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The End of Customer Service Heroes
Frances Frei and Anne Morriss, authors of “Uncommon Service: How to Win by Putting Customers at the Core of Your Business.”
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An interview with Frances Frei and Anne Morriss, authors of Uncommon Service: How to Win by Putting Customers at the Core of Your Business.
SARAH GREEN: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green. I’m here today with Frances Frei and Anne Morriss, co-authors of Uncommon Service: How to Win by Putting Customers at the Core of Your Business. Frances is a Harvard Business School professor, and Anne is managing director of the Concire Leadership Institute. Thanks to both of you for coming in.
ANNE MORRISS: It’s really great to be here.
FRANCES FREI: We’re really thrilled.
SARAH GREEN: So Anne, kick us off by maybe telling us a little bit about why we need another book on being customer-centric. Don’t businesses know this already?
ANNE MORRISS: Well, the challenge is that good service is still shockingly rare. And you would think we had figured this out by now because customers clearly value it, and companies clearly want to deliver it. And yet, it’s still the exception, not the norm. And what we discovered is that the path to excellence is not intuitive. It’s filled with surprising rules and pitfalls. And we wanted to write this book so that people could get a little bit closer.
SARAH GREEN: Now, one of the stands you take in the book, interestingly, is against the so-called customer service heroics. Why don’t you want some customer service heroes?
FRANCES FREI: I think that the notion of heroes, it makes us all feel good in the moment. You feel great to rescue someone. But it by its very definition means we’re going to have episodic excellence. And so, said differently, do you want to design your system such that it requires heroics? Most organizations, that’s how they’ve designed their systems. That it’s not that you can’t be excellent, but it requires superhuman efforts.
What we are trying to do is find out, how can you reliably and as a matter of course deliver excellence? How do you systematically deliver excellence? You can think about it that the heroics might be a nice icing on the cake.
SARAH GREEN: Mm. So it sounds like what I’m hearing you guys say is that while we know we need to be doing this, to date, we’ve just been trying harder and harder, and not really fundamentally rethinking how our customer service organizations are designed really.
FRANCES FREI: Yeah, and I would say that its– what we’ve noticed is that well-intentioned, energetic people are most likely to fall into these traps. And so that was the part that’s quite heartbreaking honestly, that the people that want to deliver the best service end up being the ones that design organizations that make it close to impossible to systematically do it.
On the employee side, we often say, don’t design jobs for employees you wish you had. Design jobs for employees you actually have. And when we design jobs for employees that we are actually likely to attract and retain, turns out we would design the jobs quite differently than designing the job for, well, Sally could do it. So everyone else should be able to do it. And Sally hasn’t worked there in 10 years. But she could do it. And so it’s almost like an ode to Sally is the job design.
ANNE MORRISS: Definitely. We see a lot of managers dealing with service problems by telling their people to try harder. And trying harder, not only is it a path to failure, but it gets in the way of the real solution which is to go back to the drawing board and redesign the system so that everybody can succeed.
SARAH GREEN: So what are those companies that do get that right? Because that’s not intuitive.
ANNE MORRISS: One of our favorite examples is a company called LSQ, which is in the factoring business. Essentially, their core service is allowing small businesses to borrow against their receivables. So it’s a pretty complex business. It requires a lot of analytics that are specific to the business. And historically, you’ve had to hire people who can really learn the specifics and deliver it. And that’s taken a lot of time and energy.
So what LSQ did is they used technology to automate as many processes as possible and set their people up to perform literally on day one, which was a radical departure for the industry. So they used what we call job design to design a system that essentially eliminated the need for training and allowed people to focus on being responsive to customers on day one.
FRANCES FREI: And they did that through the use of enabling technology. And so it’s not that the technology made the labor obsolete, but that the labor could, as Anne said, perform from day one. And put that in contrast to a typical call center– and what LSQ does is more complicated than what a typical call center does. Training is probably three months long at a typical call center. Literally, LSQ is getting performance out of employees on day one. They’ve designed a system where the employees that they attract and retain can deliver excellence just as a matter of course. All of them can.
SARAH GREEN: Mm. So what is step one in building a process like that? How do you get started if you’re a company like LSQ?
FRANCES FREI: The way I would start is, so an existing company is we look to see do you have an employee management system problem? And if the quality of service is dependent upon the employee delivering it, you do. So the question we ask is, what makes your typical employee reasonably able and reasonably motivated to achieve excellence?
Your employee’s ability is your job design. Your employee’s motivation is your performance management system. If your employees are not delivering, it’s typically those are not aligned with the actual employees that you attract and retain. In our experience, nine times out of ten, if you have an employee problem, you have a job design problem.
Typically, managers go to incentives. They try to use incentives to solve employee problems. We find that incentives solve very, very few problems. Dysfunctional incentives cause problems. But it’s job designs that solve most of the problems.
SARAH GREEN: So, Anne, you mentioned that LSQ is a radical departure from industry.
ANNE MORRISS: Mm-hm.
SARAH GREEN: And what I’m wondering is are there some industries where this approach is just really too tough? Something like– we’ve all had terrible experiences in airlines. Everyone’s got a bad airline customer service story. Or in health care, we’ve all had a terrible experience getting through to a health insurance company to a human being who can actually answer our question or something like that. And yet, we still fly. We still go to the doctor. So are there some industries where you just don’t really need to have great customer service?
ANNE MORRISS: Well, I would say, the airline industry, we fly. We hate almost every airline provider, but then fly Southwest, or fly Virgin America. And it’s like a calm sea. It’s an oasis. And so, particularly in those industries where there is rampant customer dissatisfaction, there’s rampant unprofitable businesses. The airline industry is getting what it deserves in that industry in that I believe it’s destroyed more value than it’s created since the inception of time. And customers basically hate it.
There are two airlines that customers don’t hate– Southwest, Virgin America. There are two airlines that are profitable. And they have designed their systems so that it’s not the particular flight attendant you happen to get at Southwest. That’s not why it works. It works by design. And that’s what our argument is.
And precisely the same thing is true in health care. Most people are trying to be great at everything. It’s not working. And it’s creating deep frustration. But there are a few that are magnificent. And they’re not there by luck. It’s by design.
SARAH GREEN: Hm.
FRANCES FREI: Yeah, the industries you point out, Sarah, are precisely industries where we believe there’s exceptional opportunity right now.
SARAH GREEN: Mm. Now, you keep saying it’s by design, and we talked a little bit about job design. What are some of the other things and elements you have to redesign?
ANNE MORRISS: So specifically for the challenge of customer management, we talk about there being four inputs, and those are selection, training, job design, and performance management. As Frances said, job design is where there’s a lot of opportunity right now because in most service organizations, the complexity of the job has gone up pretty dramatically, and the skill level or sophistication of employees has stayed pretty flat. So you have to figure out how to close that gap. And in most cases, it’s easier to change the job design than turn over your entire workforce and push on some of the other levers.
Those are, it turns out, the same inputs that you can push on when we talk about managing customers, which is another central challenge in service businesses. Now, when you get to customers, the big inputs you have are– you have less control over selection in some cases. But again, you need to train your customers. You need to create, you need to design a job for them that they can do. And you need to give them some incentives to perform.
In fact, you can think about– one of the challenges in services is that, in many ways, your customers are performing like your employees. And so you have to manage them in similar ways.
SARAH GREEN: Hm. What’s an example of a company that trains it customers?
FRANCES FREI: So Zipcar is an interesting one. It’s Boston-based company, and they’re a car sharing service. And so they deposit their cars in parking spots around the city. And once a customer uses the car, they return it to the parking spot. There’s not an employee there to clean it, or to gas it up. Another customer goes next and uses it. They’ve managed and trained their customers to keep the cars clean, to fill them up when they go below a quarter of a tank, to not be late because if they’re late, that means that the next person doesn’t get it.
And so think about when you go to the airport and rent a car. You’re not managed and trained to do anything because they take care of all of the work. Zipcar, the customers are really doing the vast majority of the jobs that employees use to do. Without the appropriate design and without the appropriate incentive structure, that would definitely cause chaos.
ANNE MORRISS: Zipcar’s a great example because they use fees the way lots of organizations use fees to try to create an incentive for customers to behave. But fees can backfire. In many settings, fees can be economic license to misbehave.
And so one of the other things that Zipcar does is they try to convince their customers that they are not just an evil corporation. Literally, their quote on the website is “This is a lifestyle choice.” This is more like joining a neighborhood association, and joining that community comes with certain rules and obligations. And that means not inconveniencing your fellow neighbor, who’s also part of this community. And so Zipcar does things like they have Zipcar nights where you come to a bar, and you pay pool with your fellow Zipcar members. And that helps to create the norms where customers are more likely to behave the way you want them to.
SARAH GREEN: So they’re still a relatively small company. Is this an approach that scales up?
FRANCES FREI: So the other example that we’ve used that has scaled quite well is Starbucks. Starbucks is a really fun example where they have managed and trained customers to– in the ordering process, as an example. We use a very precise language. We’re very careful. We use their language, their sequence. And we really are trying to get it right.
If you step back and think, what was Starbucks doing? The complexity that customers would have introduced if we used any language in any sequence would cause chaos in their operating environment. So they had to come up with a mechanism to get us to want to behave in a way they needed us to. So it’s very– and they do very careful things, like call the drink back in the appropriate way regardless of what you said. And they call it back loud enough so everyone else in line can hear it.
So they’re doing these things that create positive reinforcement. They’re not saying you got it wrong. They’re just stating it in the right way. And it taps into human nature. And it makes us want to get it right. And they’ve scaled around the world. And so not saying that it’s easy, but if you design the appropriate jobs for customers, we don’t see limits to scale with it.
SARAH GREEN: In Starbucks, you still have some holdouts who can’t bring themselves to use the word “tall.” But for the most part, the system works.
FRANCES FREI: Yeah.
SARAH GREEN: Interesting to me that we’re talking about improvements here that don’t cost money because I think one of the challenges and assumptions people bring to customer service is that if you want great service, you have to pay a premium. So if you are not catering to the small segment of people who are super wealthy, how do you get people to pay for the service that they’re getting?
ANNE MORRISS: So part of it is how you define service excellence. And the way we define it is that you are meeting the needs of customers in the order of their prioritized needs. And I’m sure there’s a more graceful way to say it. But Walmart delivers excellent service to its target segment and because it is addressing their needs in the order that they have them. So Walmart customers want low prices. They want a lot of variability in each category. And Walmart has figured out a model that it can deliver that because it under-delivers in areas that those target customers care less about.
So Walmart’s going to trade off the fact that the ambiance at any particular Walmart store is not particularly pleasing. You’re not going to find sales help. The lighting is harsh. The floors are unforgiving. But in return, you get low prices and you get a lot of variety. And Walmart customers are willing to make that trade off. That’s a definition of excellence.
SARAH GREEN: Hm.
FRANCES FREI: Yeah, and so with that definition of excellence, you want to be best in class at things that your customers value most, worst in class at things that they value least. In order to be great, you have to be bad is a pretty provocative message, but is absolutely the underlying tenant of it. When you think about excellence then, it’s not the high-end premium service. It can be, to Anne’s point, any target market. You have a set of needs. Who’s going to meet those needs the best way? That’s excellence in our mind.
Now, that there are– at the high end, people are willing to pay premiums. At the lower end, especially when it’s low price, we have to come up with now clever ways if we want to fund service. And that’s where there’s interesting use of having customer self-service goes on. And so the airlines is a great example where they seem– I believe soon they’re going to ask us to also fly the plane. It’s just– they’re thinking about ways in which they can get customers more and more involved. And that’s not necessarily bad. But you have to be really thoughtful about the design of the customer’s role there.
And then, there are also– we talk in the book– some interesting ways that what appears as value added to the customer is actually cost savings to the firm. And so there are some fun ways of figuring out how to design those things. And so you can think about it as a win-win.
SARAH GREEN: And that would be maybe something like the Zipcar example, where you don’t need someone to clean the car.
FRANCES FREI: Right, so that would be the example of Zipcar, the customers are doing the work. And they designed the job so that the customers are really happy to do the work because they get the value of it in the contract.
SARAH GREEN: And now, I want to ask just a broader question about service in general and service economy. We’re in the midst of a bit of a national debate right now as unemployment’s still very high about whether a service economy can really provide good jobs for an entire country. What do you see as the role of a service economy in providing this kind of value when we’re in this uncertain moment and not really sure if a service economy can really fuel the economic growth of the United States going forward?
ANNE MORRISS: Well, I think service jobs are– it’s the present, and it’s the future. It’s 80% of jobs right now. It’s 80% of our GDP. And so we have to figure out– it’s a national problem. But we have to figure out how to compete on service and how to do so in a way that people can also feed their families. So when we talk about service jobs, there is a segment where we’re talking about low-end, low-skilled service jobs.
But those aren’t the companies that are most interesting. And I don’t think they represent the future. I think the future is figuring out how to compete on service in a sophisticated way. And that will always require people who can perform at a high level and be rewarded for it. I think there is a manufacturing future for this country. But it’s smaller, and it’s competing in a premium manufacturing segments.
And I think there’s a lot of discussion about that being our salvation as a country. And I think some of that energy is misplaced. And we obviously are biased. But we would propose a sophisticated national discussion about how to compete on service, not just internally, but at a global level. And we think there’s really exciting opportunity there.
FRANCES FREI: Yeah, the nostalgic notion of we used to be great at manufacturing, and that used to be great, and so let’s go back to that. When manufacturing can be done elsewhere, there are some services that can’t be done elsewhere. If you go to a hotel, the people that are serving you in the hotel have to be in the hotel.
Many, many services are produced and consumed simultaneously. We should be embracing that and thinking, so how can we design jobs and lives that can deliver excellence there? If we deliver the best service in the world, then we have the capacity to do that, I think, in every industry. That can, and I think will, be the economic engine of the country.
SARAH GREEN: Mm. Well, thank you both for coming in and chatting about it with us today.
FRANCES FREI: Pleasure.
ANNE MORRISS: Our pleasure.
SARAH GREEN: That was Anne Morriss and Frances Frei. The book is Uncommon Service. For more, visit hbr.org.