For more than a decade, American businesses have promised--often
in loud advertisements--to deliver top-notch customer service. But
good as that sounds, it's not reality, says John Tschohl,
author of Achieving Excellence Through Customer Service
(Bestsellers Publishing).
"The general level of service remains poor. Top management
thinks they are doing great--but customers know otherwise,"
says Tschohl.
And those customers are more demanding now than ever. "The
companies that don't deliver service will be crowded out of the
marketplace," warns Tschohl, owner of Bloomington, Minnesota,
Service Quality Institute, a training company that has put on
programs for businesses as diverse as Eastman Kodak and Miller
Brewing.
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But the good news is that "the fastest, least expensive way
to make more money and grow your business is to become a service
leader," says Tschohl.
Just how can a business deliver excellent service without
denting its profit margins? Tschohl tells exactly how.
Entrepreneur:What's the state of customer service
today?
John Tschohl: Ironically, we've moved into a service
economy where the only thing lacking is service. Some 95 percent of
all business owners believe they rate at least a 9 on a scale of 1
to 10 in customer service, but their customers wouldn't rate
them anywhere near that.
For many years, customers accepted bad service as a matter of
course, but now they are much less tolerant. With customer
expectations much higher, it behooves companies that want to stay
in business to be on the leading edge and to be service-driven in
transactions with customers. The least expensive way to make more
money and grow faster is to be perceived as a service leader.
Entrepreneur:To deliver better service, don't you
need to hire more employees?
Tschohl: That's one of the two biggest myths about
service. What you need instead is to get the employees you have
working on eight cylinders instead of two. The other big myth is
that to give good service, you've got to pay employees
more.
Entrepreneur:What's an example of a company that
really understands service?
Tschohl: Wal-Mart does two things very differently from
other mass merchandisers. It truly values its employees, and it
truly values its customers.
Wal-Mart is leanly staffed, and it charges low prices, but it
still has created a culture that believes in the importance of
really helping its customers. Before Wal-Mart, customers expected
no service from discounters. Sam Walton changed all that--and he
did it without raising prices, without adding staff, and without
hurting profits.
Wal-Mart last year achieved sales of $338 per square foot,
compared with Kmart's $185. They sell the same merchandise at
similar prices, but Wal-Mart is winning--and the difference is its
culture of valuing employees and customers.
Entrepreneur:What can a small business do to meet
today's demand for fast, efficient service?
Tschohl: There are two crucial points to always keep in
mind. First, when customers come in or call, satisfy them as
quickly as possible so they can go about their day's business.
Second, really listen to the customer and find out what he or she
wants and needs and by when.
What irritates customers? It's not doing basic stuff--having
a caring attitude, following through on promises, taking the little
steps to help customers buy what they want and get out of the store
faster. You don't need a Ph.D. to do it. What you need is a
motivated staff with good interpersonal skills.
Entrepreneur:What's the first step in delivering
better service?
Tschohl: The most critical element is to involve all
employees in a service strategy. This needs the CEO's support.
The trouble is, so many top managers are so busy doing
administrative tasks that they never look at what their employees
do. They're totally unaware of a customer's-eye view of
their business.
Entrepreneur:Are you saying a customer service
philosophy starts with the CEO?
Tschohl: It's extremely important to have commitment
to service be a strong message from top management. But the CEO
cannot just send out a memo saying "This is the Year of the
Customer." Employees will forget that almost
immediately--unless there is constant reinforcement from the
top.
Entrepreneur:Why do businesses need to train
everybody, even employees who don't have customer
contact?
Tschohl: Today, you never know who the customer will
interface with--it can be employees in sales, shipping, accounting,
even product development. That's why a service program cannot
be segmented into a special department or limited to certain
employees. It has to be everybody's job.
Worse, many employees just don't know that their tone of
voice and attitude communicate a lack of caring to the customer.
People aren't born knowing how to deliver good service,
although management often acts as if they are. Customer service is
a learned skill.
Entrepreneur:What are the basics?
Tschohl: In our seminars, we teach six steps for
delivering excellent service. First is to build the employee's
self-esteem. The better employees feel about themselves, the more
effective they are in a service arena. Within seconds, customers
know if this is a positive employee. They can tell on the phone, in
person, even by mail. For the boss, this means letting employees
know how much you value them and how important they are to the
business' success.
The second step is to practice being courteous with customers.
We cannot be self-centered or preoccupied with our own work. We
have to show courtesy in every contact with customers, whether
it's in person, on the phone or by mail.
Third, give customers positive communication, both verbally and
nonverbally--smiling, for instance, and telling them how much you
value their business.
The fourth step is to perform for the customer. You've got
to get the job done right. Being friendly doesn't matter if you
fall down on quality.
The fifth factor is listening carefully. Pay attention to what
the customer wants.
The last step is to learn and grow in your job. Learn about the
company, its products and its customers. Customers like dealing
with people who know what they're doing, and managers need to
encourage workers to keep learning and getting better at their
jobs.
Entrepreneur:Isn't doing all that
expensive?
Tschohl: If you think of how much it costs to stay open
every day--just overhead such as lights, rent, payroll--the cost of
having a customer walk in or call and not get good service is very
high. It doesn't take extra time or money to be friendly. But
it takes considerable time and money to handle complaints and
constantly replace lost customers.
Bottom line: A business--even one that can't afford
extensive advertising--can still differentiate itself from
competitors on the basis of exceptional customer service.
Entrepreneur:You're saying customer service
directly contributes to profitability?
Tschohl: I'm saying customer service is a matter of
survival. Think about this: It costs five to 10 times more money to
get a new customer than it does to keep the customers you already
have. Most companies spend substantial amounts on winning new
customers but rarely spend any time or money trying to keep the
customers they already have. Just a small investment in making them
feel precious and wanted will give you a lot of business.
Entrepreneur:What should we do with the customer who
has a complaint?
Tschohl: This is a very delicate, very important
interaction. If an angry customer isn't satisfied, and it's
a big-ticket purchase, there's a 91 percent chance he or she
will never do business with you again. Even if it's a small
purchase, 63 percent will never do business with you again.
On the other hand, there is a potentially huge payoff in
satisfying that angry customer. I've seen new research that
shows if you can cut your defection rate--that's customers who
get angry and never come back--by just 5 percent, you can increase
profits by as much as 100 percent. That's proof of exactly how
profitable good service can be.
Entrepreneur:So how should an angry customer be
handled?
Tschohl: We've developed a six-step program. The
first step is to listen carefully and with interest to what the
customer is saying. The second is to empathize. Put yourself in the
customer's place, and use positive strokes to let the customer
know you appreciate his or her business.
Third, ask questions in a mature, nonthreatening way--and make
them questions that require the customer to think about his or her
answers. That will cool the customer down; a person can't
logically respond to questions in a highly charged emotional
state.
The fourth step is to suggest one or more alternatives to
resolve the customer's concerns. Number five: Apologize without
blaming anybody. Sometimes we'll try to put the blame
elsewhere--on another employee, the owner, a third-party business.
Don't do that.
Finally, solve the problem. Identify solutions, or find somebody
who can. It is very important the customer walk away feeling he or
she came out on top, even if this costs you money. If a customer
walks away unhappy, 87 percent of unhappy customers will tell their
story to nine or 10 other people. Thirteen percent will tell as
many as 20 other people. What will that negative word-of-mouth do
to a business?
Follow the six steps, and you'll have a satisfied customer.
Typically, however, employees aren't trained in these steps.
When an angry customer comes in, the employee just wants to get rid
of the customer. If that happens, you'll never see that
customer again--and you may not see the friends he tells,
either.
Entrepreneur:Can a business justify training
lower-level employees in service--particularly when many of them
are likely just short-term hires?
Tschohl: Customer service is like cleanliness: Both
require daily attention. The difference is that a company
doesn't say "Let's not clean the floors today.
Customers will just come in and dirty them again." But
companies do say "Why train employees? They're just going
to leave."
That thinking doesn't work--especially in today's
economy, where lower-level job vacancies just aren't getting
filled. Employee retention has become a driving theme. Companies
that never before considered employees important are waking up and
treating their people better.
And I'm not talking about compensation. Recognition and
appreciation are often what's crucial. And you know what?
Companies with superior service programs also tend to have higher
employee retention. It's simple. When you train employees, you
send a signal that they're important. And they respond to
that.
Entrepreneur:Isn't price what brings customers
into a store?
Tschohl: Competing on price is no way to build a loyal
customer base. Competing on price assures that, in the long run,
the biggest businesses will prevail because they have the deep
pockets to sustain this war.
Entrepreneur:Will customers pay higher rates if you
deliver service?
Tschohl: Disney proves it. Disney's theme parks are
priced higher than competitors--and people are happy to pay Disney
more because to them Disney means service and quality. Any business
can charge more if it excels at service. Yes, to compete in the
world market, you need to figure out how to get things done for
less money than ever before--but if you are extraordinarily good at
service, you can demand and get a premium price from customers.
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