service recovery holds that a customer well recovered from a failure is often more loyal than a customer that never had a failure in the first place.

It’s likely that MooseJaw lost a lot of revenue yesterday, but by correcting quickly and removing the requirement of the promo code in order to receive the benefit, hopefully they gained a few more loyal followers.

Where's the Loyalty on Black Friday?

From a services perspective, Black Friday is a tremendous loyalty creating / loyalty disrupting exercise. Companies lower margins and spend madly on advertising to induce trial from all customers, whether they’re loyal patrons or whether they’ve never passed through the doors before. Yet financial promises – the killer deal with a ticking clock – are the weakest form of linkage between a company & its customers. Like many, I hit Walmart with the precision and timing of a military operation. I checked my list off for nieces & nephews, bought nothing extra, and got out alive.

I also stopped at Nordstrom yesterday, though not because they had a once-in-a-calendar-year sale going on (they didn’t). Unlike the stores hit early, Nordstrom has developed a social bond, or relationship, with me. Kevin in the men’s department sends me a quick note when a new line comes in or when there is a sale, though there was no prompt for yesterday’s visit. I didn’t follow a script for this visit, but generally found what I was looking for, paid full price and still went away happy.

Going beyond social bonds, some retailers offer customization of the service experience. Some modify the experience through special “members-only” events where the store is open to serve the best / most loyal customers.

On Black Friday, the masses of customers are looking for a deal, and the transaction volume created through financial incentives rule. But these are temporary ties to a customer, until the next deal comes along.

I’m surprised more companies – the ones that can’t compete with Wal-Mart on price for the other 364 days of the year – don’t put effort into events taking advantage of stronger ties (with more margin) through relationship events or customized service experiences for loyal customers.

Recession Over? Check the Customer Satisfaction Index.

Most economists & business pundits agree that we’re slowly emerging from the current economic downturn, but that the turnaround won’t really accelerate until the consumer spending that comprises about 70% of GDP returns.

They suggest the reason for the reluctance of the consumer is the perceived frailty of the turnaround – jobs are still being lost, the housing market is still in a funk and equity markets are still not performing to pre-recession levels – but that once feel perceive security in their job, their home and their 401k, they’ll start spending again.

I’ll suggest an additional reason consumers have been slow to resume spending: a decrease in satisfaction with how companies treat their customer relationships.

There’s a perceived lack of equity & fairness in the customer-business relationship. Many don’t trust government (the dollar-for-dollar most expensive service we use) or financial institutions on Wall Street responsible for enabling economic growth through responsible lending. We’re suing our banks over credit card practices and ancillary service fees, and we don’t believe our news sources are representing anything other than a profit objective.

Particularly critical in service businesses, where customers give information and effort of themselves in the relationship, the public won’t resume full consumption until faith has been restored that they are not being taken advantage of by companies they trust with their time, effort and money.

The American Customer Service Index reporting satisfaction with financial services providers won’t come out until February. While it was trending downward in 2008, we could expect to see a greater decline in 2009 as twelve months of bank bailouts, suits over overdraft fees and the CARD Act are factored in.

Equity & fairness are basic requirements of the service companies we use. If we don’t feel we can trust our banks, healthcare providers, news networks, and government, we’ll choose not to consume beyond the basic requirement.

The consumer is the key to the turnaround, but to a greater extent than currently thought. While we’re investing as taxpayers in everything from financial institution to auto makers, business should also be investing in activities that result in customer satisfaction, starting with transparency, equity & fairness.

Arguing over “Adequate”

I don’t know which seems sillier – Verizon launching their national holiday ad campaign differentiating on the strength of a table-stakes service attribute, or AT&T going to the trouble to sue them over their representation of it.

Verizon is actively promoting their nationwide 3G coverage and pointing out a perceived weakness in the 3G coverage of AT&T, who has sued them in response, claiming “their use of white space in their advertisements misleads people into thinking that AT&T offers no coverage in most of the country."

Does any of this really matter?

Plotted against population density, the two networks are within percentage points of each other in terms of coverage.

Further, “coverage” isn’t a service delighter, or even representative of customers’ desired service. It’s an indicator of available service alternatives, or an identifier of adequate levels of service. If you have the coverage, you’re in the consideration set. If you don’t, you’re not. The more alternatives customers have, the higher the level of expected service.

For most consumers, this conversation is about nothing.

It’s easy for network-based services (airlines, cable, shipping, telecom) to focus on coverage, mostly because it is operational and tangible.

But of all the complaints people have about their wireless service providers, 3G coverage represents a minority. Follow either Verizon or AT&T on Twitter for half a day, and you’ll get an idea of how important 3G coverage is to consumers, compared to the themes of my phone doesn’t work / I can’t get the plan I want / my bill is never correct / I can never get through to a customer service agent that can fix my problems. I have yet to see, “I’m in the Tetons, and can’t get 3G coverage!”

By focusing on network coverage, Verizon & AT&T neglect the service their customers desire, and focus on who is doing a better job delivering on what is adequate. When adequate is the goal, I don’t wonder why churn rates in telecom are among the highest in any industry.

Who is developing the innovation you won't?

The only time most of us interact with our energy service providers is during the monthly billing cycle, though they have the ability to engage us more often using their knowledge – both of how energy is used and of our historical use of it – to offer tips on how to conserve energy, improve the survival chances of the planet and save money.

Mine has made some strides toward adding value beyond their core offering by helping turn the mountain of my personal usage data they maintain into useful information to help me understand and lower my energy costs. The functionality of their tools is a long way from what I desire or expect, consisting mostly of calculators that estimate usage based on my profile and compare it to mean users, while feeding me factoids I could generally get from reading my bill.

Their delayed action on service innovation lost them the advantage of the industry expert incumbent holding all the consumer usage data. (no small feat)

Two tech applications powerhouses have entered the market for virtual energy monitoring. Google PowerMeter is still in development stage, but looks to be a simple platform for collecting and sharing personal energy information. MicroSoft Hohm has energy company-provided usage information and smart sensors feeding a consumer’s Quicken-like energy management interface.
Because legacy service providers don’t know the emerging needs of their market, haven’t maintained innovation capabilities and got comfortable with their well-bunkered margins, they let companies who don’t know their industry innovate for them on their own terms.

The market need will get fulfilled, but I’d bet the Google & Microsoft apps are better, more quickly than what the energy companies ultimately produce. Companies that complain that their customers see them as a commodity seldom realize the extent to which they act like them.

Amazon: more reliable than a letter to Santa

Spent some time last night creating my 4-year-old’s Amazon holiday wish list for the out-of-country grandparents. For a family of expats, the combination of wishlists, universality of ecommerce, and the emergence of inexpensive / free shipping has been a lifesaver for people who care about us but can’t be with us for every holiday.

It got me thinking, however, about what a lifesaver wishlists are in general.

The holiday gift-giving traditionalists will say that wishlists are almost the copout that gift cards are. (and they’re right, to some extent)

Shopping for someone else intensifies every aspect of the retail experience, particularly for a major holiday event or a birthday. In these cases, our expectations as customers are reflective of the expectations of the people we are shopping for. We want the experience to go flawlessly, not only because we want the object of our gifting to be satisfied, but because the result of the service is a reflection on us as well.

Holiday shopping isn’t the only place this happens. Think of taking an out-of-town friend to your favorite restaurant and how heightened you are to every aspect of the service. Satisfaction and loyalty payoff in these situations is more that 1:1, as you get to satisfy two parties, one where the service expectations are at their highest.

More experiences than we realize are subject to these sort of heightened service sensitivities, driven by the expectations and perceptions of another customer present or downstream.

Much of Amazon’s success owes to consideration of the full consumer experience in the online retail environment. With service-enabling technology, they've solved problems of customer understanding that few retailers can in a bricks & mortar setting. The wishlist goes a step further, considering parties beyond the active consumer experience, using their input to improve the success of other customers’ retail experiences at the very time they have heightened expectations.

So many other service businesses would be benefited by taking a likewise step beyond the customer in front of us, to understand downstream consumers and others depending on the product of the service transaction currently taking place.

Score one for un-planning

I had my first taste of Chicago’s famous Manny’s Deli earlier this week. Proof positive that a service experience doesn’t have to be overly planned and positioned in order to be successful.

In simplest terms, if you know a customer you want to serve, create an experience they find compelling and execute consistently at a high level, people pay attention, and you will develop a following.

Manny’s provides high quality deli fare with deep Jewish roots in irreplicable atmosphere to the Chicago lunch crowd – from blue-collar to politico alike. If you don’t believe they are artisans, Google “Manny’s Deli” & see what comes up. From their website, “At Manny's you don't diet. You don't snack. You don't nosh. You come to this landmark lunchroom to pile your tray high and eat like there's no tomorrow.” They’ve been so focused on their target, it took more than 6 decades to open for dinner.

The bricks & mortar could be replicated. Melamine, formica and laminate aren’t hard to come by, even in 2009. But the atmosphere couldn’t be recreated anywhere. The staff (Manny’s is a 4th generation family business.) knows their clientele from decades of interactions. Even if you’re a newbie, they know why you’re there. The customer-to-customer interaction is great, everyone in a better mood because of where they’re eating.

It’s possible they’ve never had a planning session. Never touchpoint-mapped their customer experience, never ideated around core purpose and vision or what the organization needs to look like in 3-to-5 years.

Maybe they have by now. The website is professionally done, they’re active in social media, and they serve customer-fans by shipping nationwide. But they didn’t become a local and national landmark through countless hours spent in service development and market planning.

They did it though dedication to solid service fundamentals. Making a service promise that people found attractive, making the promise available, and delivering on it every day, for almost 70 years.

It’s that easy. And that difficult.

My Mistake, Your Problem.

What is an airline to do when someone ruins their experice for them.

The flight my spouse came home on was early, and I was late to the airport to pick up my exasperated wife and our beyond-tired 8 month-old. Reliability is equal parts precision and accuracy – it’s consistently doing what you say you are going to do. An early flight can be as bad as a late one.

I didn’t check the flight status from my smartphone, relying instead on an web update before after I had left the house for the day.

As part of my familial service recovery, I investigated what my actual options would be for future cases.

Of course, I can ask for flight status via the web, cell, PDA. These methods are all passive, as though the airlines are saying, “We’ll tell you if our flights are running late, but only if you ask us.”

I also could have subscribed to travel alerts. Or rather, my wife could have…well in advance.

With Northwest, you can subscribe to receive texts & emails of flight schedule changes as they happen. The downside is that you have to be a loyalty program member. You can then adjust your account settings to receive updates on your flights, and you can include someone else in your profile to receive them as well. (of course, I did not tell my wife it was her fault for not being a Skymiles member and not having signed me up to receive updates)

Here’s where holistic mapping of the experience would help.

I wasn’t either the paying customer or the service provider, but I had an impact on the experience. The service outcome was a failure, but the actions of a complete outsider to the encounter caused the negative reflection on the performance of the airline.

When looking at the service moments-of-truth where satisfaction or dissatisfaction occur, you often have to look beyond where your part in the service provision starts and ends. Include the actions of customers - and sometimes people not directly involved in the service at all - that need to use the product of your service to dowork of their own.

Several of these things are not like the others.

Last month, I posted on Children’s Mercy Hospital and how they effectively used the physical environment to create expectations, facilitate the service exchange and differentiate it from other care experiences.

Yesterday, I had the opportunity to visit a specialist clinic considered a branch location of the hospital.

Great care once again, but a completely different experience.

The physical environment of the main location was not nearly as evident as it was the main hospital. Though partly due to working out of a leased space vs. the owned environment sculpted to fit the strategic service vision, the effect was evident throughout. The staff was not visibly oriented to perform child health care, making it feel like a regular, every day clinic.

Providing consistency in service experiences is tough. Operating from multiple locations makes it even more difficult, adding differences in the experience from location to location. Even if the quality of outcomes is consistently high, an inconsistent experience diminishes the reliability of the brand promise.

To combat the effect that location-to-location differences have, the “keep it simple” mantra works well.

If the experience is going to be managed centrally, focus on replicable aspects. Standardize core service processes, while giving front line service employees the ability to work outside process to stay true to the spirit of the service. Create uniformity of the service philosophy through how internal service providers, performance measurement and front-line hiring principles, and consistent internal brand messaging. Where service-enabling technology is used, implement system-wide.

There was no outcome failure. The care given by the branch of CMH was consistently exceptional, but because the location had less focus on the unique needs of the child customer than the main branch, I left with a diminished opinion and future expectation of the brand.

If you love your customers, set them free.

LinkedIn and Twitter, two social media platforms I use to maintain professional networks and develop personal brand, have announced they will now have cross-platform connectivity for users. For now limited to the status update functionality, it is reasonable to assume that eventually, LinkedIn contacts and Twitter followers could be easily converted between platforms.

Both networks are immensely valuable to their users, and this development was embraced by users that now have an easier time doing business with both service platforms .

Service integration, driven by technology, is creating possibilities to improve experiences across the spectrum of B2B and B2C services. Driving this wave of innovation is the depth of engagement of the individual, enabling companies to provide better service than ever before based on an ever expanding understanding of customer needs and an equally expanding capacity to serve them. Like with the marriage of LinkedIn and Twitter, customers’ transaction costs are reduced and they become better performers of their service role.

But the new technology is also freeing. As more services are linked together, the customer becomes more portable, easier to migrate between businesses. Switching costs are reduced to the point where customers can leave as easily as they arrived.

The old mantra was to make your product or service as sticky as possible - that a customer captive to high switching costs was ideal. This notion is now challenged by the idea that the best way to keep customer is to provide more network value by linking them to as many complementary services as possible.

To the old guard of business, a scary notion. They can envision a mass exodus of customers to their age-old competitors.

Truth told, the only companies that have anything to be scared of are the ones who aren’t providing market value or better, and for the first time face the risk of their customers finding out.

Just give the kid a toy already.

In any child-oriented service experience where the objective is repeat business, the service provider should give their child-customers some tangible evidence of the positive experience.

It doesn’t have to be expensive – just a small token that prolongs the experience by making it tangible once the child is out of context and serving as a memory trigger of a positive experience.

Many companies providing service experiences for children line their walls with merchandise and wouldn’t think of giving anything away. I can almost hear them rationalizing that “It would interfere with their merchandise sales and suboptimize revenue from the retail side of the house.”

Chuck E Cheese gets this concept, as every child leaves with something. Something of nominal value, to be sure, but a reminder doesn’t have to be expensive. Even the dentist hands out a lollypop at the end of a checkup.

Too many companies miss this easy opportunity to create repeat business in young customers. Experiences that have separate service and retail operations (themed restaurants, child hair salons) are the worst. It would take almost nothing in incremental cost to add a memory device to extend the experience and provide a positive reminder.

A child won’t want to come back if they can’t remember how much fun it was to be there in the first place.

Are you ready for your customers to be your Marketing Dept?

In a service design group Slideshare presentation posted by UK design group Engine, I read the following line:

"The service economy is here, but it's just not very well designed yet."

True, but it’s quickly becoming an understatement.

Sure the service economy is here. >70% of GDP is represented by services. Even in product-based businesses, service and services are the differentiators that separate category leaders from the commoditized also-rans.

Here’s where I’d go farther.

In a service economy enabled by the connectivity of social media, companies need to put the best marketing tools in the hands of front line service employees AND customers themselves in order to prosper.

Unique to services is that the line of production also serves as a company’s primary marketers. The faces providing the service experience are the face of the brand. And because the “product” is intangible, customers’ only reference is the feeling they were left with after having used a service. What they say to others will be determined by the outcome of the service and how they were treated while receiving it.

Social media has connected us all. It has it enabled a greater depth of interaction between companies and the customer they serve, and a MUCH greater connectivity between past and prospective users of your service.

Instead of allocating marketing budgets to all of the traditional activities, companies need to be spending time, effort and capital on putting the best marketing tools in the hands of the people best suited to market the service - front line service employees and customers themselves.

The Importance of the Professors at Southwest U

The Southwest agent I spoke with at check-in today had just returned from a week’s worth of training in Dallas.

I asked her (and her more experienced peer also helping me) about the LUV-fest. Specifically, what immersion into the Southwest culture looked like.

Interestingly, they didn’t give much detail about the training itself, mentioning only that the environment was fun but VERY fast paced. What they did go into detail about was the role that leadership played in their indoctrination. Specifically, that Herb and Gary were all over the training sessions, and that Colleen was present as well. Even more interesting was that they mentioned Founder Herb Kelleher, CEO Gary Kelly and former President Colleen Barrett by first name, as though there was no doubt that I would know exactly who they were talking about – which, of course, was a correct assumption.

The agent that has seen more service also mentioned that she had multiple instances where Herb and Gary had hopped behind the agent desk to help move luggage at check-in and board passengers at the gate.

Service businesses are distinct from their product counterparts because they are fundamentally represented by people, working with a process and supported by technology, to serve other people.

In no other business are the business aspects of customer orientation, quality and engagement of the employee workforce as important.

Southwest does this as well as anyone in a big company setting, and it starts with the way senior leaders approach the business and the employees. Watching Colleen speak on servant leadership, it is no wonder that at any given time, Southwest has 10,000 pilot resumes on file.



They have the best employees because good people want to work there. Good people perpetuate good service, leading to good performance, which attracts more good people.

Easy, right?

TSA could be better, but so could their customers

I feel for the TSA and the service workers charged with providing a very important service in a difficult environment.

While as a service the TSA has its flaws, we’re not very good consumers of their services either. We don’t play our roles, or worse, actively try to subvert theirs. Travelers present some of the least high performing customers in any service environment.

The TSA could do themselves a favor by improving the physical environment where their service is performed.

We’ve figured out how to put advertising in the bottom of bins, but we can’t get people to put their shoes on the belt. Instead of the hopeless voice shouting over the din of travelers, why not paint outlines of a pair of shoes every few feet on the conveyor? Stencil, “place shoes here” if you have to.

TSA area signage generally consists of letter-sized memos topping waist-high rope-posts while the surrounding walls are covered in giant back-lit ads for consulting services. Bring the signage to eye level, make it larger, make the messages shorter. Even better - work with the airport to reclaim some ad space in order to improve service operations with really effective signage.

The metal detector alarms are too unobtrusive, and too kind to offenders. Why not switch out the generic alarm sound with something intentionally embarrassing, such as, “I still have metal,” repeated over and over. After a few embarrassing moments, people would conform.

The TSA has a great website geared towards preparing travelers for airport security, and they’re all over social media. This is great, but while most travelers go online for boarding passes, they’re not planning their trip through security.

For the most impactful results, TSA has some major work to do in understanding and improving their physical environment’s ability to convey the customers’ roles more effectively than they do today.

We know you have to follow a script, and we do not appreciate your apathetic delivery

Most airlines seem to spend much of their innovation effort actively undifferentiating their service, me-tooing every good idea anyone in the industry has. (Most of which – over the last 20 years at least – have originated from Southwest)

Today’s example: It seems everyone has co-opted a version of the phrase, “We know you have a choice of airlines when you fly, and we want to thank you for flying with (us).”

It was novel when we first heard it, but in replication, the effect has worn off.

The phrase itself has become a negative, partly because the deliveries are almost undistinguishable, and partly because we can associate poor air travel service experiences with the lifeless delivery of this now-hackneyed line.

If you’re going to thank customers for being with you, it HAS to be heartfelt, and it should feel different from everyone else who does it.

On some Southwest flights, flight attendants sing their appreciation. Sometimes good, sometimes awful, it at least shows that they feel strongly enough to not do it by rote.

Thank you doesn’t have to be said at the end of the flight. Midwest makes cookies as their calling card. They could say during the inflight service, “We like you so much, we baked you cookies”. Different, but the message gets across.

Airlines could visibly reward passengers randomly. “We love all of you, but we’re going to buy everybody in row 12 a beer today for flying with us.”

The execution of the message is almost irrelevant – the point is that an insincere “thank you” is as damaging in a service environment as it is in our personal lives.

Lose the line, lose the script. It doesn’t have to be creative, it just has to be heartfelt.

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.

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.

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.

"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.

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.

Why?

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.

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.

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.

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.

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.

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.

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.

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.

You Can Untie the Cost Accountant Now.

Finally!

Hyatt Place put in an automated check in process in the hotel I stayed at this week. I’ve been wondering when this development would come, and I can’t say that I’m disappointed in the least. I was down on the cost accountants earlier this week, but here’s one who worked with their service & brand teams for a successful result.

A service brand has to judge whether the introduction of self-service technology will reinforce the brand, be a net satisfier, and create improvements in service productivity.

It’s not for everyone. Imagine who guests at Ritz-Carlton or Four Seasons would react if greeted by a robo-staff, ready to accept their credit cards and spit out an invoice confirmation and a room key.

But for a brand that caters primarily to business travelers on limited-duration stays, this seems like a no-brainer. When I travel for business, the hotel check-in process is not a value-added activity. I’m either dead tired, or know where I’m going and in a rush. The automated check-in was faster than counter check-in the first time I used it (major bonus points for improving company AND customer productivity on the 1st try), got me what I needed and off to my next activity.

Obviously, it won’t make sense for every hotel to adopt. Automated checkout is a staple in most grocery stores, but it might look out of place at Stew Leonard’s. Self-service technology can enable the service promise, so long as it is evaluated ensure brand compatibility and satisfaction improvement amongst the target consumer.

Tie your cost accountant to a chair.

One of the main reasons why the US airline industry is composed of Southwest Airlines and everyone else is their fundamental understanding of customer behavior, its impact on their service operations, and how to promote consumer behavior that makes them a more efficient business.

Most famously, it was the airplane seating process – beginning as the “cattle call” and later evolving through multiple iterations of online check-in that have morning travelers setting early alarms the day before they fly, just so they can log in to get that highly prized ‘A’ section seating assignment.

Truthfully though, it is evident in everything Southwest does, which is one of the reasons they are consistently able to stay on time for departures, stay inexpensive and ultimately, stay profitable.

Keeping in mind the customer role the service is also why Southwest has been able to avoid the misstep that almost every other airline has made in charging customers for checked baggage.

Set aside, for the moment, the vehemently negative reaction the traveling public has had to the checked baggage fees. (A reaction Southwest takes GREAT pride in stirring up through their advertising)

In charging $15-$30 for checked bags, the other airlines have demonstrated a lack of understanding about their core service operation.

Planes are making money when they are in the air, not when they’re at the gate. Turn times and on-time departures are critical to an airline’s ability to make money. Everyone who has stood in the aisle while a 110lb non-gender-specific human tries to launch an oversized, 50lb suitcase into an overhead bin 3 feet above their head knows instinctively that the only way to get a plane to lift off on time is to completely separate the loading of people and luggage. (In fact, airlines employ professionals for just this reason, though I imagine their CFO’s at this very moment to be looking at some metric measuring bags per handler per hour and wondering why productivity is slipping.)

By charging extra for checked bags, the airlines ensure that everyone tries to cram as much as possible into the largest carry-on bag they can get away with, causing the overhead compartments to be crammed beyond capacity and requiring overflow processes of their own, all of which creates more time at the gate.

And who does this policy screw, apart from the airlines that created them? Not the business traveler, who can find room for that oversized suit bag if they take long enough. It’s the family of four, with 2-3 legitimate bags, maybe a car seat, that has no alternative but to check and pay. Of course, these customers are now flying Southwest, so it’s not the other airlines’ problem anymore.

By demonstrating a fundamental lack of understanding of how customers in a service environment pull a significant lever on their business’ productivity, most US airlines have incented exactly the wrong consumer behavior, created consumer discord and driven ever more business directly to their most able competitor, Southwest.

Leaves me wondering what's next from this group.

Willy Wonka and the Hockey Game

A factor that differentiates services from products is the inherent difficulty in balancing supply of service capacity with the demand for it.

If a product’s demand outstrips the capacity for it, a company can produce more to create more sales, increase the price to create more profit, or both. World famous brands such as Apple and Harley Davidson are masters as manufacturing scarcity in order to drive margins and sales in future periods.

In the case of services, capacity has to be matched as closely as possible to demand, knowing that there will still be gaps.

Once a flight is sold out of seats, Southwest can’t sell more seats for that flight, nor can they reprice the existing seats to gain more margin. On the other hand, once a room at a Marriot goes empty for the night, that “inventory” of service capacity has forever perished, and there will never be revenue associated with it.

Add to this the conundrum of the one-of-a-kind service experience. The Super Bowl is a great example, where demand for tickets vastly outstrips capacity to provide them. The result: Tickets can be priced excessively high, to the point where much of the live audience for the game is corporate hospitality, and most fans of the teams involved are hosting parties in their home theatres.

Here’s an interesting spin on a one-of-a-kind event: Every year the NHL hosts an outdoor “pond-hockey”-style game called the Winter Classic, where two teams meet in a match that counts only in the regular season standings. For 2009, in Chicago, there were more than 240,000 ticket requests for the game played at Wrigley Field.

This year, Fenway Park will be the venue on January 1st for a game between the Boston Bruins and Philadelphia Flyers. The interesting part is how you get in:

First “dibs” goes to season ticket holders of the Bruins and Flyers. Makes sense. These are the people that form the revenue lifeblood of the franchises, they should have first option.

A selection of tickets is held back by the NHL for youth hockey programs. Great move. Children are the lifeblood of professional sports. It’s an horrific shame that with ticket prices what they are, kids are getting squeezed out of live sporting events.

The remaining tickets will be granted in a drawing, amongst all who request them, as options to purchase a single lot of two tickets. Register to “win”, and you have a shot at attending. Regardless of geography, regardless of means (you still have to by the tix, between $50 and $350 per), regardless of connections. Its egalitarian. It lends a Willy Wonka feel to the experience, where fans (myself included) will be watching on lottery day to see if I get to buy the tickets.

A masterful way to keep make the game more accessible to greater numbers and make the excitement for the event build long before it actually takes place. The NHL has come up with a unique solution to providing fair distribution of supply to an event with extremely limited available capacity to serve.

Obviously not an everyday scenario, but enough to make you think about how you distribute your available capacity across the customers demanding your services.

Who cares how many billions served?

A marketing pet peeve of mine: companies that use how long they’ve been in business as a proof point of their expertise.

You see it in copy, usually as a slogan or a sub line, such as “serving customers since 1896.”, or “serving Linden, MI since 1939.” My least favorite form of this are those companies that add the experience of the employees and project that as the sum total of their expertise, “serving customers with over 210 years combined experience.” This type of experiential reference is usually, though not exclusively, done by small local businesses. (“Billions and Billions Served” is a variation on the theme)

These “proof points of experience” grate on me because they’re largely irrelevant to what I’m looking for in a service environment. Further, I want you to get my interaction right, and if you point to millions or decades worth of satisfied customers, I'm likely to get more frustrated that you couldn't do for me what you seemed to for them.

The services they represent can usually be characterized as out-of-date in their use of technology to enable the experience, in need of a massive service process overhaul, and often frustrating to do business with manually in an otherwise automated world. But for these faults, they also tend to have one major positive element in common: After having been in business for a reasonably long time, they usually get the people part of service right.

The way they do business may seem out of touch to those of us uberconnected, high speed, low drag customers looking for the shortest line in every encounter. But the high-touch, people-centric service models do fit with a large segment of customers that don’t place an absolute premium on their time and would rather have the confidence that comes with a reassuring, if slower, encounter.

As much as the “in service since” approach is a personal pet peeve, I concede that it is not a marketing vehicle intended for me, and likely works for the customer segment most small businesses covet.

$2.15 can lose you thousands.

Yesterday I stopped at one of two sporting goods stores that sell hockey equipment in Overland Park, KS – the one where I do a vast majority of my spending.

Not a major spree – I just needed a number applied to the jersey for my fall men’s league team. The total came to $2.15.

It was the attitude of the person who performed the service that set me off.

The same individual that applied the number also rang my purchase up. When finished, she was surprised, borderline disgusted with the amount showing on the register. “That’s it? Seriously?”

Now I know that $2.15 isn’t a heavy commission sale. I’d even acknowledge that the time and effort to apply the number likely made it an unprofitable transaction. But the service employee, other than being rude, was taking the short view, the view that didn’t take into account my lifetime value as a customer.

Ask a parent. Hockey is an expensive sport. I spend hundreds a year on equipment, sticks, and sharpening. I’ve played since moving here, and referred several adult players to the store. I’ve have coached in the area and referred kids & their card-wielding parents. In all, my lifetime value, already in the thousands, is likely to double or triple that before my wife and my doctor finally conspire to convince me to stop playing.

So sure, the transaction was $2.15, and hardly worth the service providers’ time. Except that I see it as one minor though potentially critical, touchpoint in a long-term relationship. And so should they. Then they might have also seen it as an opportunity to secure or lose a fairly revenue stream.

How then, should they have acted if a customer worth thousands in revenue and thousands more in referrals came in for a $2.15 purchase? Write it off for a loyal customer? I’d have considered it.

As it stands, their actions have me giving that other store another look.

Table (and expectations) for Two

It’s my turn to pick the restaurant for date night.

When I requested input on what type of food my spouse was in the mood for, her only reply was, “let’s try something new”.

Immediately, the task of choosing the dining experience for the night got more complicated than I ever intended.

When we’re experiencing a new service for the first time, our sensitivities are heightened. We pay more attention to the physical environment, the people providing it and the way in which they do so. In the restaurant setting, this means that EVERYTHING comes under the microscope: how easy it is to find parking, the wait, the atmosphere inside, the manner of the host, bus and wait staff, of course the food, the other diners, and on and on. In a new restaurant, I’ll probably use the facilities just to get the full atmosphere effect.

Only one thing could create greater expectations sensitivity than trying a new service yourself - choosing a new service experience for someone else.

Not only do you have your own internal evaluation going on, you’re also indirectly responsible for the experience of another. In addition to how you experience the meal, you’re intensely aware of the experience your partner is having, because ultimately, they put their trust in your selection, and you want to make sure their experience is a good one.

Now, rather than just going to OpenTable for one of our standbys, I’m on the internet reading reviews, making calls to foodie friends, going over drive times and other planning minutiae that I would never otherwise consider.

This is taking about 10 times longer than I had intended, so I’m copping out.

When we were in the Tempe / Scottsdale area, there was a hipster sushi place called RA we went to frequently. They’ve imported the experience for the Leawood, KS crowd, and so I’ll use a decisions loophole to find a place that is both new (to here) yet familiar (to us).

Of course, now we’ll be evaluating this experience against the ones we had at the former Arizona version, a tough matchup, given that we were younger, (maybe even hipper), and less discerning than we are these years later.

Everyone's a critic. (and a fan)

A friend asked me what I thought of the mystarbucksidea site. Never wanting to miss an opportunity to make my opinion public on a service question, I’m posting my response.

Customer listening posts are critical in any business, but even more so in a service business. The core offering is intangible, comprised of a process performed in full view by front line employees, and requires customer input in order to be successful.

Listening post opportunities are everywhere – traditional satisfaction and customer value research, customer service organizations themselves, front line sales and service employees, are all examples, though few companies capture knowledge from each.

A listening post will have positive customer impact if it provides customers with fair treatment – a simple, visibly legitimate outlet to voice their concerns and a quick response that is adequate to their level of dissatisfaction. This is the case regardless of whether the company actually uses the data they collect. (Though we would hope they would)

Mystarbucksidea achieves this objective.

The feedback process is easy, and if you miss it, Starbucks lays it out graphically. Users sign up by opening a starbucks.com account (also opening them up to future marketing opportunities) and leave “their starbucks idea” – anything from a complaint to a new service improvement or merchandise idea. With a lot of loyal followers, Starbucks’ customers have taken the offer up by the thousands – enough that starbucks has categorized the commentary by various categories of product variety & quality, service process and physical environment.

But, you don’t have to leave your suggestion to be heard. You can opt to show up and vote on the validity of other peoples’ ideas with a simple thumbs-up / thumbs-down selection. In this way starbucks shows procedural fairness by making every suggestion public and letting the customer base vote on which ones are most valid. Disagree with the comment that starbucks baristas should be able to have their tattoos visible during working hours? Vote the suggestion down, and the customer has to eventually recognize that they aren’t in the majority. (Incidentally, another reason why service businesses are more complex than product businesses. Think Steve Jobs has visibility of employees’ tattoos filter up to him as an area of customer concern?)

Customers are also encouraged to “discuss” their and others’ ideas through a mediated open forum, creating another source of fairness, while putting some of the corporate empathy burden back onto the customer base.

Finally, Starbucks showcases the most popular ideas, and those where they’ve taken action. This closes the loop on a clear process for launching a complaint / suggestion, having it vetted against the opinions of other customers, allowing for open discussion eventually resulting in change on Starbucks part.

My guess is, not every popular idea is put into force, (Starbucks customers come up with a lot of reasons that a free drink is ‘merited’) but the process is simple and has a high level of perceived fairness.

If they’re mining the suggestions for the next service experience improvement, all the better (my guess is that they are). If not, the site still serves as an outstanding listening post.

Customer Productivity. There is not an app for that.

The ubiquity of smart phones and supporting applications has made us ready for the next dramatic improvement in self service technology for service companies to increase customer productivity, but we haven’t seen it begin yet.

Part of the fault lies with application developers, but most lies with small service businesses themselves.

The logic behind developing customer productivity apps is simple. Yet while application developers may have taken on business productivity, they’ve missed what improving customer productivity could mean to small business productivity and profitability.

A list of best selling apps for small business have plenty of tools for small business productivity – accounting, travel, networking, HR, meetings, and even a “sloganizer” that helps managers create clever slogans for their businesses. But the list contains almost nothing that helps companies make customer interactions more efficient.

Then there are personal productivity tools, such as OmniFocus, which uses Wi-Fi or GPS to detect your location and creates lists of tasks for you to complete nearby, and OnePassword, which keeps all your online and personal passwords in one place. (For every time I’ve accessed banking / ecommerce sites through the “forgot password” side door, I NEED this.)

Still, small businesses that are not using the flood of newly created personal connectivity technology as an opportunity to review processes to make customers more productive are stepping over customer satisfiers and dollars.

Example: since many small businesses are appointment based, I would expect to see something as simple as a calendar reminder. Doesn’t need an app, just a change of process to ask for a regular customer’s email address, (once) and email them a meeting reminder for the service appointment.

This could be used in conjunction with the traditional appointment card. (I have two of these in my wallet right now, and a 90% chance that I will miss one of the appointments.)

Not sea change, but enough that a small business can improve the productivity of the customers that engage its services, and decrease the amount that they impact each other negatively.

Yesterday alone, it would have kept me from being 15 minutes late for my hair appointment, making the hairdresser late for her next customer and potentially every other for the rest of the day.

Geeks rule the world AND provide the best service.

I spend my money with the service company that puts the most expertise on the front line, providing service to customers.

Don’t get me wrong, quality of service offering and the underlying products are unbelievably important to me.

But I usually look for the provider with “service geeks” on the front line – those people that know far more than a layperson, but also more than their competitors, about the products or services they represent.

In any service environment, companies have a wide enough variety of differentiated offerings that I have a staggering selection of options to choose from to satisfy my immediate need. Because I have a choice, and I’m not an expert, I almost immediately search out the advice of an expert – a service or product geek – that knows the topic deeply.

On any trip to Whole Foods, there’s a good chance my wife will conduct 90% of the shopping while I spend 20 minutes talking with the cheesemonger about options for a $6 block of cheese to complement a meal or wine selection. He’s a cheese geek, and I want to use his expertise to make a better decision and learn a small measure of what he knows. While I may not seek him out every time I pick up cheese, there’s a good chance a previous conversation is influencing the current purchase.

If I’m at an unfamiliar restaurant, I’ll almost always ask the wait staff what is the one thing on the menu I absolutely have to have. When they answer anything at all, I’m never disappointed. They’re geeks about the food their restaurant makes – they know better than I do and taking their advice yields satisfaction. Every once in awhile, someone will say a variation of, “Everything here is good.” They’re showing that they don’t care enough about the offering to have a default answer. They’re not geeks, they’re employees. In these cases, I have almost universally been disappointed with the meal and the other aspects of the service experience as well.

In the end, if I’m ordering coffee, I want to be talking to a coffee geek.

If I’m ordering a cable package, I want to talking to a geek who watches way more cable television than is likely healthy.

If I’m in the beer store, I want the merchandise assistant to tell me about the small batch micro-brew that just came in that can only be consumed in small quantities but simply has to be tried.

When service providers display their passion and their knowledge, we’re completely drawn in as customers, almost regardless of setting. We feel that spending time with the provider is making us more knowledgeable, more of an insider, and more confident in our purchases / selections

Whether expertise comes as a result of internal training or is due to company hiring practices, the company that invests more in making its front line service providers knowledgeable about their business category is the company that I will spend with, almost 100% of the time.

All day tweet log - 20 encounters later.

The tweet log of every service encounter from a single Monday. 20 nonrepeated, distinct service encounters provided by 21 companies. The day ended up under the 25 I thought I’d hit. I will do this on an upcoming weekend day. Five encounters were provided by two or more companies working together. The day definitely could have had more entries, but a single interaction type was only counted once. Thus, every time I accessed the internet, used my cell phone, used electricity, etc. were included as a single entry. To not do so would have created an order-of-magnitude increase in the number of interactions. Here is the full list in reverse order of their occurence:

20. Picking up the mail. Service encounters definitely winding down. This, followed by the blog post, will be the last of the evening.

19. Cable used for the first time today. What is the percentage of people that watch tv while surfing? Why isn't content developed for that?

18. Service Interaction with hockeymonkey.com. Autogenerated (emailed) order status update, provided on their behalf by UPS.

17. Target for groceries. The variety of merchandise is exceeded by the variety of the clientele today.

16. Why hasn't the doctor's office waiting room evolved sincew Norman Rockwell was painting them? Magazines? Seriously?

15. It is a fun day when you can cram legal services and medical services into the same 12 hours.

14. Dean & Deluca for lunch. Decided I needed coffee more. It is good to have options.

13. Through 6h of work, the most used service has to be AT&T conference call services. Mondays.

12. Called health care prvdr. Uneasy making appointment through an IVR, as the other party doesn't confirm / 'officially' agree.

11. USPS: When you have absolutely, positively no free alternatives for the correspondence you’re sending.

10. Radio, in the car. With the number of self-funded service ads radio is putting out, is that industry is better / worse off than print media?

9. Using the wireless service provider to send the tweet counts as #9. That over / under of 25 may be in jeopardy early.

8. Starbucks. Not daily, but frequent enough they know me. I'll do a week on the service (ppl, process, phys. evidence) in local coffee chains.

7. Roads & highways. My taxes pay for it - I’m counting it, representative of all the gov't services we pay for. (& daily take for granted)

6. Why don’t banks provide more self-directed (online) money management tools? Its like they left a cost accountant in charge of new services.

5. End of the month doesn’t come & go without at least a little online banking.

4. 25 minutes into my day, I’ve used 5 distinct services, including twitter to provide these updates and the home ISP to access twitter.

3. Ever consider it takes 2 service providers to bring you a hot shower – 1 to bring the water, and 1 to heat it (gas co. or electric co.)?

2. My day doesn’t start without coffee. Coffeemaker requires electricity. By transitive, my day doesn’t start without electricity.

1. The services we use most frequently are public utilities. Could energy companies raise their profile, or will we just take them for granted?

All-Day Service Tweet Log!

Tomorrow, I’m tweeting every service experience I have throughout the day.

Partially to prove a point on just how may services we interact with every day that we pay for, partially because while I try not to take the interactions for granted, I’ve never actually accounted for every one of them in the span of a day.

It’s a work day, so it is only a partial answer on the number of distinct services we interact with on a day-to-day basis. As such, I may have a weekend version as well, depending on the results of this one.

Stay tuned.

I didn't get what I came for, so why am I so happy?

Can a service provide satisfaction if you don’t get what you were looking for when you engaged it?

Obviously, if you get something better or more than you expected, but what about if you get less?

Example: Can it be a successful trip to an urgent care clinic if you leave without fixing the health issue you came in with?

Mine from yesterday was. No wait, processing time was a very reasonable 5 minutes (waiting room time was why I put off the visit until my wife threatened guest-room banishment), I got to explain my symptoms to a very compassionate doctor who took in all information and asked a battery of follow-on questions that made me feel as though the discovery process was indeed working its magic.

But at the end of the visit, we still didn’t have a full diagnosis, hadn’t prescribed anything to make the condition better.

Still, I felt 1,000% better leaving than what I did arriving. Why? Because I understand (and it was explained to me) the process of taking tests, awaiting results, analyzing and using for treatment. The issue I had wasn’t fixed, but I understood what the service providers’ next steps were to be, what mine would be, and the process for successfully bringing, through multiple engagements, this service interaction to a successful close.

A single service encounter doesn’t always result in the satisfaction of the need that a person has when they engage it. Those that are more complex, (legal advice, and architect’s services, as examples) will often require multiple iterations before closing in on ultimate success.

Nevertheless, it makes sense as service process owners to understand the nature of the service we’re providing. When it is impossible to provide final resolution in a single encounter, reinforce the progress that was made in the current encounter, the process that leads to a successful result and everyone’s role (customer included) in creating eventual success.

Swedish for Magical Kingdom

I’ve been a longtime fan of IKEA – partially because I like the design aesthetic, but mostly because I love how they marry their retail experience with their intended target customer.

I’ve had non-fans describe IKEA customers as “people cheap enough to assemble their own furniture”, but that misses it. I would characterize IKEA customers more as “proud design DIY’ers”. I’d wager there is a fairly high correlation between IKEA customers and people that use TaxCut or Turbo Tax to prepare & file their own income taxes.

IKEA owns the entire experience, from product design & production through the retail & online environment. Consequently, the retail experience and the products themselves fit together very cohesively.

There is one intended path through the store. It is marked with arrows and limited “outs” once you begin. They want you to see their product environments in the progression they intend, rather than just allowing you to search out what you’re looking for, and leaving without seeing the rest of the catalog. This leads to project ideas, design ideas and much more impulse buying than goes on elsewhere.

Stores are configured in three separate sections, so people can follow the experience from well-articulated design concepts through to execution.

Products arranged by application – this is everyone’s favorite. Seemingly miles of display bedrooms, living rooms, kitchens commodes, offices, etc., all configured as fully designed spaces. Tags adorn everything so that customers can identify the items and where they are kept. IKEA provides measuring tape, pencils and paper as tools to let that spontaneous project take over and start redesigning your living spaces on the fly.

Products arranged by function – where the ideas that took shape in the design area get fulfilled. Sections dedicated to furniture, appliances, textiles, art and the like.

Wharehouse – where the famous unassembled furniture lives. Odds are that anything you wrote down in the design section that had a grid reference like “G7”, which points you to an aisle & section of the warehouse where you pick up the boxes that will, with your own effort, become that armoire you couldn’t resist.

Everything not related to the main retail experience keeps the IKEA look & feel, but is provided as an absolute loss leader. They know that their experience is a commitment and takes substantial time. If the cafeteria was expensive, customers would leave for lunch, intending to come back, but never really doing so. As a result, my pasta was $1.59, and my mushroom bisque $0.79, and BOTH were of better quality than what I would have received at a fast casual restaurant down the street. Their onsite child care is configured similarly.

Comedy acts have poked reasonable fun at the difficulty of IKEA furniture assembly. The 5 hours I spent in 2002 putting a china cabinet with an allen key bears witness that it is at least somewhat merited. But even in this, IKEA customers wear those experiences like a badge. In the end, they’re proud design do-it-yourselfers, and IKEA creates an environment that is exceptional at serving that segment.

I learn to carry cash again.

I slowed down on posts last week, mostly because I was vacationing at a cottage in Northern Ontario.

No cell coverage, no internet, no data feed to my Blackberry – in other words, it was great.

Not surprisingly, local businesses operate with the same level of information connectivity, which is to say, not much. After the second time I arrived at a restaurant to see a “No Visa / MasterCard / Debit. Cash Only.” sign, I caught on and started carrying money for the first time in years.

Now, I’m the first person to say that a key component of a successful business is to make it easy for customers to pay you for the services they consume. At the same time, it was interesting to see how transacting in cash changed the service experience. It took longer to take money, do the math, make change, and return it than the “swipe & sign” we’ve become accustomed to. (I don’t care what Tim Horton’s says on this matter) In that time, dialogue inevitably occurred, and the result was richer touches than the mechanical credit payment process. The extended interactions were welcome and I enjoyed talking to hardworking people about their days.

Of course, I could be wrong on the cause of the positive interactions in this case.

It is entirely possible that the conversations surrounding the service interactions were deeper because I was in a small community where life is a little slower and people more attuned to consideration of others.

It could be the halo effect of me being on vacation and free from all of the other electronic connectivity shackles we have imposed upon ourselves. I did have a lot of time on my hands.

Regardless of the cause, however, the lesson applies:

When designing service processes, take into account the frame of mind the customer has and the feeling you want to leave them with at every stage.

If your experience is built on quality and depth of interaction, then a little thing like how a customer pays for and completes the service is not a little thing at all. You may want to personalize the interaction, or even extend it beyond what it operationally possible in terms of efficiency.

If the experience is built around customer efficiency of completing the interaction and moving on, such as at a drive thru, configure your processes to aid in that.