A 'free skate' on customer roles.

This weekend, I watched my 5 year-old cruise easily through skills test his first formal skating class.

I wasn’t surprised, but not because I see in my son a budding Gretzky. He enjoys skating and puts effort into the activity – in formal practices, when we skate together recreationally and on his own. (An aside, I highly recommend Talent Is Overrated for terrific reading on where "innate ability" actually comes from.)

I mention all this because skating lessons, like any form of education, represents an experience where the customer role is generally greater than the role of the service provider. It’s the extreme example that proves that while different services have varying levels of commitment, all have a role the customer must know, accept, and be willing & able to perform. Without these, the ability to create successful outcomes is substantially diminished.

Proper attention to customer role is one of the more neglected aspects of service businesses. Companies invest in employee training, employee process and employee-enabling technology, but too seldom make the same investments in customer training, productivity & quality.

The result: companies know their role exceedingly well. They execute their role in the encounter, and feel that their outcomes are generally successful. From this vantage point, when failures occur, it is usually because the customer hasn’t performed in their role correctly.

To begin understanding the gap between customer role and performance, start by asking (and getting customers to help answer) questions like:

What is the customer role in delivering a successful service experience?

How well do customers know the impact their role has to a successful outcome?

Are customers willing to perform their role?

Do they have the knowledge, tools and abilities to perform their role reliably?

Answers to these questions help guide us to decisions that make customers higher performers on the part of the encounter that they fulfill, whether it be educating customers on their role, giving them tools to fulfill it, redesigning processes to make their role simpler / smaller; or making the outcome more appealing.

My son’s skating lessons are a successful service experience because he knows his role (mainly practice) and has the tools to perform it (mostly ice time). He values the outcome highly and performs his role accordingly. Understanding customers' varying knowledge, willingness and ability to perform their service roles helps make improvements that lead to more successful encounters.

Who makes your promises?

Who is responsible for the promises your business makes to customers? Marketing? Sales? Operations? Customer Service? Is it a collaboration effort? And when promises are made, are they accounting for differences in importance of each attribute to overall success of the encounter?

Two recent examples:

This week, I opened a bank account online. The website proudly claimed, “Open an account in 5 minutes.” I love a challenge, and with fingers flying, I attempted to get the account opened under the promise time. As it turned out, I cruised through the experience, but was at 11 minutes, on the final screen, when I was prompted to call customer service. (The account open activity ended up taking just over three days) But I don’t engage financial services with speed as my primary objective, and so while I was critical of what was clearly an overexaggerated promise, the failure didn’t dissatisfy me.

In another recent encounter, failure happened on a much more important attribute promise. It’s recreational hockey season again, and my skates need new blades to prevent me from falling down even more than usual. I asked the arena’s pro shop how long to get them replaced, referencing that I thought a nearby hockey shop could do it if they didn’t have the parts. “Should take no more than 5 days” was the reply, and I gladly handed my skates over for the change. That was 15 days and 4 outings on borrowed skates ago. In this case, the delivery date was a critical aspect of the promise. If the answer had been, “A little over two weeks” I would have gone somewhere else.

In too many cases, the service encounter fails before it even begins, when the business opens its proverbial mouth and makes a commitment it can’t consistently keep. The effect is compounded when the promise is made on a critical aspect of the experience

Two lessons on setting appropriate expectations from these experiences:

Know what service attributes are important to customers before making promises on them as part of your positioning. If a customer doesn’t value an attribute, consider whether you have to make a promise on it at all.

Once you understand what attributes customer value, set appropriate expectations that can lead to satisfying service encounters, rather than stretching your promise to its absolute maximum. While it is possible for skates to be done in 5 days and an account could be opened in 5 minutes, your everyday promise shouldn’t reflect your performance on your best day.

Just what am I deciding on?

Self-service can be incredibly enabling for a businesses.

It can increase access to your business beyond the customers and markets you currently serve, improve your number successful outcomes by putting control in the hands of the customer, increase satisfaction through self-gratification, and decrease your service costs.

No wonder most service businesses have been quick to jump on the self-service bandwagon and continue to make self-service investments a priority. Unfortunately, cost impact is too frequently the driving force behind self-service processes and technology, and is widely attributed to much of the vehement dissatisfaction customers have with service in general.

When implementing self-service processes, the critical considerations are in providing customers sufficient knowledge, tools and empowerment to successfully serve themselves. The same service processes you consider when deploying your own labor to serve the customer are the ones that need to be considered when you are using customer labor.

I came across this imperfect execution of self-service process at the local Conoco.

It is clear that they’re giving me choices. I can select between 5 different gasolines with differing octane levels when I fill my car, and Conoco will charge me 5 different prices for them.

Unfortunately, that’s all the support I get. No decision support, no education, no sources for more information. What should I use? What is better? I assume that what costs more is better, but is something that costs less more “right”. Is 88 really better than 87? Is it 1% better, or proportionally more?

Variety is good, but in this case, they’ve left me with a choice without supporting how I would make it.

And so, in a self service situation such as this most customers will do what I did – choose the lowest price and hope for the best. Yet many times I’ve driven away wondering if I should be paying more for a different product in order to take better care of my car.

Most companies would blanche at not providing their front line enough information to make informed decisions, so why would they provide lay customers with less information to make similar decisions?

Better information in customers’ hands yields better self-service decisions, more satisfaction at having performed their role correctly, and in this case, likely more revenue & profit for Conoco.

Crowdsourced service: Not whether, but how.

A debate in the regular Tuesday #custserv chat on whether or not customer service activities should be crowdsourced spilled into the customer service blogosphere last week.

One side was enthusiastic about finding a way to enable customers to help other customers, while the other was reluctant to yield control of the experience to customers.

While it was a spirited debate with a lost of great supporting points made on both sides of the issue, I see it as an unimportant question, though it does lead to some very important questions.

Whether or not to involve customers in the provision of customer service is moot. It already happens. Companies may not be aware of it. They may not control it, may not have the resources to take advantage of it and ultimately, they may decide that they do not want to support it. But it exists, nonetheless.

Brainzooming’s Mike Brown recently told me an air travel story where a gate agent could not help a customer with a new gate assignment because they hadn’t received the information. A bystanding customer armed with a smartphone successfully retrieved the correct gate information from the airport website and provided it to the inquiring traveller. While there are several things wrong with a service environment where a customer is more enabled to provide service than an employee, in the end, a need existed and was filled.

With accessing accurate information becoming easier for customers to do themselves, variations on this encounter happen more every day.

In every service encounter – from legal defense to customer service call – the customer has a role to play. The important decisions revolve around what role you want the customer to play, and how you get customers to embrace the role, and how you support that role’s success.

The customer role absolutely can (and does) include serving other customers.

As such, the choices companies have to make are more fundamental to strategy than, “should customer-to-customer service interactions happen?”

Your customers are already making service promises, on your behalf, to other customers. Are those promises accurate and relevant? Could they be made better with your input? What would that look like?

They also help you fulfill those service promises through their own effort. Should that effort be supported? Will it lead to better outcomes for all parties? Will it lead to lower costs?

Increasingly, companies need to examine what role they will play in their customers’ tendencies to provide service to other customers.

While the answer varies from organization-to-organization, my general view is that this type of service is becoming too visible to be ignored or left alone. That companies increasingly look uncooperative or incompetent by disregarding customer-to-customer service, and would be better served by finding ways to channel the energy that already exists within their customer bases, harness it creatively, and use it to provide better service than they could relying only on their own (paid-for) resources.

Happy birthday to...who exactly?

Relationship marketing is getting better.

Well, maybe just, “more prevalent”.

Every year, my birthday provides my very own “Big Mac Index” measure of the growth of relationship marketing, as service companies use show their CRM investment by sending me a birthday card. It was novel when I received my first one more than a decade ago. Truthfully, the novelty hasn’t worn off much, though I’m getting to the point where company-initiated cards are competing with the number I receive from friends & family.

But while more companies are showing me that they are using information to monitor and respond to important events in a customer’s life (though no one has ever asked me if I consider birthday important) the use of that information for relationship-building activities – the part requiring human thought and creativity – still has a galaxy of room to improve.

Cards I recieve generally fall into one of three categories, with my utility for them decreasing below zero by the 3rd:

A card accompanied by a genuine gift. The gifts are usually token, $5 - $10, sometimes much less. But these small recognitions of the relationship without any expectation of reciprocity get my greatest response. They fit with the birthday theme of gift giving, and usually get me to engage them in a service encounter in order to “redeem” my gift, where I likely spend in excess of the gift amount.

A simple birthday greeting. These represent a majority of the cards. Not much in terms of tangible benefit, but recognition of the event representing a genuine appreciation for the business I do. Even though I know how little effort this type of program requires, the fact that any effort is taken, without the express objective of corporate gain, makes me appreciate them.

A birthday greeting including a promotional offer. These often come as a 10% / 20% / 30% off coupon – “because it’s my birthday” – on an upcoming purchase. Of course, 10% off means than I’m still likely spending hundreds in the redemption transaction, and doesn’t consider whether I need the service in the promotional timeframe. These create an almost viscerally negative reaction, and have caused me to speed ending a relationship with a company that, not surprisingly, was not a very good service provider to begin with.

Companies talk almost constantly about developing “relationships with loyal customers.” What surprises me is how many of those same companies execute their relationship communications with their own benefit as the sole objective. When I see a “birthday wish” conveying 90% of the benefit back to themselves, I am capable of little sympathy as a company grumbles about their customers being “price-driven”. When all customers have seen through the false-intentioned rhetoric, the only ones that remain are those you've conditioned to be price purchasers.

In company customer relationships, like interpersonal ones, it is wise to remember that we reap what we sow.

On Encounter #2, Zappos Delivers. Early.

I wrote in a past post that my first Zappos service encounter, while good, didn’t exceed any sort of expectations I had going in. Having heard so much about their corporate culture and noting the cult-like service following they’ve developed, I engaged the initial experience with heightened expectations that would have been very difficult to surpass.

While they didn’t “wow” me, they did offer an experience that scored high on some service quality dimensions – a user-empathetic experience that was easy to interact with, name brands backed by good prices assuring the overall value, and most of all, reliably delivering on their promise.

It wasn’t enough to get me to sing their praises the way others do, but it was enough to turn me into a repeat customer and give them another chance to make me an outspoken advocate. Of course, the second service encounter began with expectations reduced at least a little by the first.

This time, they exceeded those expectations.

I made a fairly routine purchase, replacing the wallet I lost while on vacation a few weeks previous.

After receiving the usual order confirmation email, I quickly received another email from Zappos. Usually when this happens with an online retailer, someone is telling me that the item I ordered is out-of-stock and resetting expectations for when my purchase will arrive.

In this case, however, Zappos was informing me that the shipping on my product would be upgraded to expedited, free of charge.

I know that my service upgrade was an opportunistic move for them. It came at no additional charge (depending on fulfillment costs, potentially even a savings) to them. Still, the consideration that goes into evaluating the service promise and committing more than was asked is worth noting. It knowingly creates a potential dissatisfier if the commitment is unable to be kept, but also builds in the customer the sense that Zappos is empathetic to customer desires, responsive in finding and executing on opportunities to surpass their commitment and is confident in their reliability to perform.

For encounter #2, not only did Zappos retain a repeat customer, they also created someone willing to advocate their commitment to service.

What should companies & customers commit to each other?

In response to “Decency is a Customer Role,” Wim Rampen introduced me to the company customer pact – an open call for companies and customers to share responsibility for building “long-term relationships that lead to trust, strong communities, and sustainable businesses.”

While it is an intriguing idea, I’m still undecided as to whether I’m in favor of this version of a company / customer pact, or any such pact for that matter.

I’m a fan of standards in the service environment as sources of performance measurement and shared expectations. This includes standards for dialogue between company and customer. But something tells me that in the service environment – the type of business the Company-Customer Pact is most intended for – there are too many heterogeneous inputs across industries & companies, among differing customers & service providers, and in highly variable environments to make it practicable.

This pact has limited scope, addressing primarily company-customer dialogue. Much attention is paid to respectfulness, responsiveness, good intentions and clarity, and provides a good foundation for mutual respect. Missing, however, is mention of pther important company commitment characteristics, such as reliability, empathy, and assurance. In fact, the pact may actually undermine loyalty, as so much of the important company-customer interaction lies in non-communication service aspects not covered by the pact.

Finally, in committing to a conservative standard, companies may actually be limiting their ability to delight customers on all attributes.

In the end the company / customer pact may just not matter much. In any company / customer relationship, companies have the short-term leverage and customers have the long term leverage – it’s a good balance. Companies that exert the short-term leverage without consideration for customers’ ability to vote with their feet eventually get what they deserve. Good companies are going to live comfortably above the minimum standards, while bad companies will live comfortably below it, which may beg the question whether such a pact is needed at all.

So how about it – am I being too hard in what is a generally agreeable initiative between companies and customers to establish a baseline for their interactions quality? Should the pact be expanded to cover a broader range of the company / customer relationship? Should it be abandoned altogether?

Time Warner Cable wants my help.

It’s renegotiation time with Disney, one of their largest suppliers of programming content, providing ESPN, Disney, & ABC family channels. Time Warner doesn’t want to pay more for content, and Disney is threatening to cut them off. So they’ve appealed to their customers to help support their renegotiation efforts through vocal opposition to their suppliers’ demands.

Using a multi-channel media campaign, they're informing customers that their options are now reduced to “roll over and raise prices to customers” or “get tough and risk losing the programming customers love.” 1 million people have visited the rolloverorgettough.com, leaving some 300,000 comments. TWC has supplemented the site with TV and radio ads, suggesting that not only will they have to raise customer prices if they lose, but that switching providers won’t help, as similar renegotiations with other cable providers are inevitable.

As member of the Customer Service Hall of Shame from 2007-2010, Time Warner playing the role of consumer advocate may seem disingenuous to some.

I'll table whether TWC has the reputational capital with its customers to ask for help for another time. My question in this is whether this represents an appropriate role for TWC to expect its customers to play.

On one hand, the personal financial benefits are obvious if Time Warner, with my help, is successful in its negotiation with Disney – or any other supplier for that matter.

On the other, supplier negotiation is about as internal to Time Warner as who gets Jeffrey Bewkes' coffee. If customer leverage can be used on a programming supplier, why not a supplier of TWC employee healthcare benefits?

Southwest Airlines built their culture around getting the customer to do more to directly support the service operation, with lower prices and better service as the perceived payoff. But a service company is involving its customers in supplier negotiations feels like we might be crossing a line.

Am I wrong? Is use of customer purchasing leverage where the company / customer relationship it going, or is this example an inappropriate solicitation of customer effort?

Decency is a customer role.

While the commentary on the Steven Slater incident is already overdone, this story has clearly captured the public attention, perhaps because and the deteriorating state of customer behavior and the customer / service provider relationship in general represents a social aspect most of us have sensed first hand if we haven’t been guilty of participating in ourselves.

I won’t offer an opinion on whether or not Slater was justified, but will cover a needed fix for the source of his actions.

It’s a paradox in service businesses that the employees most responsible for the company / customer relationship and that most personally reflect the brand are front line service employees ranking among the lowest paid in the company. We place these service professionals in front of customers and entrust the encounter, and our brands, to their care. Their success is a direct reflection of the support they receive – training, service processes, enabling technology, and management backing they perceive as they do their jobs.

Some companies are exceptional at providing the needed support for front line providers to be effective. But when you look at the worst service companies and even entire industries, their shortcomings are usually indicative of a lack of support for the roles of front line providers.

As the airline industry has cut customer value, so too has it reduced the tools available to employees to serve customers effectively. Fewer benefits & less support have created one of the most antagonistic service environments – in some cases verging on customer mutiny. In most cases what you get is a bare minimum, where FAA-required service components are retained at the expense of relationship-building opportunities.

But decency is customer role and a service provider right. While it would take time and resources, why not spend some time in every flight reminding / setting expectations with both the service provider and the flying public about the role of each in the successful encounter?

The poor-quality image above is the customer bill of rights posted in the back seat of every Chicago taxi. As a passenger, it lets me know what I can expect and reasonably ask for in any encounter. (Yes, I have invoked my rights a time or two) It also reminds me of driver / service provider rights, and what my role is in providing that environment. This could easily be done in the airlines. A seat-back card, some language inserted into the pre-flight brief that lets customers know their service rights, and what environment the service providers can reasonably expect.

It is valid to say that such an effort shouldn’t be needed, that people should know how to act in public. Perhaps, but setting role expectations in the service environment is never wasted effort. More to the point, if people need a reminder not to be a jackass to someone serving them, companies should be willing to provide that as process support to the critical teams of professionals that steward their customer relationships and their brand.

Does your service celebrate new customers or bemoan them?

On a recent trip, I unexpectedly needed to rent a car. The company I use almost exclusively was out of stock, and faced with limited options, I went with Dollar as a first-time user. As new service encounters go, I came away extremely frustrated by the experience.

I’ve been a National customer for years. Their Aisle services were truly innovative in a stagnant space, and I was an early adopter. The “skip the line” rental process is so familiar, I don’t know how the standard rental process works, with National or any company. For the occasional lost receipt, I also signed up some years ago for automatic email distribution of all receipts. I’m a high-productivity user of National services - convenient for me and lower cost for them.

The first noticeable difference with Dollar was the price – unbelievably high, no doubt driven by their dwindling stock. While a company has a right to re-price service capacity as it becomes scarce, a customer’s first experience with your brand shouldn’t invoke reverse-nickname irony.

If the price was a turn-off, the experience was worse. Already annoyed at having to re-learn the counter check-in process, I was greeted by a service agent equally annoyed to be serving me.

Because I wasn’t a returning customer, he had no prior information to use in setting up my rental. Our annoyance build together as he asked enough questions to buy a house and he entered my endless details into their system. Asked when I would be dropping off, I replied that it would be about 5:00 AM the following day. My agent replied they wouldn’t be open, and that I would have to use the overnight drop box, a process I asked for clarification on.

As he dismissively handed me the keys and motioned me to the lot, he quipped that I must not rent cars too often.

It amazes me how companies treat a new customer.

Some roll out the figurative red carpet as if to say, “Thank you for giving us a try! We’re going to make this go as well as possible in the hope that you return.”

Most, however, provide a more or less extreme version of what I encountered with Dollar. Annoyance at having to create a new relationship, a lengthened initial service process, the highest possible price because they’re not a returning customer, and an overall experience that is singularly unspectacular.

Ironically, Dollar will see the profit from my one encounter spend resources trying to determine whether they can create a loyal customer out of me. They’ll likely conclude that I’m not worth pursuing because I don’t book cars that often, not sensing that I have a biweekly relationship with the company 3 counters down.

Most of it wouldn’t be needed if they put energy & process into new customer indoctrination, rather than treating it like a new customer is the last person they’re happy to see and ensuring a first encounter memorable for the wrong reasons.

You're such a lovely audience, we'd like to take you home with us.

Some entertainment acts I’ve experienced are among the best service providers I know. Last night I had the opportunity to see Paul McCartney in concert, a tremendous player and a businessperson committed to connecting with his audience (we, the customers) by delivering on expectations, involving them in co-production of the experience, and showing gracious appreciation for their choice.

It would be easy for someone who holds the titles of “Knight of the Realm” and “Beatle” to be self important and disconnected from his customers. I’ve seen far lesser acts disengage completely as if to say, “Your inability to appreciate what I’m doing is your problem.” (Does that sound like a company or two you may know?)

Sir Paul ended a near-perfect evening perfectly, playing an amped-up version of Sgt. Peppers Lonely Hearts Club Band, working special emphasis into the stanza thanking the audience. The audience reciprocated the appreciation, singing and well & as loudly as they /we could.

Throughout, the elements of a successful service encounter were present – the reliability that the band would play to (and above) audience expectations, the empathy to understand that most in attendance would hang on stories from his Beatles days and the tributes to John & George, the responsiveness to sense the crowd and involve them in co-producing the event.

But in the end, the most striking element of the encounter was the appreciation that an act that needs no adulation had for his audience, serving as a reminder for the rest of us that work in less high profile - but no less important - service businesses.

He ended the concert with the famous line “The love you get is equal to the love you give.” As a provider of an entertainment experience, that is exactly what occurred.

A friend in need is a friend in deed.

Which services you use are equipped to handle emergencies? I mean, really handle them? Recognize the state you’re in. Empathize and understand what you’re going through. Act responsively & flexibly to deal with the emergency. Provide the assurance that everything will be alright and the reliability to make it happen.

I see customers in emergencies of varying degrees almost constantly. The signs are unmistakable. A customer enters a service moment of truth flustered, rushed, sometimes angry, in near panic and not thinking clearly at all. What customers want at that moment are the things that a customer wants in every interaction – empathy for their plight, responsiveness to the situation, assurance that they will be taken care of, and the reliability of a solved crisis.

What surprises me isn’t how often I see customers in emergencies, but the completely standard way they are treated by the companies they’ve reached out to for help.

Responding effectively in a customers’ time of greatest need is a strong loyalty builder as a creator of positive memories. It providesan execution-reference halo for a company’s standard-level service. Depending on the urgency behind the request and willingness to pay for a solution, emergency service experiences can also be a tremendous source of profit.

Yet most companies fit emergency customer experiences into their standard operations, using the same process and people to resolve an encounter with higher stakes, more urgency and more emotion than standard processes are designed for. Worse, I hear front-line service staff using policy as an excuse not to help when a simple act outside of the established rules would fix a problem without detriment to the company.

It’s worth considering development of a separate emergency process, perhaps staffed by emergency service employees with a different skill set, to deal with customers in emergency situations.

Maybe even consider turning effective emergency resolution into the main business line.

How about a plumber whose main business is responding to weekend & holiday emergencies? She doesn’t charge the double time other plumbers get for emergency services, but still gets a premium on what is for her the “standard business line”. Her business is configured to cater to the type of work her peers avoid, but for routine work, she schedules prudently around the days she’d like to take off.

Process and people are critical elements of the service encounter, and much thought obviously has to go into providing effective service to customers interaction after interaction.

But for emergency situations, examine closely whether the process and people you have performing it fit the emergency, or if your service wouldn’t be better suited with its own emergency response capability.

The Wrong Tool for the Job.

I left my drycleaner for Tide Cleaners, and haven’t regretted it in the least.

Master of the product world, Proctor & Gamble also knows how to produce a service encounter using process, people and the physical service environment as effectively as they use promotions in a retail environment.

Still, when my old cleaner sent me a handwritten note to let me know that they have missed my business and asking that I call, I felt compelled to talk to them – to give them a chance or just some advice.

My conversation with their district manager was pleasant. She wanted to know why I had left and what they could do get my business back. Solid business fundamentals - when previously loyal customers leave, work to understand why they did and try to win them back.

I told her I wasn’t dissatisfied with their core service or price, but for me, Tide was providing a better experience by putting more convenience into a service I see generally as an inconvenience. I referred specifically to using the drive thru, as well as the off-hours drop box for times when my only available time was after close-of-business. She was aware of Tide improving on the convenience aspect of the experience, and told me she was looking into ways they could be more convenient themselves.

Then as we wrapped up, she offered me a store credit if I’d use them again.

I reiterated that I wasn’t dissatisfied with their prices - that I was looking for something else - thanks but no thanks. Still, she insisted they apply a store credit in the event that I would try them again. I told her what I really wanted was improvement on attributes not related to the price or the actual drycleaning service.

At its most basic, value is what you perceive you get, relative to what you perceive you give. A company can improve it for a customer by increasing perception of what they get or by decreasing their perception of what they give.

My ex-drycleaner did what so many businesses do when competition changes a customer’s perception of their value. Almost reflexively, they improved value in the easiest way possible – by reducing price, even when it wasn’t merited and wouldn’t be effective.

When someone tells me how difficult their business is / industry is and how tight margins are, I can’t help but wonder whether things really are that tough, or whether they choose to make it tough by following the easiest-yet-most-vulnerable path to gaining or keeping a customer.

Zappos is just Okay.

I know, heresy.

Zappos is the example of the modern enlightened organization, held up by service & leadership experts as the first company to tap into the service profit chain and the original inventor of outstanding service.

At least it seems that way, with legions of raving employees and fans & the success they’ve had merchandising their culture - the leadership books, the blogs, maybe the Amazon merger itself. They’ve turned into a social media-enabled service industry legend, extending to reach or even surpass the fabled Nordstrom experience and the Ritz-Carlton credo.

Like those examples, I’d guess that Zappos has many boosters that have never actually experienced their service. Full disclosure, I counted myself amongst them - until recently.

I'm a fan of Zappos’ position. They say the right thing about internal service & employee engagement, and how these lead to a superior customer experience. More than once used them as an example of how a good service business should be run.

But I've refrained from commenting on the actual experience, as I had yet to witness it firsthand. Recently, I decided if I was to hold them up as representing what a modern service business act like, it was time for an encounter of my own.

The experience went off without a hitch through every moment of truth. The registration-through-purchase experience on the site, the in-process updates, and the fulfillment were as expected, and I ended up having a good experience buying a good pair of shoes for a good price.

The entire experience was good – pretty much exactly as I had expected.

And there's Zappos’ problem.

Because of considerable build up – much of it self-produced – on what a wonderful a service organization they are, Zappos would have had to absolutely rock my service world in order to be notable.

In all fairness, my expectations were sky high for a first time service use. Sensitivities were heightened to every aspect of the service encounter, as though by having it, I would come away with a different perspective on how a business should be run.

For companies that set high-level of expectations, it is extremely difficult for a service business to exceed them. Unless something goes monumentally wrong and is spectacularly recovered, it’s unlikely the experience will seem more than adequate.

But in a time when many businesses seek to establish & perform to an adequate level of service expectations, Zappos seeks out a higher level of criticism. That in itself says that much of what we read about their culture might actually be true.

I'm not a fan of the "underpromise / overdeliver" ethic that has swept business culture, and while Zappos didn’t “knock my service socks off” with my first encounter, I respect them for trying, and I’ll likewise be giving them another try.

Service like a highway with no fast lane.

Stopped in to Costco on Saturday of the holiday weekend.

In a hurry. I had a small gathering to host, and I was under orders to come home with two platters of various vegetables, meats & cheeses, or to not come home at all. (The departure call of Spartan wives, updated for 2010 suburbia)

But Costco is no place for a person in a hurry, especially on a holiday weekend. Long, winding lines of cargo ship-capacity shopping carts stacked to adequately resupply a 50’s-era bomb shelter, and there I am, standing with two items.

The self check-out line helped, but not nearly enough. At a point, I would have gladly paid to skip the line. Not double, but maybe as much as 25% more.

For large-format retailers, (such as Costco, Sam’s Club, Home Depot) I wonder why an premium express line hasn’t been created for the busiest times to help serve customers in a rush. It could definitely be done, though they would have to set some rules. For example, no more than 5 items. No cash. No coupons. No price checks. They would also have to provide assurance. “Out in 60 seconds, or your 20% up-charge turns into a 10% discount.” I would have used it, and looking around, I wouldn't have been alone.

The warehouse format retailers perhaps didn’t intend a single-item shopper, but they get them. Forced to serve customers that don’t fit well with other customers, the company can either stick to the efficiency of the basic model knowing some customers will be dissatisfied, or serve customers with different needs differently, perhaps taking the opportunity to make a premium margin on a premium service level.

No customer can be characterized as shopping solely based on speed & convenience or solely on cost. If your standard service model trades these characteristics off to best serve the regular customer, look for ways to serve them in those times they need a different kind of delivery. It’s likely they’ll gladly pay a little more, and you get to provide service to your best customers along more than one dimension.

A 3-legged entry in the 100M dash.

I ran into an interesting capacity dynamic yesterday when I stopped to run a few errands on the way home at the end of my “official” work week.

My favorite time for an extended grocery run is late Friday afternoon / early Friday evening. Everyone else is on patios, in restaurants, bars or dens unwinding from the work week. Few are thinking about how bare their pantry is or how the fridge only contains condiments – that is a problem for Saturday.

On Friday evening the grocery store(s) I support offer few competing shoppers, though all of the weekend sales are already posted, and scores of people to help should I need something in particular.

Yesterday, however, I also walked across its parking lot to a liquor store. Same time & place, completely different result. The liquor store was a madhouse. The narrow aisles completely cramped with carts not designed for the space, store employees at a near sprint trying to attend to every customer with a question or and keep stock on the floor, every check-out line seven or eight customers deep.

Why don’t these businesses just team up?

They really don’t compete. The grocery store sells little beer, and the only items the liquor store sells that could be found in the grocery store are lemons, limes & Red Bull.

They could be balancing their service capacity with demand much better if they would take the Friday afternoon excess grocery store employees and apply them to the shortage of help in the liquor store. On weekend days and during the week, the flow could reverse to accommodate busy times for the grocery store.

Take it a step further. Move the liquor store from the place across the street into the adjoining retail space, knock out part of a wall and provide an experience where two patrons can sell complementary products through a single shared experience, supported by employees that know their stuff in both, able to offer suggestions on pairings, even “cross the transom” to support a single customer’s shopping experience.

Matching service capacity with demand is tricky in any environment. The natural flows of these businesses are too great a gift to be overlooked. A business can try and make it on its own, staffing for service & knowing full well they’ll have times with both excess capacity and times when they’re dissatisfying customers with inadequate staff. Conversely, they can partner to expand their formats & share labor cost, to make the most of the customer experience and approach the capacity problem creatively.

...but you can choose your business partners.

I wonder if AT&T is feeling the heat.

The best thing to happen to the company in years – exclusivity on a consumer market phenomenon – is breaking the back of it’s ability to deliver on service promises.

First the network problems and the complaints about service coverage. Then the 2GB data plan limit following shortly after the iPad release, effectively decreasing its experience value. Then the botched support on the iPhone 4 release, including inability to fulfill demand for the phones, inability to process orders, inadvertently cancelled orders and unintentionally shared private consumer information.

You have to wonder is AT&T isn’t considering asking Apple to introduce another provider (a competitor), just to prevent a complete service failure. Too much demand is a good problem to have, unless your business is a network-based service, and that demand is both abundant to the point of damaging the experience and comes at a pre-negotiated rate.

I also wonder if Apple feels like it has lost control, and a once-in-a-generation opportunity is being limited by a partner of their choosing.

Most complex services need networks of business partners and intermediaries to manage delivery. Whether it’s iPhone service or the fulfillment of online retail purchases to your home, most businesses put a portion of their customer promises in the hands of someone else to fulfill.

I don’t know specifics on where issues lay between Apple and AT&T, but I have to believe Apple is not seeing their vision of quality & consistency fulfilled by their exclusive partner.

While the selection process is critical (and it is possible that this is where Apple failed) the day-to-day management is much more important. Conflicts are certain to arise over objectives, performance, costs and rewards.

The easiest way to resolve these conflicts is the mundane stuff that most innovators don’t want to suffer through – establishment of expectations, measurement & review of performance – these are key activities businesses should must employ when using another party to be their face to the customer, or even a part of promise fulfillment.

If these are insufficient, sometimes the service owner has to engage more – helping the intermediary provide service the way they expect through standards & training on what it means to serve the customer in their intended. In extreme cases, they may even have to front service enabling technology to make the relationship work (or in Apple’s case, prevent it from failing).

It probably seems unfair that Apple may soon get to the point where it has to invest its own resources in the development of AT&T service capabilities, perhaps even going so far as to own a part of the network

But fairness doesn’t matter when you’re talking about the detrimental impact to the brand that stands on its flagship product that right now is dangerously close to falling far short of its ability to deliver on its substantial promise.

Hohm Improvement.

I’m trying hard to use Microsoft Hohm, but someone is making it difficult.

Hohm is a home energy management service with a lot of potential to help people understand more about their energy use through measurement & analysis and change
their behavior to save money & be a better steward of natural resources.

What makes it “work” is data – specifically a periodic intake of the electricity & natural gas usage information from your home.

The theory goes that Microsoft connects with your local gas & energy supplier, who feeds monthly usage data to the service, and the analysis begins.

The problem is, neither my energy nor my gas provider is linked. When I first signed up for an account, I got a message that Hohm was connecting with new providers by the day. All I had to do was wait and mine would surely get onboard. Half a year later, they’re still not connected, and wanting to see how the service works and realize its benefits, I’ve started inputting my own bill information, manually.

I emailed each of Hohm, KCP&L (my power company) and Atmos Energy (natural gas) to see whether they were working on a linkage that would enable the service to work for me. I received only one response, from KCP&L, stating that they were evaluating a linkage, but had no commitment planned. They pointed me to some helpful energy-saving tips on their website.

There’s plenty of blame to share on this one. (Even ingnoring the fact that hat two of the three inexcusably declined to answer me at all.)

Of course, there is no incentive for my natural gas and power companies to link to a service that allows customers to analyze reduce their energy usage – it represents customers tracking their usage and making better decisions - essentially money out of their pocket. I don’t know which is worse – that the regionally monopolistic utilities so blatantly ignore the desires of their customers or that Hohm didn't have the foresight to see that the main value their new service provides required input of outside parties and working with them ahead of launch to gain their support.

I’m guessing I’m a lead user of Hohm – at least in my market. Microsoft should know that lead users of services aren’t typically as forgiving as they are for software products, where they’ll often tolerate, point out and even help fix problems. With a service, if the process doesn’t work and the customer has no way to fix it, there can’t be a successful encounter. If the failure looks unfixable – as it does in this case with the providers unwilling to connect – the customer will likely abandon it entirely, rather than live with something substandard while they “work out the bugs”.

If your service depends on an intermediary or a 3rd party for fulfillment, make sure that it offers more than a reduction in revenue for them, and if you haven’t fully worked out connectivity processes, don’t launch beyond where you have.

“Internal Revenue” I get, but “Service”?

I made a call to the IRS Friday, having received one of those, “we believe you made an mistake, here is an amount of money owe us, + interest” letters.

My service expectations were low – somewhere along the lines of the 7th level of IVR hell, followed by someone who either couldn’t or wouldn’t respond to my question.

I was pleasantly surprised when my call was answered, by a human, after about 45 seconds, which unscientifically put the IRS in the top 5% for shortest customer service call wait times on this past month.

The answering agent took a minimum of information & quickly found find my case. (Their customer indicator is this handy 7-digit “social security” number. Based on the ease of use, I’m thinking others may begin to adopt this as a standard record locator.)

We exchanged some information, and having identified the source of the confusion, the agent stated, “If that is the case, you don’t owe anything at all.” Some direction on next steps ensued – steps that exactly corresponded to the letter I was sent – and she pleasantly sent me on my way after a total of about 5 minutes on the phone, or, about a half hour less than I was expecting.

Views on fairness in what we pay in taxes & what they’re ultimately used for may vary greatly, but in my encounters, I’ve experienced great service levels from the IRS.

Believe me. I paid taxes for years in Canada. As a civil service organization, the Canada Revenue Agency is far less courteous about it they taking a higher percentage of personal income. While I’ve never compared the codes (too geeky, even for me) my perception through years of use are that Canadian forms are longer & less intuitive than the U.S. as well.

There is power in words used as brands or labels. Perhaps their treatment of customers stems from the differences in their names.

“Canada Revenue Agency” provides their exact purpose & intent. They’re an Agency. Whose purpose is getting Revenue. For Canada.

The IRS has no different an objective.

Yet by adding “Service”, they not-too-subtly remind themselves that the organization is far more likely to be successful by being competent, empathetic, and responsive to the people they take money from, and whom they ultimately serve.

The theatre gets a stadium-style seating upgrade.

I went to my local AMC Theatre for a rare mid-week date with my wife. Its been months since we’ve seen a movie, and we were surprised to be treated to a new part of the box office experience when the attendant has us pick assigned seats from a touch-screen theatre layout.

My wife asked whether ticket price changed based on what we picked, and when the attendant replied that it did not, she openly wondered why the theatre would bother installing this expensive-looking technology and changing the service. AMC claimed it as improvement to the experience, but I think my spouse correctly sensed a coming change, with movement to a pricing method that varies ticket prices by theatre section.

Truthfully, I’d be alright with it, and I’m surprised theatres haven’t made this change some time ago.

The theatre is improving their service process for their own benefit - extracting consumer surplus from the seats they believe people will be willing to pay more for. Sports & concert venues long succeeded in segmenting their audience by willingness to pay for various levels of seating. (Though scalpers do better at understanding & extracting consumer surplus. I’m waiting for the day when the venues "in-source" the scalper business model to gain even more revenue from scarce commodity seats.)

It’s well accepted that mid-theatre seats, centered on the rail seats are the best in the house, while the front row, side angle seats are the worst. Personally, I’d be willing to pay a buck or two more to sit in an area where I won’t have to call a chiropractor the next day.

Will it dissatisfy some? Of course. A majority of customers will be paying more for the same level of service as they received before the change. It may even offend the egalitarian sensibilities of those who prefer the model that rewards personal time investment with the best seats in the house.

But it is fair. Based on what a customer is willing to pay, AMC undercharges for some seats and overcharges for others. Changing the pricing of the seats to gain that revenue isn’t draconian, its good business.

Now, when I start seeing scalpers outside movie theatres, I may reconsider...