The Ritz-Carlton hotel chain has an exciting customer service policy that empowers every employee with $2,000 to satisfy any guest without approval. This isn’t a one-time power but it’s per incident. Some business owners like the general idea but express concerns about providing employees with this much freedom. They worry that employees will either abuse the empowerment or simply use it as a first course of action rather than effectively assessing each situation to determine whether another course of action could achieve the same goal. It’s certainly disconcerting and scary to give your employees unsupervised access to your wallet.
The ability of an employee to satisfy an upset customer on the spot is essential to diffusing and potentially rescuing a customer relationship. The reason this is so powerful is that most customers don’t expect employees to be so empowered. This is also why most upset customers immediately ask for a manager, rather than explain their problems to the first employee that attempts to assist them.
An article in the Harvard Business Review suggests that businesses empower their employees within boundaries. It further suggests that if the situation calls for a solution outside of those boundaries, the business should then require that its employee involve management. This is preferable to having the employee tell the customer there is nothing more that can be done, and potentially losing the customer’s business. This approach takes into account that, “employees often lack the experience, judgment, and discipline necessary to achieve this without breaking the bank.” But it still allows them the leeway to make some decisions on the spot.
The key to the success of a program of this type is “giving them a framework within which to operate… and feedback about how they are performing within that framework.” This empowers employees to WOW customers while minimizing abuses. At the same time, it ensures that larger issues which cannot be resolved within this framework get escalated to a manager. It also helps ensure that the employee doesn’t brush the customer off without satisfying them.
Customers don’t expect perfection. What they do expect, however, is for a business to make right a mistake. Many times, management fails to hear about issues because employees don’t escalate them. All too often, the first time management hears about an issue from an irate customer is via a bad review on Yelp or similar review site. This situation is avoidable. Whether you choose to give your employees free rein financially a la Ritz-Carlton or choose a more moderated form of empowerment as suggested by the Harvard Business Review, implementing some sort of empowerment on the employee level is a powerful way to retain customers and put out fires before they spread.
Which method works better: giving your employees free rein financially a la Ritz-Carlton or choosing a more moderated form of empowerment as suggested by the Harvard Business Review? Why?
How is your business empowering employees?
There are countless articles on how hard it is to create a truly loyal customer and how easy it is to lose one. Creating customer loyalty is a challenge that all businesses face. There are many techniques and strategies that can assist you along this path but, at times, we’re presented with opportunities that can accomplish this instantaneously.
Earlier this year, a young boy went shopping with his father and managed to lose one of his Lego mini-figures after his father had told him not to bring them since – surprise – he was likely to lose them. Well, turns out the boy actually did. The boy had saved all of his money to purchase a Lego set that cost upwards of $80, so he was very upset. The father then suggested that the boy write a letter to Lego to see if he could get it replaced. This was the letter:
My name is Luka Apps and I am seven years old.
With all my money I got for Christmas I bought the Ninjago kit of the Ultrasonic Raider. The number is 9449. It is really good.
My Daddy just took me to Sainsburys and told me to leave the people at home but I took them and I lost Jay ZX at the shop as it fell out of my coat.
I am really upset I have lost him. Daddy said to send you an email to see if you will send me another one.
I promise I won’t take him to the shop again if you can.”
Lego could have handled this any number of ways but this is how they chose to:
“We are very sorry to hear about you losing your Jay minifigure but it sounds like your dad might have been right about leaving it at home. It sounds like you are very sad about it too.
Normally we would ask that you pay for a new one if you lose one of your minifigures and need to have it replaced.
My bosses told me I could not send you one out for free because you lost it but, I decided that I would put a call into Sensei Wu to see if he could help me.
Luka, I told Sensei Wu that losing your Jay minifigure was purely an accident and that you would never ever ever let it happen ever again.
He told me to tell you, “Luka, your father seems like a very wise man. You must always protect your Ninjago minifigures like the dragons protect the Weapons of Spinjitzu!”
Sensei Wu also told me it was okay if I sent you a new Jay and told me it would be okay if I included something extra for you because anyone that saves their Christmas money to buy the Ultrasonic Raider must be a really big Ninjago fan.
So, I hope you enjoy your Jay minifigure with all his weapons. You will actually have the only Jay minifigure that combines 3 different Jays into one! I am also going to send you a bad guy for him to fight!
Just remember, what Sensei Wu said: keep your minifigures protected like the Weapons of Spinjitzu! And of course, always listen to your dad.
You will see an envelope from LEGO within the next two weeks with your new minifigures. Please take good care of them, Luka.
Remember that you promised to always leave them at home.”
– RICHARD, LEGO
These figures retail at $2.99. The thoughtfulness and creativity involved in this Lego representative’s response was above and beyond anything he was required to do. Not only did he replace the figure with a better one but he also included an additional one for the boy. All things considered, this ~$5 investment by Lego probably created a loyal customer out of this 7-year old. He will not only continue to enjoy Legos through his childhood, but more than likely introduce them to his children, and maybe even grandchildren. In addition, this act of generosity and great example of customer service went viral with numerous blog articles (including this one) being written, as well as national media coverage.
Creating a loyal customer isn’t hard if you’re paying attention.
How is your business going above and beyond to provide excellent customer service?
List one example of how you were “paying attention” and created a loyal customer.
Articles are continuously being written in hopes of dissecting and duplicating the Apple Store experience for other businesses. I’ve even seen sessions at industry conferences that revolve around how to duplicate this in car dealerships. While I agree that it should be every dealership’s goal to achieve the level of loyalty that Apple has, an interesting thought occurred to me as I read about the legendary Apple “Five Steps of Service.” I thought about it, and car dealerships already use these steps and have since long before Apple Stores even existed. You might ask, “Why is Apple so successful at creating the customer experience that they do while car dealerships fall short?” Let’s examine why I believe dealers already have these steps in place, how they use them and where I believe they are falling short.
Apple’s 5 Steps of Service are ensconced in the same-named acronym, A.P.P.L.E.
“Approach customer with a personalized, warm welcome.” Car dealerships have done this forever. It’s called the “Meet and Greet.” Just as Apple trains its employees to approach customers individually when they enter with a warm welcome, car dealers train their staff to welcome guests to the dealership.
“Probe politely to understand all the customer’s needs.” In this step, Apple employees are trained to determine what the purpose of the customer’s visit is and assist them in finding a solution to their need or problem. Every front-line person at a car dealership already does this. If you’re a salesperson, you’re asking questions that will help you better advise a customer on which vehicle will be best suited for them. If you’re a service advisor, you’re identifying potential issues and setting up the proper inspections and/or making recommendations to the customer.
“Present a solution for the customer to take home today.” Apple isn’t necessarily talking about making a sale in this case but I’m sure it’s not far from their mind. No matter which department we’re talking about at your dealership, everyone is trained to “make the sale.” Whether that’s identifying a service need and offering a solution, or landing them on a vehicle that fits their wants and needs and asking for the sale.
“Listen for and resolve any issues or concerns.” In this step, Apple is including finding any “unexpressed” wishes or concerns. They train employees to ask questions to identify and address these unexpressed items. The same training is given to your dealership staff. Both your salespeople and service advisors are trained to listen to a customer’s objections to identify obstacles and remove them, if possible.
“End with a fond farewell and an invitation to return.” Apple Store employees are trained to end each transaction by finding a way in which they can invite the customer back to the store. According to the article’s author, “How a person feels when they end a transaction significantly impacts how they perceive the brand and whether they are likely to recommend the brand to others.” Making sure that the transaction from start to finish is great is something that Apple recognizes as important. Dealerships should remember that it’s just as important for customers to leave the finance department, and ultimately your dealership, with the same excitement and happiness that conveyed when they first arrived.
The Apple Store mainly sells computers, phones and music players. Car dealerships sell cars. Everyone is just as, if not more, excited to get a new car as they are to get a new computer. If the Apple Store’s success secrets are being modeled by businesses nationally, and car dealerships have always been using similar steps, why is there such a distinction between the perceived experience of shopping at an Apple Store and that of a car dealership?
I believe that Apple has refined the art of selling the experience or what they call “enriching lives.” People don’t perceive Apple Store employees as salespeople but rather as consultants. They’re not expecting, nor do they usually receive, a hard sell. Yet few people make it out of an Apple Store without spending money. The key to transforming the customer experience at your dealership to one similar to that of an Apple Store has to do with perception. That perception can only be changed by ensuring that you have the right people working at your store who are genuinely interested in your customer’s wants and needs. The right employees are willing to listen and truly assist the customer in presenting a solution for their problem.
You already have the same steps in place to be successful that every Apple Store has. Make sure that you have the right people taking those steps. If you do, you’ll be able to transform your customer experience without changing a single process.
How does your dealership ensure that you are hiring the “right” employees?
Which A.P.P.L.E. step do you find to be most important? Why?
What these questions all have in common is that they all answers the fundamental aspects of what type of customer experience that restaurant provided. You’re certainly more likely to share your experience with others if you had a memorable experience – whether it was good or bad. What if it was just “OK” though?
An interesting article I recently came across asked its readers to consider the possibility that providing an average customer experience is worse than providing a poor one. We’ve all heard the analogy that a happy customer tells 10 people and an unhappy customer tells 100 people. How many people does a person who just had an average experience tell? If your friends came to you and asked about this restaurant and you just had an average experience, you’d probably just say, “It was fine.” You certainly wouldn’t go out of your way to tell anyone about it, however.
When a customer comes into your dealership, you have the opportunity to define their experience. These are the three types of experiences you can offer:
- A great experience – By providing a great experience, you have the opportunity to potentially earn repeat business. You could potentially be the one that pops up in your customers’ minds when asked for recommendations from their networks. You may even be able to create a brand advocate and collect some positive online reviews and social media buzz.
- A poor experience – If you subscribe to the “All press is good press” philosophy, providing a poor experience to your customers, at the very least, has some branding possibilities. Provide a poor experience and you are certainly more likely to be on people’s lips when mentioned. They will be passionate and opinionated when it comes to your business. And, in many cases, they will be proactively making sure that others know where you failed. The chances of earning their business again probably lessen but that is dependent on how bad the experience was. They may still patronize your dealership but their reasons will become completely self-centered – convenience, time, cost – rather than having anything to do with loyalty.
- An average experience – By being “average”, you completely remove passion from the equation. By failing to be different – in any way – you won’t be on your customers’ minds at all. They won’t say good things or bad things or anything. Think about the last time you asked your friend for their opinion on something – a product, restaurant, store, etc. If they answered, “It was just OK,” chances are you kept looking. Or consider the last time you asked a friend whether they liked a movie they just watched and they replied with the opinion of “it was just alright.” That movie probably moved from the “let’s go to the theater and see it” list to the “wait for it to come out on DVD” list.
Your customers’ experiences are what define you as a business. Regardless if you are selling lemonade from a corner stand or $300,000 automobiles, the same concepts apply. The experience you choose to provide to your customers will dictate if and how they talk about you. Provide a great or poor one and you’ll have people talking about you. They’ll certainly be saying different things, but your business is on their minds. Provide an average one and you won’t exist until they need that next oil change and only if you’re the closest or most convenient place.
You need to decide if you want people talking about your business, and, if so, what you want them saying. Whatever you decide, the solution lies in one of those three experiences. If you want your customers to create positive buzz, provide a great customer experience. If you don’t care what they’re saying as long as they’re saying something, provide some kind of experience. If you really don’t want anyone talking about you at all, be average. Nobody will notice or care.
What type of experience are you providing for your customers?
How is your dealership creating positive buzz?
Many dealerships price prepaid maintenance programs (PMPs) high enough to shatter success from the start. Thinking that the real benefit comes from profit built into the plan along with forfeiture, they create a price point that’s prohibitive. While some new buyers will take the bait, the typical consumer, when asked to pay $895 for three years of scheduled maintenance, simply adds up the cost of nine or ten oil changes and a half dozen tire rotations and says, “Thanks, but no thanks!”
Successful PMPs are priced in such a way that even if a customer pulls out a calculator and – looking at the service menu – adds up the pricing for oil changes and tire rotations, the total represents at least an equal amount to what the F&I manager is charging them for the PMP.
Dealers who understand the full purpose and potential of PMPs price them well below the actual retail value. Instead of trying to turn huge profits in the F&I office, these dealers focus on the long-term potential of each customer. When incremental upsell can average over $90 per visit, dealers quickly see revenue increase. Statistics also show that up to 83% of customers will repurchase a future vehicle if the dealer can keep them returning to their service lane for regularly scheduled maintenance. With these two factors alone, even a PMP given away for free would more than pay for itself by the end of its contracted term.
With this type of program properly priced and executed, PMP sales penetrations can reach up to 50% or more, providing dealers opportunities to continually win over their customers.
Does your dealership sell PMPs? If your penetration is less than 50%, you could be pricing them too high.
What price range do you think is fair for a pre-paid maintenance plan? What would your plan include?
What percentage of customers return to your service lanes after purchasing a vehicle from your dealership? How do you track it?