Mike Hohnen

Coaching for personal growth, change and development

Hotel

In a Sea of Sameness, We need to Manage the Experience

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We have been talking about the experience economy for years, but what does it mean to create an experience?

And, have you ever wondered who is responsible for the total experience in your company?

Most companies I work with have subdivided the responsibility for the experience into various sections – the kitchen is responsible for the food experience, the restaurant  for the table service, the reception desk for the welcome.

When doing it that way, we hope that if each of them do it well, then the total experience is going to be the best possible experience.

But if we were to apply that principle to manufacturing, we would be calling it sub-optimization. Ensuring that the parts are fantastic doesn’t guarantee that the total becomes fantastic. Purchasing the 11 best soccer players in the world does not guarantee a championship.

If you take your family to a theme park for the day – does it end up being a fantastic day because of one or two rides, or is it the integration of all the different experiences that blend into what you all feel was an exceptional day?

So, how do we ensure that the overall experience is fantastic?

I became curious about all this because I came across an article that stated that 69%of major UK companies have a customer experience manager.

The financial sector and the telecom sectors seem to lead the way. In retail, we don’t see many; and I struggled to find any in the hospitality sector at all.

Interesting.

Why have people in finance and telecoms seen the need before everyone else to appoint someone senior to take responsibility for the total experience of our customers?

I think this has to do with the fact that in the financial sector and the telecoms sector, they have a huge challenge in differentiating their product.

Once you have obtained your overdraft facility or your loan or whatever it is you want from a financial company, the difference in the actual product is not clear. A loan is a loan. The same applies to the telecom sector. If I send you an SMS, it’s difficult to know if it has been sent through Telia or Orange or whoever it is. The quality of the SMS doesn’t vary from one telecom provider to the other – although the content may vary… but that is another story.

What does vary from company to company is the actual experience you have when applying for your loan or creating your mobile phone account. Paying your bill etc.

This is something that Virgin understood years ago.

They took boring industries and tried to see if they could improve the experience. Not a cheaper experience but a more interesting or fun experience. They did it to the airline industry, they did it to trains, they’ve done it in the banking sector, telecoms, and fitness centers.

So why is the retail sector or the hospitality sector not concerned about the total customer experience – they stand out as the two sectors who don’t seem to employ customer experience managers?

They don’t see the need because when you have a shop or a hotel and you stand inside your own business and look out into the world, you are convinced that what you have is very different from any of the other products out there. Furthermore, you are convinced that, of course, the customers can tell the difference between your beautiful shop and all the other mediocre shops that are out there. It is obvious. But if you switch perspective and look at the marketplace through the eyes of the customers, what they see is a sea of sameness.

From the customer’s point of view, in each category they are all similar products that do the same things at the same prices, etc.

Which is why we have now come to a point where customer service is probably the last frontier of a sustainable competitive advantage. Products are very similar; process – the way we do things – is the differentiator.

So, if you want to out-perform your competition, you need to focus on your processes. How do all the things we do blend into that great total and unforgettable experience?

In the following blog posts, we will take a closer look at what that means.

Customer Centric : they get it – Virgin Hotels

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In my previous post, I tried to illustrate how some hotels (and other service businesses) truly understand what it means to be customer centric and then all the others who really just don’t get it.

Two days after posting that I came across the following video from Virgin – who is now entering the hotel industry.

This is interesting because Virgin has always had a strategy of moving into industries where most of the players just don’t get it… Airlines, trains, banks, phone providers, and now hotels. What it means is that Virgin sees an opportunity to do it much better…there is room for improvement… Check out their website

Virgin Hotels – ‘Brilliant’ Not To Scale New York. from Not To Scale on Vimeo.

We make love and steal hearts. We’re passionate about creating brilliant experiences that make peoples’ lives better. And there’s nothing more honorable than that.

Customer centric – do you get it?

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Walt on legs

In my view there are basically 3 kinds of hotels.

Hotels that just don’t get it. The law of supply and demand eventually takes care of them.

Then there are hotels, who get it, or should I say they think they get it. They are the hotels who continually ask themselves: how could we get more money out of each guest by providing more options, loops and hops they must jump through?

– so they have complex internet packages, like lousy internet for free, decent internet at a price – cheaper if you take the full 5 day pass etc.
– or when you walk into the room the television screen is blaring at you suggesting all the films that are on offer – at a price – and it takes you 10 minutes to workout how to turn the dam thing off or find the news.

Then there is the third category .

These are the hotels that ask themselves: What is it like to be on the road, away from home? What does one need, what is annoying, troublesome, irritating? How can we create a service that would make life better, easier, smoother or more fun for our guests and what would we need to charge to make that possible.

From a guest point of view this kind of hotel has a very different feel from the former. The final guest experience is totally different because that basic intent ‘to serve’ comes out in everything they do.

And when you experience that it is such a pleasure because you feel like a welcome guest and not like a ‘wallet on legs’.

Building the emotional connection

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Here is a great example of a brand making the emotional connection

In my view a brand is a product that you have feelings for – it becomes a brand the moment you ‘care’ about it in some way.

That is also the reason why we spend so much time talking about the importance of generating customer loyalty when we work with implementation of the Service Profit Chain.
Emotions drive loyalty.

Your ‘product’ becomes a brand in your guests head as a result of the emotional connection that your staff makes with the guest.

The first step in brand building is therefore making that connection ( it is not advertising spend) – then you can always reinforce that with clever advertising as it is done here – but it starts with positive moments of truth

Customer Loyalty – the magic formula

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Most of us experience a market situation that can best be described as hyper-competition. Supply out strips demand in virtually any category you can think of.

When that plays out advertising becomes less and less useful because there is already so much of it that few people, if any pay attention to it.

So the name of the game is customer loyalty – trying to draw customers closer to us in such a way that they are less tempted to switch to the competitions latest bargain offer.

Many companies use a variety of sophisticated marketing tools and tricks to do this from simple punchcards that give you your 10Th coffee for free to more elaborate loyalty clubs like what many Air Lines have developed.

But I don’t think that bribing customers to come back is what really counts. It may produce some form of customer renetion but there is no emotional loyalty.

What is loyalty then if not retention or what is the difference you may ask?

Well, there are two reasons we need customer loyalty. One is the obvious, that it is much cheaper to sell to an existing customer than it is to acquire a new one.That is the Customer retention part.

But more importantly loyal customers tell their friends – in fact the more loyal they are the more they talk about it – and that is what makes the all important difference between mechanicaly loyal and emotionally loyal.

When you have positive emotional feelings about a product or a brand you become an ambassador or what Fred Reicheld calls a ‘promoter’.(Here is a quick overview of the Net Promotor Score system)

Obviously in order for customers to become loyal they must first of all be satisfied to some degree. Customer satisfaction is the prerequisite for customer loyalty. But how much customer satisfaction does it take to create lasting loyalty?

From deeply dissatisfied to relatively happy, nothing much happens. Then, as satisfaction becomes more than just satisfaction and turns into enthusiasm, loyalty increases sharply.

But notice that when we deliver the right service/product at the right price, at the right time, and to the agreed-upon specifications, we score a 3 or possibly a 3.5 if we are lucky.

“Hey! But that is not fair,” you might be thinking, “we are doing everything perfectly and just as agreed, and all we get is lukewarm feedback!”

Doing everything perfectly and as agreed upon is exactly the problem. When clients read your marketing material or listen to your sales pitch, they learn that you will do this, this, and this for them at this price and on such and such terms.

So, who will be impressed when you actually deliver on what you said you would deliver?

You are performing exactly as expected. If you do less, they will be annoyed. If you do more, they will be en route to enthusiasm. If what you do far exceeds their expectations, they will be ecstatic.

But what can we do more than delivering everything we said we would?

We can establish an emotional connection. And because so few companies get it, it is still unexpected. When we touch our customers emotionally we exceed their wildest expectations.

Just think of a wonderful service experience you have had at some point. What made it exceptional? The mechanical stuff or was it because some one touched you at an emotional level some how?

Nine times out of ten you will find that what creates enthusiasm and loyalty is an emotional connection.

So forget the punch cards and the bonus points – what you need to work on is your team.

It is the attitude and loyalty of your team to your business that drives true customer loyalty. ( see my previous post on Employee loyalty here)

Loyal employees create loyal customers – that is the magic formula and that is also at the heart of the Service Profit Chain

What comes after the Service Profit Chain?

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What is great service?

Great customer experiences have an emergent quality. They arise out of a multiplicity of relatively simple interactions. Each one of them separately is quite simple – together they form a complex pattern that becomes an experience.

The challenge therefor lies not so much in the individual transaction – that is relatively easy – the art lies in the getting the combination right. The timing, the sequence the ’temperature’ – just like when you are baking a fruit cake.

When you bake a fruit cake you are in sync with you – hopefully. But when providing a great customer experience you need to be in ‘sync’ with everybody else (including the guest.) There needs to be a certain resonance between you and the rest of the crew.The better we ‘understand’ each other the easier it is to get it right.

The key word therefore is relations.

The way we interact with each other – the quality of that relationship – drives our collective thinking and sensitivity to the situation.
The way we think and feel about what is going on has a huge influence on the quality of our actions. And as we all know the quality of our actions at the end of the day drives the quality of our results.

Which then brings us back full circle to where we started, because what we achieve and the way we achieve it drives the quality of our relations.

So what will it be?

We can go round this loop with a positive spin and things will steadily improve… or we can chose the downward route and things will go from bad to worse.

It all depends how we decide to relate to one another.

I only just recently discovered Daniel H. Kim’s model, I realize that is has been around for while. But nonetheless it struck me with great force because suddenly here was a way to describe what I have intuitively been working towards with many of my clients over the past years. I have just not been able to articulate it so clearly before.

In 2013 this kind of thinking is going to be at the foundation of what I shall be working on. It is the next step after many years of working with the Service Profit Chain.

Once we understand and how the Service Profit Chain works the next logical step for me is to look at our organizations from a relations perspective.

And the tools we shall be working with in order to achieve that are:

• Building a Common Vision
• Personal Mastery
• Mental Models
• Team Learning
• Systems Perspective

These five tools are also not new – they are at the core of Peter Senge’s The 5th Discipline. But although quite a lot of industry managers have heard of The 5th Discipline I see few who are actually working with or implementing this kind of thinking. ( That was also the the experience I had when I first started introducing the Service Profit Chain – People might have heard of it but it remained something relatively abstract – and very few were actually implementing it).

So what do you think? Do you have a team or and organization that would benefit from taking a walk down this path? Or do you have something you would like to contribute?
Let me know I am very curious as to how this resonates with you.

TEN “Obvious” Questions Concerning Your First-line Supervisors

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I have been a HUGE Tom Peters fan for years. I read In Search of Excellence and have been hooked ever since.

Recently TP has generously been sharing his collected wisdom in the form of the famous TP PPT slide sets. You will find them on his web site here.
There are 23 slide sets in total – more than 3500 slides of wisdom and/or provocation – one set that is particularly close to my heart is no 3 : First-line Supervisors Rule.

Here TP asks these 10 ‘Obvious’ questions

TEN “Obvious” Questions Concerning Your First-line Supervisors

1. Are you, Big Boss, a … formal student … of first-line supervisor behavioral excellence?* (*Yes, this sort of thing can be formally studied.)

2. Do you absolutely understand and act upon the fact that the first-line boss is the … KEY LEADERSHIP ROLE … in the organization? Technical mastery is important—but secondary.

3. Does HR single out first-line supervisors individually and collectively for tracking purposes and special/“over the top” developmental attention?

4. Do you spend gobs and gobs (and then more and more gobs and gobs) of time … selecting … the first-line supervisors? Are your selection criteria consistent with the enormity of the impact that first-line bosses will subsequently have?


5. Do you have the … ABSOLUTE BEST TRAINING & CONTINUING DEVELOPMENT PROGRAMS IN THE INDUSTRY (or some subset thereof) … for first-line supervisors?

6. Do you formally and rigorously … mentor … first-line supervisors?

7. Are you willing, pain notwithstanding, to … leave a first-line supervisor slot open … until you can fill the slot with somebody spectacular? (And are you willing to use some word like … “spectacular” … in judging applicants for
the job?)

8. Is it possible that … promotion decisions … for first-line supervisors are as, or even more, important than promotion decisions for the likes of VP slots? (Hint: Yes.)

9. Do you consider and evaluate the quality of your … full set/CADRE …. of first-line supervisors?

10. Are your first-line supervisors accorded the respect that the power of their position merits?

The job that needs to get done.

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Clayton Christensen – in his book The Innovators Dilemma has done a great job of explaining to us all why it is that time and again market leaders get ambushed by much smaller new entrants. If you have not read it please do it’s a fascinating read.

The classic scenario is that the much smaller new entrant launches a product that is obviously inferior from a quality point of view and therefore the existing players in the market don’t take it seriously. Ryanair is a good example of this and before them, Japanese car makers ambushed the American automobile industry with their compact cars.

And just now we are witnessing that the traditional newspaper industry is flapping around like headless chickens trying to come up with a business model that will save them from disappearing altogether – but they too woke up to late.

The key to understanding why this happens again and again is that established providers focus on their core customers and in that process lose sight of the job that needs to get done.
Take journalism, the demand for news is the same – but the way it is consumed has changed. My grandfather had the maid iron his newspaper before it was brought to him in his study. Well not many people consume news that way any more if you get my drift – but they still need it and somebody is providing it.

The reason I’m taking this up in my blog is because I have noticed how hugely popular a number of essentially couch surfing services have become. Airbnb seems to be the most visible but there are many others.

The concept enables private people to rent out their spare space to travelers. In Berlin a popular tourist destination hoteliers are now asking for government intervention, new rules and regulations because it is estimated that a whopping 5,000,000 bed nights a year are being supplied by private vendor’s. Interesting. Big chains are feeling threatened by small private vendors. What is going on?

Well, if we look at it through the lens of the job that needs to get done my interpretation is that this is not just about price – lots of private vendors are charging the same or more than your average budget hotel. I think this has more to do with hospitality – or the lack thereof.

If you visit a site like Airbnb.com and pick any popular city and look at the comments that some of the popular providers have on their listings from satisfied guests. What visitors appreciate is clearly the personal touch. The host that catered to a particular need, showed them the right dance club or whatever – in every case of a raving review it is clear that there was a real connection between the host and the guests. And that to me is what hospitality has always been about. That is the job that needs to get done.

But lately we have seen especially budget and mid priced hotels automating and streamlining their processes in order to cut costs. Check yourself in and out. Pick up your breakfast in the automate etc. But in the process they threw the baby out with the bathwater.

The obvious success of the couch surfing services is a big wake up call for the industry – we need to refocus on the job that needs to get done – which means being great hosts.