Hotel

What is the difference between service levels and service standards?

April 13, 2022By Mike Hohnen

Service levels and standards

A key part of implementing the Service Profit Chain’s thinking is to work on consistency; in order to do that, we need to have a clear understanding of what the difference is between service levels and service standards.

The easiest way to understand this is to look at a few examples.

Many independent restaurants have high levels of service. But they may not have high standards. On the other hand, McDonald’s has a relatively low level of service, but has very high service standards, while Ritz-Carlton hotels have both high levels of service and high standards of services. And the greasy spoon down the road has neither service levels nor high standards.

Service Levels.001

Standards are all about consistency. We do things in a certain way, always. Levels of service are all about how much time and effort you put into the delivery process.

Many independent restaurants and other small service businesses go out of business because they lack service standards. Their delivery is inconsistent and creates confusion in the marketplace.

Our level of service needs to fit with our overall value proposition. How much service does this customer segment need and are they willing to pay for it?

Understanding this is crucial to building loyalty.

This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future’s posts, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.

If it is all about loyalty, does satisfaction matter?

April 13, 2022By Mike Hohnen

Consistency

It is true that in the Service Profit Chain framework, there is a huge emphasis on establishing loyalty; loyalty is the key driver of profit and growth.

Before we can even hope to establish a relationship that will lead to loyalty, we must ensure that we have a firm grip on the basics and that we can deliver on our promise every time. The keyword here is consistency, the key driver of basic satisfaction.

Consistency or lack of consistency is also one of my pet grievances. Consistency is the flip side of reliability. If as a customer I had a great experience last week, you as a service provider have implicitly promised me that I will have the same experience when I return next week.

If not, you are not only unreliable in my eyes, but you are also performing below my expectations, and we all know that meeting expectations is the first key to customer satisfaction.

This is a balancing act because, on the one hand, we would like to see creativity and initiative on the part of our teams, but on the other hand, we need to deliver a product that is as expected.

The name of the game is to generate repeat business. Customers return to get more of what they enjoyed the first time. If they don’t get that, then they could just as well have gone somewhere else.

Just think back for a moment about how many times in your life you had a great experience somewhere, and then went back only to find that what you had last time was not what you got the next time. Did you go back a third time just to make sure?

Probably not.

Where do you go frequently? Most probably to a place that is very consistent in some aspect of their service delivery that is important to you. That consistency is what brings you back.

Requiring consistency in the delivery process is universal across all types of services. It is the foundation of your success, and that applies to all service businesses, the way your insurance company processes your claim, the way the consultant interacts with you, how your auditing firm performs the audit. You return to the same supplier in all of these situations because you liked the way he or she did the work.

Together with emotions, consistency is an important element in our ability to recall one service experience more easily than others. You remember the consistently good experiences. They stand out. You have a much harder time remembering inconsistent experiences because you easily confuse them with all of the other inconsistent experiences that you have had.

Customers come back to experiences that consistently live up to their expectations. When that happens, we call it loyalty. Loyalty is built on consistency. Never forget that.

So take a good hard look at your basic processes, are they consistent?

What do you need to focus on if you in order to create a dream team?

April 13, 2022By Mike Hohnen

In my view, the three cornerstones in the thinking behind the concept of the Service Profit Chain are:

Customer Loyalty – as the key objective
Value – understanding the true need of the customer
Dream Team – the people that actually make it happen

We have already looked at Loyalty and Value in the previous post.

In this post, I would like to explain the 6 key ingredients in creating a dream team:

The Right People

Careful selection of new recruits. Hire for attitude. Train for skills. Coach for performance and that includes dealing with the bad apples.

Continuous Improvement

Best in class training and development at all levels in the organization. Continuous improvement is considered one of the great benefits of the job. “In this job, I grow”…

Great Support Systems

Service is not just something the frontline does for our customers. Service is our culture. Employees and managers, who do not have customer contact, service the employees that do. (Our IT department is not the IT-Police – it is an internal service department that supports the frontline in getting the job done.)

Empowerment/autonomy

The best service employees take pride in solving the problem on the spot. So the freedom to act is hugely motivating. Southwest Airlines famously tells its employees, ”You may do anything you are not uncomfortable doing to solve a passenger’s problem.”

Clear Expectations

In the same way, that anyone who has made it to a great sports team knows what is expected of them, employees in the best service organisations also know what is expected of them. It is part of their motivation to be part of a team that is not afraid to set the bar high. Candour is a key element of high-performing teams.

Appropriate Rewards and Recognition

Focusing on what works, celebrating success, and acknowledging each other’s contributions makes work meaningful.

The principles are not complicated. There is no magic involved. But it requires commitment and persistence to get it right. When you do, the benefits are amazing.

You can download the Dream Team checklist below and benchmark yourself!

Dream Team Questions

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ETC is at the heart of your employee experience.

January 26, 2019By Mike Hohnen

ETC

What kind of employee experience are we delivering? That has been the theme of my blog posts over the past 3-4 weeks.

A few years ago, MIT Sloan Management Review ran an article entitled “Designing the soft side of customer service”. In it the authors argue that regardless of whether we are talking a pizza delivery or a complex consulting agreement, emotions are lurking under the surface and that our job is to make those feelings positive.

If we are aiming to create the optimal customer experience, we will need to start off by examining the kind of employee experience that is going to be the foundation of the customer experience.

A miserable employee is not going to provide your customer with a breathtakingly positive emotional experience – no matter how much you train them.

But this is not just about the full employee journey: recruitment to exit-interview. As managers, we need to focus on the day to day experience as well.

We have looked at endings, consequences and psychological safety in previous posts, so this week let’s take a look at what else we can learn from the field of behavioural science that can help us understand what drives a great employee or customer experience.

You need to focus on the “ETCs”.

Emotions influence what we remember. Emotionally charged episodes are easy to recall. “Experiences” that triggered no emotional reaction, positive or negative, are quickly forgotten.
Basically our emotions are triggered when something turns out better or worse than we expected. And the corresponding emotional response is then either positive or negative. A good manager does her best to manage the emotions of her team – and sprinkles the day with a few unexpected positive surprises as well. Positive surprises are anything from throwing a pizza and beer party to celebrate a win, to the simplest little gests of encouragement during the day.

Trust is the basic psychological variable that is essential to any form of relationship. No trust, no relationship. If we want engagement, there needs to be trust. And trust is the mirror of how we show up on a day to day basis as human beings. Are we reliable? Do we do what we said we would do? Do we care for and stand up for our team?

Control over one’s environment and knowledge of how events are going to unfold are fundamental psychological needs. But control is also linked to trust. In a high trust environment, the need for control is less. There is one more aspect of control when we are talking employees and that is the sense that I have some degree of control over how I do my job. This is one of the foundational cornerstones of employee engagement.

Every situation in the day that involves uncertainty either in outcome or in process will cause our team members to experience a loss of control – and that closes the loop back to emotions because a sense of loss of control creates some very negative emotions.

So there it is, as a manager, I need to manage the emotions, trust and sense of control of my team if I want to make sure that they are in the best possible shape to create a fabulous customer experiences.

It sounds complicated, but it does not need to be – In our next manager’s toolbox workinar*, we will talk about some simple tools and tips that can help you do a much better job at this.

* I have a new online training out on this: The Team Leaders Toolbox – check it out

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This is the 14th article in a series on how to lead as a first time manger. If you would like to know more, check out other articles of the first time manager series:

Service is a Contact Sport

April 13, 2022By Mike Hohnen

And that needs to be reflected in the way you manage who gets to play on your team.

Step number one, when we are trying to create a service dream team, is having the right people on the bus. There are two parts to this: recruiting and developing.
Before we explore those two aspects further, let’s just take a look at why this is important. The name of the game, when we are running our service company using the Service Profit Chain framework, is employee loyalty.
In this context, loyalty has two dimensions: retention and attitude.
So, if we want to keep our best people and ensure that they continue to have that world-class, can-do-attitude, we need to be careful not to take away their job satisfaction.

How to Insult Your Best People

Ask them to work alongside an idiot!
Nothing demotivates a great service provider as much as having to work with a colleague who is not performing or, even worse, is blatantly annoying our clients. And if you – their manager – are not seen as doing something about what is obvious to everyone, one of two things will happen.

Either…
1) They will leave the team and find a place to work where they are sure to work with other star performers. (This is one of the secrets to Ritz-Carlton’s success, in my opinion – the best service people want to work there. Why – because they know they are going to work with the best in the industry.)
Or…
2) They will reduce their efforts so that they match the underperforming colleague.
In either case, your customer will be at the receiving end of a lousy service experience.
So, when we look at the best companies in a given service category, we always see that they are picky about who they hire. They do not adhere to the warm-body principle, “As long as they have a pulse, we’ll take ‘em,” to the extent that they prefer not hiring to hiring someone they are not 100% sure fits. And ‘fit,’ in this instance, is about values and attitude – not about skills.

Deal with the Bad Apples

Secondly, great managers do not put up with bad performance. If someone is not performing, they are coached. And if they are not seen to be making an effort to improve, they will need to go.
Great service organizations play to win – consequently, they have no room for players who are not performing – it’s that simple.

Seven Steps to a Dream Team

There are 7 more steps to creating a dream team – I have outlined them in a handy Checklist that you are welcome to download here.

Building a great service business begins with understanding the Service Profit Chain framework. In my view, that is the foundation. Check out my free introduction here

The Frontline Manager Makes the World go Around

April 13, 2022By Mike Hohnen

Despite the fact that we read stories that companies such as Zappos and others are abolishing the role of middle management, the reality out there is that the vast majority of companies rely heavily on middle managers to keep the wheels moving.

So, unless you have embarked on the experiment of abolishing middle managers, there is a high likelihood that you recognize that your frontline managers are crucial to your business.

Take one metric. Staff turnover.

A controllable cost that also has a high impact on your customer loyalty and satisfaction. It is widely recognized that employee turnover is linked to the management style of the immediate supervisor.

Or, change management.

Whatever customer satisfaction strategy and tactics you are developing – the effort is wasted if your frontline is not implementing according to that plan.

The Frontline Manager is the Linchpin

But, how much attention are you giving the growth and development of those frontline managers?
If you are like most of the companies recently surveyed by HBR, not much.

What that same survey shows is that, paradoxically, the same companies that say the frontline manager is a linchpin in the organization also say that the same frontline managers need to develop a number of crucial skills, including organizational savvy, leadership, and talent development.

But they recognize that not much is being done in the company to actually develop those people – go figure.

The reality out there – still according to the HBR survey – is that most development for this level of management tends to be ad hoc, sporadic, or just too brief to actually make a difference.

In general, it seems that leadership development follows the trickle-down model. Most gets invested at the top; and if there are resources left, they are spent on the frontline managers – sometimes.

So, once again, we have a classic knowing – doing gap. The problem is recognized – but somehow nothing gets done.
I wonder why.
Let’s just recap why frontline leadership is crucial to your service organization. We live in a world of Hypercompetition. Customers are flooded with offers and messages. In every imaginable category, supply outstrips demand.

So, if you are not just going to live a mediocre existence trying to survive, you need to stand out and be, if not the absolute best, then at least among the best.

Your aim is customer loyalty. If you can get that right, you will drive profits and growth as a result. This is the basic learning from the research done that led to The Service Profit Chain.

The best starting point for developing your frontline managers is to introduce them to the Service Profit Chain framework.

If you would like a refresher course on the mechanics of the Service Profit Chain and how employee engagement ultimately leads to profit and growth, check out my free video course here:

Management Team or Just Heads of Tribe?

April 14, 2022By Mike Hohnen

Often when I work with a GM and the department heads, I will start by asking each of them to write down the name of a person on their team – just the first name that comes to mind. Then I ask them who in the group has written the name of a person who is in this room now on their piece of paper. And invariably, it will always be only the GM who raises his hand. The GM sees the other people in the room as his team. But, the department heads seldom see each other as the team.

Department heads tend to see themselves as Indian chiefs. Each represents his or her tribe; and when they meet, it is about defending territory and resource allocation, not about collaboration.

Two Different Cultures: Taking Responsibility and Being held Responsible –

They key to understanding why department heads end up as heads of a tribe and not as the team we dream about has to do with how we work with responsibility.
If we spend our time at management meetings trying to identify who was responsible for ‘That’ when something goes wrong, then each department head learns that the only way you can play that game and not get hurt is to create clear boundaries. ‘This is what I am responsible for – and that is what you are responsible for. Just make sure you don’t cross that line.’
The savviest department heads also learn not to stick their necks out and take on more responsibility than they need to.

Responsibility means trouble.

So, over time leaders (and their teams) become more and more passive and reactive.

But, we all know that being passive/reactive is not what gets us raving customer reviews. In order to rise to the top in our category, we need to be proactive. Managers and their teams need to take initiatives and anticipate needs in order to delight customers.

But, they will only do that if:
a) it is accepted that boundaries between departments are soft and
b) that we do not ‘punish people’ for taking initiative even when they are not successful.
That means a different culture.

Taking Responsibility

The alternative to being held responsible is to develop and encourage a culture where we take responsibility.

But that is a completely different culture; because, if you think about it, no department is an island. The boundaries we have created between departments are, in reality, just here for our own sake so that we can organize stuff in a meaningful way. From the customer’s viewpoint, these boundaries should be invisible.
The customer is looking for a total experience – the whole.
And because no department is an island, when something goes wrong, in most cases it goes wrong for a number of reasons – not just for one reason.

So, the question we need to always ask ourselves when something goes wrong is: “What could WE have done to prevent this happening?” Then, maybe department head A immediately jumps in and says: “That was my fault. I screwed up, and I will do my best not to make that mistake again.” Case closed and we can move on to the next item on the agenda.

If that does not happen, we need to analyze what happened, not to place the blame, but to learn how we could have prevented this… most probably, with better collaboration at some level.
Because – if you remember – the definition of a team is:

A group of people with a common goal and who feel mutually responsible for reaching that goal.

Feedback Drives our Behavior.

Everything that we do is based on our previous experiences or our beliefs about what an experience will be. So, as the leader, your feedback to your team governs their behavior, and over time they become a reflection of your feedback.

And, they will either become a team or they will default to heads of tribe – it’s up to you.

Building a great service business begins with understanding the Service Profit Chain framework. In my view, that is the foundation. Check out my free introduction here:

The Asymmetric Nature of Services

April 21, 2016By Mike Hohnen

In my previous blogposts, we started looking at this whole concept that we have labeled “The Experience Economy” and why the shift towards a service-dominant logic is raising the bar for everyone involved in service.

So, if we can agree that there is a shift from focusing on goods to focusing on needs, we need to spend some time understanding the concept of needs as seen from the consumer’s perspective.

Many hotels, restaurants, or other traditional service providers forget that they are in the needs business and fall in love with their own products. They mistakenly think that it is the product the consumer is actually interested in and do not understand that the product is just a translation of their needs into something more tangible.

Loving the product and missing the need is also what happens every time a company or industry is disrupted. The needs shift or someone sees a totally different way to fulfil those needs – and titans of industry get washed away. Kodak never believed for one moment that we would ever drop Kodachrome and replace it with pixels.

Services are Asymmetric

So, when we look at the nature of services, it is important to remember that there is this phenomenon of asymmetry – what you sell and what the consumer buys are often two very different things. If you are an airline, you will have a tendency to think of your product as Seat 7A on Flight AB1234. That is what you have sold to that passenger. But the passenger doesn’t think of it that way. What they have purchased is transportation from A to B. That is the need they have.

If you take the restaurant industry, you don’t go to a fine dining restaurant because you are hungry. The restaurant may see itself as providing food and drink…that is its product. But, you are presumably there for something completely different. Something that has to do with atmosphere, occasion, or whatever.

In the hotel industry, they see themselves as providing you a room with certain specifications. But in many cases, you are not in that market for that product specification. You are in the market for a good night’s sleep…that is your need. If the ventilator on the ice machine rattles all night and prevents you from sleeping, then all the beautiful treats and frills in your room are not going to help one iota – you will hate the experience.

So, in that way, traditional service providers also need to make sure that they don’t fall into the trap of seeing themselves as product providers fixated by their own product specifications, to the extent that they forget about what the need is that they are supposed to fulfill.

Now, the problem this surfaces is that needs are deeply personal, subjective, and situational. So, when the travel industry talks about pax – we have 50 pax next week and then 200 pax on that flight – or the restaurant industry talks about covers – we will be doing 145 covers for dinner and then 85 covers for lunch – it is an insult to the individuality of their customers.

What pax and covers implies is that they are all the same – a flock of sheep that all need a standard shearing.

In the next blog post, we will take a closer look at how we can get better at understanding what needs are all about and maybe, more importantly, how to better get a grip on the fact that different people have different needs

– welcome to the age of mass-customization.