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How providing internal support for excellent service promotes customer retention Featured

9:40am EDT January 27, 2012
How providing internal support for excellent service promotes customer retention

When Harlan Platt saw a sign for a free safety deposit box at the bank next to his, he went into his bank and asked his bankers to match the offer. When they told him they were unable to do so, Platt took all of his business to the other bank.

Smart Business spoke with Platt, a professor of finance at the Northeastern University College of Business Administration in Boston, about how empowering employees to deliver excellent service is key to retaining satisfied customers.

Q: How do you view world-class customer service?

I would describe it as when you’re finished, it’s been painless and it may even be pleasureful.

It can be something that is not pleasureful, but you feel good afterward.

The consumer knows it because it’s so exceptional, it’s so unusual, it’s (such) a deviance from most experiences that it just stands out in the same way that when you have a good glass of wine you say, ‘Oh my god, now I see why people pay for expensive wine!’

You have to empower. Obviously, if people are not empowered, they can’t do anything.

I don’t expect companies to cut their own throat. But when a longstanding customer walks in, I would have expected the manager (at my old bank) who I spoke to to say, ‘But you know, let me get on the phone and call some people and see what I can do.’ And then call me back and say, ‘I’ve got it for you.’ That’s where I think it’s not just the empowerment, I think it goes back to the hiring function — who you hire.

Q: How do you hire to ensure excellent service?

If you hire people who are ‘people people,’ if you hire people who want to do a superior job, if you hire people who go home at night and feel good because they helped somebody else, then you can have an accomplished (team). You can empower people as much as you want, but if you employ people who are very ... solipsistic, thinking mostly of themselves, it’s not going to happen. They have to extend themselves. I think that’s really what you’re talking about, is an individual extending themselves to make the product/service of a company better suited to the needs of a customer.

You don’t hire 60,000 people and insist or ensure that the ones you are hiring are ‘people people.’ It just can’t be done; it’s a whole different mission. By contrast, if that hiring had been done, say, not at a regional level but at a store level, even a big firm ... could pull it off.

You and I both have been in situations where the person you’re speaking to is nasty, makes you feel uncomfortable, tries to make you embarrassed for even asking. That’s not a good person to hire. And I think companies can inform their hiring process or train their hiring process to weed (them) out.

Too many companies say, ‘We’re going to hire 60,000 people. That’s the goal,’ not, ‘We want to hire 60,000 great people who are going to provide superior customer service.’

Q: How does delivering superior service impact customer loyalty?

Simple: They care about me. It’s just that one sentence. They care about me. I’m not just a number, I’m not just an account, I’m not just an individual who walked in. They care about me.

I had done a transfer on my online banking with (my new bank) and I think I did it twice, and one account was short and then a check didn’t clear. So I called up and I said, ‘I made a mistake and you charged me $35.’ She said, ‘I’ll change that. I’ll fix it, don’t worry.’ That’s very nice. I know one thing for certain, if I had done that at almost any other bank, they would have been very sympathetic and then they would have hung up the phone. With her, I didn’t have to fight or argue, I simply said, ‘I made a mistake and you charged me $35.’ And immediately they said, ‘No problem.’

Q: Can delivering top-notch service affect pricing?

Stonyfield Farm is a company (that) talks to its consumers and says, essentially, ‘We’re looking out for you. We’ve moved away (in the Stonyfield Farm case) from hormone-ingesting cows, going back to the old days.’

By separating itself from the pack ... it owns its brand.

What they own is a niche, and that allows them premium pricing. So if you go to the supermarket, there is nobody that can deliver the product that Stonyfield is delivering. My wife buys it because this hormone-based milk is now an association of tumors in women. She pays $3.69 for the large-sized yogurt that’s Stonyfield Farm, and the store brand is on sale for $1.49 and it’s regularly priced at $1.69. That’s a premium price.

Of course, Stonyfield doesn’t sell as much and they have higher costs. And buying milk where the cows don’t use hormones, that affects their output and so the price is presumably higher. So the higher price is somewhat justified by these cost factors, but I think your point is better taken, that they can premium price because they own the niche.

HOW TO REACH: Northeastern University College of Business Administration, (617) 373-3232 or www.cba.neu.edu.