Full Service When it comes to customer service, actions speak louder than words.

For more than a decade, American businesses have promised--oftenin loud advertisements--to deliver top-notch customer service. Butgood as that sounds, it's not reality, says John Tschohl,author of Achieving Excellence Through Customer Service(Bestsellers Publishing).

"The general level of service remains poor. Top managementthinks they are doing great--but customers know otherwise,"says Tschohl.

And those customers are more demanding now than ever. "Thecompanies that don't deliver service will be crowded out of themarketplace," warns Tschohl, owner of Bloomington, Minnesota,Service Quality Institute, a training company that has put onprograms for businesses as diverse as Eastman Kodak and MillerBrewing.

But the good news is that "the fastest, least expensive wayto make more money and grow your business is to become a serviceleader," says Tschohl.

Just how can a business deliver excellent service withoutdenting its profit margins? Tschohl tells exactly how.

BIZ Experiences:What's the state of customer servicetoday?

John Tschohl: Ironically, we've moved into a serviceeconomy where the only thing lacking is service. Some 95 percent ofall business owners believe they rate at least a 9 on a scale of 1to 10 in customer service, but their customers wouldn't ratethem anywhere near that.

For many years, customers accepted bad service as a matter ofcourse, but now they are much less tolerant. With customerexpectations much higher, it behooves companies that want to stayin business to be on the leading edge and to be service-driven intransactions with customers. The least expensive way to make moremoney and grow faster is to be perceived as a service leader.

BIZ Experiences:To deliver better service, don't youneed to hire more employees?

Tschohl: That's one of the two biggest myths aboutservice. What you need instead is to get the employees you haveworking on eight cylinders instead of two. The other big myth isthat to give good service, you've got to pay employeesmore.

BIZ Experiences:What's an example of a company thatreally understands service?

Tschohl: Wal-Mart does two things very differently fromother mass merchandisers. It truly values its employees, and ittruly values its customers.

Wal-Mart is leanly staffed, and it charges low prices, but itstill has created a culture that believes in the importance ofreally helping its customers. Before Wal-Mart, customers expectedno service from discounters. Sam Walton changed all that--and hedid it without raising prices, without adding staff, and withouthurting profits.

Wal-Mart last year achieved sales of $338 per square foot,compared with Kmart's $185. They sell the same merchandise atsimilar prices, but Wal-Mart is winning--and the difference is itsculture of valuing employees and customers.

BIZ Experiences:What can a small business do to meettoday's demand for fast, efficient service?

Tschohl: There are two crucial points to always keep inmind. First, when customers come in or call, satisfy them asquickly as possible so they can go about their day's business.Second, really listen to the customer and find out what he or shewants and needs and by when.

What irritates customers? It's not doing basic stuff--havinga caring attitude, following through on promises, taking the littlesteps to help customers buy what they want and get out of the storefaster. You don't need a Ph.D. to do it. What you need is amotivated staff with good interpersonal skills.

BIZ Experiences:What's the first step in deliveringbetter service?

Tschohl: The most critical element is to involve allemployees in a service strategy. This needs the CEO's support.The trouble is, so many top managers are so busy doingadministrative tasks that they never look at what their employeesdo. They're totally unaware of a customer's-eye view oftheir business.

BIZ Experiences:Are you saying a customer servicephilosophy starts with the CEO?

Tschohl: It's extremely important to have commitmentto service be a strong message from top management. But the CEOcannot just send out a memo saying "This is the Year of theCustomer." Employees will forget that almostimmediately--unless there is constant reinforcement from thetop.

BIZ Experiences:Why do businesses need to traineverybody, even employees who don't have customercontact?

Tschohl: Today, you never know who the customer willinterface with--it can be employees in sales, shipping, accounting,even product development. That's why a service program cannotbe segmented into a special department or limited to certainemployees. It has to be everybody's job.

Worse, many employees just don't know that their tone ofvoice and attitude communicate a lack of caring to the customer.People aren't born knowing how to deliver good service,although management often acts as if they are. Customer service isa learned skill.

BIZ Experiences:What are the basics?

Tschohl: In our seminars, we teach six steps fordelivering excellent service. First is to build the employee'sself-esteem. The better employees feel about themselves, the moreeffective they are in a service arena. Within seconds, customersknow if this is a positive employee. They can tell on the phone, inperson, even by mail. For the boss, this means letting employeesknow how much you value them and how important they are to thebusiness' success.

The second step is to practice being courteous with customers.We cannot be self-centered or preoccupied with our own work. Wehave to show courtesy in every contact with customers, whetherit's in person, on the phone or by mail.

Third, give customers positive communication, both verbally andnonverbally--smiling, for instance, and telling them how much youvalue their business.

The fourth step is to perform for the customer. You've gotto get the job done right. Being friendly doesn't matter if youfall down on quality.

The fifth factor is listening carefully. Pay attention to whatthe customer wants.

The last step is to learn and grow in your job. Learn about thecompany, its products and its customers. Customers like dealingwith people who know what they're doing, and managers need toencourage workers to keep learning and getting better at theirjobs.

BIZ Experiences:Isn't doing all thatexpensive?

Tschohl: If you think of how much it costs to stay openevery day--just overhead such as lights, rent, payroll--the cost ofhaving a customer walk in or call and not get good service is veryhigh. It doesn't take extra time or money to be friendly. Butit takes considerable time and money to handle complaints andconstantly replace lost customers.

Bottom line: A business--even one that can't affordextensive advertising--can still differentiate itself fromcompetitors on the basis of exceptional customer service.

BIZ Experiences:You're saying customer servicedirectly contributes to profitability?

Tschohl: I'm saying customer service is a matter ofsurvival. Think about this: It costs five to 10 times more money toget a new customer than it does to keep the customers you alreadyhave. Most companies spend substantial amounts on winning newcustomers but rarely spend any time or money trying to keep thecustomers they already have. Just a small investment in making themfeel precious and wanted will give you a lot of business.

BIZ Experiences:What should we do with the customer whohas a complaint?

Tschohl: This is a very delicate, very importantinteraction. If an angry customer isn't satisfied, and it'sa big-ticket purchase, there's a 91 percent chance he or shewill never do business with you again. Even if it's a smallpurchase, 63 percent will never do business with you again.

On the other hand, there is a potentially huge payoff insatisfying that angry customer. I've seen new research thatshows if you can cut your defection rate--that's customers whoget angry and never come back--by just 5 percent, you can increaseprofits by as much as 100 percent. That's proof of exactly howprofitable good service can be.

BIZ Experiences:So how should an angry customer behandled?

Tschohl: We've developed a six-step program. Thefirst step is to listen carefully and with interest to what thecustomer is saying. The second is to empathize. Put yourself in thecustomer's place, and use positive strokes to let the customerknow you appreciate his or her business.

Third, ask questions in a mature, nonthreatening way--and makethem questions that require the customer to think about his or heranswers. That will cool the customer down; a person can'tlogically respond to questions in a highly charged emotionalstate.

The fourth step is to suggest one or more alternatives toresolve the customer's concerns. Number five: Apologize withoutblaming anybody. Sometimes we'll try to put the blameelsewhere--on another employee, the owner, a third-party business.Don't do that.

Finally, solve the problem. Identify solutions, or find somebodywho can. It is very important the customer walk away feeling he orshe came out on top, even if this costs you money. If a customerwalks away unhappy, 87 percent of unhappy customers will tell theirstory to nine or 10 other people. Thirteen percent will tell asmany as 20 other people. What will that negative word-of-mouth doto a business?

Follow the six steps, and you'll have a satisfied customer.Typically, however, employees aren't trained in these steps.When an angry customer comes in, the employee just wants to get ridof the customer. If that happens, you'll never see thatcustomer again--and you may not see the friends he tells,either.

BIZ Experiences:Can a business justify traininglower-level employees in service--particularly when many of themare likely just short-term hires?

Tschohl: Customer service is like cleanliness: Bothrequire daily attention. The difference is that a companydoesn't say "Let's not clean the floors today.Customers will just come in and dirty them again." Butcompanies do say "Why train employees? They're just goingto leave."

That thinking doesn't work--especially in today'seconomy, where lower-level job vacancies just aren't gettingfilled. Employee retention has become a driving theme. Companiesthat never before considered employees important are waking up andtreating their people better.

And I'm not talking about compensation. Recognition andappreciation are often what's crucial. And you know what?Companies with superior service programs also tend to have higheremployee retention. It's simple. When you train employees, yousend a signal that they're important. And they respond tothat.

BIZ Experiences:Isn't price what brings customersinto a store?

Tschohl: Competing on price is no way to build a loyalcustomer base. Competing on price assures that, in the long run,the biggest businesses will prevail because they have the deeppockets to sustain this war.

BIZ Experiences:Will customers pay higher rates if youdeliver service?

Tschohl: Disney proves it. Disney's theme parks arepriced higher than competitors--and people are happy to pay Disneymore because to them Disney means service and quality. Any businesscan charge more if it excels at service. Yes, to compete in theworld market, you need to figure out how to get things done forless money than ever before--but if you are extraordinarily good atservice, you can demand and get a premium price from customers.

Contact Sources

Service Quality Institute, fax: (612) 884-8901, (http://www.customer-service.com).