Customer Service Champs or Chumps

by Tom Hinton

In the March 2, 2009 issue of Business Week, the magazine’s cover story was entitled Extreme Customer Service. Business Week touted a list of 25 companies they referred to as “Customer Service Champs.” I’m wondering if there was a typo. Perhaps, it should have read “chumps.”

Frankly, these types of annual customer satisfaction lists amount to little more than beauty contests. In this case it appears that Business Week wiggled and waggled the criteria in so many different ways, the Wicked Witch of the North might have come out a winner! Consider how Business Week arrived at its results. First, Business Week tinkered with the credible criteria of its sister-company, J.D Power & Associates. Next, Business Week padded the scoring with bonus points for industry leaders while punishing companies like Starbucks, which scored high among readers, but was penalized because none of its peers-competitors scored well (duh!). Finally, Business Week included the randomly subjective views of 1,000 of its own BusinessWeek Market Advisory Board. Seriously, folks, this is how Business Week gets us to their Top 25 Customer Service champs. Hmmm? It causes me to wonder if this exercise is about crowning customer service champs or selling more issues of their popular weekly magazine?

As I examine the rankings of the top 25 companies, I note that nearly half, 11 in all, of the 25 companies cited for customer service excellence received a grade of B+, B, or B- on one or both of the major criteria -- Quality of Staff and Efficiency of Service. This begs the question: How can a company that scores less than an “A” be crowned as a customer service champ?

Another consideration for the scoring was a company’s industry ranking. What does that have to do with customer service excellence? A company either gets it right with its customers -- like a Starbucks -- or it doesn’t. Incidentally, I only mention Starbucks because by Business Week’s own admission, Starbucks might have deserved to be on their top 25 list, but was not included because its industry peers scored poorly. So what? If that principle was followed across all industry sectors I seriously doubt a single automaker would be listed. But, somehow Business Week came up with four credible selections from the auto industry to grace their top 25 list of customer service champs. How interesting.

Another question I have regarding Business Week’s criteria is how does a customer judge the Quality of Staff? It’s superficial criteria because rarely do customers get close enough to an organization to competently judge its quality of staff. Just because Joe Hustler or Susie Saleswoman smiles and remembers my name does not mean they have superior product knowledge or customer service skills. Quality of Staff is tied to a company’s hiring and training process. It’s determined by a company’s culture and level of investment in people. Certainly, customer satisfaction is a byproduct of Quality of Staff, but to suggest a reader of Business Week would know the intricacies of how Amazon.com or Lexus develops its staff is nonsense.

And, what in the world does “Efficiency of Service” have to do with customer satisfaction? The answer is nothing. If Business Week had called it “Effectiveness of Service” I would be impressed. But “Efficiency of Service” is nonsense.

Let me offer an example that demonstrates the difference. This week I met a client for breakfast in a well-known chain restaurant. Miguel, the waiter, was friendly and efficient. When we asked for coffee or juice, he responded. When we requested a refill, he responded again. If I used Business Week’s criteria, the chain would score an A+ because Miguel was efficient. But, despite Miguel’s positive demeanor, the order was wrong. The bacon was not crispy and the scrambled eggs were dry. Yes, he served us quickly but that was not our criteria for customer satisfaction. We wanted him to get the order right! When a customer needs to flag down the wait staff to request more coffee or hot water that’s not deserving of an A or a B score. When the cashier failed to add the gratuity to our final check as requested causing us to wait until he could reprocess our credit card, that’s not deserving of an A or a B score. Efficient? Yes! Effective? No!

But, let’s set aside the flawed methodology of Business Week for a moment and examine their top 25 customer service champs. Maybe, by some stroke of luck, they got it right. Among the 12 companies that scored ratings of A+, A, or A- are: Amazon.com, USAA, Jaguar, Lexus, The Ritz-Carlton Hotels, Publix Super Markets, Zappos.com, Hewlett-Packard, Ace Hardware, Four Seasons Hotels & Resorts, Cadillac, BMW, and JW Marriott Hotels. At first glance this appears to be a solid list. But, what’s disturbing to me is that between #1 Amazon.com and #25 JW Marriott, there’s a spread of 170.14 points. What’s wrong with this picture?

The answer lies in the “B” squad results. You see, 11 companies -- T.Rowe Price, KeyBank, Nordstrom, Enterprise Rent-a-Car, American Express, Trader Joe’s, JetBlue Airways, Apple, Charles Schwab, True Value, and L.L. Bean -- all outranked JW Marriott (#25) despite the fact that their grades included a B+, B, or B-. Are you kidding me? So, you can see how a flawed criteria can skew the scoring results.

On that subject, I seriously wonder how three of these companies even made the list. Based on my personal experience and knowledge of their service performance I am amazed that Enterprise Rent-a-Car, American Express, and JetBlue Airways got past the first cut. For the past year, American Express has been canceling credit worthy card members to reduce its exposure in tough economic times. That’s understandable, but it's not good customer service. And, my experience with Enterprise Rent-a-Car has been disastrous. In three rentals, Enterprise never got it right. Of course, their rental car competition leaves much to be desired as well. And, fair or unfair, JetBlue Airways cannot possibly be considered a serious contender for customer service champ as long as the image of passengers left stranded on JetBlue airplanes for up to 11 hours during an ice storm at JFK on Valentine’s Day 2007 remains fresh in our minds. Sorry JetBlue, but that’s a deal-breaker in my book. For what it’s worth, Business Week scored JetBlue Airways above Apple, Charles Schwab, and BWM among others. Go figure?

Of the remaining 8 companies on the “B” Squad, I seriously question how top performers such as Charles Schwab, which rates a perfect score based on my personal experience, and Apple, which continues to run circles around its competitors as the leader in consumer electronics innovation, rank below the pathetic “Double B” score of Enterprise Rent-A-Car? Business Week can’t be serious!

Perhaps it can be argued using valid data that companies like Nordstrom, the once-legendary customer service role model, and True Value, the hardware store that only scored a pair of B+s, should have scored higher in the Business Week customer service poll. But, these are tough times and some companies have cut staff and training to save money. If that’s the case, they don’t belong on the top 25 list.

KeyBank of Cleveland and T. Rowe Price, the brokerage firm, get a pass. I cannot dispute their service performance since I have no personal experience with either company, nor have I studied their customer service ratings.

I do find it interesting that four automakers -- namely, Jaguar (#3), Lexus (#4), Cadillac (#14), and BMW (#22) -- all scored A+ ratings with Business Week despite the fact that most consumers rank the auto-buying experience just below a visit to the dentist. Perhaps, Jaguar has done some remarkable things in the past 12 months to earn its position as the customer service champ of automakers. But I doubt it. Jaguar would have to be wizards to push ahead of Lexus and BMW on their customer service scores.

So, there you have it, folks. The top 25 customer service champs. With all due respect to Business Week, the numbers just don’t add up. Having said that, I do consider Business Week to be among the top 25 business publications in America!

About the Author. Thomas Hinton is president & CEO of the American Consumer Council, a non-profit consumer education organization which administers the Green C Certification program for companies and organizations. For more information, visit: www.americanconsumercouncil.org

Empowering People to Act

by Bill Kalmar

I think most of us would agree that there are a handful of attributes that separate average companies from those that should be held up as role models. Some of those traits would be: a strong and achievable strategic plan, management interaction with staff and customers, well-trained employees, a passion for excellence, a silo-free organization, an open-door policy, and a team of professionals who are empowered to perform their job without constant management intervention, to name just a few.

Of all those traits, I would place empowerment at or near the top. Organizations that properly train and empower their staff operate more efficiently and do a better job of meeting and exceeding expectations of customers. There’s a minimum of lag time in resolving problems or disputes with customers because each employee can take the appropriate action without kicking it upstairs.

In examining the reasons for employees’ lack of power, one has to conclude that managers are afraid to let go of their decision-making domain. Carrying that concept a bit further, I contend that quality is greatly diminished in an organization unless people are empowered.

Most of us have at some time been involved in a transaction that required a company’s agent to seek guidance or approval or permission from another person. This is a time-consuming practice that irritates customers and humiliates employees because he or she realizes that they’re nothing more than a figurehead lacking authority to perform even the most mundane tasks.

Permit me to provide you with two examples of an extreme lack of empowerment. In my tenure as director of the Michigan Quality Council, my office was at a major university. Once when I needed a meeting room, the conference rooms in my department were all occupied, so I wandered onto another floor seeking an unoccupied room. There was an available room in the history department, but my request would have to be approved by the department head, who was out for the day. No one else could give the OK, because he hadn’t deputized anyone to act in his stead.

The receptionist said that if the Keeper of the Keys learned that the room had been used without his approval there “would be trouble.” Armed with that information and the theory that it’s “better to seek forgiveness than approval,” I used the room anyway, much to the dismay and consternation of the history department. For the absent professor, I left a short write-up on the advantages of empowerment with the receptionist. I wish he had responded.

The second example is from a national restaurant chain where my wife Mary and I frequently dine. As with numerous other dining establishments, this restaurant provides their guests with a card whereon visits are logged—after the purchase of eight meals you get a free dinner. We dutifully bring in our cards each time and have the cards stamped by the staff. After we surrendered our cards for a free meal, we discovered that the restaurant had exhausted their supply of new cards. We were to bring in our receipt at our next visit, when more cards would have arrived. I’m nosy, so I asked why someone hadn’t noticed earlier that the supply of cards was low and ordered more.

It seems that a vice president at headquarters, let’s call him the King of Cards, is the only person responsible for ordering these cards. All requests have to be routed through the king, who then doles out the cards to the various restaurants. My suggestion that each restaurant be responsible for ordering its own cards met with agreement from the restaurant management, but as in many organizations, altering an existing procedure through a labyrinth of senior management is cumbersome and difficult. I’d like the Keeper of the Keys to meet with the King of Cards and see what other blockades they could invent to stifle productivity. Both of these management dinosaurs should be jettisoned from their organizations, or at least made to write the phrase “Empowering my staff adds to customer and employee satisfaction” a thousand times on a blackboard.

Baseball and showerheads
Motoring to New York recently to watch the Detroit Tigers play the Yankees at Yankee Stadium taught me two life lessons: Mayor Michael Bloomberg is genuinely a man of the people, and when it comes to height standards at a national hotel chain, size does matter. Permit me to explain.

For my 65th birthday my son and I attended opening day at Comerica Park in Detroit. The Tigers lost but the day was salvaged when my son presented me with tickets for an upcoming Tigers/Yankees game in New York on his birthday and, as most baseball fans know, this is the last year for The House That Ruth Built—Yankee Stadium.

I wanted to surprise my son with upgraded seats, so I contacted Mayor Michael Bloomberg, Governor David Paterson, and Yankee owner George Steinbrenner and suggested that, if their seats for the game weren’t being used, perhaps a couple of out-of-town fans could be the new occupants.

Well-run organizations always respond to customers whether by phone, e-mail, or snail mail. I have made a habit of contacting organizations when I receive excellent service or when I have a complaint. Organizations that value their relationships with customers always respond, and those are the ones that retain my business and admiration. Then there are the companies that never acknowledge the contact, and that tells me everything I need to know about the management. Their lack of concern cascades onto everyone in the organization. No wonder service is shoddy.

Mayor Bloomberg took the time to respond, stating that he in fact doesn’t have season tickets but he sent a personalized letter to my son for his birthday hoping that he would enjoy his stay in New York. This reflects why he’s so revered in the Big Apple. On the other hand, judging from the poor condition of the reserved box seats, Bloomberg may be waiting for the new stadium to purchase season tickets.

We never received the courtesy of a response from Steinbrenner or Paterson. I realize that both of them receive numerous letters and requests every day but a simple “No, are you crazy?” response to my letter would have been a nice gesture. So Bloomberg goes to the top of my list of world-class mayors.

Let me say at the outset that the staff, the ambience, the food, and the surroundings at the Hampton Inn were first class. What was a bit disturbing was the showerhead, of all things. Entering the shower in the morning was like being a Lilliputian in a Brobdingnagian world. I’m 5'10", and the showerhead was positioned so high that I could adjust the water stream only by standing up on my toes. I’d just turned 65 and already I seemed to be shrinking. Upon checking out later that morning, I mentioned my experience to the front desk staff. Their response was simple and straightforward: Hampton Inns had done a survey and determined that the majority of their business traveler guests were 6'2", and the showerheads were adjusted to accommodate them. They raised the sinks, too.

I sent an e-mail to Hampton Inn management regarding this incident, which elicited the following response from the general manager: “Please accept my apologies for any inconvenience you experienced with our showers. Our hotel was constructed to Hampton brand standards, which specify showerhead heights. Until these specifications change, a solution would be to request a room with accessible features that have handheld showerheads”. In response I asked what would happen if I returned with a broken arm. How would I hold the shower wand, and would the hotel supply someone with a loofa to help me bathe. As with Steinbrenner and Paterson, I haven’t received a response.

All in all, it was a great trip. The Tigers swept the Yankees, and I’m doing stretching exercises in the event we return to New York and I need to take a shower.

As you read this, I’m resting comfortably after June 2 robotic prostate cancer surgery at Henry Ford Hospital in Detroit. The hospital is the pioneer in this type of surgery, having performed more than 3,000 such operations for people from all over the world, so I knew I was in good robotic hands. What makes it even more appealing (if surgery can be appealing) is that the hospital has partnered with the local Ritz-Carlton Hotel and thus patients for this procedure are transported back and forth to the hospital by hotel staff, and special arrangements are made at the hotel for pre- and post-surgery dietary needs. If one has to experience this type of operation—I’m told one in six males will—it’s comforting to have the best at one’s disposal.

As I relax in my hammock contemplating my next column, I just might arrange for a conference call with the Keeper of the Keys and the King of Cards so we can discuss empowerment. Wouldn’t that be a hoot?

About the author
William J. Kalmar has extensive business experience, including service with a Fortune 500 bank and the Michigan Quality Council, of which he served as director. He has been a member of the Malcolm Baldrige National Quality Board of Overseers and a Baldrige examiner. He’s also been named quality professional of the year by the ASQ’s Detroit chapter. Now semiretired, he’s a freelance writer for the Detroit News and writes a monthly column for Mature Advisor newspaper. Kalmar is a mystery shopper for several companies and a frequent presenter and lecturer. He also does radio voice-overs and competes in duathlons.

How to Avoid Green Schemes When Getting Green Certified

by Thomas Hinton

Last week, during a speech to business executives, I was asked about the proliferation of Green schemes and how a company could evaluate the credibility of a Green Certification Program. Given the number of misleading web sites and schemers who are trying to make a fast buck from the Green Movement, here are five questions your company should ask before applying for a Green Certification program.

1. Is the Green certification program sponsored by a credible non-profit organization?

I strongly encourage companies to avoid for-profit ventures that claim to offer certification programs but, in fact, are fronts for some money-making scheme. The leading Green Certification programs are administered by viable non-profit organizations or associations that are legal entities and led by volunteers and a professional staff. Most non-profit organizations have been established for the public good and have bylaws and members. While non-profit organizations will charge a fee for their certification program, they do so to sustain their programs and pay their professional staff. Among the leading non-profit organizations that offer outstanding Green certification programs are the U.S. Green Building Industry Council, the American Consumer Council, the Forest Stewardship Council (FSC), Green Steam, and Green-e, which is operated by the Center for Resource Solutions. They are many more credible non-profit organizations, but these non-profit organizations are leading the way in the area of Green Certification.

2. Does the Green Certification program have written criteria and standards that govern the application and certification process?

Yesterday, someone sent me a link to an online green certification program managed by a mom-and-pop website. The alleged certification consisted of 32 yes/no questions. If the applicant answered a majority of the questions correctly, they earned the right to affix the website’s green-certified logo on their company materials. This type of green certification is bogus and does a disservice to the many valid green certification programs that have formal criteria and rigorous standards. Any Green Certification program that does not require your company to complete a detailed application and respond in-depth to serious questions regarding environmental compliance and sustainability is suspect. I should note that Green Certification for a specific product is even more rigorous and often requires some type of ISO-related certification compliance.

3. Does the Green Certification Program have a verification and validation process as part of its certification?

Two common elements among all credible sponsors of a Green Certification program are the verification and validation of the information contained in a company’s application for certification. In order to verify and validate the contents of a company’s application, an independent team of assessors or auditors is trained and certified to review the contents of the application against the criteria and, in some cases, conduct a site visit to verify that certain claims by the applicant are, in fact, being performed.

The certification of assessors or auditors should be done by the sponsoring organization or the American National Standards Institute (ANSI). In the case of the American Consumer Council, our Consumer Green Council is responsible for recruiting, training, and certifying its Assessors. Only then are certified Assessors assigned to review an application. Also, an independent Board of Judges reviews all recommendations for certification prior to any certification being awarded. In this way, there can be no collusion or conflicts-of-interest. This process ensures that only qualified applicants receive ACC’s Green C Certification designation. Other non-profit organizations have a similar process in place to ensure the integrity of their certification program.

4. Once your company is Green Certified is there an accountability step and a process for continuous improvement?

The most progressive Green Certification programs not only have contemporary standards and a strong verification process, but they also have a way to hold certified companies accountable to those standards after certification has been earned. In other words, a company cannot earn its Green certification and then engage in practices that violate the spirit of the certification program. Organizations like the Forest Stewardship Council (FSC) and the American Consumer Council have high standards in this regard and frequently review the practices of certified companies to ensure they are in compliance and striving to reach higher levels of certification.

5. Does the Green Certification Program have credibility in the marketplace?

Let’s face it, most companies are not altruistic. Very few businesses decide to go Green because they want to save the rain forests. Instead, their motives range from increasing their profits to boosting market share. Frankly, that’s fine. As long as there is integrity in the certification process, it doesn’t matter what motivates a company to get certified.

Based on my observations over the past few years, I can say that consumer acceptance of a brand or product that bears the Green C certification (or some other Green designation) is a strong reason for any company to go Green and get certified.

I’ve also witnessed an interesting transformation among executives as their companies go through a Green certification program. Typically, three things happen to executives. First, they begin to truly appreciate the growing number of Green Consumers and their purchasing power. Secondly, they begin to understand that their company is capable of doing many small, but significant things, to sustain our natural environment and planet. Thirdly, executives realize that their employees genuinely care about our planet and going Green is a smart way to engage employees in the workplace and stimulate innovative solutions to reducing costs and making their company more efficient.

About the Author: Thomas Hinton is president of the American Consumer Council and serves as the executive director of the Consumer Green Council, which administers ACC’s Green C Certification Program. He can be reached in San Diego, California at tom@americanconsumercouncil.org

Lufthansa Airline is Customer-Focused

by Thomas Hinton

Recently, I flew Lufthansa Airlines round-trip between Los Angeles to Frankfurt. While I have traveled internationally many times, this was my first international experience with Lufthansa. Given the mediocre in-flight service I’ve received from various U.S. carriers in both coach and business class, I must confess my expectations for Lufthansa were not very high. Boy, was I surprised! Not only were the Lufthansa airport representatives and in-flight personnel exceptional, their courteous service in both coach and business class exceeded my expectations.

While courtesy, kindness, and in-flight comfort aren’t rocket science, very few airlines have mastered these simple pillars of superior customer service. It’s too bad because studies show that good service breeds customer loyalty. Lufthansa understands this simple equation because Lufthansa has analyzed its’ in-flight customer experience and determined how to make a ten hour flight a pleasant experience instead of agony and torture like many of their competitors.

I realize there are certain costs associated with providing passengers warm hand towels, a free glass of wine, complimentary newspapers and magazines, and in-flight entertainment programs including two movies. But, these simple in-flight niceties demonstrate that Lufthansa has moved beyond the “bean counter mentality” and makes operational decisions using a higher principle. That principle, namely, is customer satisfaction! Lufthansa has figured out that customer loyalty generates repeat business and repeat business is money in the bank!

While there’s still (leg) room for improvement -- especially in terms of the leg room and hobbit-sized seats most airlines use in coach class -- I think Lufthansa earns kudos for its exceptional service and challenging its airline competitors to raise the customer service bar! I look forward to my next exceptional experience on Lufthansa!

About the Author: Thomas Hinton is a frequent contributor to GlobalBizExcellence.com and he can be reached at tom@tomhinton.com

Not Another Survey!

by William J. Kalmar

As customers, we have all come to understand the importance of customer surveys. Customers are the lifeblood of any organization and to achieve a certain level of success, the needs, wants, and expectations of customers must be understood. Role-model companies exceed the expectations of customers.

My take on the subject of customer surveys is fairly simple: No new product or service should be launched without first involving customers in a review process. Failure to do so could result in a process that is shunned by your clients or, worse yet, in customers flocking to another company.

The Checkbook Debacle
Let me give you an example of just such a scenario. When I worked for a large national bank, we prided ourselves in having an extensive training program modeled after the Malcolm Baldrige National Quality Award. The goal was to introduce every employee in the organization to the Baldrige criteria for performance excellence. The training went on for years, and we emphasized the concept of being in lock step with customers.

Somewhere along the line, we lost sight of this very important concept when it came to something as mundane as new checkbook orders. Our demand deposit department, in meeting with a vendor, learned that by eliminating one style of check reorders, the bank could save $500,000 a year. It meant that instead of offering side- or top-stub tear offs, we would only be offering checks that were attached to the stub across the top. Now $500,000 is nothing to take lightly, so it was full steam ahead to implement this new process.

Well, guess what? When customers began to reorder checks and discovered that their favorite way of tearing checks from the folder had been eliminated, there was an uproar. The branch offices were filled with irate customers, and phone lines in the customer service areas were swamped with customers threatening to move their funds to banks that offered both features.

Someone in management asked for the customer survey that was done before we made this change--of course, there wasn’t one. The bank quickly retrenched and again began offering both features for check reorders. The upside was that we used this as an example of what happens when customers are not brought into the brainstorming process. Weighing the loss of many customers and good will against a savings of $500,000 was a no-brainer.

Health care Focus Group:
As a follow-up to this concept of customer involvement, I recently participated in a focus group staged by a major health care company. The organization was exploring the introduction of some new products that would supplement Medicare. There were ten of us in the group--people who had just signed up for Medicare and others in the throes of reviewing their various options. I have participated in many focus groups over the years, and this one stood out: It was well organized, it kept on point, and it paid each of us $75 at the conclusion of the two-hour session. (Expediting the payment for our involvement was key in my accepting a role in the focus group, which I will expand on.)

As I participated in the roundtable discussion, my thoughts wandered off to this article on customer surveys. As a result, I concluded that more organizations should avail themselves of this technique before launching any new product or service. The participants represented a cross-section of the target audience, and the participants were allowed to voice opinions on subjects not originally outlined in the instructions. The health care organization came away from this with a clear understanding of the expectations of its customers.

Various Paths to Information
Other organizations have approaches to surveying customers as varied as the organizations themselves. In addition, we as consumers often look to the results of survey recommendations before we buy a particular product or service. How many of us have viewed a movie only because it was given “two thumbs up” by a certain pair of reviewers? How often have we eaten at a particular restaurant or stayed at a resort because a survey has designated it four stars? As consumers, we seem to depend on survey results to guide us to the best establishments. Let’s examine for a moment how some of these establishments entice us to participate in their surveys.

I mentioned earlier that the focus group I was involved with provided us with payment, as promised, at the conclusion of the session. In fact, being the cynical person that I am, my participation hinged on their paying me for my time and doing so at the end of the session. As a retiree I no longer offer advice pro bono.

Many companies conduct customer surveys on their receipts. Here is just a small sampling:

• OfficeMax--”Tell us about your shopping experience and enter to win one of five prizes.”

• Walgreens--”How are we doing? Enter our monthly cash sweepstakes. This month the prize is $3,000 cash.”

• Panera Bread (Saint Louis Bread Co.) --”Tell us how we are doing and you may win $2,000.”

• Montana ’s Cookhouse -- ”Please tell us about our serv ice and you could win $1,000.”

• Caribou Coffee Co. --”Tell us how we are doing. We would like to hear about your Caribou experience. Enter our monthly sweepstakes. Ten $100 Caribou Coffee gift cards awarded monthly.”

• Romano’s Macaroni Grill --”Win $1,000--a winner every week.”

• Meijer--”How are we doing? Rate your shopping experience and you may win a $1,000 gift card.”

Are you seeing a pattern here? These companies want our opinions, and if we participate, we may win a prize. Candidly, I am not inclined to assist them, because, as I mentioned earlier, I am somewhat mercenary: I want instant gratification. When I complete the survey, I want a coupon that I can download for a free coffee at Caribou, or a complimentary donut at Panera Bread, or a $5 coupon at a department store.

Here’s my quandary: While at each of these establishments, I have queried the employees about these surveys and information on any of the winners, and to date no one has been able to share with me the names of winners, or details of any payouts. Do I think that these promotions are bogus? Well, until someone comes forward to contradict it, my answer is yes! Therefore, don’t expect me to spend my time commenting on my veal piccata at the Macaroni Grill unless there’s a complimentary cannoli in it for me.

Some companies that have survey information on their receipt and promise nothing--Kohl’s, Macy’s, and On The Border, to name just a few--are saying, “We want your opinion and feedback, but unlike other companies who promise you a chance at a prize but may not deliver, we are being straightforward in telling you that there is no prize. The prize will be better customer service if you participate.”

These are what I would call after-the-fact surveys. I think a more effective way of exploring the needs, wants, and expectations of customers is to survey them while they are involved in the service or sampling the product. I call this method on-site, live surveys. A company that does it best in my estimation is the two-time winner of the Malcolm Baldrige National Quality Award--The Ritz-Carlton Hotel Co. Let me give you a recent example of this methodology.

It’s no secret that the “Ladies and Gentlemen” (as the staff are called) of the Ritz-Carlton constantly update a guest database that contains each guest’s special preferences. For instance, if a staff member notices that a guest prefers a specific wine, that information is entered into the database so that upon a return visit, a similar bottle of wine will be in the room upon check in. Permit me to provide you with a couple of personal examples.

While dining at our local Ritz-Carlton in Dearborn, Michigan, I opted for an appetizer of scallops. Our waitress overheard me remark to my wife, Mary, that “these are the best scallops I have ever eaten.” Evidently that information became part of the on-site, live survey information that was entered into the database, because every time we dine at a Ritz-Carlton establishment, I receive a complimentary scallop appetizer.

Then there’s the incident that occurred about a year ago that to this day still resonates with me. Mary and I periodically enjoy high tea at the Ritz-Carlton. It’s decadent, very soothing, and relaxing. On one occasion I requested extra finger sandwiches. Our waitress, a lovely lady named Anoushka, smiled and kept bringing me the sandwiches, much to my delight. Moving the calendar up two months found Mary and me enjoying another high tea. As we sat down, our waitress came up to us and said, “Anoushka is on vacation in Florida, but she called moments ago to make sure we provided you with extra finger sandwiches.” Now that’s service and an example of taking survey information to the next level. Is it any wonder that the Ritz-Carlton regularly ranks at the top of surveys when it comes to meeting and exceeding guests’ expectations?

Rather than survey guests at the conclusion of their stay, this hotel conducts surveys on an ongoing basis. This is a methodology that other companies should implement because it demonstrates to current customers that they are valued. The hotel also provides survey cards in each room.

Besides surveying customers about their services, many organizations hire mystery shoppers to conduct on-site reviews. I am one of those mystery shoppers. My responsibilities include visiting restaurants, fast-food chains, national department stores, and even a national transportation company. What I have been most impressed with is that clients take it as a given that their food is going to be delectable or that their products will be care-free, so the emphasis is on customer service. Naturally I review the food and the products, but the bulk of my report is about interacting with the employees. Absent great service, it doesn’t matter how good the food is or how sound the products. If employee service is mediocre, customers don’t return.

Conclusion
It is critical to be in lock step with your customers, and there are myriad ways to do so. Each organization needs to establish a pipeline of information from its customers and then make sure that those needs are met or exceeded so that the company will attain legendary status. Don’t get caught up in some money-saving gimmick without first surveying your customers.

Also, please don’t provide me with a receipt and a chance at a cash prize. If you want my opinion or feedback, I prefer a reward on the spot--a coupon for a free dessert or a free coffee would make my day.

Well, time to go. I have to complete a survey from the local hospital where I was a patient recently. They are offering a drawing for a free lobotomy. Who knows, it might just be on the level. If I win, it would be an opportunity to somehow put this dreadful, frigid, Michigan winter out of my mind.

About the Author:
William J. Kalmar has extensive business experience, including service with a Fortune 500 bank and the Michigan Quality Council, for which he served as director. He has been a member of the Malcolm Baldrige National Quality Board of Overseers and a Baldrige examiner. He’s also been named quality professional of the year by the Detroit Chapter of ASQ. Now semi-retired, he’s a freelance writer for the Detroit News and other national newspapers; serves on the USA Today vacation panel; writes a monthly column for Mature Advisor newspaper; writes a monthly column titled “Hammock Thoughts” for Quality Digest’s e-newsletter QualityInsider ; is a mystery shopper for several companies; is a frequent presenter and lecturer; does radio voice-overs; and competes in duathlons.

What Makes a Good Employee?

by Bill Kalmar

May I have the envelope, please!

Each year at this time a momentous event is announced in the pages of a prominent magazine. No, I’m not talking about the Sports Illustrated swimsuit edition, although thoughts of that warm me up on frigid evenings in Michigan (sorry if that’s sexist). I’m referring to Fortune Magazine’s announcement of “The 100 Best Companies To Work For.”

For us quality and customer-service geeks it’s an opportunity to examine the inner workings of some of the best organizations in our nation. For the companies who applied for this recognition it’s a guessing game to see where they rank among some of their peers and who is labeled No. 1.

Ever since this list was first published I’ve been following and reviewing these companies like a broker follows blue chip stocks or a wine connoisseur absorbs Wine Spectator’s list of the top bubbly. We all want to work for an organization that espouses sound customer-service processes and provides employees with a safe, challenging, rewarding environment. Fortune Magazine lists those companies.

After the list is published each year, the featured companies are flooded with unsolicited applications. In fact, in the current edition of the list there’s a section entitled, “How To Get Hired By A ‘Best’ Company.” As the author points out, “Looking at the past decade, our top 25 each year have averaged job growth of 14 percent.” The author goes on to mention that it helps to know someone at the company, because thousands of people submit applications. Before it opened in 2006, the Doha Hotel in Qatar received 25,000 applications for 600 positions.

Before we get into the specifics of these companies, let’s first examine how they were chosen. There’s that special moment in the Oscar awards program where two or three sartorially correct accountants come out on the stage with a briefcase containing the envelopes naming the winners for the evening. Of course we learn how the balloting was done. So in imitation of the Oscars, here’s how “The 100 Best” were selected:

“More than 105,000 employees from 446 companies responded to a 57-question survey. Two thirds of a company’s score is based on the survey, which is sent to a minimum of 400 randomly selected employees from each company and asks about things such as attitudes toward management, job satisfaction and camaraderie. The remaining third of the score comes from an evaluation of each company’s responses to a culture audit which includes detailed questions about demographic makeup, pay and benefits programs, and open-ended questions about the company’s people-management philosophy, internal communications, opportunities, compensation practices, diversity programs, etc. About 1,500 companies participated in the survey. Any company that is at least seven years old with more than 1,000 U.S. employees is eligible.” (Courtesy of FORTUNE magazine)

I have used this listing in my presentations to illustrate the attributes of these organizations. In that regard, I first shared the following 12-point list with QualityInsider readers in “The Corporate Running of the Bulls.” Interspersed with that list are examples from the “100 Best” list:

What makes the “100 Best Companies To Work For” so great:

They make people feel that they’re part of a team or, in some cases, a family.

• With an average salary of $90,083, the 1,376 employees of American Fidelity Assurance call this Oklahoma insurer their “second family.”
• National Instruments yearly stages an employee-appreciation week with executives serving breakfast and culminating in a family outing day.
• Nugget Markets throws a year-end bash, and in 2007 took all of its 1,322 employees whitewater rafting.
• In 2007, as is the case every year, the Plante & Moran team gathers at its annual conference, an opportunity to bond. Partner Jeff Jenkins stated that the theme was to “amp it up,” which means that in workplace and with client relationships and in family-oriented activities, the staff was asked to ratchet it up another notch while living the “golden rule” (i.e., treat others as you would like to be treated) More energy results in better client service, a more enriching work environment and better results.

They encourage open communication, informing their people of new developments and encouraging them to offer suggestions and complaints.

• The CEO at Adobe Systems answers employee e-mails within 24 hours and employee councils feed management with ideas.
• After feedback from employees, SRA International switched insurers, added health savings accounts and adoption aid, and increased 401(k) matches.
• Four times a year employees at Nike are invited to an all-employee meeting where feedback and suggestions are encouraged.
• The head of Yahoo hosts monthly chat ’n’ chow lunches with employees and even answers employee questions online.
• Perhaps the lowest turnover rate in the hotel industry (18 percent) is attributed to J. W. Marriott Jr.’s visits to 250 Marriot properties each year and meeting with employees.
• Cisco Systems uses an employee feedback/suggestion system, “On My Mind.”

They promote from within, letting their own people bid for jobs before hiring outsiders.

• Eighty-five percent of managers at supermarket Stew Leonard’s were hired in house. This supermarket has been featured in many of quality guru Tom Peters’ columns. Here’s a bonus: CEO Stew Leonard Jr. has a surefire way to determine the strength of the economy: “I look for the mashed-potato effect. If customers are buying our freshly-prepared mashed potatoes instead of whole potatoes, then the economy is doing well. Lately, bulk potato sales have been going up, so there’s a concern about where the economy is going.” The so-called experts can cackle about their charts and their prognostications, but for me, I’m focusing any investments I might make on the “mashed-potato” metric.
• At S.C. Johnson & Son more than half of employees are over age 45, 28 percent have worked there more than 20 years, and 78 percent more than six years.
• Twenty-three percent of Herman Miller’s workforce are “Water carriers,” employees who have 20 or more years with the company.

They stress quality, enabling people to feel pride in the products or services they provide.

• Quick action by Mattel in recalling defective toys from China illustrated this company’s focus on quality and safe products.
• Granite Construction has a zero-accident goal and employees are rewarded, not fired, for bringing attention to unsafe situations.

They allow their employees to share in the profits through profit sharing, stock ownership, or both.

• Ten percent of employees’ pay is deposited into 401(k)s at Booz Allen Hamilton.
• Workers at Stanley own at least 50 percent of the company.
• How about a 43-percent stock price rise at EOG Resources, where all employees have stock options.
• Intuit offers all new employees stock options.
• Of the 3,558 employees of PCL Construction Enterprise, 2,200 employees own shares in the company, and many received dividend checks last year in excess of their annual salaries.

They reduce the distinctions of rank between top management and those in entry-level positions, and they bar executive dining rooms and exclusive perks for high-level people.

• Everyone gets overtime pay at David Evans & Associates.
• No one earns more than 10 times anyone else at TDIndustries.

They devote attention and resources to creating as pleasant a workplace as possible.

• Because during tax season the workplace is home six days a week for employees of Plante & Moran, management has designed a building with staff in mind: Custom wood stain throughout the entire building, work stations designed by focus groups, each staff member has his or her own space with a nameplate, and in the front lobby a huge assortment of flowers is replaced weekly. Dan Essad, human resources senior manager stated it best when he was interviewed recently by reporter Carol Marshall for the Oakland Business Review: “We care for our clients, we care for our employees, our community, our families, and that caring is reflected in our space.”

They encourage their employees to be active in community service by providing money to organizations in which employees participate.

• Every employee at Intuit receives four days off with pay each year to perform community service.
• Umpqua Bank provides 40 hours of paid time yearly for employees to volunteer in the community.

They help employees to save with matching funds.

• Aflac boasts a 401(k) matching fund.
• Seven and a half percent of salary is offered as profit sharing at Arnold & Porter.
• Genentech bumped up 410(k) match in 2007—100 percent up to 5 percent of pay.
• Here’s quite a bonus from Boston Consulting Group—15 percent of pay deposited in a retirement plan.
• Alcon Laboratories has the richest retirement program in U.S. business with employee contributions matched 2.2 to 1.
• A 15 percent of pay contribution by Russell Investments is part of their automatic profit sharing.

They try not to lay off people without first making an effort to place them in other jobs, either with the company or elsewhere.

• American Express had 6,000 internal job moves last year.
• There’s a no-layoff philosophy at FedEx.

They care about the health of their employees, sometimes providing physical fitness centers and regular exercise and medical programs. (This was a perk provided by too many companies to mention. This is a sampling.)

• Healthways has walking trails, bikes for rent, and easy-to-locate stairways to encourage exercise.
• Certainly this was to be expected—Nike has a decathletes dinner every year.
• Tennis and basketball courts are provided by AstraZenica.
• eBay has hired a full-time staff of personal trainers and nutritionists.
• A pool, cardio room, a racquetball court, putting greens, and horseshoe pits can be found at SAS Institute.
• At Goldman Sachs, where the average salary of $137,000 keeps people financially healthy, you will also find rock climbing, a martial arts boot camp, massage therapy and Pilates. Even with the over-the-top salaries paid here, the company will even outfit you with workout duds.

They expand the skills of their people through training programs and reimbursement of tuition for outside courses.

• Tuition reimbursement of up to $20,000 and bonuses for advanced degrees, which 65 percent of MITRE employees have, makes this a company that encourages learning.
• Let’s not undercut what Station Casinos is doing—free dealers school for staffers wanting to advance and gain new skills.
• Johnson Financial Group offers a graduate tuition reimbursement up to $10,000.

No. 1 is Google, which prides itself on having fun and minting millionaires. The stock just rose above $700 and 99 percent of employees have stock options.

There you have it. So update your resumes and start campaigning for that new job, unless you are fortunate enough to work at one of these extraordinary companies. I’m just pleased that all of you are still working and supporting my social security and Medicare.

P.S. Finally, for those of you who are anal-retentive like me, I did mention in last month’s column that I would report on two recent books, The Three Signs of a Miserable Job (Patrick M. Lencioni, Jossey-Bass, 2007) and one about General Electric—Jacked Up (Bill Lane, McGraw-Hill, 2007). I suspect that some of you have been searching for that. Rest assured that will be in next month’s column. I thought learning about the best companies better served me and you than harping on a miserable job. I hope you agree.

About the author
William J. Kalmar has extensive business experience, including service with a Fortune 500 bank and the Michigan Quality Council, of which he served as director. He has been a member of the Malcolm Baldrige National Quality Board of Overseers and a Baldrige examiner. He’s also been named quality professional of the year by the Detroit Chapter of ASQP. Now semiretired, he’s a freelance writer for the Detroit News; writes a monthly column for Mature Advisor newspaper; is a mystery shopper for several companies; is a frequent presenter and lecturer; does radio voice-overs; and competes in duathlons.

Editor's Note: This article appeared in the March issue of Quality Digest Magazine which can be accessed at: www.QualityDigest.com

What's Happening at Starbucks: Training or Retrenchment?

by Tom Hinton

An interesting thing happened this past week. On Tuesday evening, February 26, all across North America, Starbucks stores closed promptly at 5:30 pm and remained closed for three hours. With the exception of those Starbucks-licensed shops in supermarkets, airports, malls, hotels, and train stations, some 135,000 Starbucks employees gathered in various locations to complete three hours of training, motivation, and re-indoctrination.

While a handful of loyal Starbucks customers were locked out because they didn’t get the store closing message, most customers accepted this unusual occurrence and simply skipped their evening Java fix or found another place to hang-out with their laptop, book, or newspaper.

Since Tuesday night, a growing number of people have contacted me as “America’s Expert on Business Excellence” to ask the question: What’s going on with Starbucks? Due to the growing number of inquiries I thought it best to post this article on my Blog so that everyone got the same answer. Of course, listening to the voice of my customers, I discovered some interesting things that I didn’t know about Starbucks -- as much as I like the company -- and why Starbucks has been retrenching for the past year.

To borrow an adage from my parent’s generation, it seems that “what’s good for Starbucks is good for America!” But, lately, Starbucks’ slip has been showing! It’s evident from sluggish sales, leadership changes, and a myriad of other corporate problems that have been exposed. These problems and challenges have hurt Starbucks’ stock performance which has slid nearly 45% in the past year (Nasdaq: SBUX). It is currently selling at $17.98 per share down from a high of $38.29 on April 13, 2006.

Things got so bad for Starbucks that Howard Schultz, who had relinquished his title of CEO eight years ago in order to focus on the company’s customer experience and other life pursuits, reclaimed his CEO title on January 8, 2008. Schultz, who first joined Starbucks in 1982, is responsible for building Starbucks from a fledging coffee bean retail operation into the most prolific and successful retail coffee business in the world. Most Starbucks aficionados are not aware that Schultz left Starbucks in 1985 when his idea to establish Italian expresso bars in the Pacific Northwest was rebuffed by Starbucks’ original owners. Schultz had a passion for coffee and he left Starbucks to form his own company, Il Giornale, in 1985.

According to Wikipedia and Starbucks’ website, two years later, Starbucks’ management decided to sell its Starbucks. Schultz bought it and renamed Il Giornale to “Starbucks” and aggressively expanded the company’s reach across the United States. Starbucks popularized espresso drinks such as the cafe latte and introduced them to many Americans.

For 20 years, Schultz has done a brilliant job of building the Starbucks brand and expanding its reach around the world. He has given good jobs to more than 170,000 partners (employees), kept commercial real estate agents busy with the opening of more than 8,500 company-owed outlets worldwide plus 6,500 joint-venture and licensed outlets that employ nearly 70,000 adjunct personnel.

It’s fair to say that Howard Schultz has single-handedly created a cult-like following among millions of people who had previously only tasted freeze-dried coffee. There is no question that Schultz ranks among the best leaders in corporate America and his brilliant 20-year track record proves it. So, what has happened to Starbucks during the past 24-months? What changed?

I think the answer is a combination of three key factors:

First, there’s no question that economic pressures and the cost of making Starbucks coffee have taken their toll on the company’s profits and operating methods. This partially explains why Starbucks is slowing its growth and retrenching its efforts to focus on the basics of quality and superior customer service.

Secondly, given Schultz’s brilliant leadership and thorough understanding of the intricacies of the coffee bar retail business, his absence from the post of CEO created a Visionary vacuum inside the company. In turn, I think a “bean counter mentality” crept into operational decisions without taking into consideration two important factors: Culture and Customer Needs and Wants. Unfortunately, many of these internal changes at Starbucks were not well-received by customers who voted with their feet and tried the competition.

Thirdly, Starbucks got sloppy in terms of customer satisfaction, listening skills, and honoring its core values. While executives were busy crowding new products onto already-cramped retail floor space, and experimenting with things like books and CDs (which were positively received), store managers got distracted and seemed to be spending more time erecting marketing displays and banners instead of paying attention to their customers.

This misstep allowed Dunkin Donuts, McDonalds, and other aggressive local competitors to nip away at the once-loyal Starbuck customer base. Given the choice to pay $2.75 for a latte at Starbucks or 99 cents at Dunkin Donuts, many customers were seduced into trying a competitor’s brand. And, once a customer leaves, it’s very difficult to win them back.

So, fast forward to last Tuesday night’s “Art of Espresso” three-hour training when Howard Schultz took the stage and pronounced to his loyal and faithful partners, “Tonight, we will begin to elevate the Starbucks Experience for our customers. We are passionate about our coffee. And we will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us. But, as I think about it, there is another -- perhaps equally important -- reason why we have scheduled this training. It’s to celebrate who we are.”

After three hours of motivation, training, and re-affirming the Values and Quality Standards that have made Starbucks a great American success story, Schultz reminded everyone that, “We are Starbucks. We should be incredibly proud of what we have built. We are the worldwide leader of specialty coffee. And, believe me when I tell you, we are just getting started. We will overcome the difficult and humbling challenges we face, and will be stronger for it. You have my word on that.”

I have no doubt that given Starbuck’s recommitment to excellence and the reappearance of Howard Schultz as CEO that Starbucks will rebound stronger and healthier than before. But, he’s right. Sometimes it takes a “difficult and humbling challenge” (like dissatisfied customers and unfocused employees) to kick you in the head before you “get it!”

Now, if you’ll excuse me, I’m off to my local Starbucks to see if my favorite Barista is honoring Starbuck’s newest customer pledge: “Your drink should be perfect every time. If not, let us know and we’ll make it right!”

While I’m there, I might suggest Starbucks strengthen that pledge to read: “Your drink will be perfect because instead of chatting with other employees about why I hate my boyfriend, I’ll be listening very carefully to you as I take your order. And, I’ll repeat your order while using your first name to make sure that the Barista hears it correctly, too!”

Oh yeah, have a nice day!