Strategic Service Management

By Giacomo Squintani, Marketing Manager EMEA, Servigistics

Earlier this week, The Economist reported on how staff-motivation schemes may be feeling the impact of the recession. You may be experiencing it yourself: as corners are cut, those elements that are not seen as directly linking to revenue, and which take up time that could be devoted to primary activities, are most endangered. Of course, the line between perception and reality is blurred: as The Economist reports, “Towers Perrin, a consulting firm, found that between 2002 and 2006 companies with excellent records in motivating staff generated an average annual return over the period that was 9.3 percentage points higher than that of the companies in the S&P 500 stockmarket index”. Their message is clear: dismiss the value of motivation at your peril.

This article in last October’s Harvard Business Review did a pretty good job of pinpointing four key areas to focus on for motivating employees. However, in times of trouble, our focus shifts towards corporate stability, rather than individual benefits. We can go back to basics, and Maslow’s Hierarchy of Needs: we pursue Self-Actualisation and Esteem only when Safety is taken care of. When this is no longer a given, our perspective changes – and, with it, our behaviour. The best healthcare and pension plans in the land are worth nothing without a job underpinning them.

If this blog entry could guarantee you safeguarding your job, it probably wouldn’t be publicly accessible – and I would retire on selling the formula. But this is anything but The Age of Guarantees. Furthermore, how you go about re-engaging your staff (and yourself?) within your organisation depends on specifics that a generic entry cannot address. You should be aware, however, of changing behavioural patterns around you.

But I will make one point I believe is relevant to us all. As you look to cut costs, close that deal, refocus… don’t lose sight of the importance of customer service.

Companies that excel in customer service foster an atmosphere that improves both internal and external relationships. Furthermore, remember:

·         Winning a new customer costs as much as five times as much as retaining an existing one – and that’s before you’ve built up any loyalty or knowledge;

·         Customers who become advocates are an amazing marketing tool; unhappy customers are a potential barrier to growth;

·         Dealing with happy customers motivates staff. Solving issues for appreciating customers gives a great buzz. But dealing with unhappy customers, not being able to help them… that leads to high turnover rates. And high agency fees…

·         If your products and service are at the premium end of the scale, this is the time to be engaging with customers – to ensure you are not threatened by low-cost alternatives

This is not just about niceties. Even in a recession, excellent customer service makes sound financial, commercial sense – throughout your value chain. It’s only normal for you to lose sight of this, at times. But, if you let your competitors make the mistake on a long-term basis and you keep your eyes on the prize, you will come out of these time a stronger player for it.

By Sebastian Urbina, product manager, Servigistics

On a commuter flight one Friday night from NYC to Atlanta, I ended up speaking to the two people sitting next to me.  That should worthy of note in and of itself. I generally limit the comments to my row-mates to “Excuse me” as I head to the restroom if I’m on an inside seat and “You’re Welcome” if I’m the one inconvenienced by their bodily needs.  I’ve had overnights flights in which we haven’t even reached that level of communication due to the  “don’t bug me I’m on the plane and don’t want to know your life story” approach.

This time, my row-mates were two consultants from competing software companies.  I originally thought it was funny and tried making fun of the situation, but they didn’t seem to care.  Both were road warriors with years of experience as the Monday morning to Friday afternoon.  Me, a former cubicle monkey converted into a stay-at-home-laptop-on-lap-coach worker, was eager to hear the war stories.  However, one of the consultants, a married woman, was talking about her husband.  Normally, this would be enough for me to tune out the conversation as old woman’s gossip, but this was interesting.

She was talking about how her husband, a non road-warrior, complained when airplanes were late and plans went awry.  She would just tell him to relax and not worry about it.  Apparently, the discussions went on ad nauseum and the husband simply could not understand how she would not be bothered by incompetence.

It wasn’t until he became a fellow road-warrior himself that he understood her patience and stopped complaining.  She explained that the experience of being on flights so much taught her that “stuff happens” so it no longer caused her grief or stress. Once her husband started travelling he developed the same tolerance.

The actual underlying problem here is not that airlines have poor service.  (As someone once stuck in the airport at the beginning of a month long back-packing trip through Southeast Asia, I can assure you they do.)   The problem here is that expectations are poorly managed.

People buy airline tickets expecting a service, a service that includes on time arrival.  That is why airlines have schedules.  Services based on a schedule are generally controlled tightly, just as anyone trying to get on a German train arriving at a station 2 minutes too late can tell you.  We do understand that things happen; however, we believe these are rare events that generally do not affect us - especially if we only travel sporadically. Now the veteran air commuter had enough experience to know that she had to reset her expectations.  When things went wrong she expected it and, thu,s was not fussed or stressed.  She is a much happier person than her husband was as her expectations were in-line with the service offered.

This got my thinking into the wider range of services.  I started feeling that most angry customers are probably a result of improper expectations.  If you buy a 30 year old car and the radiator falls out are you upset?  You probably are somewhat, but less than if you had just bought a brand new car and the same thing happens.

Lets analyze this situation, in both cases you are buying a car (new to you) and it breaks down shortly afterwards.  The difference in reaction is complex, but it is fully based on your expectations.  You do not expect a new car to break down but you could expect a very old car to have problems.  The person who bought the new car will cause havoc and complain about the quality of product.  This drop in customer service can have serious consequences for a company.

However, it is not enough to simply try and reset expectations.  Lower service expectations come with a drop in revenue.  There is a joint Toyota-GM car factory in northwest United States.  The cars coming from the factory are identical but the GM cars were selling for less money purely based on the brand on the car.  This was a result of the expectation placed on the car based on the manufacturer.

This type of situation created a conundrum: you need high expectations to ensure a price premium, but they can’t be too high or those expectations will result in terrible costumer service, which would undermine the process.

Managing expectations should thus become paramount for any company.  Set them to high and bad costumer service will skyrocket; set them too low and you will end up being priced down.   I guess the obvious solution is to set high expectations and deliver on them.

My row-mate would not have had discussions with her husband about the pathetic state of the industry, if the industry had been able to deliver on the costumer’s expectations by simple changes unrelated to weather, like increasing flight times (giving greater margin of error) and increasing maintenance cycles (reducing unexpected mechanical problems).  Guess we know what the industry values.

by Giacomo Squintani, Marketing Manager, EMEA

From the moment you first sent an e-mail, you knew that things were never going to be the same again, at home or at work. With the Holiday Season truly upon us, are you escaping those checkout queues and putting on a Christmas CD as you surf for gifts? If, like me, you are (well, minus the CD), you are a challenge – to the retail marketers for whom seasonal in-store promotions and glitzy shop windows are of no use.

Of course, many of those skills have been successfully transferred to e-mail – and enhanced in the process. But what about our less frivolous investments – those that are set to last a few years (the Web 2.0 age equivalent of what our parents would call a “lifetime”)? What are the implications for us – both as marketers and customers?

Research in Motion experienced one such implication quite clearly in the UK recently. As they launched their BlackBerry Storm model with a marketing campaign worthy of its name, they could not foresee the online backlash. In particular, popular comedian and TV personality Stephen Fry caught the imagination with a Twitter comment – and, while he made a point of stating that “Yes, I blame n’works more than RIM”, his paragraph “Problems are terrible lag: inaccurate t’screen, awful, slow and fiddly text input. I SO wanted to like it” was still sufficient for the BBC to ask: “Can Stephen Fry kill a gadget?”

Yet, for every negative side of a coin, there’s an upside. Web 2.0 allows the smarter players to turn junk mail into viral marketing. We accept comments from people we like and trust far more than corporate communications. The problem for marketers is that this can mean losing control.

The key reason Service is both a threat and an opportunity today is the “2:11 Principle”. This states that customers receiving good service will share their experience with two people, whereas those receiving poor service will tell eleven. Now take a second to consider how everyday Web surfers have taken over the Net from the critics, and how they influence opinion through social networking, blogs and even review sections on e-commerce sites. Your Service team was late resolving a call? The product was delivered late? What before was a private matter between customer and the Customer Services Department is now as public as the Internet itself. And, while commercial buyers may be more reluctant to air grievances online, don’t think you’re immune if you’re operating in B2B.

But easy on the Prozac. Your Service team exceeded expectations? They always deliver on time? Hey, it works both ways. Positive enthusiasm may not match angry venom, but it still has a role to play. When, in 2007, TechRepublic asked “What bothers you when you are a customer?”, it received 132 responses; when it asked “What do you remember about good service you received?”, just 12 comments followed. But that just makes the praise (such as this heaped on Dell for the speedy replacement of a faulty hard drive) all the more valuable.

Will great post-sale service ever help turn a terrible product into a success? Unlikely, but not impossible. Will bad service ever turn a great product into a failure? You bet. So make sure you take care of your customers for the long-term – long after the excitement of opening the box is gone. And leverage the Web to make sure tomorrow’s customers know how happy today’s customers are.

With the real-time applications and connectivity it enables, Web 2.0 has taken away many excuses. And for Service to be a threat to your business is one of them.

by Sebastian Urbina, Product Manager

A month ago I thought I had found a killer deal on a new HD TV: a 37” High Definition TV for $450 at an online retailer.

I had never used the retailer before, but since I’m technophile, I went ahead with full confidence in the website. After all, I trusted the site that referred me, and they do analyze the sites they refer users to. Additionally, I was paying with my trusty American Express with their great consumer protection policies.

I was excited. Not just with the new TV, but also with having found a good deal.

There is something magical about high definition that makes college football so much better; it’s almost like you are there. Of course, nothing is like being at the stadium. Nevertheless, I wanted my High-Def TV, and I wanted to see the individual leaves of grass on the field.

It turned out the price was actually $500 as I had to pay for shipping, but $500 for a new HD TV seemed pretty good.

A few days later, the door bell rang and I received the big box. Like a kid on Christmas morning, I ripped it open and started arranging it in my living room. Within moments, I was watching Judge Judy in High Definition. I would have chosen another show, but really, Tuesday early afternoon the channel selection, is well, limited. Despite my lack of interest in the show, Judge was crystal clear, and I could see every pore in her judicious face.

A month later the unfortunate occurred: My TV wouldn’t turn on.

Now the fine print of a purchase comes into play. The TV is branded “Scott;” turns out it’s basically a rebranded Aiko. Another company I had never heard of. There is a refrub in the fine print. Turns out refurb means refurbished, which means this was broken, but the manufacturer hope it’s fixed. I called the online retailer. They told me I have to contact the manufacturer, but it should be covered since I’m within 90 days of the purchase date.

I contacted them and explained the situation; they tell me to send them a receipt. I forwarded the confirmation email in and was told to wait 5-7 business days before I’d learn if the warranty was approved.

A week later I called to check in and was told that the receipt hadn’t been received. Fortunately, I wrote down the name of the agent that I had talked to the week before and asked for her. She informed me that I can’t just forward the receipt because it’s too easy to modify. They need it faxed in. So I called the retailer, who told me how to get a receipt form their website and how they could fax it in. I went online, created a pdf of the website and emailed it in. Apparently, that was enough to satisfy the receipt requirement. Next, I had to wait for the warranty department to come through.

A week later they contacted me and requested that I ship them the bad TV. That would cost me $100 - A quarter of the price! Good service would have offered me one of three possible solutions:

1. A refund
2. An in-home technician to service it
3. A new TV with return shipment paid for so that I can replace one with the other and ship the bad one back.

Not this company. I called them multiple times, argued with costumer service, asked to speak to the warranty department, supervisors, and different agents - all to no avail.

The retailer is equally unaccommodating until I threatened to dispute the charge through my credit card company.

So now I’m fuming. Do I waste another $100 chasing a TV that may be returned to me bad again or attempt to recover the cost through my credit card? Why do I have to be in this position? It’s a bit frustrating that all it would take to make me a repeat costumer would be good customer service. And instead of ranting about what went wrong, I could be lavishing praise on them for taking care of a frustrated costumer.

In the future, I’d rather pay more for a product – if it includes outstanding and reliable service – than find the best “deal.” After this ordeal, good service is worth the extra money.

You know a business is a bit desperate when it hires a plane to write boldly in the sky, “SALE TODAY.”

I remember planes flying banner advertisements over the beaches of sunny Ft. Lauderdale over spring break, but they’d fly those things back and forth, usually announcing some type of event – like a happy hour drink specials, ladies night or a wet t-shirt contest. That’s one way to garner attention among beachgoers lying on their backs looking forward to a night of partying. It’s quite another on a weekday in Atlanta.

But this morning, as I hastily schlepped my coffee and laptop to my car, the “SALE” portion was already fading like the morning mist as the plane completed the “y” on “TODAY.” The worst part: As I drove toward the interstate, I never even got to see who was having the sale. What a waste of advertising.

Was it a clothing sale? Car sale? Home appliance sale?

Perhaps I’m a bit jaundiced, but with consumer spending down, it appears that people simply aren’t purchasing new products. Which is why, when my friend – no, not Joe the Plumber but the female equivalent, a stay at home mom – complained to her husband that she desperately needed a new washing machine, he asked her to see if the current one could simply be serviced.

Since the washing machine was no longer under warranty, she discovered that it would cost over $100 just to have someone come out and look at it, much less repair it. Follow-up trips and parts would add up, so she packed up her three children – all under the age of 10 - and drove to the nearest home appliance store. The one she wanted was priced well over $1000, far beyond her budget, and the lower-priced options weren’t near the same quality as what she already had. What could she do? The clothes had to be washed.

This seems like bad news for business, but there is a silver lining – for business and for “Hockey Mom” - and that’s SERVICE. Since most consumers are cutting spending on durable goods, they have to maintain what they’ve already got. Businesses with sub-optimized service centers may be taxed, but those that have optimized the people, parts, prices of those parts and the knowledge involved in repair/return have a significant opportunity in increase profit margins on service. If you can’t sell more washers/dryers, you can sell service on those already purchased.

Case in point: my friend walked out of the home appliance store not with a new washing machine, but with a new service contract on the appliances she already owns.

WIN/WIN for business and for the consumer!

Sounds like an episode of HBO’s “True Blood” - the one that features vampires - but it’s not.

In fact, it’s not even related to television or film. It happened at a local deli.

Some Servigistics colleagues and I walked over to a popular deli during our lunch hour to feast on some fresh subs. The line ran long and the number of employees low. The woman in front of me ordered a tuna sub on wheat, as did I, but the customer in front of her had ordered roast beef.

While the employee took the order from my colleague who ordered after me, the woman said aloud to any employee that would listen, “Uhm, excuse me. There’s blood on my sandwich!”

No joke.

Only one employee paid attention to her. With a look of annoyance, he moved over to face her behind the counter where the sub makers placed blocks of cheese and deli meat on the stainless steel slicer in order to prepare the subs.

She pointed to her tuna sub on wheat that was placed next to the meat slicer.

“Some blood from that beef fell on my sandwich,” she said.

“What?” the employee said.

“Blood,” she said. “On my tuna sandwich there,” and she pointed to her tuna sub.

He lifted the bun off the top of it. “I don’t see anything,” he said.

She insisted that she saw blood fall somewhere on her sandwich.

The employee let out an exasperated sigh and lifted the piece of cheese up from the tuna fish.

“I don’t see anything,” he insisted.

The woman tried one more time to explain that blood had spurted on her sandwich. It was obvious that she was NOT going to eat that sub. Instead of offering to make another one, the employee just looked at her, insisting that HE didn’t see any blood. I didn’t either, but she sure did. Real or not, the woman threw up her hands and walked out of the store.

No doubt she’d never return. And I’m sure once her friends and acquaintances heard of blood spattered sandwiches and poor customer service, no doubt they’d never return either.

When my colleagues and I finally sat down with our sandwiches, one of them said he’d never return to that deli after witnessing the spectacle. Blood or not, the employees’ reaction was inexcusable, he said.

How much business did this deli just lose? How spoiled had their brand become?

Certainly the loss will amount to more than the $4.29 tuna mini-sub. Blood or no blood, the employee should’ve offered to make her a fresh sandwich. A satisfied customer, positive word-of-mouth and relieved patrons would have been worth the cost.

It was the worst of times; it was the best of times.

So, as with everyone, the economy is top of mind. I promise that I’ll talk about technology soon, but the current events seem so much more relevant today. My bank was just purchased by another bank. While this doesn’t scare me - I know the money is safe - but I know the service levels are not.

That bank and I have a history for the better part of a decade. I had a horrible customer service experience with them. They have been on a purchasing tear for most of that decade; I’ve been paying avoid them. Somehow we keep running into each other. I’ve canceled credit cards, moved mortgages, and closed accounts all to avoid ever being its customer again.

What did it do? The bank sent me an account statement that said one thing, and I acted on that information, and it wound up being incorrect. The fall out was about a hundred dollars. Rather than admitting the issue and refunding me the difference, the bank rep. proceeded to tell me he understood my confusion but there was nothing they could do. Most of the call center employees didn’t even have the information to even know what I was talking about. Faxes, letters, escalations and countless hours on hold, they did nothing. I even called the local consumer advocate and he admitted defeat. Hence, my current fear and loathing of this bank.

Now, a positive customer experience: I had bought a laptop for my MBA program to keep my school stuff separate from all my other work and personal data. It was near the very end of the program and, of course, the laptop dies. The machine will not start; the screen will not even light. I was in a panic so I rushed to the local retail location. The store took in my machine, did a full backup to a local hard drive at the store and allowed me to pull critical files to a USB key. The store rep. told me the repair will take about 7 business days.

I relax and head back to class a few days later. Oh no, I had forgotten to pull a semester’s worth of notes onto the USB key . The final was on Friday but the machine was due back on Monday. I run back to the store, but the backup they took was just an image file, not the files. I’m sunk. However, a fast thinking technician said he could restore the files to a loaner machine, pull the files, and give them to me.

However, he feared that he’d have to charge me the restore fee. Who cares?!? Get me my files!

The tech told me to come back in an hour so I spent the time drinking too much Starbucks. When I return, there’s the laptop with all my files. I pulled them off greedily and went to pay, but they waived the fee. The tech said it had been a slow day and no big deal. I passed my test on Friday and picked up my machine early Saturday.

My experiences show how powerful the customer experience can be either in the positive or the negative.

I have spent time and money avoiding one company and I’ll do the same to enforce loyalty with another. I have hence bought three more computers from that same company and I have spent hours on the phone and well over a thousand dollars to avoid that other bank.

Was a $100 dollars worth me never being a customer again? Was an hour of an employee’s time worth a customer for life? Do you think I don’t share those experiences with friends and family?

I believe a small investment in customer service can save millions in customer acquisition costs and brand equity. Companies need to consider this experience when they think that customer commitments are unimportant. I am sure there are people with the same opinions due to an out-of-stock part, late technician, or out-of-whack price.

Excuse me, now, I need to do the research to find another bank. <–>