The Cost of Service

This week I’ve been living out how the level of service affects your business and business costs.

Personally, I’m in the middle of a whole-house renovation. Much of the work my wife and I are doing ourselves, but we hire others for things that are either too cumbersome or require special equipment. This week our replacement windows arrived, and the vendor attempted to install them. Without going into this too much, I knew these were not installed correctly even though the installer said they were. When another company technician arrived, he agreed with me and tried to “patch” the mistakes. When his boss’s boss arrived (who happened to be in town for a trade show), he acknowledged that none of the 17 windows were put in correctly and at least 5 didn’t even fit correctly.

The immediate costs associated with this are reordering the correct sizes, a second day of install labor to redo both the inside and outside of every window, new trim for each of the windows, and replacing our cedar shutters that were dropped and broken.

Yelp! However, there is always a higher cost of service. Consider the Yelp effect. Many people looking for a service company, restaurant, or other business turn to this or other consumer-review sites to see the experiences of others. I know from my experience in restaurants that these sites usually create a skewed image of the business since generally only the highly motivated take the time to post.

Highly motivated can mean a really great experience, a really bad experience, or receiving some incentive for posting the review. Most people will have an experience in between. Think about it: you go to dinner, the food is great, the service is friendly, you pay and leave. That is all I expect when eating out. Who jumps online after a meal and say, “This place met all my basic expectations.”

Motivating Reviews: So, what would incentivize someone to review? Did you make special accommodations for the customer? In a retail or other business, this could include helping them load their purchase, special ordering or drop shipping something out-of-stock, or spending extra time to explain a product or feature. These are the extra service touches that excite people and make them want to tell others about your business.

On the other hand, if your customer encounters a rude or unhelpful employee, can’t get enough information, or ends up with a wrong or damaged product, that experience will also color their perception of your business overall. These type experiences are what push customers to speak negatively about your business to others or stop being your customer entirely.

You may also choose to offer something of value in exchange for the review. I created a promotion once where we asked our email list to provide a Yelp review. We’d then email a “next-visit” coupon to anyone who clicked the link. Another offer example is a car dealership inviting customers in for a free auto-detail and tank of gas once they receive their JD Power survey (about 90 days after new car purchase). The idea was to ensure there are no unreported problems disclosed in the survey and to give the dealership a good review since the buyer is filling out in front of you.  What incentives could your business use to increase positive reviews?

Managing Service: You must invest in creating positive customer experiences which will be less expensive in the long run than the cost of poor service. These investments include hiring the right people to represent your company values, training, creating culture, and incentivizing client focus. We’ve all seen the stark difference in employees that seem to enjoy their job and talking to people and those that make you feel as though it’s a bother to assist. Never settle for the latter.

Creating Culture: Personally, I like to always  ask customer-centric questions when making business decisions: Is this right for the guest? Will they feel fairly treated? Is it a good value? Is this better than their alternatives? Will this make them want to come back? This is the foundation of the customer-focused culture that I bring to the companies I work with. It’s a part of the decision process and can enhance the business side of the decision making process.

To use a real example, we were pricing the menu of an American style fast-casual restaurant and there were two separate issues: We wanted to price it on the higher end of the market due mostly to the higher cost of some premium ingredients. We also wanted to offer five different side options besides fries, but felt like everyone is going to get fries, so the others wouldn’t rotate and stay fresh. The solution ended up being to include 2 sides with the burgers and sandwiches and upping the price. Looking at my customer culture questions above: the guest gets to try a new flavor/side beyond fries that they might not have tried on their own, it’s a larger portion overall, it eliminates the decision whether to get an extra side, and no other local restaurants were doing this at the time. From the business side, it increased the per guest average, rotated more product, and allowed us to stand out as being more than burgers and fries.

What About the Windows? Circling back to my current issue, it’s clear that my window company has not built customer-focus into their business model. Several people have told me, “This is not how we do business,” and yet, it’s exactly how they did business with me. You may have noticed that I haven’t named the company. That’s because we are still trying to resolve the issues. Who knows!? They may surprise me by finally showing me how they intend to do business and turning this fiasco into a positive customer experience. I guess you’ll have to wait for the Yelp review to see.

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