Phil's blog

High employee turnover can bedevil your attempts to build a customer-centric culture. With people constantly coming and going you use up masses of resources and never get a customer-focussed culture to embed. The customer, presented with a parade of constantly-changing faces, can never build relationships with any of them.

In some sectors that rely on temporary employees this doesn’t matter. But, in most it does. So, here’s a tip from Horst Schulze, founder of the Ritz-Carlton hotels, on how to reduce your employee turnover:

“We derive our employee selection profile from our best dishwasher, manager etc. We analyze what the best ones do then we hire against that profile. Annual employee turnover is typically over 100% in the American hotel industry. In the Ritz-Carlton in 1992 it was 80%. By 2000 we had reduced it to 24%. It was because of the process.”

Selection was only part – but a significant part – of the process Schulze introduced and embedded. I’ll return to other parts of the process in later tips.

Source: My shorthand notes from a talk given by Horst Schulze at a conference I helped organize in London

This tip is a sample from a book series I am putting together called
One A Day
365 Practical Ways to
Get Closer
to Your Customers

Talking of Gary Hamel (see previous post), I’ve just come across this, from him, which made me laugh:

“Not so long ago, IBM celebrated “The Year Of The Customer.” One wonders what the company celebrated in other years – “The Year of the Monkey?” perhaps?”

It’s in the foreword to Stuart Crainer’s very readable book The Ultimate Business Library: 50 Books That Made Management, which I am working through at the moment.

Gary Hamel told me this recently in an interview:

“Companies have relied rather too much on traditional customer research and consumer marketing. If you look at those that have really changed the customer experience and customers’ expectations, most of them have done it from a deep insight into unarticulated needs.

We’re talking about things that customers can’t even know yet, so no point asking them! By the time a customer starts talking about something and asking for it or complaining that you don’t do it, it’s too late.”

Other ‘gurus’ like Tom Peters recommend seeking out ‘leading edge’ customers – the awkward ones who seem to be in advance of the others and are always making demands on you that you can’t currently meet. Maybe they are too small and too kooky for you to pay attention to. But one or two of them are early arrivals at where your other customers will arrive soon. So, listen to them to get ahead. Hamel says something similar. I have a quote from him about Nokia that I will dig out and post to reinforce the point.

This tip is a sample from a book series I am putting together called
One A Day
365 Practical Ways to
Get Closer
to Your Customers

We are blogging over at the Execubooks ‘thought leaders’ blog (they think I’m a thought-leader and so invited me: stop laughing; I can hear you from here) on Fred Reichheld’s book The Ultimate Question, which claims there is one question you should ask customers instead of all those time-wasting, self-serving customer satisfaction questionnaires that have become an industry in themselves.

So, I’m committing the sin of almost repeating my post over there over here, if you see what I mean.

Fred’s ultimate question is “Would you recommend us to a friend?” And it’s a great question. He recommends scrapping all your satisfaction surveys and replacing them with this one ultimate question. Enterprise Rent-a-Car has done something similar, and to great effect.

But, it’s still a question about intention. And customer intentions are slippery beasts. There is a better question.

I heard Chris Pilling, the CEO of the UK bank First Direct describe a better question that they ask customers:

“HAVE you recommended us to a friend?”

It’s a measure of actuality, not intent; of what customers are doing now, not what they say they might do.

He gets a massive positive reaction to that question from First Direct customers: an astonishing 96% of customers say ‘yes’, 86% saying they have recommended the bank in the previous year. As a result, 36% of all new customers come from existing customer recommendations.

Reichheld told me off once when I interviewed him and had the temerity to ask “Is loyalty dead, Fred?”. But, I didn’t mind, as it was a cheeky question. He has converted thousands of marketers from a ‘get customers’ mentality to a ‘keep customers’ mentality. And you have to love him for that. Still a long way to go, of course…

This tip is a sample from a book I am putting together called
One A Day
365 Practical Ways to
Get Closer
to Your Customer

I interviewed Val Gooding, CEO of the healthcare company BUPA, a while ago. She pointed out that BUPA no longer uses the definition of ‘customer service’ that 99% of organizations use. She’s right and the 99% are wrong. Here’s what she said:

“We use a new definition of customer service. It’s not the interface, the edge where your company meets customers. It’s the theme that runs through everything you do, from the Boardroom right on down.”

– Val Gooding, CBE, CEO, BUPA. Named by Fortune magazine as one of the world’s 50 most powerful women in business

Steve Ridgway, CEO of Virgin Atlantic, told me when he was COO of that company that Virgin, too, practises what he called “whole body customer Service”. It’s the same underlying principle as runs through how BUPA, Amazon and one or two other organizations do business.

In a sense, EVERYTHING, from your business model to the agenda of your board meetings to your staff motivation programmes (if, god forbid, you have them) is about customer service.

Tom Peters is fond of saying in his seminars “Close your customer service department! Shut it down! Lock the doors!” He’s using shock tactics to make the same point: Customer service departments are either complaint departments or call centres used to queue customers.

They are not sufficient. Customer service is much bigger than that. Yet the vast majority of organizations don’t get it.

This tip is a sample from a book I am putting together called
Take One A Day
365 Ways to
Get Closer
to Your Customer