BBS Exceptional Service Exceptional Profit

Business Book Summaries® March 25, 2011 • Copyright © 2011 EBSCO Publishing Inc. • All Rights Reserved

March 25, 2011

Exceptional Service, Exceptional Profit The Secrets of Building a Five-Star Customer Service Organization

Leonardo Inghilleri and Micah Solomon

©2010 Leonardo Inghilleri and Micah SolomonAdapted by permission of AMACOM, a division of The American Management AssociationISBN: 978-0-8144-1538-2

IntroductionThe key to a successful business is customer loyalty. Building enduring business relationships is a time-less strategy that transcends factors that are out of a service organization’s control, including technologi-cal changes, economies of scale, and exchange rates. Solid customer loyalty serves as insurance against the risks of a commodity being viewed as replaceable or interchangeable.

In Exceptional Service, Exceptional Profit, Leonardo Inghilleri and Micah Solomon share a variety of tech-niques pioneered by the Ritz-Carlton hotel chain, Netflix movie rental service, and other companies that have earned a loyal customer base. From mastering the four elements of customer satisfaction to handling service failures to personalizing the online experi-ence, organizations can make the shift from reactive to anticipatory service and build a base of clients that

will keep coming back for more.

Satisfaction GuaranteedInghilleri and Solomon consider customer satisfaction a prerequisite to establishing loyalty. Although satis-fied customers are still at risk of being wooed away by a competitor, they will believe a business offers a reasonable product or service and, if asked, offer a positive assessment. The first element of customer satisfaction is a perfect product, designed to be as defect-free as possible, and supported by a supply of staff and provisions that can maintain perfection in the face of absenteeism, service issues, and other fore-seeable boundaries.

Second, the product must be delivered by caring people. For example, a customer might experience the perfection of an on-time, comfortable flight, but a curt and impolite ticket agent may adversely affect that

Exceptional Service, Exceptional Profit Leonardo Inghilleri and Micah Solomon

Business Book Summaries® March 25, 2011 • Copyright © 2011 EBSCO Publishing Inc. • All Rights Reserved Page 2

person’s satisfaction. Third, the perfect product must also be delivered in a timely fashion, especially as the definition of “on-time” is getting shorter and shorter. If a service takes longer than the time anticipated, the provider should communicate this ahead of time so customers can reset their expectations.

The final element of customer satisfaction is an effec-tive problem resolution process. A breakdown in service or product quality can lead to an emotional moment that can make or break the relationship with a customer. Although avoiding such problems is the ideal, an effective recovery can restore and even strengthen a customer’s confidence in a business’s capabilities.

Words CountLanguage is the underpinning of all components of customer satisfaction, from describing the product to handling service failures. Inghilleri and Solomon suggest that companies adopt a distinctive style of speech, not just for consistency of service but also to promote collaborative pride. For example, the Ritz-Carlton trains staff to use polite phrases such as “My pleasure,” “Right away,” and “Certainly,” and forbids “okay,” “hey,” and other less formal terms. The Ritz style is so successful that it is imitated throughout the industry.

The language a company adopts should take into account what works best with customers as well as what might turn them away from a product, and the level of formality in which the company operates. Once these phrases are worked out, a lexicon or lan-guage handbook should be developed. The language must put customers at ease and not come across as condescending or coercive. For example, instead of the negative-sounding “You owe…,” Solomon advises using, “Our records show a balance of…”

Staff should focus on their language during the most crucial moments in their conversations with custom-ers. Their hellos and goodbyes should be warm and personal and dialogue about service failures should be handled with grace. Negative nonverbal cues such as looking at the computer screen instead of the customer can hamper communication, and giving directions without making the effort to show custom-ers how to find their destination can also be unsettling.

Key ConceptsIn Exceptional Service, Exceptional Profit, Leonardo Inghilleri and Micah Solomon share a variety of techniques pioneered by leading com-panies that have earned a loyal customer base, including:

• Providing exceptional service is the key to building customer loyalty, which can ensure the success and survival of an enterprise re-gardless of external forces such as economic downturns and technological change.

• Rather than merely reacting to customer requests, organizations should strive to provide anticipatory service by tracking customer preferences and frequenting their own facilities to understand what customers experience.

• A response to a service failure and the open-ings and closings of transactions are the most crucial emotional moments in custom-er service.

Companies can distinguish themselves from the competition by building web sites that offer valuable information in both long and short form to meet general needs, and features such as chat buttons, toll-free numbers, email but-tons, and options for the disabled for a more personalized experience.

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Information about the author and subject: www.leonardoinghilleri.com

www.micahsolomon.comInformation about this book and other business titles:

www.amacombooks.org

Related summary in the BBS Library:Strategic Customer Service

Managing the Customer Experience to Increase Positive Word of Mouth, Build

Loyalty, and Maximize ProfitsJohn A. Goodman

www.leonardoinghilleri.com

www.micahsolomon.com

www.amacombooks.org



All phone calls should be answered before the third ring. Screening calls can alienate people; if necessary, callers should be referred to the appropriate staff as quickly and courteously as possible.

As more and more interactions take place over the Internet, businesses should strive to come across as more personal. Customers should be able to reply to mass emails, all emails should contain a saluta-tion, and live chat staff people should be named and expected to communicate with participants as warmly as they would in a face-to-face encounter.

A Careful and Thoughtful RecoveryAlthough in a perfect world there would be no service failures, handing them the right way can lead to cus-tomer loyalty. The first step is the delivery of a sincere and personal apology that makes the customer feel as though he is being listened to and valued, and that the staff person is on his side. Inghilleri and Solomon recommend avoid-ing condescending statements such as, “If what you say is correct,” and stretching out apologies until the anger is diffused and customers express that they understand that the failure is not the staff person’s fault. Questions such as, “Did you plug it in?” can be insulting to a customer if asked too early.

You’ll find an opportunity hidden inside your company’s worst moments: the opportunity to bring a customer closer to you. Indeed, you can learn to handle service breakdowns so master-fully that they actually help you to create loyal customers.

About the AuthorsLeonardo Inghilleri is Executive Vice President and Managing Partner of West Paces Consult-ing, a subsidiary of the West Paces Hotel Group. He has created the Ritz-Carlton Leadership Center and Learning Institute and applied his service expertise in working with Ritz-Carlton, Walt Disney, and other companies.

Micah Solomon is President of Oasis Disc Man-ufacturing and founder of the “College of the Customer” website. His techniques have been featured in Success magazine, Seth Godin’s book Purple Cow, and other case studies and profiles in the business press.

The second step to recovery involves going over the complaint with the customer, which fosters a feel-ing of collaboration in fixing the problem. The third step is to “fix the problem and then follow up,” which may mean replacing the service or product. Because of the inconvenience the problem has caused, offer-ing something extra might alleviate the customer’s sense of injustice; this could be an upgrade or addi-tional service, or the opportunity to provide valuable feedback to help the company improve its product or practices. The three-pronged approach to following up includes:

1. The immediate, in which the staff person who fixes the problem checks in with the customer

2. The internal, involving making other staff aware of the service failure so that they can learn from the experience or keep it in mind when dealing with the same customer, and

3. The wrap-up, in which the staff person calls or sends a handwritten note at the end of the recov-ery.

The recovery process is not complete without the fourth step: the deposition, or documenting the prob-lem in detail. The information should be entered into an incidents box, problem log, or verbal report which gathers data that can be further analyzed to pinpoint patterns that can lead to identifying the underlying causes for repeated service failures.

While not every staff person should be equally involved in customer service or trained in the same specialties, all employees need to be able to handle customer complaints. Staff members who are empow-ered to resolve issues themselves or drop what they are doing to find the right person who can resolve the issue will help diffuse complaints. Also, sales reps should be encouraged to offer something extra even if the person they approach is already a customer, in order to make up for their inconvenience.



Systematic Noting and SharingExcellent customer service is the result of custom fitting. In order to provide individualized experi-ences, all of a company’s employees need to use and continually update a tracking system that contains information about customers and their preferences. Inghilleri and Solomon outline seven key principles for building such a system:

1. “Keep Your Systems Simple:” The KYSS approach ensures that a company’s staff is not bogged down by too many details and difficult-to-find data.

2. Anything important to the customer belongs in the system: Categories such as roles, goals, and prefer-ences can keep staff apprised of what the cus-tomer shows interest or takes pride in, as well the best time of day for contact. Other types of infor-mation to have on hand include missteps from prior transactions, current problems, any product/services references made by the customer, input from surveys or comment cards, known personal ties to the establishment, number of purchases and visits, notation if the customer has been “dif-ficult,” and personal facts about marital status and number of children.

3. The information needs to be available in real time: Be-ing able to recognize customers when they enter the place of business and addressing them in their preferred manner decreases the risk of alienating them.

4. Preferences can change: It is a safer bet to ask cus-tomers to confirm a preference before delivering it based on a prior assumption.

5. Moods can change, so track them: Noting the changes in customers’ level of enjoyment over the course of their experiences can help pinpoint what can be done to improve their mood.

6. Avoid a wooden delivery: Customers should be greeted and handled with enthusiasm, not with their names mispronounced or inserted in an

artificial-sounding script.

7. Use technology in a clever, not creepy manner: Avoid using intrusive questioning in online forms, make certain questions optional, or explain the reasons for asking them.

Clerks and other staff need to exercise caution; unless it is necessary for doing business, asking the wrong questions or revealing the wrong knowledge can be an off-putting invasion of privacy.

Think Like a CustomerOne of the best ways for companies to determine the effectiveness of their services is to have employ-ees frequent their own services and facilities to get a sense of what the customer is experiencing. For example, a person dining alone may feel more com-fortable if offered reading material. Inghilleri and Solomon explain that building procedural antici-pation “requires managerial vision, judgment, and persistence. But it brings you closer to achieving cus-tomer loyalty.”

Inghilleri has worked with a team of Ritz-Carlton employees on a Continuous Improvement System known as Mr. BIV (Mistakes, Rework, Breakdowns,

Inefficiencies, and Variations in work process). Each word in the acronym stands for a possible cause of a defective situation that needs to be addressed immedi-ately. It is important to find all of

the reasons for a problem, such as late room service, and alert the appropriate people who can attend to them. Employees who are responsible for defects should never be attacked. There is a greater chance of discovering faults within an underlying process if they feel comfortable enough to reveal issues,.

Inghilleri and Solomon are advocates and adopters of manufacturing-based systems and controls found at companies such as Xerox and FedEx because they help locate and reduce waste. Toyota’s Taiichi Ohno has identified seven examples of waste that can be addressed to improve service and increase value: unnecessary transport, excess inventory, excess and non-ergonomic motion, waiting, overproduction/pro-duction ahead of demand, inappropriate processing, and defects.

Don’t be deterred from collecting information—in a sensitive way, for respectful uses. There is little that’s more important to your growth as a company.



Service-focused teams might have reservations about such systems because they feel that anticipating customers’ needs ahead of time cannot be achieved without excess inventory, and going to extra lengths to satisfy the customer may not be the most efficient use of time. However, companies can still strive to be efficient behind the scenes, using such methods as improving food preparation in kitchens or stream-lining customer choices in online systems. Before instituting any streamlining plan, it is important to assess the value of the component to the customer. Many people cannot pinpoint what aspect of their experience made it positive, and some form emotional attachments to specific customer service rituals that they do not realize they missed until after they are gone.

Internet businesses often have the advantage of being able to provide anticipatory service by using software algorithms. For example, Netflix can use the rental history of both the customer and others who have made similar choices to offer recommendations for further orders. Because the information used is not too personal, Netflix can provide this service without crossing the line into creepiness.

Surveys can help businesses understand the viewpoints of their customers. In-house three-to-seven-question mini-surveys are more likely to yield a high participation rate than those that are taken home. In-depth surveys will provide the most useful information if designed and administered carefully. A specialized survey service can help companies craft meaningful questions and build in free-form text fields for customers to articulate novel responses.

Recruit and Retain the Right PeopleInghilleri and Solomon believe that personality traits play a more important role than job-specific experi-ence when it comes to finding the right staff to interact with customers. Their top five desirable traits are:

1. Genuine personal warmth

2. An optimistic attitude

3. A team orientation

4. Conscientiousness in carrying out work

5. Empathic skill, or the ability to understand what customers are going through and interact with them accordingly

Employers should maintain high standards in hiring, as one inferior employee can slow down or com-promise the service other employees are delivering. Consistency in the recruitment and selection process will help employers develop personnel benchmark-ing. It is also useful to compare new applicants to the best current employees to see if their skills match up.

Sending new employees off to be shown the ropes by just any co-worker will not ensure that the right tone is set on Day One. Instead, the CEO or other leader can instill the core customer service principles, values, and beliefs, and explain the employee’s important role in carrying out the company’s mission. When new team members walk into the company, they should be provided with all the tools and computer access needed to do the job and be greeted with an attractive orientation setting and materials.

A well-planned training curriculum balances the priorities of providing anticipatory service with respecting the customer’s protective bubble, the unseeable sanctuary in which the customer expects to not be disturbed. Inghilleri and Solomon stress five principles:

1. Service starts at the moment the customer comes in contact with the staff person. A warm greeting must include eye contact and a smile.

2. Learn to read the subtle verbal and non-verbal mes-sages the customer is delivering. For example, if the customer maintains eye contact, it usually means that they are hoping to be asked if they need as-sistance.

3. Adjust to the pace of the customer. Some customers may be on a leisurely vacation while others are more stressed for time.

4. The bubble is the sanctuary of the guest. The timing

Give that friendly, insightful, responsible applicant who has a knack for making people feel comfortable a shot—even if it means passing over an applicant with a résumé that more closely matches the job’s day-to-day functions.



of attending to a customer depends more on the customer’s schedule than on the server’s to-do list.

5. Closing the sanctuary door--or not. If customers do not need service, the staff person should recognize this, thank them graciously, and leave them alone.

In order to reinforce the company’s service model and support employees, managers should hold daily standup meetings focusing on a single aspect of ser-vice, allowing everyone to join in the discussion.

A Visionary, Supportive GuideAn organization’s service production capability can be compromised before the day begins; for example, an employee could bring his preoccupation with an issue outside of work to the job. Leaders need to master the tools of constant reconnection with workers in order to keep them engaged with the organization. Inghil-leri and Solomon outline what they consider to be the five most important characteristics of a strong leader:

1. Vision: envisioning the organization’s future and direction and communicating it clearly to others.

2. Alignment: simplifying complex or abstract ideas into a single, more accessible idea to focus the company’s efforts.

3. Standard Setting: establishing, implementing, and enforcing consistent, effective performance standards.

4. Support: providing workers with the training and resources necessary to perform their tasks effec-tively.

5. Motivation, recognition, and reward: encourag-ing employees to succeed, and celebrating and rewarding their achievements.

Moral leaders regard their employees as people, and whenever possible include them in decision-making. They support employees’ involvement in areas of the

company outside of their assignment as well as with their families and communities.

The Price of ValueCompanies should not have to spend all of their rev-enue building customer loyalty, but some invest more in resources to ensure an excellent experience. For example, ESF summer camps in Pennsylvania and Connecticut hire older and more experienced coun-selors and offer a lower staff-to-camper ratio than the average camp, and the investment has paid off.

Positive parental word-of-mouth has made it possible for the com-pany to expand. Other benefits of making those types of investments include fewer turnovers among staff and clients, lower insurance rates, and a decreased chance of negligence lawsuits.

Inghilleri and Solomon offer a few caveats. First, companies should watch out for “lily gilding,” or offering customers a fancy feature or service that may not interest them. Second, what customers expect or receive across the industry should also be considered, and much can be learned from shopping the competi-tion and surveying customers about the competition, as long these activities are done anonymously.

Third, in considering the equation “Value = Personal Benefit minus Cost and Inconvenience,” businesses have to consider what the Personal Benefit would be to their target market. While Wal-Mart may be all about low prices, Nordstrom customers expect higher qual-ity and more personal service and are willing to pay more for it. However, some customers are sophisti-cated enough to recognize overpricing. Finally, nickel and diming can turn off customers; as the successful car dealer Carl Sewell asserts, if a friend would not charge for a service, neither should the business.

Master the Internet ToolWith its broad reach, the Internet holds an enormous potential for many customer-oriented enterprises. However, those who choose this avenue of service need to prepare to execute it correctly and in ways that honor each customer’s individuality. A dis-gruntled customer’s complaints can lead to a public relations fiasco. Therefore, Inghilleri and Solomon

Loyalty makes customers less price sensitive, more willing to spend money with you, more willing to take a chance on extensions to your product line (assuming you don’t abuse this trust in inappropriate ways), and much more immune to com-petitive entreaties.



recommend that companies make themselves easy to reach, respond promptly to public complaints, and authorize an appropriate leader or other staff person to make those responses. If there are evangelists—loyal customers who will publicly endorse or defend a company—asking them to add their positive opin-ion to the forum can help control damage. Trolling, or having staff pose as customers, can backfire and should be avoided.

Individualization can be built into a web portal in sev-eral ways. Even though most sites feature Frequently Asked Question lists that take care of many custom-ers efficiently, there must be an option to receive more assistance if someone’s answer to “Did this answer your question?” is “no.” To deal with differences in attention spans and the amount of time customers can spend, customers can access a “short copy,” or brief description of the product or service, with an option to “learn more.”

However, with most companies capable of supplying these self-service features, businesses need to build in more opportunities to distinguish them-selves online, such as:

• Build in options throughout the site for personal interactions, including live chat buttons, a toll-free service number, and an “urgent email” button.

• Keep accessibility and sensitivity in mind when designing the site. Choose layouts that can be un-derstood and navigated by customers of all ages and computer proficiencies, and add “alt” tags to graphic elements, so they can be read by a text reader.

• Design the self-service elements to be engaging to users. Depending on the product or service and the audience, animations, sounds, or other fun features can be built in to keep users at the site.

• When automated responses are needed, craft them to be personable and, if appropriate, funny. Friendly and lighthearted approaches to com-municating about shipments or other notifications can leave customers with a positive impression about a company and its employees.

Different Online Paths to Customer LoyaltyThe online merchant Amazon.com is a master of what Inghilleri and Solomon refer to as the “repetition strat-egy;” basic services are offered repeatedly to eliminate friction from the customer experience. For example, a customer’s credit card and address information is stored, enabling “one click” purchasing. The order is delivered faster because it is sent directly to UPS or another shipper, and Amazon can recommend more relevant products based on customer rankings. How-ever, most other companies cannot take advantage of Amazon’s ability to attract high-volume shipping contracts with leading carriers or offer high salaries to attract talented programmers and security experts to stay on top of technical issues.

A more typical business would take a different approach. For example, a rug-cleaning company could create an informational presence by offering online advice, as long as it does not overtly advertise the company’s products or services. Also, the web site could use the short copy/long copy model to introduce visitors to the company’s approach, history, technol-ogy, and staff. Computer-driven modeling can allow potential customers to compute an estimated cost of services without having to register with the site, and contact the company via a web form. These courteous approaches allow customers to interact conveniently and without personal intrusion.

The Power of Beginnings and EndingsResearch on memory has shown that what comes at the beginning and the end is remembered the most. This is true not only for a grocery shopping list but also for interactions with customers. In many businesses, the warm greetings and heartfelt farewells from the front desk receptionist are crucial points of contact; show-ing recognition and appreciation for repeat customers enhances the experience. Phone calls should not be

Being the go-to place for free information online is terrific. It magnifies your perceived trustworthiness. It appeals to poten-tial customers, because giving away expert information makes you an expert—their expert. And it brings potential customers to your virtual doorstep.



rushed. “A proper telephone answering sequence includes an appreciative greeting, a clear introduc-tion, and a sincere offer of assistance,” Inghilleri and Solomon indicate, and ends with “a personalized farewell and a warm invitation to return.”

To be more inviting to disabled customers, businesses must consider providing more than a wheelchair ramp. Outfitting doors with “universal access” handles and making them lightly weighted can accommodate a wider range of physical challenges. On the company web site, captchas, letters or numbers presented in image form that users are required to retype in an effort to screen out hackers, should be avoided unless necessary to facilitate access by the visually impaired, and both phone and email customer service outlets should be made available. Also, as customers of all levels of ability use Google or other search engines, results may direct them to any part of a company’s site, so each page should contain point-of-entry fea-tures such as the name of the proprietor, tour buttons, contact information, and other appropriate links.

Before moving to a proper closing with a customer, the final question should be, “Is there anything else I can do for you?” However, a “no” answer should not serve as the end of the transaction. Whenever possi-ble or appropriate, staff should customize the closing by using the customer’s name and language reflect-ing prior knowledge, inviting the customer to return, offering a parting gift, and sending a follow-up note. The warm feelings and gratitude of these final ges-tures should encourage customers to come back again and again.

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Features of the BookReading Time: 5-7 hours, 170 pages

Customer loyalty will help bring both strategic and financial value to a business, regardless of size or specialty, through both good and bad times. These positive relationships can lead to free word-of-mouth advertising and boost employee pride and morale. But how can an enterprise differentiate itself from the others in its market and provide the best service pos-sible?

In Exceptional Service, Exceptional Profit, Leonardo Inghilleri and Micah Solomon share the fine-tuned loyalty-building techniques learned from their expe-riences in the hospitality, technology, entertainment, and other industries. Each chapter explores a differ-ent aspect of customer contact, including anticipating needs, addressing service failures, and handling hellos and goodbyes. Special features highlight case stud-ies and explore issues related to each strategy, and appendices reproduce service standards and guide-lines used by three companies in different industries. Decision makers in any organization can read the book cover-to-cover to understand the overall impact of service on a business or explore specific chapters to find tools to help with a variety of service issues.

ContentsSpecial Features

Acknowledgments

Foreword by Horst Schulze

Introduction: The Only Shop in the Marketplace

Chapter 1: The Engineer on the Ladder, Reaching for the Highest Level of Service

Chapter 2: The Four Elements of Customer Satisfac-tion: Perfect Product, Caring Delivery, Timeliness, and an Effective Problem Resolution Process

Chapter 3: Language Engineering: Every. Word. Counts.

Chapter 4: Recovery! Turning Service Failures Around

Chapter 5: Keeping Track to Bring Them Back: Track-ing Customer Roles, Goals, and Preferences

Chapter 6: Building Anticipation Into Your Products and Services: Putting Processes to Work for You

Chapter 7: Your People: Selection, Orientation, Train-ing, and Reinforcement

Chapter 8: Leadership: Guiding the Customer-Cen-tered Organization

Chapter 9: What’s Worth it, and What’s Not? Pointers on Value, Costs, and Pricing

Chapter 10: Building Customer Loyalty Online: Using the Internet’s Power to Serve Your Customers and Your Goals



Chapter 11: Hello/Goodbye: Two Crucial Moments with a Customer

Appendixes

Appendix A: Oasis Disc Manufacturing: Customer and Phone Interaction Guidelines and Lexicon Excerpts

Appendix B: CARQUEST Standards of Service Excel-lence

Appendix C: Capella Hotels and Resorts “Canon Card”: Service Standards and Operating Philosophy

Notes

Index


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