"Quality in a service or product is not what you put into it. It is what the client or customer gets out of it."
What organizations come to mind as leaders in customer service - Southwest Airlines, Federal Express, Disney and Nordstrom? Now, companies come to mind when you think of mediocre service providers? We encounter poor service every day as customers: the restaurant chains, retail stores, and the telecommunications companies that perpetually annoy us with long waits, uninformed personnel and self-serving policies (insert any cellular provider or cable tv provider here). What the first group of companies has in common is that they planned for service excellence from the beginning. Good service is not something they tried to introduce after they were up and running; it is part of their DNA, an essential component of their business model.
These service leaders offer a valuable lesson for entrepreneurs. Business plans typically include details about how to attract customers, but little information about how to sustain and build relationships after acquisition. They often include platitudes like, "We are a customer-centric organization," and "We create value for all of our stakeholders," but seldom present a clear strategy that shows how customers will be retained, nurtured and made progressively more profitable over time.
There are significant financial benefits to articulating and following a strategy of service excellence: lower customer and employee turnover, fewer complaints and returns, greater average purchase, positive word-of-mouth endorsements. But good service costs money, and it is easy to invest in service standards and programs that do not provide a measurable return. The key is to create a clear strategy that links service investments with profit-based outcomes, and to make sure the service strategy aligns with all components of the business plan.
Smaller companies with no formal service strategy frequently appear "customer-centric" - because there aren't many customers, and because the internal service providers tend to be owners or others who are heavily invested in the organization's success. In time, the responsibility for customer relationships will devolve to employees who are less invested and less empowered to take risks, solve problems and spend money on solutions. A formal service strategy acts as a Plan to keep the company true to its vision.
Many of the defunct dot-coms failed because they neglected to think through a retention plan after spending millions on attracting customers. Other companies suffer from chronic customer churn and low profitability because they have not aligned customer expectations with a service strategy.
A service strategy begins with an understanding of the typical customer's lifecycle with the company. It identifies the points at which the customer and company interact, when and how often those interactions are likely to occur, and how they can best be used to advance the customer relationship.
In the book "The Loyalty Effect", author Frederick Reichheld makes the case that the longer customers remain with a company, the more profitable they become. The loyalty effect works because long-term customers have more opportunities to learn about the company (and vice versa), allowing the relationship to become increasingly efficient and productive. But the benefits of loyalty do not occur simply because customers have more experiences with the company over time. To move up the loyalty/profit curve they need to have the types of experiences that will add to their knowledge and influence their behavior. Understanding the customer lifecycle allows the company to plan the right types of Customer Experiences at the right time.
Implementing a Customer Experience Program funnels down from the service strategy defined in your Business Plan. By identifying when and how interactions occur, as well as what they should accomplish (both for the customer and the company), one can work backwards to design a service-focused Customer Experience Program. The service strategy helps define appropriate standards and policies, and also suggests how standards and policies can be supported through hiring practices, training content, research and measurement, business tools, etc.
Many companies make a substantial investment in customer surveys, call monitoring, mystery shopping and other service-related research that generates reams of data reports -- which sit, unread, on the desks of overworked managers. If they had a well defined Service Strategy that is incorporated into the business model, they can make much better decisions from the beginning about what data they should collect and how they should use it. For example, by mapping out the points at which service failures are most likely to occur, the company can create feedback channels that will identify at-risk customers, and service recovery mechanisms to prevent turnover. The service strategy will also suggest what data should be captured to ensure that standards are executed properly and that employees and managers are rewarded for the right outcomes.
Choices of business tools and systems also follow from the service strategy. By defining what an ideal customer relationship should look like, a clear service strategy fills that void, allowing the company to invest in tools and systems that support a well-defined vision.
All of these details do not necessarily go into the business plan - they may go into the marketing plan behind the business plan, or as a formal Service Strategy. What must go into the business plan is a declaration of the role that service will play in the overall offering of the company, and a description of how the service strategy will align with other components of the organization. A picture of what the relationship between the company and customer should look like as it advances through the customer lifecycle must also be in the plan.
Armed with this information, new companies can make service work for them from the outset, and build on it over the long term.
