An article on Dis-Un-Empowerment, focused on helping people improve customer loyalty. It shares ideas for improving organizational and personal effectiveness. (can be printed - not for reproduction or distribution, please)
or Using Dis-Un-Empowerment to Build Customer and Employee Loyalty
© Scott J. Simmerman, Ph.D., 2006
Performance Management Company
Taylors, South Carolina
The guru of quality, W. Edwards Deming probably said it best:
"...it will not suffice to have customers that are merely satisfied. Satisfied customers switch, for no good reason, just to try something else. Why not? Profit and growth come from customers that can boast about your product or service - the loyal customer. He requires no advertising or other persuasion, and he brings a friend along with him."
Building loyal customers with service quality is a common competitive strategy for business success in the 1990's. Yet why is it we get service that is often less than satisfactory? Why don't some people seem to care? What really builds customer loyalty and maintains profitability? The answer is simple, obvious, and manageable. Let's illustrate with a few simple stories:
Can I, Really? At a major hotel chain, employees are wearing buttons that say, "Yes I can." I ask the front-desk clerk if she could give me a button and she says, "No, I can't." She said wearing the button was management's policy and the hotel didn't have extras. Caught in a dilemma, she was not able to do what the company or customer wanted her to do. And it is these types of dilemmas that, over time, will drain her self-esteem.
At McGuffey's Restaurants, employees and managers wore buttons saying, "The Answer is Yes." Ask anyone for a button, and they'll give you their very last one, knowing this response is the expectation of top management. This attitude infected the restaurant, with waitresses making a quick run to McDonalds to buy a customer's kid a Big Mac, raising money for charities or driving to the grocery store to buy anchovies for my Caesar salad.
The hotel chain talks about competing on service, even including questions about their "Yes I Can Attitude" on its customer surveys. But people feel frustrated by situations where they can't respond to customer requests quickly and efficiently. McGuffey's, on the other hand, uses the same concept to establish extraordinary levels of teamwork and commitment to customers, helping them build an outstanding reputation for service quality. McGuffey's people are expected to take staff-taught programs in self-esteem and goal-setting.
Fly Me Again, Please. A flight attendant cordially bends the rules so a friend traveling to the same conference can join me in First Class -- after all, the cabin is only one-third full and my upgrade certainly paid for a couple of drinks. She then surprises us by offering my friend a drink and a dinner. She made two customers quite happy by her behavior -- another great service story in the making? Is this another one that we'd both tell others in our training sessions?
Nope. With a landing and crew change in Boston, a new attendant comes on board and rudely confronts my friend in an accusing tone, saying, "You're not supposed to be in that seat, are you?" End result? "We Love To Fly" didn't show, I sit alone in an almost empty front cabin and the airline now has two dissatisfied customers. So far, they have lost a few thousand dollars in sales with my decision to fly their competition, losing many times more than the cost of a couple of drinks and a smile. And we have this story to tell other people.
Most of us have similar stories of people doing not what's right, but doing only what the systems and procedures require. Unempowered employees tend to drive customers away or miss chances to build customer loyalty.
Top performers, the ones who build positive long-term relationships with customers, will often bend rules and make decisions for the long-term good of the customer relationship when necessary. They tend to retain customers and build loyalty.
The answer to service quality improvement is simple and straightforward -- It's people; people dis-un-empowered to make decisions to the benefit of the customer and the company. And dis-un-empowered people will generally make the right decisions!
Dis-un-empowered people do what's right for the business, rather
than doing only what the systems and procedures require.
Why is dis-un-empowerment important?
The well-known Rockefeller University data (1988) indicate that almost 70% of customers leave because of perceived rude or indifferent behavior by an employee, compared to about 20% combined for price and product quality. And an article about Fidelity Investments' recent customer research, reported in the Wall Street Journal (11/27/90), indicates that customers value polite treatment well ahead of investment performance and accuracy of statements for their retention. "At the very top of their list were things like 'People taking responsibility for me' and 'People listening to me.'"
I didn't complain to the airline -- after all, what was there to complain about? But I did write a positive letter about the first attendant and her overall performance. I also took my business elsewhere, something most customers do. We don't complain, we just go away.
Most customers don't complain; 50 percent just go away.
John Halbert, a service quality consultant, talks about the little "pinches" that all of us receive in dealing with organizations. Over time, these little pinches become increasingly annoying and increase the likelihood that the pin will hit the balloon and we will shift to a competitor. The oft-cited TARP research on complaint behavior suggests only 5% of customers with problems will complain to management and that 50% simply go away.
But TARP research also indicates that customers do tend to complain to front-line people about 45% of the time for service-related issues. The right responses at the right time will retain or even build customer loyalty. Thus, complaints to action-oriented people will positively impact customer retention through their responsive behavior.
Why aren't people more responsive? Frank Layton, former basketball coach of the Utah Jazz, once complained to a player not playing to his potential: "Son, what is it with you? Is it ignorance or apathy?" To which the player responded, "Coach, I don't know and I don't care."
Complaining to people who act like they know or don't care tends to insure customer defections. The real cause in most organizations isn't ignorance -- people know how to do the job. It is more likely apathy caused by ineffective management of people or frustration caused by your policies, procedures, and systems.
As we said before, the people who handle service opportunities the best are those most focused on doing the right thing for customers and the business. These people will make decisions, take appropriate risks and take action. And these people are the ones that retain your customers as shown in Figure One.
What is Dis-Un-Empowerment and how do we improve it?
Our notion of Dis-Un-Empowerment fits tightly with the concept of customer retention. If organizations are truly focused on retention, this focus drives a wide variety of desired behaviors and insures that systems and procedures work well. Customer retention is also profitable; companies will boost profits by about 100% by retaining just 5% more of their customers (Reichheld and Sasser, 1990). Thus it makes sense that:
A primary goal of every organization should be the
attraction and retention of customers and employees.
There are two issues to dis-un-empowerment, the organizational ones and the personal ones.
The response of the service provider is based on the structure and systems of the organization. Service providers are the messengers and will tend to reflect the alignment of vision and values in their organization. Dis-un-empowerment requires organizational alignment to allow people to make decisions based on customer needs as they relate to organizational goals.
At the same time, many organizations with structural support are stymied by an apparent unwillingness of many of their service providers to actually make these decisions. We will address some of the factors that underlie this issue as we conclude this article.
Our Service Maturity Model of service quality management is a basic framework to relate service quality to training and competitive strategies. There are three levels of service and strategic focus:
Level One - Systems and Procedures:
Organizational systems and procedures must work effectively and efficiently so that customer orders, questions, and problems can be quickly handled. Sertec, an Atlanta-based complaint monitoring company, finds that resolving a complaint within 24 hours results in 96% customer retention; for each day of delay in responding, there is about a 10% additional loss. Response time is critical to perceived service quality and the structure and systems of the organization must lend itself to rapid responses.
The Service Maturity Model suggests that systems and procedures must exist to process and handle these transactions efficiently and effectively and that initial training must focus on operating systems and following procedures. If systems aren't effective or efficient, consider the costs and the corresponding impacts on response time and employee morale. The costs of fixing systems problems are generally far outweighed by a high return on your investment in people.
Teamwork, as well as a linkage of interdepartmental objectives, is often required since many transactions will cross departmental boundaries. A call to a salesperson about a billing discrepancy, for example, is best resolved quickly on the initial call with the salesperson handling the situation themselves. (If you can't trust your people to do this, get new people.) The goal is to make all of your systems work efficiently and effectively from the customer's perspective.
McGuffey's, for example, shares an elegant example of a systems glitch related to the condiment dishes called ramekins. Company President Keith Dunn was working as an order expediter and had dinners ready to be served, but no ramekins. Given their commitment to service quality, he asked himself why a 25 cent item should be allowed to interfere with the entire dining experience. His next step was to make a public commitment that his restaurants will never, ever run short of ramekins. In fact, if you ask for one, they will give you one free.
To effectively manage the "Process and Handle" Level of Service Maturity:
Level Two - Customer Satisfaction:
The next level of service is focused on meeting customer expectations with training focused on technical and professional competencies. Customers like to interact with people who do more than process and handle transactions. They often require access to technical information and expect good interpersonal and communication skills.
To accomplish these objectives, companies need to share missions, visions and goals. They need to monitor changing customer expectations and modify the delivery of service and product quality to match these expectations on an ongoing basis.
Leadership must demonstrate a consistency in its behavior toward these visions and values, as well as a commitment to them from the top down. A common breakdown in quality management occurs when top managers don't truly understand the issues, costs, and impacts of their behavior and behave in ways that send conflicting messages to the front-line employees and supervisors, as in our hotel example.
To effectively manage the "Satisfy" Level of Service Maturity:
Level Three - Exceptional Service Quality:
Service quality is more than having systems that work and doing what's expected. Service quality must be built on people exceeding customer expectations, which we label "Care" in the Service Maturity Model. And here is where the dis-un-empowerment issues become most obvious.
Organizational dis-un-empowerment issues around systems and procedures linked to decision-making are pretty straightforward. Do people truly feel that they are able to make decisions? Has risk-taking been rewarded (or punished) in the past? Are people praised or are they second-guessed? Has the organization truly gotten people involved in making decisions? And do employees feel a strong sense of ownership and commitment? You can find out by asking. Contrary to common belief, it is not Rocket Science!
Personal dis-un-empowerment issues are less clear.
Astronaut Scott Carpenter gave a nice analogy about walking in space. Years of training, simulations, and practice in weightless conditions as well as hundreds of hours of discussion and preparation did not adequately prepare him for the reality of standing in the doorway of the spacecraft with black infinity in every direction. He thought he could do it, but he froze. Wouldn't you? There are direct parallels to dis-un-empowering people.
The American Society for Quality Control recently reported that while two in three workers said they had been asked to become involved in workplace decision-making, only one in seven felt they had the power to make those decisions. And if they don't feel dis-un-empowered to make decisions, they won't.
Why don't most people feel dis-un-empowered to make decisions? Because they are uncomfortable doing things differently than they have done them before. Most people will resist change. (See Box One). One key is to help these service providers to internalize the personal resources necessary to Service Maturity Level Three.
"The only change people like is the kind that jingles in their pockets."
Note that almost every organization has a few top-performing employees doing exactly what is necessary to build and maintain customer loyalty. They are the people that generally receive most of the letters of recognition and generate the highest profitability. They are the ones that customers would follow if they moved to a competitor. The challenge is to expand the number of people who perform at this level. For example:
Cindy sells jewelry. A few years ago, she thought to send Thank You notes to her customers. The response was most interesting -- she began to get thank you notes for her thank you notes. Cindy did more than $1,000,000 in sales and the owner of the store bought her a mink coat. Her co-workers were actively encouraged to model her system, and the sales of the store have dramatically improved.
Exemplary performers manage roadblocks much more effectively (see our related article on roadblock management - "back" to return) and tend to have clearer perspectives and focus on what your customers require. They also tend to focus on doing the small things that truly make a difference in building a client relationship with the customer. But also recognize that they often bend the rules to do what is right -- thus delivering the highest perceived value.
If organizations want to build service quality, they must have systems that work, must understand customer expectations, and must be willing to let trained people make decisions with few restrictions. Work hard to remove the things that people think are getting in the way of improving quality and service. They will add revenues and build loyalty of the customers.
Simple structural or systems changes do not necessary result in behavior change on the front-line. Changes meant to help workers make decisions are often resisted by the majority and implemented by a minority. Why don't people accept risk and change more readily?
Consider patterns of thinking as one of the keys to improving organizational performance. Our current behavior is influenced primarily by our memories of our past experiences -- a series of positive and negative images or thoughts. Top performers think about past successes and often embellish these memories; poor performers think about failures and tend to embellish them and make them worse than they were.
By understanding the mental aspects of performance and structuring your organization to better manage constructs of mission, vision, goals, and expectations, you can create more positive environments that better support top performance. Change is made easier by a positive image of the future that engages and enlists people in the effort.
Top skiers, for example, see themselves successfully negotiating a race course. This repetition of success helps them develop a positive mindset for the event. Poor performers, on the other hand, often think about previous crashes, thus programming themselves for future failure.
An insurance salesman calculates he earns a $1,000 commission for every sale and that only one in ten sales attempts is successful. While an average insurance salesperson finds selling frustrating because of the high turndown ratio, this one mentally thanks each prospect for the $100 he will receive from their discussion. Imagine thanking every prospect you meet for $100 and the message it conveys to the prospect!
Imagine the attitude and behavior of your billing personnel if they were to (mentally) "thank every complaining customer for $100" when a question was resolved. But isn't a resolved complaint and a retained customer worth at least $100 to your company? This is the type of attitude and thinking that underlies performance of your best people.
Ideas for Customer Care.
Here are some ideas about what you and your organization can do to effectively manage at the "Care" Level of Service Maturity. Many of these ideas are focused on asking for information. Asking invites involvement and commitment.
Your people are your human capital. They are assets that appreciate in value with experience and polishing. And these assets directly impact your profitability and growth by building a growing base of loyal customers that will have many impacts on your business and your future.
Let's end with two quotes that get to issues of service quality, change, and empowerment:
"We cannot become what we want to be by remaining what we are."
Max DePree in Leadership is an Art
"A lot of people have fancy things to say about customer service, including me. But it's just a day-in, day-out, ongoing, never-ending, unremitting, persevering, compassionate type of activity."
Leon Gorman, President of L.L. Bean.
One Last Story:
A customer comes back into McGuffey's needing help. Seems he locked his keys in the car and had only a few minutes to save his child from Day Care Purgatory. A young waiter he didn't know loaned the customer the keys to his new Camero, asking only that the customer, "bring it back before my shift ends at 11:00."
On Thanksgiving, this same restaurant closes, yet most of the workforce come in -- they volunteer to transport and serve dinner to the needy in their communities. They sponsor golf tournaments as fund raisers and do a wide-variety of community development programs.
McGuffey's Restaurants in Asheville NC is an incredible organization in a most competitive industry. Their employee turnover is one fifth the industry average. And with most of the staff knowing hundreds of customers names and preferences, they build personal relationships and loyalty with their customers. And they show steady growth on existing stores using word of mouth for their marketing.
Keith Dunn, their leader, closes the chain for their Spring and Fall team olympics. He's been on the cover of Inc. Magazine as a leading example of small business leadership and has even presented his concepts to Zig Zeigler's staff in Texas.
People are what most businesses are about: the attraction and retention of customers and employees. And personal empowerment is what drives most organization. It's difficult to manage and most difficult to control, but if it can work in a restaurant, it can work almost anywhere.
"DARE TO BE DIFFERENT"
If you think you are beaten, you are,
If you think you dare not, you don't.
If you like to win, but think you can't,
It is almost certain you won't.
If you think you'll lose, you're lost
For out of the world we find,
Success begins with a fellow's will
It's all in the state of mind.
If you think you're outclassed, you are,
You've got to think high to rise,
You've got to be sure of yourself before
You can ever win a prize.
Life's battles don't always go
To the stronger or faster man,
But soon or late the man who wins
Is the man WHO THINKS HE CAN.
Resources and References:
Reichheld, F. F. and Sasser, W. E., Jr. Zero defections; Quality comes to services. Harvard Business Review, September-October, 1990.
(c) Copyright Performance Management Company, 1995. All Rights Reserved.
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