Great Service, Terrible Something Else

“Design x Culture”

Today, eight out of 10 employees are service workers. Some 80% of the United States’ gross national product depends on service activities, yet quality service is rare. People’s natural inclination is to serve others, so why is it so difficult to provide — or receive — good service?

Most companies won’t make the necessary trade-offs to produce great customer service, contend Frei, a noted author and a professor at Harvard Business School, and Morriss, head of its leadership institute. Firms should purposely plan to be bad in areas that customers don’t care about and focus on rendering the high level of service that customers want.

Great service depends on following this formula: “Service Excellence = Design x Culture.” Great service depends on a well-designed, pre-planned business model buttressed and endorsed by a supportive corporate culture.

Excellence requires underperforming on the dimensions your customers value least so that you can over perform on the dimensions your customers value most.
Frances Frei, Anne Morriss

For example, Commerce Bank built its business spectacularly during the 1990s, a decade when its stock price rose 2,000%. When Commerce opened in 1973, the accepted wisdom was that banks attracted customers by paying high interest rates, and most banks sought to expand through acquisitions. Commerce’s interest rates were the lowest in banking, and it seldom acquired other banks.

Its leaders understood that Commerce Bank’s loyal customers were its likeliest source of profits. Commerce set out to excel in the areas of banking that customers care about: hours of operation and customer service. It hired upbeat, friendly people and opened every day. On weekdays, Commerce customers could bank from 7:30 a.m. to 8 p.m., and the bank accepted drive-through deposits until midnight.

Spend on Great Service

Great service costs money, so pay for it by charging customers for something else. For instance, Commerce customers paid for good service, in effect, because the bank paid lower than usual interest rates on savings accounts.

Service costs more at Progressive Insurance, but Progressive doesn’t charge its customers more. When an accident occurs, Progressive dispatches an “immediate-response van” to the scene. The firm’s representative assesses the accident’s potential costs and often gives the customer a check for repairs on the spot. This helps Progressive reduce fraud and legal claims while demonstrating consistent, immediate concern and follow-through for its customers.

It couldn’t be clearer that to win in one area, you must lose in another.
Frances Frei, Anne Morriss

Ask, “What can we do better than anyone else?” Develop new value-added services based on your unique expertise. Take Ochsner Health Systems, which set up “patient portals” that enable clients to receive services online. Among other activities, patients can view their lab results or insert their appointments directly into their physicians’ schedules.

Great service must become and remain a bedrock of your firm’s culture. Achieving that goal depends more on following smart business models than on your employees’ individual efforts. Consider the typical call center, where harried employees must monitor multiple screens of complex information during an onslaught of calls. They must immediately produce details on a wide range of products or services, or both. It’s little wonder, then, that many customers hate call center phone services.

The most successful service models incorporate a mechanism for reliably funding an exceptional experience.
Frances Frei, Anne Morriss

Companies that establish and maintain harried call centers set staffers up to fail. Such flawed service results from bad service models, not bad employees.

Bugs Burger Bug Killers

Bugs Burger Bug Killers (BBBK), once America’s biggest independent pest extermination company, offers a unique guarantee of total elimination of all pests. If it doesn’t deliver, BBBK promises to refund the customer’s money and pay for an entire year of service by another exterminator.

BBBK focuses on smart recruitment; it even interviews job seekers’ family members. BBBK pays well, gives employees a 20% share of billings, and offers attractive performance bonuses. It also provides all new hires with five months of training, when its competitors might provide only a few days or weeks. 

The alternative to such an extensive training program is to make jobs so easy and intuitive that employees can handle them immediately. For example, the LSQ Funding Group created an intelligent service model that grants small companies loans expeditiously, based on their receivables.

Frei and Morriss explain that to serve your customers better, you must manage them. Customer management is an essential element of BBBK’s business model, and its service specialists carefully train their clients in pest elimination procedures. The company refuses to take on clients who won’t sign contracts agreeing to a rigorous cleanup program. Some clients have had to promise to change their “trash management” procedures and make expensive building repairs.

Corporate Support

Anecdotal evidence will reveal if your customers are responding as you want them to, but be sure to build in an objective evaluation. Too many executives have unrealistic expectations about their customers’ “operating behavior.” Regard customer complaints as learning tools you can use to improve your products and services. Your customers can help you discover flaws in your products, services, and operations. Online customer forums can guide you to better customer service, but always be aware that your customer service program depends on having the full support of your corporate culture. 

Deep insights

Frances Frei and Anne Morriss offer deep insights and useful customer service data. They provide detailed, rich examples and integrate those real-world success stories into their advanced theorizing. And they are refreshingly unpretentious and accessible. Their book, which dates from 2012, contends that “good service is…rare,” although today many firms – perhaps more than in 2012 – wield it as a competitive advantage. Could it be – given this classic bestseller’s clarity and enduring popularity – that lots of leaders have gotten the message since then and built better service? That may outdate the authors’ claim that good service is scarce, but it challenges little else in this worthwhile guide, much of which remains fresh and relevant years later.