Starting and Managing a Business for Profits and Wealth Part 4 : The Worst Kept Secret of Every Business

The Worst Kept Secret of Every Business

One of the most important lessons I learnt early in the years of making mistakes running businesses is the realization that a business really only exist because customers exist. If we have no customers there is no reason for us to continue with the business. There is nothing new here; most business owners will tell you that customers are very important to them. But there is whole of difference between saying it and delivering it. The intention may be there but the will to make it real is often non-existent. There are plenty of examples: Many have untrained staff that they try to excuse by sticking the badge “trainee” on their chest. Some have inconsistent service level because they merely ask the staff to treat customer well but how Johan does it and how Jamilah does it may not be the same. Some provide no training and have no service performance systems. They sacrifice customer’s satisfaction for operational conveniences by having their front liners say things like “Sorry, our policy does not allow us to do that”.

As customers we meet this all the time; every day and we shake our head and ask why can’t they do a better job of treating customers better. Some business owners will blame it on the incompetence’s of the new work force. Some even blame the customers; they are too demanding and have unreasonable expectations. So there goes the worst kept secret of every business; treating customers as king just becomes lip service.

But I discovered giving good service actually pays! Sales does not only comes from getting more new customers but it also about getting your existing customer to come back more often and getting them to buy more. And in almost any business it cost more to get a new customer than to get a customer to buy more or buy more often. Good service is obviously a driver to make them happen and securing customer loyalty is the ultimate aim of every smart business.

During the time when I was carrying numerous consulting projects helping Asian organizations to improve service, I visited and studied some American organizations reputed for their outstanding customer service. Here are some of them:

1.      Disneyland: I enrolled into Disneyland University for a course with the objective of wanting to understand how a large organization with over 40,000 staff can maintain a high level of service quality. The program includes lectures but more revealing and interesting are the site visits. Two things stand out and one of them is how they manage to control the frustrations of the hordes of people having to queue for hours, waiting for the rides. They ‘manage the customer’s expectations”. Service gaps are the gaps between what your customers expect and what your organization delivers. Most organization focus on increasing the level of delivery and service performance to close the gaps but that is not the only way. Excellent customer-oriented organizations are great at lowering or should I say managing the expectations. In Disneyland you would notice as you went into that long long queue for rides, a signboard that might say “one hour wait from here”. So you might just decide to do that one-hour since you travled from far away. When you finally reached the ride you look at the watch and you realised that it is only 45minutes. How do you feel? Great! Right? Well you waited 45minutes and you are happy? That is how Disneyland manage your expectations. Some organizations actually do the opposite; over promise and therefore raise the expectations and then under deliver.

The other interesting thing is the fact that Disneyland employs part-timers during the summer holidays to cater for the huge crowd. These are normally college students who might just work six to eight weeks. What is interesting is they have to be trained for two weeks before they actually get to work! Think about that employ you for six or eight weeks and train you for two weeks. How many organizations are willing to do that? The message is clear; you are not going to excuse Disneyland for bad customer service if the reason they give you is that the person dealing with you is a trainee.

2.      Stew Leonard is an award winning dairy store or in our context a supermarket. They achieve ten times the market average for sales per sq foot of retail space. They even won the Guinness Book of World Records warded for largest sales per square foot for a single grocery store: $115 million in annual sales, $3,470 per square foot.  I traveled all the way to Norwalk, Connecticut to experience and to find out why they are so successful. The first thing that greeted me when I approached the place is a big stone and on it was written; “ Rule No.1; Customers is always right. Rule No.2 If Customers are ever wrong, refer to Rule No 2” .That message is powerful but putting up jazzy sign does not make an organization successful. The answer lies in the fact that Fortune Magazine named
Stew Leonard’s was one of the “100 Best Companies to Work For” 10 years in a row! They also won the award for the one of the Best 25 Company to work for in Connecticut. The principle seems overly simple; only happy people makes customer happy and happy customers will buy more and come back more often.

3.      Nordstrom is legendary when it comes to service; stories were told about how the staff of this retail organization would go out of the way to deliver personalized service to their customers; sometimes to a point of being ridiculous such as agreeing to accept return goods without question even when the goods does not come form them (I am not suggesting that you do that locally). I was kind of walking on air when I visited the store in San Francisco; it has a really pleasing environment (some one playing soft music on a grand piano) and really; every one smiles at me. What make them great and profitable even in a down period for the retail business in last few years becomes apparent when you read their 75 words “Employees Handbook “ and it says” Nordstrom Rules: Rule #1: Use best judgment in all situations. There will be no additional rules.

4.      Ritz Carlton Singapore; I had a chance to interview the General Manager of the hotel famed for empowering their staff. The highlight of my experience is when I asked if empowering Asians is as easy as empowering Americans. There was long silence and the reply (not in exact words) is “ Not Really”. I came to one conclusion; Asians front liners are by nature capable of being nice and courteous when we deal with customers (we were trained since young to welcome and treat visitors to our home like kings) but we lack confidence and are not expressive as the Americans. Their challenges are different. Their good services are sometimes too plastic.

Giving good customer service is a profitable thing to do but it is not done with a single training program or some writing in the wall or an eloquent speech by an inspiring CEO. It takes efforts and it takes time; it is really about changing the culture of an organization and that takes strong will and focus.

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