Document View

There's a difference between those companies that talk the talk, and those that are actually able to pull off major customer service improvements. Stories of three firms that were able to engineer customer service programs that actually worked are presented. For one company, customer service was what brought it back from the brink of ruin and once again enabled the firm to compete nose-to-nose in the race against its industry peers. For another, the overhaul was necessary when executives suspected that their customer service data wasn't telling them the whole story, and that to get the truth, they had to recreate their metrics from scratch. And for the last, customer service became a lifeline that would keep the company from being swallowed up by much larger, more powerful competitors. For all, the renewed customer focus has improved their financial fortunes. The companies discussed are: Qwest, Oakwood Worldwide, and Labe Bank

FOR MUCH OF CORPORATE AMERICA, "customer service" is about as close as firms get to religion. It's a simple truism that if you don't give your clients platinum-grade attention, they'll take their business elsewhere.

But there's a difference between those companies that talk the talk, and those that are actually able to pull off major customer service improvements. "Many firms exist at the level of posters and plaques," says Karen Leland, cofounder of business consultancy Sterling Consulting Group, based in Sausalito, California, and coauthor of Customer Service for Dummies. "They know it's important, but they don't take any actions."

Then there's the other end of the spectrum, the companies that dream up dramatic top-down solutions that amount to too much, too fast. "If they don't understand their own readiness, they tend to bite off more than they can chew," says Ron Rosenberg, customer service guru and founder of consumer activist site Drive-You-Nuts.com. In other words, pulling off major, but necessary, change can be a real balancing act. But if you do it right, it's something that could very well save your company from disaster.

Here are stories of three firms that were able to engineer customer service programs that actually worked. For one company, customer service was what brought it back from the brink of ruin and once again enabled the firm to compete nose-to-nose in the race against its industry peers. For another, the overhaul was necessary when executives suspected that their customer service data wasn't telling them the whole story, and that to get the truth, they had to recreate their metrics from scratch. And for the last, customer service became a lifeline that would keep the company from being swallowed up by much larger, more powerful competitors.

For all, the renewed customer focus has improved their financial fortunes. "Companies used to say, 'Prove it to me that customer service makes a difference to the bottom line,' " Leland says. "Now they never ask that anymore. They all accept that there's a real connection between the service you offer and the ultimate health of your business."

Enlarge 200% Enlarge 400%

QWEST: Back From the Brink

Just a few years ago, phone giant Qwest Communications, based in Denver, was in pretty dire straits-and customer service had a lot to do with it. Poor attention to clients, the challenges of its merger with U.S. West (also Denver-based) because of combined client lists and corporate cultures, and a plummeting stock price all had people whispering about the possibility of bankruptcy. It was even, at one point, kicked out of the Better Business Bureau for its lax standards-no small feat.

So when new management under CEO Dick Notebaert assessed the situation in 2002, it was clear that renewed attention to customer service was going to have to be the savior of the company. If customers kept leaving in droves, as they had been doing, there wasn't going to be any company left to save. "There was genuine customer anger that we'd let people down," says Renee Karson, Qwest's director of marketing. "So we had to get back to our heritage of service, and focus on the customer instead of just products."

Enlarge 200% Enlarge 400%

Karson heads up the firm's internal polling unit, the Customer Transaction Survey, which canvasses 20,000 users every month. In November 2002, she helped roll out the Spirit of Service program: fresh employee training that reoriented the firm away from its previous technology focus and entirely toward customer satisfaction. Among its initiatives are improved product delivery, better pricing plans, and call centers that strive for "one-call resolution"-resolving any customer situation in a single phone call. Qwest even has dedicated teams that pore over every single customer comment that noted "fair" or "poor" service, to find out what went wrong.

. In early 2003, shortly after the rollout, the percentage of clients reporting "excellent" or "very good" service was only in the high 50s. But after the program gained traction, the percentage of "excellent" and "very good" responses rose to the mid-70s, a spike of almost 20 percent. The company's next target, which seemed unthinkable a few years ago: 85 percent. The University of Michigan's own annual metric, the American Customer Satisfaction Index Survey, confirmed those findings, with Qwest's overall score rising five percentage points in one year, the best in the industry. It hasn't yet exceeded competitors like Verizon or BellSouth, but has drawn itself into a statistical dead heat-no longer the service laggard that it once was. "It's nice to get that affirmation of what we've been doing," Karson says. "While the industry as a whole has gone down, we've improved over the same period of time."

As a result, notes spokesman Bill Myers, Qwest has put the brakes on losing phone lines, a trend that had put the whole company in peril. Bankruptcy talk, too, is now part of the company's past. Karson offers one tip for getting the entire staff on board for such a major cultural shift: Demonstrate what a priority customer service is by building it right into their compensation. The numbers derived from the Customer Transaction Survey, for instance, weren't just statistics. They became part of the bonus plan, from which every Qwest employee-not just senior executives, as is often the case-would benefit financially if the firm reached its goal.

OAKWOOD WORLDWIDE: Searching for Clues

One company had an innovative reason for engineering a customer service overhaul: Its client satisfaction scores were too good. And it was by not trusting the numbers that company executives were getting back from their surveys that they were able to save themselves from decline and rack up some impressive customer satisfaction improvements.

As the foremost provider of corporate housing in America-with revenues of well over $300 million, it's bigger than its next 10 competitors combined-Oakwood Worldwide had been collecting customer service data for ages. But it had come from old-fashioned tools, like the fill-in cards you often find at hotels, or phone surveys that can be notoriously unreliable. After all, people don't want to be nasty to someone nice on the phone who's soliciting their opinions.

So the founder and chairman of the privately held firm, Howard Ruby, took a critical look at the numbers (an average rating of 4.6 out of 5) and decided something was fishy. In fact he called in Blake Ingram, vice president of strategic sourcing at Oakwood, who, as a fresh hire, didn't yet have any of his compensation tied to these customer service results. "He picked me to do the analysis and figure out whether to make changes," Ingram says.

Enlarge 200% Enlarge 400%

The result: a new survey called The Pulse, an online questionnaire produced in partnership with the research firm Market Metrix, based in San Rafael, California. The 35 new questions focused on whether the Oakwood experience was meeting or exceeding expectations of guests, and the online format lent itself to extremely honest answers. Since the first quarter of this year, The Pulse has resulted in 4,500 completed surveys.

Ruby's hunch proved to be dead right: The results weren't as spectacular as before. First, scores for the new metric were in the mid70s out of 100 (with a score of 75 signifying Oakwood was meeting guests' expectations), and the rate at which guests experienced movein problems-such as scratches on the furniture, or poor quality of the housewares-stood at an uncomfortably high 18 percent. But now, Ingram says, the company has been able to find out what's been going wrong and how to fix it, before those undetected problems begin to harm sales and eat away at market share. In just a few months scores for the new metric have risen from the mid70s to the low 80s, and initial move-in problems have dropped a third, to 12 percent. That's helped fuel growth rates of 15 to 20 percent in the past year.

The company also implemented World Class Service Standards in 2003, based on high service standards common in Asia. Oakwood employees all over the world have been trained on the new standards.

One example: The "5-25 rule," in which guests within five feet of an employee are verbally greeted, and guests within 25 feet are given a nonverbal greeting, like a wave. That kind of uniform service is especially critical in a business-to-business environment. Oakwood often strikes contracts with corporations, as opposed to individuals; having wildly fluctuating standards isn't good business. "Companies are looking for customer service consistency," Ingram says, "whether it's Saigon, or whether it's Pig's Knuckle, Arkansas."

LABE BANK: Taking on Goliath-and Winning

In the banking industry, it's become a battle of the big against the bigger. With financial institutions branching into more and more areas since the 1980s, such as insurance and investments, giants like Citigroup Inc.'s Citibank and rival Bank of America now dominate the landscape.

So for tiny community banks, customer service isn't just a trendy buzzword. It's become critical for their very survival, if they want to exist amid these gargantuan providers. That was the issue facing David Arts, CEO of Labe Bank, a two-branch operation with its headquarters in Chicago. A modest outfit founded in 1905 by Czech immigrants, by 1993 it had grown to a "whopping" $65 million in total assets, jokes Arts-barely a rounding error for some of its competitors.

Somehow the bank had to distinguish itself if clients were going to be persuaded to stay at the little neighborhood operation. So in 2003, the bank started rolling out its new brand. Executives figured Labe could never compete on some of the traditional banking battlefields-the highest interest rates for savings accounts, or the lowest fees-so they had to set themselves apart in customer service. The new tagline was "The Way a Bank Should Be," developed in association with Chicago-based ad agency Brandtrust; it was the result of two years of intensive research on how Labe Bank could boost customer service initiatives-and, hopefully, gain clients and revenues as a result.

Enlarge 200% Enlarge 400%

"We didn't roll it out for two years, because we didn't just want to be throwing it out as a tagline," says Arts, who's been with Labe since 1996. "We wanted to be comfortable that every employee understood what this was all about, that it was a whole new culture and a way of doing business."

The data collection that preceded this overhaul came on a number of fronts. There was intensive surveying of what customers' expectations were. There were continuous visits by "mystery shoppers," undercover clients (hired from an outside vendor) who would report back on the quality of their experiences. Brandtrust staffers even canvassed the employees themselves on what they felt the bank's strengths were, and what programs they would design to build on those.

From this research, Labe codified its Golden Rules of Service, 12 rules for going above and beyond for every customer. A couple of examples: using the customer's name at least once in conversation, and personally escorting them to other departments if need be. They also instituted "Wow" awards, by which staffers were recognized for outstanding service. Past winners include an employee who went to an elderly woman's home on his day off to set up her online banking account, and others who took clients grocery shopping or changed their tires. "We wanted to wow the customer, instead of just meeting their expectations," says Vicki Dreyer, the bank's vice president of marketing. "We wanted to exceed expectations, and then we developed an action plan, with due dates for actually achieving that."

So what was the result of the renewed customer service focus? Current assets now sit at $400 million-a 40 percent growth since 2001, with a 50 percent increase in deposits. "We've grown more in the last few years than we did in the first ninety," Arts says. The bank is even opening a third branch, while the big boys gobble up many other community banks. And even though it's still a speck compared to other banks, Labe's not scared of them anymore. "When a big bank comes into our area, like Washington Mutual or LaSalle, we end up with more customers," Arts says. "They can anger people faster than anybody. And then clients always come back to us, for the customer service."