You Can’t Be Good At Everything
- To achieve service excellence, you must underperform in strategic ways. This means delivering on the service dimensions your customers value most, and then making it possible—profitable and sustainable—by performing poorly on the dimensions they value least. In other words, you must be bad in the service of good.
- The primary obstacle to service excellence is not the ambition to be great, but the stomach to be bad. This is an emotional obstacle. It’s difficult to compete without understanding your customers’ needs and how well your competitors are meeting those needs. Fortunately, customers are typically very willing to give you that information. And it’s cheap and easy to ask them for it.
- There is an important distinction between marketing and operating segments. Marketing segments tell us how to identify and communicate with different kinds of customers. Operating segments tell us how to serve customers differently. There is rarely a one-to-one mapping between these segments.
- There are two key ways to improve service: (1) meet your customers’ existing needs more effectively, or (2) convince your customers that they need something you already do well.
- There is a difference between financial models and service models. Service companies need to be “bilingual” to excel.
Someone Has To Pay For It
- Service excellence must be funded in some way. If not, you risk delivering gratuitous service, service features that are donated to customers but never paid for in any way.
- There are four ways to fund a premium service experience: (1) get customers to pay you extra for it, (2) reduce costs in ways that also improve service, (3) improve service in ways that also reduce costs, or (4) get customers to enjoy doing some of the work for you.
- Method 1 is the simplest, at least from a design perspective. Methods 2 and 3 are the most reliable. Method 4 gets the most attention. Extra service fees aren’t inherently good or bad. Their success depends on the specific contract you have with customers.
- A loyalty program is one way to get paid for a premium service experience. True loyalty programs—programs that increase customers’ willingness to pay a premium price—are rare, largely because most loyalty programs are mislabeled retention programs.
- For self-service to be part of an uncommon service experience, customers must prefer self-service to a full-service alternative.
It’s Not Your Employee’s Fault
- The goal of an excellent service organization is to deliver outstanding results with average employees.
- Many companies design service models for employees they don’t have—for a payroll filled with superstars when, in fact, there’s a healthy range of talent and initiative on the team. Capture this reality in the design of the business model.
- Successful employee management systems have four main components: selection, training, job design, and performance management. These components must be internally consistent and aligned with the rest of the service model. There’s no such thing as good or bad selection, for example. The issue is whether it’s consistent with the rest of the employee management system and whether the system is consistent with the rest of the service model.
- IT solutions can help or hurt your employees’ productivity, often in dramatic ways. IT tools that work are sensitive to the employee experience, including how and when data is entered in the rhythm of a particular job. The best solutions are developed in tandem with the role itself—not piled on after a job design is already in place.
- The average service employee is overwhelmed by the increasing complexity of his or her job. When a company identifies a gap like this between operational complexity and employee sophistication, it has two choices: change the people or change the job. In other words, (1) train and hire differently or (2) redesign the job so that your current team can do it.
You Must Manage Your Customers
- Service customers don’t just purchase a service; they also participate in creating it. Among other things, they make the service faster or slower, better or worse, cheaper or more expensive to deliver—for themselves and for other customers. They are active producers (and detractors) of the value they end up consuming.
- For example, a customer at a salad bar affects the quality of his or her meal, whereas patients who skip dental appointments drive up the costs of running the entire practice. When customers are influencing the service experience in ways like these, we call them customer-operators.
- Customers can be more or less involved operationally, depending on your industry and on your specific design choices—for example, how much self-service you build into your model and whether you involve your customers in your improvement efforts.
- The more dependent your service business is on the behavior of customer-operators, the more important it is to manage them successfully. Similar to employee management, the four components of a successful customer management system are customer selection, training, job design, and performance management.
- Not all customer-operators are alike. When compared with each other, they are faster, slower, smarter, pickier, later, earlier, or more or less prepared to perform their operational roles. This diversity increases the cost and complexity of running a service business.
- Assume that you don’t know exactly how your customers are affecting your operations or how well your efforts to manage them are really going. Reframe any certainties as hypotheses that need confirmation. Test them. Fortunately, the data you need is usually right at your fingertips.
Now Multiply It All By Culture
- It’s not enough to design your service model right. Uncommon service is achieved when great organizational design meets a culture of service excellence. A basic way to think about it is this: service excellence is a product of design and culture.
- The right culture is not a universal concept. Your right culture is a distinct asset that must be consistent with your organization’s service model.
- One way to understand culture is to break it down into its relevant components. We like Edgar Schein’s culture framework, which loosely divides a culture into artifacts, behaviors, and shared basic assumptions. As Schein argues, to change behavior (a company’s typical goal), you have to change the way people think. To change the way people think, start with the underlying assumptions that drive that thinking.
- Great service organizations tend to do three things well in their relationship with culture. They have deep clarity about the organizational culture they must cultivate in order to compete and win. They are effective in signaling the norms and values that embody that culture. And they work hard to ensure cultural consistency, alignment between the desired culture and organizational strategy, structure, and operations.