There are not many strong incentives for individuals to provide great customer service. There may be small financial rewards that accrue if customers routinely tell an employee’s supervisor what a great job they did; but if someone owns the business, the rewards are greater because positive word of mouth will generate new customers. Not surprisingly, many reports of great customer service (one instance of which we’ve blogged about before) are associated with small business owners.
For most employees, the only real benefit of great service is the good feeling that comes with making another person happy and the pride of doing a job well. Add to that the chance to be written up in Freakonomics.com.
In the last week, I have had two shockingly positive experiences with major airlines. The first was with American Airlines — a connecting flight through LaGuardia as I headed home to
The walk, along with a slight departure delay, got me to the ticket counter too late to check in for my original flight. The machine could do no better than to put me on standby on the next flight. I dashed through security to reach the gate from which my original flight was scheduled to depart. There were people everywhere – literally dozens of standbys who would not be accommodated because every seat was taken.
Halfheartedly, I approached the counter and said that I had a seat on this plane, but it was probably long gone. The woman behind the gate, Carlene Boyd, replied, “Is your name Steve Levitt?” I said, “Yes.” She said, “I thought you might show up. So I saved your seat until the last second. Here it is, feel free to board.” I didn’t think to ask her why she thought I would show up so late. But that one simple act was enough to make me loyal to American Airlines until the end of time.
That is, until United Airlines did one better yesterday. Once again, I was returning home via LaGuardia. Because of weather, all the flights were delayed two hours or more. I arrived an hour early, which meant at least a three hour wait. Because of an earlier cancelled flight, the person at the counter told me there was no way I could catch one of the earlier (but also delayed) flights.
As I sat down to a dinner of fast food Chinese, my cell phone rang. The caller was a United Airlines employee named Michael. (Sorry, Michael, I can’t recall your last name.) He said, “I see that you’re at the airport and your flight is delayed a few hours. A seat opened up on an earlier flight, so I grabbed it for you in case you wanted it. It leaves in forty minutes, so you’ll have to hurry.”
When I met up with Michael to get the boarding pass, I asked him what his job title was. It turns out his job is to watch out for the interests of frequent flyers and make sure things go as smoothly as possible for them. Who knew United had people specifically employed to handle that job? I asked how he got my cell phone number, and he said it hadn’t been easy — he’d had to make four calls before anyone would give it to him. That is great customer service.
I have no illusions as to why American and United are nice to me: I travel way too much and they are the major airlines serving
Finally, one last example of amazing customer service that has nothing to do with being a regular customer: This spring I was visiting my best friend from college, a fantasy baseball co-owner and high school principal extraordinaire named Matt Spengler, at his new house outside of
The manager was incredibly apologetic. “No problem,” I told him. “But I need you to make me a second pizza exactly like this first one.”
Matt and I sat down for a beer at the bar. Within ten minutes, there were three pizzas: the original one, and two more. I thought that there had been another mix-up (three pizzas instead of two), but the guy was so nice that I wasn’t going to say anything. “How much do I owe you ?” I asked, since so far I had only paid for the first pizza. “Nothing,” he said. “It was our mistake.” Matt and I argued with him for about five minutes, but he refused to take any more money.
My guess is that Matt will order enough extra pizza from this restaurant over the next ten years to pay them back for their kindness twenty-fold. If that is the case, this kind of service makes good business sense. But if it makes good business sense, why is it still so rare?
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I really wish I wrote a best-selling book to get that kind of customer service!
— smperkIt’s so rare because most business are so focused on cost-cutting and their own internal work processes that they never can be bothered to look at things from their customers’ point of view.
I worked at a small business that was like this a couple of years ago….all the employees were much more focused on their own internal work processes and routines, despite the fact that these greatly inconvenienced many of our customers.
Remember:
1) An unhappy customer will bad-mouth you to everyone they know.
2) It’s a lot easier to retain your current customers than to acquire new ones.
3) The cheapest way to grow you business is though positive word-of-mouth from satisfied customers.
It’s truly mind-boggling how many large corporations ignore these three basics!
— mfw13It’s actually the opposite. But hey, it’s your blog.
.lermit
— lermitsmperk: Don’t we all.
Sometimes, companies do value their customers. Having a lease on one vehicle, enabled me to have an expensive out-of-warranty repair (over $2,000) on another vehicle performed at no-cost to me.
— Vincent Clement“But if it makes good business sense, why is it still so rare?”
It is so rare, because you are the rare person who actually appreciates that effort, and makes a concerted effort to show it.
I think that there are too many out there who expect something and don’t acknowledge when someone goes out of their way to do something. Who wants to help out someone who feels somehow “entitled” to that help?
As always, “incentives matter” and there are too many negatives for most people (people as the foundation of any business) to bother going out of their way.
— FrankTheTankmfw13: It is mind boggling how many companies, large and small, ignore those basics.
After having a new wood privacy fence installed, the installers left a pile of material to be picked up at a later time. Coming back from work, I noticed the pile was gone. Entering the house, there was a message from the fence building company asking where their surplus material was. They implied that we had taken the material.
My wife called them back and said that the material was gone when we arrived home and that they were more than welcome to check out our house and garage for the missing material. I haven’t recommended that company to a single person.
On the other hand, I had to get new eavsetroughs installed on the house. The owner of the company came out to give a quote despite not feeling well. He made a number of suggestions to improve flow and to keep water as far away as possible from the foundation.
When it came time for the job, a one man team took down the gutters and installed the new ones in less than half-a-day. Someone called back a week or later to ask about the work and if we had any questions or concerns. I have recommended this company to anybody that asks.
It’s the small things that can make a huge difference.
— Vincent Clementlaguardia is the worst…if enough people sneeze at the same time in manhattan the place shuts down.
— ptkellyFrankTheTank: Your last paragraph is dead on. Some of the blame lies with managers who like to point out bad behaviour rather than good behaviour.
A few years back during my annual job evaluation, my supervisor and manager raised the fact that one or two customers had complained about my treatment of them.
I shot back and said that if a customer had an issue with me, why was I not made aware of and asked about the incident when it happened.
I also stated that, one, how could I be expected to correct my behaviour if I was unaware of the complaints and that, two, the purpose of the evaluation was to look at my overall performance not one or two isolated complaints. They backed down.
— Vincent ClementSorry to ask this, but is there any chance that your treatment by the airlines was a perk of celebrity?
— prosa…is there any chance that your treatment by the airlines was a perk of celebrity?
Is Levitt a celebrity? I thought a celebrity was someone everyone new by sight, Paris Hilton for instance. As a mere southerner who is quite provincial in these matters, I don’t know how many people in an airport would recognize Levitt as he walked by. Does anyone know? Assuming Levitt will continue to stay silent on this matter.
What about his name? Assuming he doesn’t register for his tickets as “Dr. Levitt, author of the phenomenal bestseller - Freakonomics”, do you think airline workers recognize his name?
Or do all frequent flyers at his level get the same treatment?
— egretmanThree excellent anecdotes, but I think the most interesting stories of good customer service are similar to the third one — that is, those in which your “status” as a customer is not part of the equation.
If a business I’ve never patronized goes above and beyond the first time I use them, certainly that will encourage me to use them again. (Though, certainly that could be a one-time tactic in an attempt to secure customer loyalty.)
— Novak“…if someone owns the business, the rewards are greater because positive word of mouth will generate new customers.”
This seems like a non-sequitur. What does someone owning a business have to do with whether word of mouth generates new customers?
— majikthise“If that is the case, this kind of service makes good business sense. But if it makes good business sense, why is it still so rare?”
Because many business owners, like CEOs of large companies, are far too focused on the short term. Why are companies taking on huge amounts of debt in order to buy back shares? Because that boosts earnings per share and helps them hit quarterly Wall Street numbers and collect bonuses. Those two extra pizzas, if delivered by a Domino’s employee, would probably create an Inventory Loss Report that had to be filed all the way up the corporate food chain.
— ScottWApparently American Airlines is making a concentrated effort on their customer service.
Maybe the Jet Blue blow up scared everyone into remembering the basics.
http://stanleybing.blogs.fortune.com/2007/06/02/a-shout-out-to-captain-chenowith-of-aa-flight-177/
— kentavosGreat customer service from an airline is truly beyond remarkable.
For infrequent flyers though, it’s abysmal. Cases in point (all from recent trips on United):
Charlotte to SFO, Connecting through Washington D.C.: Landed at Dulles and didn’t see my connecting flight listed on the board. Learned it was departing from Reagan National. I had to take a taxi from Dulles to National to make my connection, which took almost an hour and cost $80.
SFO to Philadelphia red-eye: On the day of my flight, I learned that United had changed my direct flight to one that connected through Dulles and arrived two hours later. United claimed their “automated system” had alerted me to the change by telephone, even though all other communications from United come to me via email.
Newark to SFO: No plane at the gate at the scheduled departure time. No agent at the counter. No announcement of any kind. A customer standing at the counter said he’d been waiting for an hour. A plane and an agent eventually showed up, about ten minutes after the scheduled departure time. My girlfriend and I wanted to change our seats to sit next to each other, but we were told this would not be possible.
— shawn“My guess is that Matt will order enough extra pizza from this restaurant over the next ten years to pay them back for their kindness twenty-fold. If that is the case, this kind of service makes good business sense. But if it makes good business sense, why is it still so rare?”
I like to compare this to fencing. In fencing there are a number of moves you can use, let’s assume there are only two moves to use. A and B. Most of the time I will be using move A, though sometime I might pick move B. Move B has the advantage that I score a point immediately. Why won’t I use move B more often then?
Well it relays on the element of surprise. If I use it to often the marginal benefit for using the move declines. To play a successful match I have to use the right mix, a mix where both the marginal benefit provided by A is equal to the marginal benefit provided by B.
I suspect it is the same with customer service. it’s the right mix that counts. The marginal benefit of being friendly declines with its use.
— tobiasrelays=relies
— tobias> What does someone owning a business have to do with
> whether word of mouth generates new customers?
It doesn’t — but owning the business has a lot to do with whether you get the rewards that come with new customers.
— htbThe stench of entitlement is the cologne of all newly minted authors.
— egretman-Mark Twain
What value is it to John Q. Retail employee if you ever shop there again, have a pleasant experience, tell a friend, etc. If John knows he needs to sell $3000 per week of products from his department to get his hours, what value does he gain from the next dollar. Zero.
Working in retail, I run into the situation often when developing priorities. If it comes between completing a task or taking care of a customer, the task always wins. Why? The task is being measured. If I do not complete it, then I missed a metric. The level of satisfaction of the customer who did not receive a satisfactory experience is not as DIRECTLY measured; therefore, he/she doesn’t count.
— jdj2x#18: Ah, I see. Thanks for the clarification (regarding a question I asked in comment #12).
But now a new question arises: according to this hypothesis, only the owner has an incentive to be nice; no one else does. But is the increased probability that customers deal directly with the owner in small businesses vs. large ones sufficient to explain why small businesses are nicer than large ones? It seems not.
That is, it seems that, even in a small business, your chance of dealing directly with the owner is low, and niceness stems not from the owner but rather from the employees, just as in a large business.
— majikthiseWhat value is it to John Q. Retail employee
None. All Levitt’s examples are either employees paid to be extra nice to a few customers or a pizza manager/owner who is paid not to be John Q. Retail Employee.
What Levitt is really saying, nay yearning for, is a time (the 1950s) when employees were paid a living wage in order to be loyal to that employee. Americans, including me, prefer cheap and six sigma quality. Not good service.
Alas, the Kenmore washing machine salesman at Sears is gone. Perhaps for the best.
— egretmanI’m not too convinced about the airline examples. Both airlines had to fill their planes anyway, and may just as well have given the last seat to someone else, which would have been equally good customer service. Handing out seats for a capacity-constrained plane is ultimately a zero-sum game: the fact that you got a seat simply means that somebody else didn’t.
— EconomienlMmmm, Bertucci’s.
— jstilweOnce a Schwann’s truck (a company that deliver ice cream and other groceries to your home) was blocking my driveway while making a delivery to a neighbor. I sat in my car for a minute and scowled at the driver until he moved.
The next week when the truck returned for another delivery, the driver came up to my door and handed me a free half gallon of ice cream along with a tip for making a delicious shake. I felt awful about scowling, but the gesture went a long way to making me not hate Schwann’s anymore. (I can’t say I’ve bought anything, but that’s a matter of affordability.)
— patik