hspace=6For companies in industries marked by declining margins, slower growth, and fundamental challenges to yesterday's value propositions, those that succeed are those that constantly reinvent.

In a maturing industry, you have to be constantly asking, 'What are the value propositions that keep us in this ball game?' said Steve Church, Chief Operational Excellence Officer at Avnet, Inc. For the most successful companies, that value proposition is about offering customers more -- moving from products to services to solutions.

But how can a company move from products to services if it hasn't demonstrated an ability to provide excellent customer service? Church asked. Indeed, for many excelling-yet-mature companies, their value proposition is customer service. Think Nordstrom, Ritz-Carlton, USAA, Starbucks, Chick-fil-A.

Church and his colleague, Terry Cain, the Vice President of Operational Excellence at Avnet, spoke at the 24th Annual Services Leadership Institute, hosted by the Center for Services Leadership at the W. P. Carey School.

Creating a culture of customer service

To build a value proposition around excellent service, said Church and Cain, a company must create an enterprise-wide culture of customer service excellence. For some employees, that's easy. Those employees are what Cain and Church call customer service heroes -- they understand the value in excellent customer service. Others are swayed by the impact of customer service on the bottom line. That impact is real -- companies that excel in customer service often see their financial performance improve.

Yet despite the clear importance of excellent customer service, as many as one out of every four customers are dissatisfied enough to do business with someone else. Even scarier, said Cain, of the customers dissatisfied enough to leave, only one of 25 will tell you about it.

What's more, it costs five times more to attract a new customer than to keep an existing one, Church said.

The key to retaining existing customers and to learning when customers are dissatisfied enough to leave, is to build an entire culture around excellent customer service. To do that, Church and Cain said, is to follow the Culture of Service Excellence Wheel.

The wheel's spokes include integrity, vision, attitude, skills, support systems, accountability, and passion -- and it never stops turning. There is no arrival at customer service excellence, Cain said. It's a never-ending process.

Don't be a liar

Cain said that he first realized the importance of integrity at home, not at work. He told the story of coming home one day after work to his wife who said, You're a liar. He had the habit of saying he'd be home at 6:30, and strolling in at 7:15. Or promising to make dinner at 7:00 and coming in at 9:00. I realized that, indeed, I was a liar -- I didn't do what I said I would do.

In business, Cain said that integrity -- doing what you say you're going to do -- is especially critical because if there is a lack of trust, your customer will take his purchase order somewhere else. Your customers don't have time to wonder if you'll come through and do what you said you would.

That doesn't mean customers expect the companies they do business with to be perfect. It does mean they expect an apology and atonement when you don't deliver like you said you would.

Have a vision and share it

Cain started with Avnet more than three decades ago in the company's warehouse. He said that he still remembers vividly the day that then-CEO Tony Hamilton came to visit him at the will call window, where Cain was responsible for selling parts to small businesses and tinkering engineers.

You are a salesman for the company, Hamilton told Cain. You never know who your customers are or who they could become. One might invent something big someday. So you have to take excellent care of them.

 Hamilton had a vision, and he shared that with me, probably the lowest guy on the company totem pole, Cain said. But then I became part of that vision, too.

Engage your employees

Spreading a vision of customer service excellence across the company takes effort from employees at all levels. To drive a great customer service experience, you need employees who are engaged, Church said. They need to feel like their work is meaningful. They need to feel a sense of mutual trust and respect with their managers.

According to Church, other strategies to build engaged employees include:

  • Hiring to the culture you're attempting to build (though Church said that at Avnet their strategy focused on building a culture of service excellence among current employees).
  • Listening to your employees. Employees on the front lines, dealing with your customers every day, are the ones who know how customers feel, Church said.
  • Making sure that employees are ready, willing, and able to serve your customers.
  • Showing appreciation for your employees. Say thank you, Church said. A culture of recognition breeds goodwill that will transfer to your customers.

Attitude is (almost) everything

Church and Cain asked their audience of business leaders to list the qualities of great customer service experiences, and then to think about whether those qualities were a matter of skill or attitude. Only one of the 19 service attributes the audience listed was purely a matter of skill. Loyalty, responsiveness, consistency, empathy, accountability, timeliness, integrity -- all attitude.

At the Ritz-Carlton, the mission is Ladies and gentlemen serving ladies and gentlemen. It's an attitude that is reflected in everything the hotels do. Cain explained his first experience with customer service excellence at the Ritz: I had made plans with my boss to play tennis at 6 a.m. before our conference began, but I wasn't able to find him a tennis racket the night before. I called the front desk to leave a message for Mr. Braverman that we wouldn't be able to play after all.

Instead of agreeing to deliver my message and wishing me a good night, the receptionist said that she would get me a tennis racket, despite the fact that the pro shop didn't open until 9 a.m. I was skeptical about her ability to come through on her promise. But it was the Ritz, so I took her at her word. The next morning, an employee met Mr. Braverman at the pro shop to pick up his racket at 5:30 a.m.

The customer service lesson for Cain was that the receptionist thought beyond his initial request (leaving the message for his boss) to fulfill his real need (finding a tennis racket before 6 a.m.). That's all attitude, he said.

Passion is the final frontier

When Church initially began his work in operational excellence at Avnet, nearly a decade ago, he had a hard time getting other senior leaders on board with the value of employee feedback. I have always read all of the comments (several thousand) from our employee engagement survey because that's where the emotion is, he said.

But initially, the other leaders thought that was just touchy feely stuff, Church said. So he aggregated some of the employee comments into a video. I couldn't get these executive to look at a PowerPoint slide or even at the numbers, but by infusing some heart into it -- by highlighting comments from real employees with real feelings, I was able to get through to them.

Getting the executives on board is critical, Church said. The company's leaders need to be in lockstep to successfully create a culture of service excellence.

The power of service excellence

We all know the adage that a dissatisfied customer will tell 10 friends about his bad experience. Add in YouTube, and Dave Carroll has told more than 8 million people about his customer disservice experience with United Airlines. Carroll's music videos tell the story of how United broke his custom-made Taylor guitar, which he needed to play the shows he had flown to Nebraska for.

Carroll spent almost a year trying to get United to reimburse him the cost of repairing his guitar, to own up to and atone for its mistake. Even before the YouTube videos hit the 500,000 viewer mark, the embattled airline offered to pay Carroll to remove them. But they still didn't atone, Cain said. Carroll refused the money, suggesting that United donate it to charity.

The story turns out well for Carroll -- Taylor built him a new custom guitar and Carroll has garnered huge exposure for himself as a singer. The story turned out very badly, of course, for United.

As bad as the consequences of disservice can be huge, a culture of excellent customer service can be incredibly powerful -- maybe not as famously, but powerful nonetheless.

What's the difference between a 1 gigabyte computer chip that can hold 1,000 novels and a cup of Starbucks coffee? Cain asked. His answer: The 1 gigabyte computer chip is a $2.15 commodity. The coffee is a $3.50 experience.

So moving up the value chain -- remaining competitive in a maturing industry -- is about selling not a commoditized product, but a service experience. Doing that right requires a company-wide culture of customer service excellence.

Bottom Line:

  • For the most successful companies, their value proposition is about offering customers more -- moving from products to services to solutions. That requires an enterprise-wide culture of service excellence.
  • In business, integrity is especially critical because customers need to be able to rely on you -- to trust that you'll do what you say you will. Otherwise, they'll do business somewhere else.
  • Company leaders must share their vision of service excellence with employees at all levels.
  • Employees must be engaged. Build engagement by listening to what your employees have to say, by recognizing their successes, and by making sure they're fully equipped to serve your customers.
  • Most great customer experiences are driven by employees' attitudes. Attitude is (almost) everything.
  • Passion for building a culture of service excellence is critical. All of the company's leaders need to have it.
  • At the same time that the consequences of disservice can be huge, a culture of excellent customer service can be incredibly powerful, too -- on the bottom line and beyond.