Think Customers: The 1to1 Blog

One company that has mastered implementing internal processes to support their strategic intent is the Ritz Carlton. As a two-time Baldrige Award winner in the services area (1992 and 1999) they have been able to continually morph their processes to facilitate emerging strategies as a result of the codevelopment of value environment they have with their guests and employees. How many organizations give their employees authorization to spend $2,000 at any moment-of-truth interaction point even if it means placing guests at a competing property? Their motto: “We are ladies and gentlemen serving ladies and gentlemen,” shows a culture of serving as one would like to be served. I’ll also wager they also know which service quality attributes are highly correlated with satisfaction, value and behavioral intentions. Companies that know how to measure these links will be the ones that understand the difference between cultivating barnacles and chasing butterflies and the impact on increased profits and sustainable competitive advantage.

Some say the Ritz Carlton model won’t work in their context. I say Bunk! It’s simply a customer focus with enabling processes around it. Desperately needed are servant leaders who have vision, passion and discipline but lead with conscience instead of ego. These will be the common ingredients of top executives who will enjoy the future mahogany halls of successful companies in this global service economy.

Others are Baptist Hospital and Robert Wood Johnson University Hospital Hamilton; also Baldrige winners. Both have increased patient quality and value in spite of decreased budgets, which in some cases, is a result of their demographics. The patient is part of the process and every channel is investigated in collaboration with all internal and external customer groups and stakeholders to squeeze out costs and increase efficiency, effectiveness and value. Remember the old saying, “faster, better, cheaper: pick only two?” That does not apply at these two organizations. It can be done, even in ties of reduced budgets.

In the end, “The head leads the way.”

John, you hit on something when you talked about warranties and again about bad profits. This is a topic that has come up a great deal lately. In fact loyalty guru Fred Reichheld cites several examples in his latest book, The Ultimate Question. Warranties are high on his hit list of bad-profit activities.

These activities often damage the customer experience. Similarly, a poor service experience, no matter the channel, can destroy customer value.

To your point, and also to Rob's, email is a big focus because so many companies are still trying to "get it right." But is there perhaps too much emphasis on that one channel and not enough on the potential of options like mobile or on the mainstay of the contact center? Or are companies simply trying to capture email's potential?

Ron points out that generationally the phone is and will be for some time a preferred channel for one of the largest population segments: Boomers. But as he also points out, younger generations prefer other channel.

So it's seems that the key here may be the balance of focus on service delivery across channels -- improving currently popular channels while effectively adopting new ones, all the while delivering stellar service through each. Sounds like a tall order, but certainly possible and happening now.

What companies do you think have mastered multichannel service delivery?

I tend to agree that the phone solution is preferred since it is what customers have been taught by companies over the years. How many remember calling the phone company and getting hold of an actual phone company employee you could actually understand without and interpreter and was actually empowered by company processes that were both efficient and effective? How many customers today remember companies for their products or for their after-sales service? Which is the most important component? Sure, a quality product may not need service but how many products today does that apply to? Today, the true differentiator is service quality and not product quality. Product quality is simply the cost of admission to the Big Game. Isn’t it interesting that supposed quality products are now pressure marketed with extended warranties? Why should quality products require these warranties? To promote these warranties are companies possibly reducing product quality?

The most telling information is Heinen’s response from the analysts regarding which channel is getting the most mind-share of executives: e-mail. I would like to know what data supports this e-mail focus. Is it the executives’ focus, with a cost reduction focal point, or is it the result of a rigorous survey research approach? Would most customer segments want equal and optimized (from the customers’ perspective) service quality from both phone and e-mail channels? What customer segments desires e-mail and why? How do they want it offered? Has an effective and efficient internal strategy been implemented with enabling processes and technology to meet or exceed customers’ service quality expectations? What are the most important service quality attributes for each channel of communication by customer segment? What is the optimum queue time per channel from the customers’ perspective for each segment? How does it impact loyalty (positive word-of-mouth and repurchase intentions)? What are the associated customer total costs (a value proposition) for each channel? Is e-mail a viable medium for complex calls (by customer segment), such as a technical call center environment? These are outcome questions that should measurably link to output processes and activities.

I have just one question: If companies have developed a co-development of value proposition with their customers to implement changes to accommodate emergent strategies, why is e-mail a concern? If these companies were proactive, they would already have enabling processes successfully implemented.

To those companies that feel I am preaching to the choir and have already implemented customer-focused strategies and processes, just keep on reaping the rewards it provides in helping you secure true differentiated advantage in a services economy. You will be one of those companies left standing.

As Einstein said, “The significant problems we face today cannot be solved at the same level of thinking we were at when we created them.” Executives and vendors must develop an operationalized understanding of the differences between a product-centric and services paradigm. So far, many organizations simply perpetuate the product-centric processes and quality paradigms which attempt to drive out variability and reduce internal costs. This is a short-term perspective at best. Unfortunately, reducing costs for companies, especially in the offshore, outsourced space, transfers costs onto the customer. It’s like pushing in on a balloon; it simply expands elsewhere equalizing pressure. That is fine for making bolts all at the same specification but how does this work when people are involved who are not bolts and each have different expectations of service delivery?

Think “Follow the Requirements for Organic Growth before Feeling the Consequences of Following the Costs.” Profit from a financial perspective is one number. However, good profit adds value to customers while bad profit takes value from customers. How many executives know the difference?

Can't say I'm surprised to hear this.

I think there's a clear demographic explanation.

Generationally speaking, boomers are the largest generation in the US -- and they prefer to use the phone for customer service interactions.

To some extent Gen Xers, and to even greater extent, Gen Yers prefer online channels, especially email.

Until the boomers either die off (not happening THAT soon) or change their channel preferences (which can certainly happen), I think the analysts' projections were pretty accurate.

Hi Ginger, fascinating statistics, but I can't help thinking that the current state of many deployments underachieve when it comes to delighting customers looking for service. Enterprises need to realise the needs of the consumer are not being met with the current deployments, and many consumers are looking at their mobile phone as a way to improve the interaction with the contact centre.

Multi-modal interactions have been a long time coming, and I'm not suggesting that will change anytime soon, but imagine how good it would be to schedule a call without having to call into the contact centre, by using SMS or email. Then finally I don't have to wait in queue and my life as a consumer is greatly improved.