THE BLOG
03/05/2014 11:36 am ET | Updated May 05, 2014

Companies That Care: How to Turn Customer Service Into a Compelling Competitive Advantage

My wife and I had two astonishing customer service experiences this week -- one good and one bad. Both were small events that will have a large and lasting impact on our buying decisions. Both were "remarkable" -- something we talked to other people about -- each in their own ways. Together, they illustrated a sharp truth: In today's globalized world, products are becoming commodities. Brands are becoming hollow. And competitors are always just one mouse click away. But customer service is here to stay.

Customer service is one of the last frontiers of sustainable competitive advantage. It's one of the strongest ways to grow your profits. Yet many companies still treat it like a cost function.

Business leaders often pay lip service to its value, while doing everything they can to cut costs, rather than investing in customer service as an opportunity for growth. Or managers may try to codify good service, as if they were writing a program for a computer. They may proclaim simplistic mantras such as "the customer is always right," or invest in creating detailed processes and procedures for their employees to follow.

This can work if your goal is to meet customer expectations. But excellent customer service can't be reduced to a stack of three ring binders and call center scripts. It requires creating a company that cares.

We had a positive example of this over the weekend, at a Marriott hotel. Even though my wife just gave birth to our second daughter, I was crazy enough to agree to speak at a conference there. Rather than leave Nicole at home with the girls, we brought the family along, and the hotel staff astonished us with their service.

The first surprise came when we checked in, and we were told that as a way of making things easier for my wife, we'd been upgraded to an executive suite. The second surprise came while I was at the conference, and Nicole took the girls to the restaurant. Our baby suddenly started crying, wanting to be fed. A manager named Allison saw what was happening, came over, and offered to bring Nicole to a private room next door. Along with another manager named Michelle, she helped entertain our three year old while Nicole was breast feeding, and then asked if there was anything else they could do. As if that wasn't enough, we received a third gift that night, when room service brought up a gorgeous table filled with an orchid, a bucket of bottled waters, a stuffed doll, a molten chocolate cake, and a card from Allison wishing us a pleasant stay.

What touched us wasn't the price of the gifts, but the care behind them. And in return, we will absolutely be giving them our business in the future.

In contrast, our car was recently rear ended, and the other driver was clearly at fault. We filed the claim with his insurance company, and while the company's employees were prompt and responsive, their actions were clearly designed to minimize every dollar they could out of the transaction. We had to fight with the adjustor, just to get them to cover the actual costs of repairs. The size of the disagreement wasn't that large -- a few hundred dollars -- but because of how they demonstrated their lack of care, they earned a permanent spot on our "no go" list.

TARP, a behavioral research company, found that customers who have a negative experience like this tell an average of 12 people, and that those people tell an average of 72 more. That's 85 people who get taught not to use a company, all from a single incident. And in our wired world, this pattern is only becoming more pronounced.

So how can you create exceptional customer service? How can you turn genuine care into a true competitive advantage? There are five essential steps.

  1. Start at the top. If you want to build a company that cares, you have to start with leaders that care. The real question of leadership isn't "what do you value?" It's "what do you value more?" Your executives need to have a set of values -- building a culture, providing exceptional service, growing their people -- something that they care about even more than they care about short term profits. And they need to align their actions with those values.

  • Hire people that care. Zappos uses their bus drivers to screen job applicants. Candidates ride a shuttle to the office, and the driver watches how they act. How courteous were they? How much did they genuinely care about the people around them? The company hires equally based on character and competence. If you don't care, you don't get the job.
  • Create a culture that cares. Building culture is like trying to walk up a down escalator. Either you're constantly working at it, or else you quickly end up in the basement. If you want to know how much a company truly cares about customer service, find out what their budget is for leadership and culture development. Are they putting their money where their mouth is? If not, a culture of compliance, overstress and short term thinking is just around the corner.
  • Shift from win/lose to win/win or no deal. The customer isn't always right. Sometimes you need to fire them. But there's always an opportunity to look for the win/win first. Not just as a concept or a platitude, but as a discipline and a practice. The insurance company treated our relationship as a short-term, zero sum game. They were playing win/lose, and it showed. Even worse, their adjustors didn't seem to understand that there was another option. The managers at the Marriott were playing a completely different game. Not because they were following a different manual, but because they were thinking in a different way. They were living from a different paradigm, where the focus was on making a difference, rather than just trying to meet their short term numbers.
  • Train your people to embrace conflict. The true test of customer service is not what happens when things are going well. And it's not about meeting expectations. Those are just the ante to get in the game. Exceptional service is about anticipating and addressing conflict. In the face of conflict, most people drop into a stress based, fight or flight reaction. But with training, it can become an opportunity to "wow" people with your response. When a conflict showed up over the cost of repairs, the insurance adjustors treated it like a battle. In contrast, the Marriott managers took a crying baby in a crowded restaurant, embraced it as an opportunity, and created some very loyal customers in return.
  • Allison Williams and Michelle Tu, who work at the Los Angeles Airport Marriott hotel - thank you for making our stay special, and for modeling what exceptional customer service truly looks like.