Every customer knows that all companies do not provide equal customer service—some excel at it whereas others fall flat. Those that provide excellent service tend to follow certain patterns, according to Frances Frei, UPS Foundation professor of service management at Harvard Business School, and Anne Morriss, managing director of the Concire Leadership Institute. Frei and Morriss spoke with Associate Editor Judith Aquino about their new book, Uncommon Service, and why companies need to put customers at the core of their business.
CRM: What is your definition of excellent customer service?
Frances Frei: Excellent customer service means providing great service for the things that matter most to your customers. The reason why may seem counterintuitive, but in order to be great, you have to be bad in some things. You need to understand what your customers value about your business and you'll have to make some choices. To be the best in class, you have to be the worst in class in some areas.
CRM: In your book, you discuss four rules: "You can't be good at everything;" "Someone has to pay for it;" "It's not your employees' fault;" and "You must manage your customers." Why did you decide to focus on these four rules?
Anne Morriss: We looked at a lot of industries and looked for patterns. What practices did companies with excellent service reputations have in common? We weren't specifically looking for four truths—and there wasn't a fifth truth that made the cut. These four were the most robust and can be widely applied to numerous industries.
CRM: Do companies need to follow all four to achieve excellent customer service?
Frei: Definitely the first rule [You can't be good at everything]. It would also be unusual if the third [It's not your employees' fault] didn't apply. The rule about funding [number two] applies to classic businesses but maybe not if you're a not-for-profit. The customer management system [rule number four] doesn't always apply, because the customer doesn't always have an operating role. You'll know what fits your situation.
CRM: Going back to the first rule, aren't companies taking a risk if it becomes known that they're not striving for excellence in everything they do?
Frei: There's a well-intentioned desire to be good at everything. The great irony is that will hold you back from achieving it. Most companies don't deliver sustained excellence.
Morriss: Your customers know where you're succeeding—and where you're not. Walmart is a good example. Everyone who walks into Walmart knows they're not walking into a high-end store, but they do expect great prices. It's a trade-off.
CRM: Can you describe a company that abides by the four truths in your book?
Morriss: One good example is Rackspace, the hosting and cloud computing company, which grew from about $12 million in revenues to $800 million in just a few years. Rackspace is best in class in service, but beaten by most of its competitors on price. It's very focused on clients with IT systems that are complex....The company does nothing to accommodate anyone who is price-sensitive or can do much of the work themselves.
Rackspace has much higher customer retention than its competitors. This is a funding source. The company estimates that existing, satisfied companies are up to 10 times more profitable than new customers.
"Rackers" (employees) are selected based on values, as well as skills, and there are clear, team-based performance incentives.
In addition, Rackspace has developed rigorous customer tracking tools—pricing, retention, churn—that make the profitability of every customer completely transparent, along with the cost of internal actions.
The most amazing thing to see is the company's die-hard belief in the capabilities of its people. Rackers are treated as precious resources who can do anything they put their minds to.
CRM: Is customer service changing for the better?
Morriss: The trend now is to ask customers to do an awful lot of work through self-service. You have to manage and train your customers. Set them up for success. The company Threadless, for example, is giving its customers the ability to weigh in on the designs of the T-shirts that it sells. Giving your customers more work may be a good idea, but can they do it? Can you handle [the customers'] sense of ownership?
Frei: Companies don't have to spend more money, they just have to shift it. We're optimistic the world will catch up to people's desire for service.