What do the following companies have in common? Apple Retail Stores, In 'n Out Hamburgers, Trader Joe's, Costco, GoDaddy, and Constant Contact? Whether retail or services, online or brick and mortar, these companies are recognized by all who use them as having extraordinary customer service. Oh, and significantly, they are all wildly successful and profitable right through the recession.
In 30 years of writing business books, I have never included customer service in the list of the top 10 things that determine success or failure in a business. And on deep reflection I would still not change my list. Good Enough customer service is, and probably always will, be good enough to keep a business going. Even poor customer service will be forgiven by some consumers who otherwise find the location visible and convenient, or the product or service necessary. I won't bother to name the companies we all know who are doing pretty well in spite of their horrible customer service.
The conclusion I and others have reached is that there is a direct and clearly definable line that can be drawn between the level of customer service and the profitability of the company. And this is true for manufacturers, lawyers, chimney sweeps, and bicycle shops.
Companies like Allianz, Philips, Schwab, Vanguard, American Express, Progressive, Logitech, Dell, Symantec, Experian, Apple Retail, and PwC have turned to a method of measuring customer service and overall customer satisfaction that is based on a very popular book by Fred Reichheld titled The Ultimate Question: Driving Good Profits and True Growth. The book was based on a study published in the Harvard Business Review, "The Ultimate Question: Driving Good Profits and True Growth," in 2003.
The study claimed, and the books published since have documented, that asking a single question of your customers can give you a true gauge of their experience with your company. They extrapolate this to bottom line results on growth and profits.
The Net Promoter Score is obtained by asking your customers a single question on a 0 to 10 rating scale, where 10 is "extremely likely" and 0 is "not at all likely": "How likely is it that you would recommend our company to a friend or colleague?" Customers answering the question are divided into three groups depending on their answers. Promoters (9–10 rating), Passives (7–8 rating), and Detractors (0–6 rating).
To derive your score or NPS, the percentage of Detractors is then subtracted from the percentage of Promoters. NPS could possible be as low as -100 if nobody loves you, or as high as +100 where folks are wearing your Tshirts everywhere they go. An NPS that is positive is felt to be good, and an NPS of +50 is excellent. Costco has an NPS of +79.
While large companies can compile these statistics in very sophisticated ways, the most likely way for you to get this information from your customers would be through an email survey. The survey would likely include two to three additional questions, but no more that that.
You do the survey and find out that you are -20, or you don't even need a survey for that purpose. You've seen your reviews on Yelp. What is the next step. Let me take a page from another of those excellent companies mentioned above: In 'n Out.
For years I've been using In 'n Out Hamburgers as my primary resource for best-of-class business practices. I can't help but share a recent story I heard due to a family member being on the front lines.
The story takes place at a location and city that shall be anonymous to protect the guilty. Three employees were fired on the same day due to customer service issues. One received a customer complaint for smirking at a customer. I suppose that might be similar to rolling the eyes. This employee had received two other customer complaints over SEVEN months. Keep in mind that a typical newcomer to the In 'n Out business might deal with 30 visitors per hour. Would you have fired this person after three customer complaints out of 21,000 encounters?
Probably not, but then you probably wouldn't send someone home for being consistently $30 off on the cash or for showing up late or failing to call if late or not coming in. The first and most critical thing you can do to improve the quality of your customer service is to expect and demand quality customer service, and to reward those who provide it, and dismiss those who don't.
Costco and In 'n Out are known in their neighborhoods for paying more than the other retailers in the area. They also have a more rigorous interview process to gain employment. Since they pay more, they have far more people to choose from. They also provide incentives to their employees who recommend great people ($50 if the new employee is still employed after 90 days).
These minor changes in the way you do business are not that hard. But the difference could be dramatic in terms of your take home, your ability to go on vacation while trusting the store to your people, and your ultimate value to both your customers and the employees you have properly trained.
Here are the specific dares for today:
- Make a decision to improve your Yelp and Google+ ratings by one full star during 2015.
- Hold a company meeting to announce the goal and brainstorm on how to achieve it.
- Fire anyone who isn't giving great customer service.
- All new hires should be made with customer service as a major criteria.
- Hold weekly meetings for a while to discuss progress on the goal.
- Review any new Yelp or Google+ reviews, negative and positive with the staff.
- Pay bonuses based on employees name being positively mentioned in reviews.
- Make sure you are the best in the building at customer service.