The good intentions that will kill your businessMarch 28, 2012: 11:31 AM ET
Whether it's trying to be great at everything or giving great service away for free, there are plenty of ways in which the best intentions spell business failure.
By Frances Frei and Anne Morriss, guest contributors
FORTUNE -- The world is desperate for good service. Companies that get service right – see Southwest and Zappos – are rewarded with profitable growth and devoted customers. And companies that get it wrong are relentlessly punished. Bank of America's persistent presence at the very bottom of the rankings for customer satisfaction is one such example.
There are powerful incentives to serve customers well, so why is service excellence still so rare?
Here's part of the problem: good intentions. It turns out a central barrier to service is not backward thinking and callous management. More often than not, it's the very human desire to want to do the right thing. BofA's biggest problem may be that it's trying not to disappoint anyone right now.
The bank's not alone. When it comes to service, below are three good intentions with consistently bad outcomes:
1. Trying to be great at everything
Great service providers tend to over-deliver on the things their customers value most, and under-deliver on the things they value least. Patients at the Mayo Clinic can get same-day appointments, but in exchange for that exceptional access, they must give up control over which physician they see. It's a deal that anyone with an urgent, complex medical issue – Mayo's sweet spot – is more than happy to make.
These kinds of strategic tradeoffs are built into great service models, and no one apologizes for them. Southwest Airlines (LUV) shamelessly refuses to feed you a meal and transfer your bags, because that's precisely what allows them to deliver cheap, frequent flights – the things their customers really want.
If Southwest tried to be great at everything, if it tried to be the low-price airline with a tricked-out, high-touch cabin experience that flew anywhere in the world multiple times a day, the model wouldn't work. The company would end up losing money while being mediocre at everything, which describes the trajectory of most of the major airlines.
Bank of America now seems to be pushing itself on every aspect of its retail offering, with predictably disappointing results. It's trying to win on cost, convenience, product scope and friendly service, a strategy that's captured in its epic name: a bank for all of America can't let anyone down, on anything.
Rather than designing a service model – or multiple service models (see the distinct strategies of Toyota (TM) and Lexus) – that are optimized for key service attributes, Bank of America (BAC) is going for it on all dimensions, hitting it out of the park on none. It's not the lowest-cost, most convenient or friendliest place to deposit your money. The bank is disappointing all of us in different ways, without the strategic freedom to make anyone truly happy.
What do your own customers value most? What would they give up if they could reliably get those things? Answering these questions is often the first step towards exceptional service.
2. Getting your employees to work harder
When things go wrong, lack of effort is an easy target. Many think service should improve with a little more commitment, usually from your direct reports.. But this argument obscures the fact that you may be systematically setting your employees up to fail.
Call centers are the classic, absurd example. Typical call center employees are asked to watch up to eight screens at once, while fielding questions from callers all over the world on a complex mix of products. Many service reps are timed on call length and instructed not to escalate calls, even though they lack the power or information to solve callers' problems. Trying harder in this environment isn't going to do much good – there are serious barriers to employee performance.
What's the alternative? Design a management system that allows everyone to excel casually. Zappos sees its service reps as company ambassadors on the front lines, building customer relationships. Employees have the tools and authority to take care of customers, 24-hours-a-day, and they're encouraged to stay on the phone for as long as it takes. Extended call times have even become a badge of honor for service teams.
Our advice to any company suffering from service angst: stop telling your employees to give 110%. Instead, take a hard look at whether you're setting them up to make your customers miserable.
3. Giving service away
Generosity is at the core of great relationships, and customer relationships are no exception. Create tremendous value for the people who pay you, and then capture some of that value for yourself. Those are the generous economics behind successful service companies.
But unconditional love doesn't work. You must get something in return for your kindness, or you won't be around for long. Take Celebrity Cruises. In an increasingly competitive market, Celebrity added 150 new ways of "delighting" its customers. The initiative produced flutes of free champagne, sunset yoga, poolside sorbet, sushi bars, and pizza-on-demand.
Here's the problem: no one would pay extra for it. The dynamics of the cruise industry made a price hike impossible, and so this short-lived initiative turned into gratuitous service, service nice-to-haves donated to customers with little chance of recovering the costs.
The U.S. Post Office delivers gratuitous service when it blankets the country with low-volume Saturday delivery. Sure, we all like the option, but most of us are unwilling to pay more than the price of a stamp for it. It's the postal version of free champagne.
Our message, simply, is that service must be funded. New fees and price increases are just one approach – often the least creative – and many markets won't tolerate them.
Having trouble getting paid for service? Make sure you're creating real value for your customers. And then try to capture a fraction of it.
Every day, we work with leaders whose hearts and minds are in the right place, but their numbers aren't. Their problem isn't a lack of commitment to customers. Rather, it's an attachment to a worldview that assumes that good intentions are enough to succeed. Not only are they not enough, but they are also sometimes the very things standing in your way.
Frances Frei and Anne Morriss are the authors of Uncommon Service: How to Win by Putting Customers at the Core of your Business.