A Survey of Some “Best Practices”

1. A Survey of Some “Best Practices”

2. Leadership atSouthwest Airlines On the busiest airline travel day of the year (“Black Wednesday” – the day before Thanksgiving) co-founder Herb Kelleher often worked a full shift loading luggage onto planes.

3. Leadership atRitz-Carlton Hotels Horst Schulze, former president of Ritz-Carlton (which is now owned by Marriott), grew up in a German town so small that it had no hotel. When president, he would open each new hotel by staying 10 days.

4. Leadership atBaptist Hospital • At Baptist Hospital in Pensacola, Florida, the president described his vision for a TQM Program as follows: • “We had to create the type of environment where people drive by two other hospitals to get here.” • Baptist Hospital was a recipient of both the 2000 RIT/USA TODAY Quality Cup and the 2003 Baldrige Award in Health Care.

5. Hiring at Nordstrom • Nordstom believes in • “Hiring the smile and training the skill.” • When asked once about who trains his salespersons, then co-chairman Bruce Nordstrom replied, • “Their parents.”

6. Hiring at Southwest Airlines Herb Kelleher, co-founder of Southwest Airlines, stated, “The hardest thing for a competitor to do is copy our people.” Very rarely does Southwest open a new city with only local employees. Current employees get first bid for new positions at any new location. Southwest hand-picks about a dozen of its very best employees to go as a team to assist the set-up of a new location.

7. Hiring at Southwest Airlines For public-contact jobs, Southwest conducts group interviews with 30-50 persons in a group. For example, each member of the group might be asked to give a 5-minute presentation about him/herself. The audience includes not only other job applicants but also some of Southwest’s frequent flyers. Southwest judges not only the presenter but how the audience reacts to the presentation. Applicants who listen attentively and even cheer on others have a much higher chance of getting hired than applicants who ignore their fellow presenters and look over their own notes.

8. Importance of Location toLands’ End Customer Service Lands’ End located its “call center” in the Midwest in the middle of a 40-acre corn field in Dodgeville, Wisconsin, where there are “down-to-earth” people with a strong work ethic.

9. Employee Loyalty at Staples Staples rewards an employee who has contributed a great idea with shares of Staples stock – not cash. Why is this a “best practice”? The employee becomes an “owner”.

10. Employee Loyalty at Staples Many companies recognize an “Employee of the Month”. The reward for being an “Employee of the Month” is often only a picture on the bulletin board in the staff lounge, a picture on a the store’s wall, or a picture in the company’s promotional magazine. At Staples, a frequent recipient of a store’s “Employee of the Month” gets to choose a Staples store anywhere in the United States and travel to that store and spend a day “shadowing” the store’s general manager.

11. Hiring at Charles Schwab Example 1. When hiring, Charles Schwab looks for evidence of community service and charitable giving. Example 2. In the past, orientation of new employees focused primarily on procedures and regulations. Now, procedures and regulations are posted to the Intranet. Now, there is much more emphasis on helping new employees understand what the company stands for and how it expects an employee to treat another employee and to treat a customer.

12. Training atSouthwest Airlines At Southwest, anyone with a “Manager” title or higher must perform at least 4 “field visits” per year in departments other than his/her own.

13. The “Value” of a Customer of Southwest Airlines Southwest found for 1994 that that a flight became profitable only after the 75-th passenger and that its flights averaged 80 customers. So, only 2.5 million of the 40 million passengers accounted for Southwest’s 1994 total profit of about $180 million. Southwest concluded that losing just 1 passenger per flight because of bad service would reduce profits by 20%.

14. Service Recovery at Southwest Airlines Employees are told that, when recovering from a service glitch, never use rules and regulations as a “crutch”. Employees are told that no employee will ever be punished for using good judgment and common sense.

15. Corporate Culture at Southwest Airlines At Southwest, there is a Culture Committee with 100+ members to reinforce the culture by: • Planning celebrations. • Ensuring that new employees understand the airline’s “underdog” origins. • Passing on to all employees extraordinary customer service by an employee that captures the “spirit” of Southwest. Stories about organization heroes are easier to remember than a lecture about 10 points of service excellence.

16. Customer Retention at Charles Schwab Example 1. At Charles Schwab, an employee’s bonus depends not only on the dollar volume of new customers but also on the dollar volume of RETAINED customers. Example 2. As a measure of the effectives of responses to complaints, Charles Schwab tracks how much business a customer does 6 months after a complaint versus 6 months before the complaint. Example 3. Charles Schwab has a Service Enhancement Team (“Barrier Bashers”) to change internal policies and procedures that get in the way of excellent customer service.

17. Reinforcement of Customer Service Philosophy at Lands’ End • When an issue arises at Lands’ End, a frequent first question is, • “How will this affect our customers?” • or • “What will our customers think of this?”. • The feeling at Lands’ End is that, if managers get in the habit of asking such questions, it will “trickle down” to all employees.

18. Creating Customer Loyalty at American Express AmEx recognizes that the merchants at which its cardholders do business play a key role in how its cardholders feel about AmEx. AmEx realizes that its customers are not only its cardholders but also the merchants. AmEx’s “Express Rewards” offers its merchants an opportunity to make a customer feel special. For example, after a cardholder makes a predetermined number of visits to the same restaurant and uses his/her AmEx card to pay each check, the restaurant’s cashier will see a “VIP symbol” appear when clearing the card and can offer a predetermined award (e.g., “You’re bottle of wine tonight is on the house!”).

19. Reinforcement of Customer Service at Staples • Staples wants to its employees to understand: • Customer service at Staples. • Customer service at Staples’ competitors.

20. Reinforcement of Customer Service at Staples (continued) Understanding Competitors’ Customer Service Each morning, the store’s general manager holds a “Rally Meeting” to discuss any customer service problems that occurred on the previous day. Sometimes, she gives $20 to an employee (say, John) and instructs John to go immediately to a competitor’s store, make a difficult purchase, and report at the next day’s Rally Meeting. At the next day’s Rally Meeting, the group listens to John’s report about his evaluation of the competitor’s customer service during his purchase. After John’s report, the general manager turns to another employee (say, Anne) and says, • “OK, Anne, now you go to the competitor’s store and try to return John’s purchase without a receipt.”

21. Reinforcement of Customer Service at Staples (continued) Understanding Staples’ Customer Service Staples has a “Mystery Shopper” program. Staples contracts with an external company. Each month, this company sends to each Staples’ store a “mystery shopper” who pretends to be a real customer. • Staples receives from the company reports that are: • Reviewed by senior management to determine “problem” stores. • Reviewed by each store’s general manager at a Rally Meeting with the store’s employees. • Used by a store’s general manager in 1-on-1 counseling with “problem” employees.

22. Customer Loyalty at Staples Staples calls its top customers once per year. The calls are made by managers. • The manager: • Thanks the customer for his/her business. • Asks the customer for suggestions on how to improve Staples’ customer service.

23. Staples’ Recognition of Who the Customer Really Is Staples sells office supplies not only to individual customers at its retail store but also to corporate clients over the phone or the Internet. Staples realizes that the customer is not just a corporate client’s Director of Purchasing. The “roots” of Staples’ customer relationship with the corporate client are … the client’s employees who submit to the Director of Purchasing an order for 6 red pens, 1 box of folders, and a stapler. As much as possible, Staples tries to have personal contacts with these customer “roots”.

24. Customer Loyalty at Ritz-Carlton Hotels Ritz-Carlton keeps an extensive database of guest preferences and problems. • As examples, • If a guest orders “rocks in his pillows” in Sydney and his next stay is in Boston, then he will find rocks in his pillows in Boston. • If a guest in Sydney has a problem with room service problem just before check-out and her next stay is in Boston, then, at check-in at Boston, the front-desk clerk will acknowledge the problem in Sydney and offer a complimentary meal.

25. Customer Service at Ritz-Carlton Hotels Ritz-Carlton Hotels teaches an employee that, if he/she sees a problem, he/she owns the problem until it is solved or clearly accepted by another employee better suited to solve the problem. For example, suppose a guest asks an electrician working in the hallway where the ice machine is. Instead of describing how to get to the ice machine, the electrician will stop working and walk the guest to the ice machine.

26. Customer Satisfaction at USAA(United Service Automobile Association) Example 1. To deal with NEW customers, USAA has at its “call centers” agents specially trained to make an excellent “first impression”. Example 2. USAA values customer service practices even if a particular practice might go unnoticed by the customers. For example, USAA has a “Survivor Team” that each morning alerts all areas of the company about a customer who has experienced a death in the family. This alert ensures that, for some specified period of time, the customer will not be bothered with unimportant mail or phone calls from USAA.

27. Employee Satisfaction at Ritz-Carlton Hotels At Ritz-Carlton Hotels, an important component of employee satisfaction is empowerment. • As examples, at a Ritz-Carlton Hotel, • A housekeeper can make a decision to order new washing machine. • To resolve a guest’s complaint, a front-desk clerk can deduct up to $1000 from a guest’s bill without asking for authorization.

28. Customer Loyalty at USAA USAA increased its profits by expanding its services from just insurance. Example 1. USAA insured a boat and then realized it could profit from arranging the financing of the purchase of the customer’s next boat. Example 2. USAA realized it could profit by giving a customer who filed a claim for damaged personal property the option of obtaining the replacement item directly from USAA instead of waiting for the claim to be paid and then shopping at a retailer. Later, USAA realized it could profit by allowing customers who had not incurred a insurance loss to use USAA’s buying service via catalog sales.

29. “Growing” Businessat MacIsaac MacIsaac Products for the Office increased its profits by realizing that, while one of its truck was delivering office supplies to a customer, it could also deliver janitorial (custodial) supplies.

30. Customer Service atBaptist Hospital • Arriving visitors find huge signs directing them to FREE valet parking. • After cleaning a room, a custodian asks the patient, “Is there anything else I can do for you? I have some time to help you.” Many patients ask the custodian to close window shades, shut doors, or lower the TV’s volume. There are two benefits: happy patients and lower costs, since calls to nurses to do such things fell by 40%. • Nurses carry cell phones so that doctors can contact them without paging them over the intercom system, thereby reducing noise and allowing the patients to rest better.

31. TQM Reduces Costsat Baptist Hospital Baptist Hospital’s TQM Program reduced costs in three ways: • Because word of the TQM Program spread through the media and through happy patients, the hospital reduced its marketing budget by 20%. • Improved employee morale led to lower turnover which in turn led to lower training costs. • Because patients are better satisfied with the care they received, the number of malpractice claims decreased significantly.

32. Customer Service atOmni Hotels & Wingate Inns • Under Omni’s Select Guest Program, a guest entering his room for the first time after check-in will find that the room has a radio station tuned to his/her preferred style of music, has copies of his/her favorite magazines, and has complementary items ordered from the mini-bar during previous stays. And, a guest automatically receives his/her preferred room type: smoking or non-smoking, king- or queen-size bed, and low or high floor. • Under Wingate Inns’ U1 Program, a guest accessing the Internet from a hotel room will have a personalized “My Wingate” home page that will provide personalized information like the weather in the guest’s home city and local restaurants with the guest’s preferred cuisines.

33. “Breakthrough Service”at Granite Rock At Granite Rock in Watsonville, California, loading rock into a dump truck is as easy as withdrawing $20 bills from a bank’s ATM. Granite Rock operates a 24-hour ATM-like automatic system that dispenses a quarry’s rock. Granite Rock’s system resulted in a 70% reduction in a truck’s average loading time, thereby providing significant savings to its customers (where operating a truck costs over $1 per minute).

34. “Breakthrough Service”at ANA Hotels At the ANA Hotel in Tokyo, I was was “blown away” by the bathroom mirror that would not fog up during a hot shower.