Customer Service Building Organizations with Service Culture, Focusing on Customer Experience and Business Outcomes October 24, 2018 Cyprus

John Tschohl Service Strategist Service Quality Institute The Service Strategy

• A Competitive Strategy • Eat or Be Eaten • Almost Impossible to Copy • Crush the Competition or Be Crushed

// Customer Experience and Financial Results Principles

• Value, train and develop people - Everyone • Focus on the total customer experience • Master empowerment • Eliminate costs - pass savings onto customer • Eliminate stupid rules & policies • Reduce Friction • Dramatically improve speed • Master operational excellence like Amazon • With every slide look for principles

// Customer Experience and Financial Results What is the source of your competitive advantage?

“Creating a customer experience superior to anything my competitors can create.”

Jeff Bezos, Amazon Steve Case, AOL Time Warner Jerry Yang, Yahoo

// Investing in Customer Service and Reducing Costs Steps to Achieving Awesome Service

 Creating Customer Friendly Systems, Policies & Procedures  Master Speed – Become Another Amazon  Reducing Costs - Stupid Policies - Under Performing Employees - Too many employees  Training Everyone on Customer Service every 4 Months with a NEW Program  Building a Leadership Team Focused on a Service Strategy

// Eliminating Rules and Procedures Are your Employees Trained on Policies and Rules Or Principles?

// Eliminating Rules and Procedures Amazon.com “Our number one goal is to be the earth’s most customer centric company”

Jeff Bezos, CEO Amazon.com

th  American Customer Satisfaction Index 8 year in a row ranked Amazon #1

 UK Customer Care Satisfaction Index by Institute of Customer Service 5th time in a row ranked Amazon #1

 Ranked #1 in LinkedIn’s 2018 Top Companies. Ranks the most sought after places to work for professionals in the US

 Harris Poll annual Reputation Quotient surveys over 25,000 consumers on workplace environment to social responsibility, 3rd year in a row ranked Amazon #1 // Customer Service As a Branding Tool Amazon

 Net Sales: $177.9 billion in 2017 up from $136 billion in 2016

 Sales up 31% - $41.9 Billion

 Chat, email or phone

 Exceeded 100 million paid Prime members globally

 566,000 employees

 Past 21 years stock up 98,000%

 Stock price up 270% over 3 years and 103% in past 12 months

// Customer Service As a Branding Tool • 480 million products • Jeff Bezos owns 20% collects $81,800 salary & no bonus. Net worth $160 billion. World’s Richest person • Leaves 1 seat open at conference room – occupied by their customer. “the most important person in the room.” • “The No. 1 thing that has made us successful by far is obsessive , compulsive focus on the customer.” • “Corporate America – either innovate or Jeff Bezos will do it for you.” Forbes “There are two kinds of companies: Those that try to charge more and those that work to charge less. We want to be the second”

Efficiency – cheapness is as much a part of the Amazon culture We dramatically lowered prices, further increasing customer value. Word of mouth remains the most powerful customer acquisition tool we have, and we are grateful for the trust our customers have placed on us. Repeat purchases and word of mouth have combined to make Amazon.com the market leader. We will continue to focus relentlessly on our customers We believe the principle competitive factors in our retail business include selection, price, and convenience, including fast and reliable fulfillment We maintained a dogged focus on improving the shopping experience  Sunday Delivery  54 million memberships US 64% of US households  Cost $99 a year Members spend $1100 vs $600 non-members  Amazon Prime Now – One hour delivery in 5,000 Cities  $7.99 or FREE 2 hours 10 AM to 10 PM Drones

Amazon is developing the technology to use drones to deliver packages in 30 minutes or less

Amazon - Speed

“If you want to do more of something make the friction less. If you want to do less of something make the friction more”

Jeff Bezos, CEO

// Customer Service As a Branding Tool Less Friction • 24/7 • Live people answer phone • Return calls in 1 second • Never say no • 12 addresses & 13 credit cards • Delivered to my door Click here: How the Amazon Warehouse Works Financial Results  May 2003 Invested 9 Service Leaders  $1,000 each  September 30, 2018 Results $96,355  Amazon $64,096  Home Depot $9,846  Costco $9,161  TD Bank $4,744 Used to outperform Amazon while Commerce Bank  Southwest Airlines $4,130  Walmart $2,323  JetBlue $1,394 Winter Snowstorm February 2007  GE $660 Greed, Waste  Dell $475 Michael Dell Retired 2004 Kevin Rollins new CEO Amazon Service Leader Lessons

• Everything Built Around Speed. • Everything Built Around Great Service • Awesome at Service Recovery. • Incredible at the Customer Experience. • Always Focusing on the Customer. • Understands Technology. • Exceptional at Empowerment. • Word of Mouth Advertising What are 3 things you can do immediately to improve your level of customer service that you learned from Amazon?

1. ______

2. ______

3. ______“Going through the motions of providing service is one thing. Exceptional, Noticeable, Unusual service with speed is quite another.” JOHN TSCHOHL

// Hiring and Developing Service Employees Creating a Service Culture

1. Vision as a Service Leader not as bank, retail, health care or government 2. Use technology to drive business 3. Create customer friendly process and procedures 4. Effectively, build and develop employees 5. Train all employees

// Bringing Customer Experience to the Next Level Creating a Service Culture

6. Customers value exceptional service 7. Demand excellence – Compensate 8. Value managers, employees and customers - invest in them 9. Demand leaders make decisions 10. Track results through revenue 11. Service Strategy dramatically impacts your revenue, image, brand and market share 12. Be relentless

// Bringing Customer Experience to the Next Level Customer Service Leader

Apple

Steve Jobs

Tim Cook

// Case study: Apple Angela Ahrendts

“If you’re going to employ people anyway, why not make them the differentiator? They are not a commodity.” Senior Vice President Retail – Responsible for strategy, real estate & development and operations of Apple’s physical stores, online store & contact center

// Case study: Apple Angela Ahrendts

Ranked 25th most powerful woman in world Burberry July 1, 2006 CEO UK Rose value from $2.6 billion to $9 billion Highest paid CEO in UK 2012 $26.3 million Earned over $70 million at Apple 2014 - More than Tim Cook

// Case study: Apple Angela Ahrendts

Believes the key to Apple’s future is not just marvelous products, but also engaging and energizing its nearly 66,000 employees in 36 countries

// Case study: Apple Apple

June 30, 2018 3rd quarter $53.27 billion – Net profit $11.52 billion 52.2 million iPhones sold in quarter International 65% of sales September 30, 2017 yearly revenue $229.23 billion – Net profit $48.35 billion #1 Fortune World’s Most Admired Companies #1 Brand in World

// Case study: Apple Today Apple is the most profitable retailer on the planet, averaging some $7,000 in revenue per square foot (compared with $156 at Penney’s, $194 at Kohl’s, $171 at Macy’s, and $474 Nordstrom's)

Apple’s Fifth Avenue Store generates over $35,000 per square foot

// Case study: Apple Apple becomes world's first company worth $1 trillion • Stock hit a value of $207.39 a share • Apple is among the most widely held stocks in the world • It makes more money and pays its owners - the shareholders - more than any other public enterprise on the planet • The iPhone launch on June 29, 2007 turned Apple into a financial juggernaut ... That year saw Apple's market value climb from $72 billion to $173 billion. It reached $500 billion in 2012 and then $600 billion in 2016.

// Case study: Apple Greeter Apple Store Manhattan

// Case study: Apple The goal was to get people who were creative, wickedly smart, and slightly rebellious.

“Under Steve Jobs, there’s zero tolerance for not performing”

CEO Tim Cook

// Case study: Apple Steve Jobs never settled for anything but the extraordinary

• Business guru Jim Collins likened him to the “Beethoven of business.” • Silicon Valley billionaire Larry Ellison dubbed him “our Picasso.”

// Case study: Apple Tim Cook, CEO Apple

“If you believe the most important data points are people. You want to push the people who are doing great. Any you want to either develop the people who are not or, in a worst case, they need to be somewhere else”

// Case study: Apple Apple Stores

• 503 Stores • 36 countries • More employees per sq ft • Call you by name • Always will be approached • Never talked down to. • Employees love their job

// Case study: Apple Apple – Steve Jobs/Tim Cook

What are the two ideas you learned that you can leverage to make you more effective? 1. ______

2. ______

// Case study: Apple Remember Me

1. Indifference 2. Fear 3. Lack of Training Remember Me

Remembering your customers and clients is the highest level of customer service  It carries more significance than any other word Remember Me How to Make More Money with First Class Service

7 employees 1973 – Commerce Bank 2007 10,000

40 employees July 29, 2010 Metro Bank 2017 3,000 The average American bank branch grows deposits at a rate of $1- 2 million for branch per year

Commerce Bank grew $18 million annually

Metro Bank is growing $103 million per year, per store this is 50-100 times faster growth

Neither spent any money on advertising – Word of Mouth • 7-Day Branch Banking • 100+ Locations in Metro London • Opened in 2010 with 4 branches • Initial Capitalization of 75 million (euro) HOURS Monday Friday 8 AM 8 PM Saturday 8 AM 6 PM Sunday 11 AM 5 PM

Metro Bank UK closes 3 days a year.

Open 78 hours a week

That’s because they are in the account opening business, which means taking business away from the competition Close

All calls in call center answered on the third ring by live person seven days a week 44- 20-3402-8312 Customer toilets in branches Open 10 minutes early and close 10 minutes late

Join the Revolution New Accounts

 Average US branch do well to open 25 new accounts a month

 Commerce opened around 300

 Metro’s branches each adding 750 per month

 Over 1,418,000 retail and business accounts

 Gained 302,000 new customers 2017 and 201,000 first 6 months of 2018

 Spend NO money on advertising Metro Bank June 30, 2018

 Total deposits have exceeded $17.7 billion

 Total loans have exceeded $15.4 billion

 Total assets $24,579 billion

 59 Metro Stores, growing at 1 + per month

 Cost $2.92 million to open a new store

 Betting that speed and convenience make up for lower interest rates Tenth Anniversary July 29, 2020

“Will grow to $39 billion, 100 stores and 2 million accounts” Is this what your lobby looks like? 2023 Targets

Deposits $69.7 -76.7 Billion Stores 140-160 How Do You Motivate Employees to Care?

A. Create Emotional Impact B. Focus on Skills and Techniques C. Personal Growth D. Handling Complaints and Irate Customers E. Teamwork and Inter-Employment Communication

// Motivating and Retaining High Performing Employees Designing A Training Strategy That Works

1. Fun and entertaining 2. Focus on basics 3. Quality packaging 4. Experiential learning 5. Personal development

// Motivating and Retaining High Performing Employees CREATE A SERVICE CULTURE

Total Work Force Culture Change 10 9 8 Strategic Focus 7 All Level of Management 6 5 4

3 Typical results 2 without 1 reinforcement

1- 4 5 - 8 9 - 12 13 - 16 17 - 20 21 - 24 25 - 28 29 - 32 33 - 36 37 - 40 41 - 44 month months months months months months months months months months months // Motivatings and Retaining High Performing Employees SQI DisruptiveTechnology

Disruptive Product Disruptive Business Model

Changes Attitudes and Behaviors Teaches the skills/fundamentals of customer service Improves employee morale and teamwork Drives dramatic increases in revenue

// Motivating and Retaining High Performing Employees SQI Process

1. Something new every 4 months 2. Fresh 3. Different 4. Short interventions 5. Onsite facilitation - Train the Trainer 1. Enthusiasm 2. Peer Respect 3. Customer Service Role Model

// Motivating and Retaining High Performing Employees Measure Behavior

• Measure soft skills • Terminate non performing employees • Sometimes SQI fertilizer does not work • If no behavior change send to competitor • Do you really believe you can change attitudes and behaviors with one magic program? • A university degree takes 4 years. Must pass tests for each course.

// Motivating and Retaining High Performing Employees

SPEED Speed means dramatically reducing the amount of time needed to complete any task by altering such factors as your mindset, empowerment, and organizational policies and systems. Culturally and Socially Speaking

It is not in our nature to think and act with Speed. Even with established deadlines, we tend to wait until the last moment to complete our tasks. Speed does not forgo quality for the sake of finishing faster.

Speed shows everyone you can over-deliver on your promises INTERNAL BARRIERS Your mindset and attitude INTERNAL BARRIERS Empowerment INTERNAL BARRIERS Follow Through INTERNAL BARRIERS Accountability “Empowerment is giving employees the authority to do whatever it takes, on the spot, to take care of a customer to that customer’s satisfaction not to company's satisfaction.”

John Tschohl

// Empowerment and Service Recovery: Costs or Investments? Empowerment Fears

1. ______

2. ______

3. ______

// Empowerment and Service Recovery: Costs or Investments? When your employees have empowerment it gives them more benefits than they even expect

// Empowerment and Service Recovery: Costs or Investments? Empowerment

You will never be a service leader without empowerment

// Empowerment and Service Recovery: Costs or Investments? I’m Going to be Rich!

Empowerment gives you permission to appease angry customers with a refund, gift certificate, or merchandise. It does not grant permission to give away a bunch of free stuff to family and friends. That is not empowerment. There’s a more technical term for that. It’s called stealing!

Directly profiting from a customer is stealing.

// Empowerment and Service Recovery: Costs or Investments? Stealing Just imagine what you could do with an entire workforce of empowered employees ready to do whatever it takes to succeed.

// Empowerment and Service Recovery: Costs or Investments? Making Empowerment Work

✓ Recognition

✓ Celebration

// Empowerment and Service Recovery: Costs or Investments? “Half the money we spend on advertising is wasted,…

… and the problem is we do not know which half.”

Lord Leverhulme British, Philanthropist, Founder of Unilever

// Empowerment and Service Recovery: Costs or Investments? Empowerment is NOT about breaking the rules but bending them to keep the customer happy

// Empowerment and Service Recovery: Costs or Investments? Empowerment

Millions, and millions and millions and millions of over happy customers

// Empowerment and Service Recovery: Costs or Investments? Indispensable and extraordinary employees set goals and work tirelessly to achieve them. They don’t sit on the sidelines and hope that success comes to them.

// Developing Indispensable and Extraordinary Employees The Real Cost of Losing Customers

 68% of customer defection takes place because customers feel poorly treated

 95% of people who have a bad experience do not complain

 13% tell up to 20 other people, while a satisfied customer tells only five other people

 It can cost five times more to buy new customers than retain existing ones

 1% cut in customer service problems could generate an extra $2 million in profits for a medium-sized company over five years.

// The Cost and Value of Retaining Unhappy Customers Service Recovery

Making things right when they go wrong. Good service recovery takes place at the front-line or it

solve customer problems.

// Empowerment and Service Recovery: Costs or Investments? To take a customer from hell to heaven in 60 seconds, you must move heaven and earth.

// Dealing with Difficult Situation and Fixing Mistakes 1. Act Quickly

The employee at the point of contact best implements service recovery. Avoid moving problems and complaints up the chain of command. Dealing with difficult situation and fixing mistakes

// Dealing with Difficult Situation and Fixing Mistakes 2. Take Responsibility

• Take responsibility no matter who is at fault. • Sincerely apologize. • Don’t place blame. • Thank the customer for pointing out the problem.

DON’T make excuses or lie to cover a mistake. DON’T point out a customer’s misunderstanding. DON’T pass the blame off to another employee or the organization.

// Dealing with Difficult Situation and Fixing Mistakes Policies and Procedures

When a customer approaches an employee with a complaint, the response “We have a policy” can often pour gasoline on the fire.

// Dealing with Difficult Situation and Fixing Mistakes 3. Be Empowered

➢ Gives those who work with customers the authority to do whatever it takes to ensure customer loyalty. ➢ Empowerment is the backbone of service recovery. ➢ Tells customers that you will put them first. ➢ Empowerment constrained by policy is really NO empowerment.

// Dealing with Difficult Situation and Fixing Mistakes 4. Compensate

Give the customer something of value. Every organization has something of value it can give to a customer who has experienced a problem.

What do you sell or provide as a service that costs less than the value it has in the eyes of your customers? // Dealing with Difficult Situation and Fixing Mistakes Handling Irate Customers

1. Listen carefully 2. Put Yourself in your customer’s place 3. Ask questions that address their concerns 4.Suggest alternatives that address their concerns 5. Apologize without blaming 6.Solve the problem quickly and efficiently

// Dealing with Difficult Situation and Fixing Mistakes Insert Irate Customer Service Vi. Handling Irate Customers

1. Do not let your ego get hooked 2. Always be polite 3. Always act professional 4. Be calm 5. Do NOT let the Power of your Position go to your head

// Dealing with Difficult Situation and Fixing Mistakes Bad word-of-mouth can sink you faster than that iceberg sank the Titanic. Social Media becomes viral

// Empowerment and Service Recovery: Costs or Investments? Transparency - Jeff Bezos

“We’re in the midst of a gigantic transition, where customers have incredible power as a result of transparency and word of mouth. If used to be that is you made a customer happy, they would tell five friends. Now with the megaphone of the internet, wherter online customer reviews or social media, they can tell 5,000 friends.”

// Dealing with Difficult Situation and Fixing Mistakes Someone is going to be promoted. It might as well be YOU.

// Motivating and Retaining High Performing Employees Your unconscious mind doesn’t know the difference between fact and fiction. It takes whatever you say at face value.

// Motivating and Retaining High Performing Employees Self-imposed limitations are the biggest barriers to your success.

// Remove Self-Imposed Limitations Self-Concept

The greatest limitations you face are self imposed

If you don’t control what you think about yourself, somebody else will.

One’s attitude, not aptitude, is the chief determinant of success.

// Remove Self-Imposed Limitations “We have to respect our customers. Second, you have to learn to love them, eventually you will adore them.”

Stanley Marcus Free e-mail newsletter in English at www.customer-service.com

John Tschohl President Service Quality Institute 9201 E. Bloomington Freeway Minneapolis, MN 55420 USA

Facebook: www.facebook.com/johntschohl Twitter @johntschohl LinkedIn: www.linkedin.com/in/johntschohl Spiros Trivolis Greece/Cyprus [email protected] [email protected] www.JohnTschohl.com