The Real Cost of Customer Service

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Estimated Read Time: 8 Min.

Recently, a high-powered attorney — who specializes in Employment Law, Non-Compete Defense, Trade Secrets and Partnership Breakups – shared a story about his recent attempt to book a room at a Mandarin Oriental Hotel.  One can guess that the story he shared was not a positive one.  He didn’t rave about their customer service.  He didn’t gush about how his interaction with this luxury hotel brand left him feeling warm and fuzzy.  If they had delivered on their brand promise, I doubt he would have posted anything at all. 

Instead, he wrote, “When I’m traveling, I usually choose a nice hotel based on the gym and reasonably healthy dining options (i.e., grass fed, organic, farm to table).  So when I called the Mandarin Oriental Hotel Group in NYC, I asked if their gym had a cable machine with a pull-up bar.  The person who answered the phone was totally surprised — and somewhat annoyed – by my question. He’d clearly never set foot in the gym. I don’t even think he understood what I was saying when I said ‘cable’ machine. He asked me to hold on and 10 seconds later said “no.. no we don’t have that.”  He was happy to quickly get rid of me.”

He went on to add that his issue with this has to do with business.  He made two points that every business owner and manager should know.

“1. The person who answers the phone can make you or lose you a lot of money. Imagine every day, four or five people like me call the Mandarin Oriental and get lousy, lazy answers to their questions. And, because of it, they decide not to stay there.  At their five-star price point coupled with other non-room expenditures (such as dining, spa, shopping, etc), they’re losing thousands of dollars of revenue per person.  Places like this – that disregard customer service — are just giving that business away. Easily $50,000+ a week. Just by having the wrong people answer the phone.”

“2. Everybody has to know the product or service you sell. How are you going to claim to be a five-star hotel while the person answering the phone doesn’t know what equipment is in the gym or can’t immediately figure that out?  And this doesn’t just apply to hotels. It applies to everything. And especially to anyone and everyone customer-facing.”

His experience brings up several important points regarding customer service.  Just exactly who is responsible for a company’s customer service?  Are they eager to help?  Are they willing to go the extra mile to find out the answer to questions they don’t know or get the help needed?  And just how much should employees know about the products or services of a business?  Can they answer tough questions?   Do they know seemingly small details? 

Every Employee is Responsible for Customer Service

Simply put, everyone at an organization is responsible for delivering customer service. It is not just the people who work in the sales or customer service departments or those who work at offices or stores that interact with customers.  Those who don’t accept their part in delivering excellent customer service need training. 

While many companies have departments dedicated to Customer Service, actual customer service is the responsibility of everyone in an organization, not just those who are customer-facing.  Even those who only deal with other members of the organization are servicing the internal customer.  So everyone plays a role in delivering five-star service.  And those stars are not just related to the hospitality industry.  It’s for every company in any industry.

What Does Stellar Customer Service Entail?

Five-star customer service is the act of going above and beyond to meet and exceed customer expectations. It is about providing a personalized and memorable experience that makes customers feel valued and appreciated.  Here are some of the key elements of five-star customer service:

  • Understand your customers.  The first step to providing five-star customer service is to understand the organization’s customers’ needs and expectations. What are they looking for when they do business with you?  What are their pain points?  What matters to them?  What will surprise and delight them?  Once you understand your customers, you can tailor your service to their individual needs.
  • Be responsive.  Customers expect you to be responsive to their needs and inquiries. This means answering their questions promptly, resolving their issues quickly, and keeping them informed of the status of their requests.  That requires extensive training and frequent mystery shopping to ensure every customer-facing employee is “responsive”… able to respond. 
  • Be helpful and courteous.  Customers should always feel like they are being treated with respect and courtesy.  They should feel valued.  This means being friendly, helpful, and patient. It also means going the extra mile to make their experience as positive as possible.
  • Be proactive.  Five-star customer service is not just about reacting to customer problems. It is also about being proactive and anticipating their needs.  The Ritz Carlton calls it exactly that:  “Anticipatory Service.”  This means following up with customers after they purchase a product or service, offering personalized recommendations, and providing helpful tips and advice.
  • Go above and beyond.  The best customer service experiences are the ones that go above and beyond what customers expect. This could mean something as simple as remembering a customer’s name or offering them a free sample. It could also mean something more significant, such as helping a customer with a difficult task or providing them with a special discount.

The Gold Standard of Customer Service

There are many companies that teach Customer Service.  Their training is what ensures that every employee delivers the same level of service.  For example, the Ritz Carlton has their own training program.  The Ritz-Carlton customer service program is based on a set of 12 Gold Standards, which are:

  1. The Credo.  This is the Ritz-Carlton’s mission statement, which emphasizes providing the highest level of service to its guests.
  2. We are Ladies and Gentlemen serving Ladies and Gentlemen.  Ritz-Carlton employees are always respectful and courteous to their guests.
  3. We are proactive in recognizing and responding to the expressed and unexpressed wishes and needs of our guests.  Ritz-Carlton employees are always looking for ways to exceed their guests’ expectations.
  4. We strive to provide a warm and relaxed atmosphere while offering personalized, attentive service.  Ritz-Carlton employees want their guests to feel comfortable and welcome in their hotels.
  5. We are always prepared to deliver the highest quality of service and products to our guests.  Ritz-Carlton employees are always ready to provide their guests with the best possible experience.
  6. We take pride in our appearance, our surroundings, and our work.  Ritz-Carlton employees are always professional and they take pride in their work environment.
  7. We protect the privacy of our guests.  Ritz-Carlton employees respect their guests’ privacy and confidentiality.
  8. We embrace change to provide our guests with the best possible service and experience.  Ritz-Carlton is always looking for ways to improve its service and it is willing to adapt to meet the needs of its guests.
  9. We give back to the communities in which we live and work.  Ritz-Carlton is committed to giving back to the communities in which it operates.
  10. We continuously improve our service and facilities.  Ritz-Carlton is always looking for ways to improve its service and facilities.
  11. We empower our employees to create unique, memorable and personal experiences for our guests.  Ritz-Carlton employees are empowered to go above and beyond to meet the needs of their guests.
  12. We build relationships with our guests so that they will return again and again.  Ritz-Carlton is committed to building long-term relationships with its guests.

Every Ritz-Carlton employee is trained to follow these Gold Standards in every aspect of their work. That is true of customer-facing employees as well as corporate staff who never see a customer.  This ensures that their guests receive the highest level of service possible, regardless of which Ritz-Carlton hotel they visit.  And it ensures that internal customers receive the same level of service.

Stellar Customer Service even for Pedestrian Products

Some may think that the customer service training for employees of a luxury hotel chain should be more stringent than that of companies that deliver pedestrian products or services.  But that is not so.  Take, for example, the customer service training offered at Zappos.  Zappos, which started out selling shoes online and is now a billion dollar company owned by Amazon, insists that all employees are trained to deliver top notch service.  Here is what they emphasize:

  • Wow the Customer.  Zappos employees are encouraged to go above and beyond to meet and exceed customer expectations. This may mean things like sending handwritten thank-you notes to customers, sending replacement items without requiring customers to return the defective items, or simply taking the time to listen to a customer’s problem and offer a solution.
  • Be Yourself.  Zappos employees are encouraged to be themselves and to let their personalities shine through in their interactions with customers. This helps to create a more genuine and personal connection with customers. 
  • Empower Employees.  Zappos employees are empowered to make decisions and to take action on behalf of customers without having to get approval from a supervisor. This allows them to quickly and efficiently resolve customer issues.
  • Have fun!  Zappos employees are encouraged to have fun at work and to create a positive and enjoyable experience for customers. This helps to create a more relaxed and welcoming atmosphere for customers.

What does that look like in practice?  A Zappos customer service representative may stay on the phone with a customer for hours until their problem is resolved, even if it means going past their shift.  Or a Zappos employee may send a customer a handwritten thank-you note for their business, or for their patience and understanding when resolving a problem.  In fact, a Zappos employee might even send a customer a replacement item without requiring them to return the defective item, even if the customer is outside of the return window.  But at its most basic level, Zappos employees often just take the time to chat with a customer and get to know them on a personal level.

Having won numerous awards for its customer service, including the Stevie Award for Best Customer Service Department and the J.D. Power Customer Service Excellence Award, Zappos’ customer service program has been praised for its focus on customer satisfaction, its employee-centric approach and its flexibility.  At Zappos, there is a willingness to adapt to the needs of its customers. For example, Zappos offers a free 365-day return policy, so customers can return items for any reason, even if they are worn or used. Zappos also offers free shipping on all orders, both ways. 

Zappos’ customer service program is a model other businesses, such as Chewy, have followed.  Chewy is an online retailer that sells all things related to pets, from food to medicines to toys.  Chewy’s staff are known for sending condolence cards and flowers to pet owners requesting a refund on medicines because their pet passed away.  They’ve taken customer service to the next level.

The Real Cost of Customer Service

Training programs like those offered by Southwest Airlines, Chewy, Zappos, Chic Fil A and Ritz Carlton cost money.  Training can be a big expense for any organization, especially if there is high turnover in the organization.  But the real cost of customer service hits the bottom line hardest when there is no training at all. 

Customers like the high-powered attorney mentioned at the start are hard to win over.  One uncaring, poorly-informed employee cost the Mandarin Oriental Hotel Group not just one customer.  He then wrote about it on LinkedIn where he reached about 76,000 of his contacts.  The post was read, shared and commented on by tens of thousands.  His contacts likely travel in the same circles… stay at similar quality hotels… and are also focused on health and fitness. And they want to be treated like a valued customer. Should his post go viral, it could haunt and hurt the Mandarin Oriental brand for years. The cost of that is hard to measure but surely far more than initially calculated.  That costs far more than offering real customer service training.  There’s food for thought.

Quote of the Week

“Customer service training is not an expense, it’s an investment.”
Tony Hsieh, Zappos CEO

© 2023, Keren Peters-Atkinson. All rights reserved.

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