Exceptional Service, Exceptional Profit

The Secrets of Building a Five-Star Customer Service Organization

 Exceptional Service, Exceptional Profit

Authors: Leonardo Inghilleri, Micah Solomon
Pub Date: April 2010
Print Edition: $21.95
Print ISBN: 9780814415382
Page Count: 192
Format: Hardback
e-Book ISBN: 9780814415399

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What’s Worth It, and What’s Not?

Pointers on Value, Costs, and Pricing in Terms of Customer Loyalty

What does loyalty-enhancing customer service really cost? In today’s economy, that’s a critical question for service-driven companies of all sizes, specialties, clientele, and price points. In their new book, EXCEPTIONAL SERVICE, EXCEPTIONAL PROFIT (AMACOM 2010), renowned service experts Leonardo Inghilleri and Micah Solomon offer these valuable insights and practical guidelines to help you calculate the answer for your company:

 Take full account of all the benefits. In some cases, superior service clearly does cost more to deliver. For example, the ESF group of summer camps in Pennsylvania and Connecticut employs counselors who are older and more experienced than the “kids counseling kids” found at many competitors. What’s more, its staff-to-camper ratio is among the lowest in the industry. The payoff? ESF boasts exceptionally devoted parents, who promote the camp tirelessly to their friends and neighbors, and counselors. In this case, the higher cost of loyalty-enhancing service is offset by the various expenses saved and revenue earned through energetic word of mouth marketing and unusually low client and staff turnover.

 Keep a firm eye on lily gilding. Compressed from a Shakespeare phrase, the term “lily gilding” means overdoing something that’s already perfect. In customer interactions, it often takes the form of fancying up your offerings beyond what your customers are interested in. Lily gilding has both obvious and hidden costs, including excess features that can make your offering less attractive by complicating it for customers or that imply to customers that they’re paying for something they don’t need.

 Value is relative. Customers often judge your value relatively. That is, they judge each interaction with your company against their previous interactions with you—and with your competitors. To make sure you understand the competitive expectations of your customers, shop the competition—your best competition. (Don’t just “window shop.” Spend some money, and take a transaction from beginning to end.) Don’t let resentment lead you to dismiss a competitor’s innovations. Think rationally about whether there is value there that you could make use of for your own customers as well.

 Pricing is part of your value proposition. Not everybody values money the same. If value was all about low pricing, there would be no space for retailers like Nordstrom; everybody would be shopping at Wal-Mart. A reliable equation is “Value = Personal Benefit - Cost and Inconvenience.” Therefore, in product and service design, it helps to focus on the personal benefit you provide for customers in return for the price you charge. A loyal customer is the least price-sensitive customer of all.

 Don’t charge a customer for performing the Heimlich. A touchstone in pricing is that your charges should demonstrate that you care about the customer. Among other things, this means you should never surprise you customers with charges they wouldn’t commonly expect. Avoid nickel and diming customers by using the rule of thumb that Texas car dealer Carl Sewell made famous long ago: Is this something a friend would charge for? Ignore Sewell’s rule (like hotels that not only charge you for bottles of water, but do so at a rapacious rate), and you’ll be tripping yourself up on the path to customer loyalty. Go the extra mile, for free and with a smile, and you’ll be helping yourself out as well.

Adapted from EXCEPTIONAL SERVICE, EXCEPTIONAL PROFIT: The Secrets of Building a Five-Star Customer Service Organization by Leonardo Inghilleri and Micah Solomon (AMACOM 2010).

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