Category Archives: John Tschohl

Five Golden Rules of Customer Retention

By John TschohlJohn Tschohl

Every company makes mistakes that could make them lose customers. I don’t care what business you are in, something will go wrong.

But the smart companies know how to recover a customer and turn them into loyal customers for life.

However, less than 2 percent of companies use service recovery techniques. That’s really bad. All companies make mistakes. All companies have things go wrong.  Many companies and most employees run for cover instead of solving the problem.

The problems are only getting worse thanks to social media. If customers aren’t happy, they’ll post the problem on Twitter and Facebook. They’ll do it fast. Then you’ll have a massive public relations problem that will take time, effort and money to fix.

Instead of handling problems quickly and efficiently, most employees pass the buck or lie!

That’s because people don’t like confrontation. Instead of saying they messed up, they might say the product was shipped.

Companies spend a fortune on marketing. But they don’t spend a dime teaching front-line employees to keep the customer from defecting.

Wouldn’t it be better to spend that money on training employees to handle problems in the first place?

The most important person is the person who has direct contact with the customer. Unhappy customers won’t call the company president. They will talk to whoever is in the store or who answers the phone. Those people need to follow the 5 Golden Rules of Customer Retention:

  1. Apologize and offer a better option. For example, you might offer expedited delivery at the company’s expense.
  2. Act quickly. You must respond to the complaint within 60 seconds. That’s when the magic happens.
  3. Take responsibility. Most employees shovel the problem off and blame everyone else. Customers know when they are being passed along the chain and they don’t like it.
  4. Empower employees to make a fast decision. Each front-line employee should be able to take action quickly. They shouldn’t have to ask for managers to get an approval or pass the buck to them. Take action.
  5. Give away something that has high value and low cost. Customers will be pleasantly surprised and delighted with your company if you not only make things right, but make things better. For example, let’s say a customer calls to complain about a new computer that has a hard drive crash in the first month. In addition to solving the problem, you might offer an extended warranty. It costs the company nothing but it has a high perceived value to the customer.

While I find it hard to find examples of companies doing this well, here are two companies that stand out from the pack:

  • Outback Steakhouse:  If there is any kind of a problem, they immediately take care of it. I once had a dirty knife with water stains. I only wanted a new knife. The waiter apologized and brought me a new knife. The manager also came over to apologize. He also offered me a free dessert that cost about eight dollars. The dessert might have cost him only a dollar but it meant everything to me. Now I tell thousands of people about my positive experience.
  • Red Box: I recently ordered a DVD movie but it wouldn’t play on my TV. I called them and quickly realized that I ordered the Blue Ray version by mistake. Blue Ray doesn’t work on my TV. Even though it was my mistake, they offered me two free rentals. What’s the cost two DVD rentals to them? Nothing. They turned me into a customer for life!

Very few firms understand that.

Companies should spend some of their money on customers. Customer retention is all about creating loyalty and a fan base. Customers will come back on more often. Their loyalty is greater when they have experienced service recovery.

John Tschohl, President, Service Quality Institute – described by Time and Entrepreneur magazines as a customer service guru and service strategist – presents strategic keynote speeches to companies worldwide.  He is the author of “Loyal for Life.” Contact him at John@servicequality.com or www.customer-service.com.

12 Reasons Why Employee Training Fails

By John TschohlJohn Tschohl

Most of the money and time companies spend on training is wasted. That’s because the majority of companies use outdated training ideas and boring training methods.

Training that is poorly presented goes in one ear and out the other. It’s no wonder employees don’t change their attitudes or behaviors after they attend a badly presented training session.

After working in the training field for more than 40 years on six continents, I’ve seen 12 reasons why group training fails:

  1. Large groups: You can’t have a good group discussion if 100 people are in the room. Try to limit training sessions to 15 people so everyone has a chance to participate. If the group size is larger, most employees will not participate and hence will not change their behaviors or learn new skills.
  2. A small number of people dominate the conversation: It’s natural in groups for three people to speak up while everyone else stays silent. Facilitators must call on everyone in the room to participate. If people don’t talk, they won’t buy into the training goals.
  3. Stupid games: People don’t like role-playing games. Games and exercises have to do with something that builds success as a team. People need to be actively involved in the exercise.
  4. Complicated training materials: If the material is not easily understood, it will not be implemented. Make sure the information is easily comprehended. Test the material on several small groups. Make adjustments and then roll out the final version to the entire organization.
  5. Facilitator dominated: Facilitators should be seen and seldom heard. They should steer the conversation, but they should not dominate the discussion. They should ask leading questions of the participants and make sure everyone talks at some time. The facilitator is a juggler. He/she needs to keep the conversation going. The more discussion there is, the more likely attitudes and behaviors will improve.
  6. Lectures: Remember how you fell asleep when boring professors spoke in college? Your employees are no different. Lectures are not an effective way to get people to change their attitudes and beliefs.
  7. Irrelevant Information: If the material is not relevant to their jobs, people will not accept the information. They want ideas they can use immediately.
  8. Bad physical environment: Learning can’t take place if people are not comfortable. Invest in a room that looks pleasant and professional. It sounds basic, but make sure the room is well heated or cooled and has comfortable seats. Offer refreshments. Add audio and video presentation equipment. Make sure there aren’t any outside distractions, such as noise.
  9. Not offering enough training sessions: If training isn’t offered regularly, skills won’t be learned and attitudes will not change. Consider offering training every four months. Companies need to reinforce and refresh training every few months with something new. A one-shot program will have one-shot results.
  10. Repeating the same training programs and materials: A child can watch the same program 50 times, but an adult can’t watch the same training materials twice. Companies need to bring in new trainers who have new information and different teaching styles. Companies should also invest in new training materials to spice things up.
  11. Not having supplemental training materials: People learn by using a variety of techniques. Good training techniques require that discussions be supplemented with videos and reading materials that can reinforce the message. The old saying, “A picture is worth 1,000 words” is even more relevant in today’s video age.
  12. Not taking today’s young people’s learning styles into mind: The vast majority of workers are young people. They learn differently than previous generations and they get bored easily. Look at the games they play on their phones. They want to be entertained. If the training isn’t entertaining, you lose the participation.

Training costs a lot of money and takes a lot of time. Labor time is your single biggest cost. If the listening switch for participants is off you waste all your money. If you do it right, then training is a wise investment. If you make mistakes, it will hurt the company and the employees.

John Tschohl, President, Service Quality Institute – described by Time and Entrepreneur magazines as a customer service guru and service strategist – presents strategic keynote speeches to companies worldwide. He is the author of “Empowerment, A Way of Life.” Contact him at John@servicequality.com or http://www.customer-service.com.

Empowered Employees Power Profits

By John TschohlJohn Tschohl

Employee empowerment is defined as allowing employees to make fast decisions — on the spot — in favor of the customer. Empowerment is the single most difficult skill to get employees to utilize. That’s a problem for businesses and government because if you don’t have empowered employees, you will never be a service leader.

It is critically important for businesses to give employees the power to make decisions on the spot because one policy can’t cover everything. There are too many weird things that happen every day. The best news is that most decisions will cost the company less than $50 which is a pittance when you consider the lifetime value of the customer and the good will that empowered decisions can make.

If you have over happy customers you make a lot of money. And since 99 percent of all customer contact is with an employee either by phone, in person or over the Internet, it is vitally important that employees know they can make bring resolution to a problem by being empowered

But employees are afraid to make empowered decisions on their own – regardless if the company actively supports empowerment. There are three key reasons employees don’t take initiative to solve problems.

1. The primary reason employees will not make an empowered decision is they think they will lose their jobs. In their minds, they absolutely know they will lose their jobs. Most people don’t want to go home and tell their family they are fired. They think it is less risky to lose a customer than your job. After all, they think, “No one ever got fired for enforcing a policy, rule or procedure.”

2. They are afraid they will be penalized and have to pay for what they did. For example, if they upgraded a person form a room to a suite, they will have to pay the difference.

3. They don’t want to get chewed out. There is very little upside for an employee who makes decisions. They don’t get any pats on the back and there aren’t any celebrations when they make a decision.

Companies need to adopt an employee empowerment plan.

1. To implement an employee empowerment plan, every top manager and department head needs to be on board. They must enforce a culture of empowerment culture and they must celebrate when employees make empowered decisions. It just takes one negative management feedback for the employee grapevine to get the message that the policy is just lip service or the policy du jour.

2. Train employees on empowerment. You have to teach them what is it, how to do it and how we make a big deal about it.

3. Reinforce and celebrate empowerment. Most empowered decisions have no significant cost. For example, they might open the doors early to let in a customer. They can bend policies and procedures to fit a situation. In a restaurant, they can let customer mix and match menu items.

There are so many things you can do to make customers over happy.

In fact, I wanted to buy my wife an iPad from the AT&T store so I could get a $100 voucher. However the store was out of stock. But instead of sending me to the Apple store across the mall, the employee walked me to the Apple store and she bought the iPad and he gave us the $100 voucher even though I didn’t buy the computer at his store. That’s empowerment.

Unfortunately, most companies don’t have empowerment programs. I can think of only a handful that fit the bill – Ritz Carlton, Marriott and Amazon. Very few organizations understand employee empowerment or are good at it. Ritz Carlton empowers any employee to spend up to $2,000 on the spot. However, no one has ever given away $2000! The irony is that other companies think employees will give away the store. They won’t.

Some decisions don’t take any money at all, but they improve the customer experience.

Another irony is that companies spend massive amounts of money on marketing to attract customers. If companies spent part of their marketing budgets to retain customers by training employees to make empowered decisions they would see an immediate, measurable return on their investment.

You want to empower employees to make decisions on the spot. When he does, the impact on customer is immediate.

If employees knew their jobs were to make over-happy customers, the company will grow faster. By empowering employees, you can build market share and market dominance. You will have happy customers. And you will make more money

John Tschohl, President of Service Quality Institute, is described by Time and Entrepreneur magazines as a customer service guru and service strategist – presents strategic keynote speeches to companies worldwide. He is the author of “Empowerment, A Way of Life.” Contact him at John@servicequality.com or http://www.customer-service.com/

Customer Service Leaders Must Master Speed

By John TschohlJohn Tschohl

Among the many tools and tactics a company can use to improve the customer experience, speed is the most overlooked. That’s unfortunate because a major factor in creating a positive customer experience is speed. There are three major obstacles to improving the customer experience through speed:

1. Employee mindset. If an employee has four days to do a task, they will take four days to do the task. In fact, they won’t get started until the fourth day! And then they will usually not finish the task because they need help from another employee who called in sick or is otherwise unavailable.

2. Company policies. Many companies have policies that slow down tasks that could be completed quickly and easily. They might require two or three sets of eyes and signatures for approval before a task could be completed when one set of eyes is really enough. Companies must eliminate policies and procedures that add to the cost and time of a task. That’s because every time another set of hands touches a document, the company spends money. When you buy an Apple product in their stores you will see speed.

3. Disregard for the customer experience. In today’s world, customers want it now. They won’t wait in a doctor’s office for an hour. They won’t stand on long lines. If they can’t get something quickly, they will go to another provider.

Companies that understand the need for speed can actually profit greatly. Southwest Airlines’ planes have a 20-minute turnaround. Because of this speed they need fewer planes, which saves them billions of dollars. As a result, they have been profitable for 40 years while competitors in their industry have posted huge losses.

In the early days of computing, Dell became a major player when they convinced customers they could create and ship a fully customized computer in just four hours.

In today’s competitive world, if you snooze, you loose. Customers want everything faster. Employees must understand that competition demands that employees work quickly. Every customer wants speed. They want everything faster. Employees need to understand everything is urgent. Every extra minute they can save will translate to the bottom line.

Look at your company policies. When the order comes in, do you ship the same day? When a loan application comes in, does it get processed in one day or in seven days? You better believe there is another company out there who can do that job that fast. And they will get the business and you will lose the business.

Every employee needs to figure out where they improve speed without foregoing quality. You can never compromise quality.

Management also must be open to employees’ suggestions. After all, they do the work every day. They know what actions can be taken to make any process faster and more efficient. Listen to them. They will feel appreciated and will be motivated to do a better job. Individuals who master speed have the ability to move up in the organization. Be on the lookout for employees who master speed. CEOs, for the most part, are driven by speed.

If you want to differentiate your company in the marketplace, then you need to show how you can dramatically deliver service and products faster than your competitors.

Fortunately, companies can create a new mindset that helps win the war on speed:

1. Create a culture for the need for speed. If the employees realize the importance for speed, they will get the job done faster.

2. Customer service is a skill. It can be taught. And it should be taught every four months with new and interesting materials to keep employees fresh and engaged.

3. Modify policies that are speed traps. The lack of speed can cost a company a lot of money. Speed is customer service at its best — a powerful competitive advantage.

John Tschohl – described by Time and Entrepreneur magazines as a customer service guru – presents strategic keynote speeches to companies worldwide. Contact him at John@servicequality.com or http://www.customer-service.com/.

Superior Customer Service Requires a Strategy

By John TschohlJohn Tschohl

All too often, service is not a priority for management. Instead of focusing on people—on their customers—they focus on numbers. What they don’t realize is that, if they would pay attention to their customers’ needs and do whatever they can to fill those needs, the numbers will follow.

In order to increase sales and profits, organizations must provide the type of service that will gain—and retain—customers. That doesn’t mean advertising that “the customer is king,” or that “the customer is always right.” Those are mere words. Customers will decide for themselves what kind of service you really provide.

You must act, not profess. You must make customer service a priority. You must do whatever it takes to provide your customers with what they need and want and to do so quickly, enthusiastically, and accurately.

To ensure that service becomes a driving force in your organization, you also should develop a plan, much as you would for any other goal, personal or professional, in your life. For example, if you decide that you would like to retire at 55, you must develop a plan that will get you there. Just as importantly, you must work that plan.

Before you develop a Customer Service Plan and put it in writing, take these steps:

Understand what your business is. Regardless of what you are selling—whether it’s life insurance, automobiles, or printing—you are in the customer service business. You must build everything you do around the customer experience.

Identify the elements of superior customer service and eliminate the obstacles that prevent you from providing it. How can you make it? How can you make it easy for people to do business with you? Are your hours convenient? Are your employees well trained? Is someone in the organization available 24 hours a day, seven days a week to answer customers’ questions and to help solve their problems?

Identify your customers’ needs and wants. If you don’t know who it is you are trying to satisfy and what their needs are, it will be difficult, if not impossible, to meet them. Gather information you need to set goals that will include average revenue per customer and the market share you want to achieve.

Compare your organization and how you operate to role models outside your industry. Look at the best of the best and model your behavior after those businesses. What do they do that you aren’t doing?

Put your money where your mouth is. Create a service guarantee that gives customers peace of mind. Northeast Delta Dental did just that by guaranteeing that it will provide its customers with certain services within certain time frames. For example, if it does not send a member identity card within 15 calendar days after the enrollment form is completed, it will pay that member $50.

Track your progress. Use mystery shoppers and surveys to evaluate how you are doing and to assess the impact of your focus on customer service. Look at your sales and market share before you implemented the plan and compare it with where you are every six months afterwards.

Drive the program. Provide continuous training that will instill in all employees an enthusiasm for—and commitment to—customer service. Reinforce the focus on service by rewarding high-performing employees and enforcing and reinforcing service standards.

Make a commitment. Creating a customer service culture takes time. If you aren’t committed, you will fail. Dell built its business on customer service but, after Michael Dell stepped down as CEO in 2004, the stock dropped 25 percent, because his successor was not committed to providing the customer with the best experience possible.

When organizations know what is important to their customers, and when they realize the shortcomings of their current service, they are ready to write a Service Plan. Planning, drafting, and implementing that plan requires management commitment, a long-term strategy, and continual effort to improve service. It will take some work, but the rewards will be well worth the effort.

John Tschohl, internationally recognized service strategist, is founder and president of the Service Quality Institute in Minneapolis, Minnesota. Described by USA Today, Time, and Entrepreneur as a “customer service guru,” he has written several books on customer service and has developed more than 26 customer-service training programs that have been distributed throughout the world. John’s monthly strategic newsletter is available online.