CHAPTER 1
How the Service Covenant Became Corrupted

The service covenant has been around for centuries. It is grounded in the concept of the direct or implied pledge of fair bartering—a merchant provides a product or service in exchange for some type of remuneration. Energy might be spent on either side of the covenant as to the fairness of the exchange (server spending energy on promotion; customer spending energy on getting perceived worth), but the essence of the agreement remained intact. There was a promise implied on both sides of the encounter

The covenant for a product was different from the covenant for a service. Customers gave the product provider license to make the product without their participation, or even observation. You did not need to watch the maker of your basket or your dishwasher; you could trust it would be as promised. The tangible nature of an object made the determination of quality easier. As customers, we expected the product would be as described and we had recourse if it was not—typically the object could be returned for a replacement or our coconuts or coins would be returned if it failed to meet the value we were promised. Replacement meant another object like the one we purchased was taken from inventory and given to us. In this fashion the covenant could be restored.¹

The service covenant has some similarities. There were expectations of features and benefits, as for a product. Energy around promotion and price was also similar. However, since service was largely experiential, it could not be stockpiled, inventoried, or sent back for a replacement. Consequently, recourse for a broken promise could not be in kind. Displeasure with your haircut might get you a discount on your next one but there was no way to get your hair back like it was.

So, what was the recourse hardwired into the service covenant? The customer derived some comfort or security through the fact that service would be delivered through an experience which the customer co-created with the service provider. The inclusion of nods, clicks, sounds, and sighs both from customer and service provider during the co-creation process provided customers a way to be the guardian of their side of the transaction. As a haircut customer you could say “Not so much on the sides!” early enough in the experience to prevent the outcome from being a disappointment you were then forced to wear.

Unlike a product, a service is produced at the moment of delivery. You cannot create it in advance. You cannot send the customer a sample to be inspected and approved. Unlike a product, the receiver of a service gets nothing tangible, and value depends on the receiver’s experience and perception. As the service provider, you might be able to plan presentation, people-manners, and processes, but for almost all services it was not deemed a “service received” until it was experienced by (or with) the customer.

Should a product provider opt to change the way the product was manufactured or redo the manner that inventory was organized, it could all be accomplished with minimal impact on (or involvement from) the customer. However, alter the way the service experience occurs and the covenant is fundamentally changed.

Let’s examine a metaphor. When banks got the bright idea of using ATMs instead of a teller, they encountered sizable resistance. ATM use was less than 15 percent even ten years after the machines were introduced. Compare that to the speed of adoption of smart phones or Netflix. The ATM fundamentally altered the nature of the service experience. Now, don’t push this ATM metaphor too far by examining it in light of today’s use. We all know customers today enjoy the convenience of the ATM plus the warmth of dialogue with Peggy. ATM acceptance changed when tellers stood outside the bank and taught customers how to use them, allaying fears about the security of a deposit placed in an uncaring, automated machine.

Progress requires change, and change provokes resistance. However, customers do not necessarily resist change itself. They resist the perception or prediction of being controlled or coerced without their involvement. They accept change when they get a vote; they embrace change when they can participate.

E-SIGHT

The remedy for buying a faulty product that disappointed was getting to return or exchange it. The recourse for buying a faulty service was getting to stop it, influence it, or change it in the middle of the experience. Giving the service experience the features of a product is like putting lipstick on a pig. It may make the pig look better, but it doesn’t make ’em happy.

Alteration in the service covenant has been fueled by the push for cost cutting and efficiency. Migrating customers toward self-service, for example, brings an array of time-saving benefits to both service provider and service receiver. But the manner in which that migration typically occurs—without influence from customers—can be viewed as devaluing the co-creator, thus adding another spark to the flame of their opposition.

The Rebellious Customer

Customers today are picky, fickle, vocal, and vain.² They are picky in that they are more cautious in their choices (and they have many more choices) than customers of yesteryear and are interested only in getting obvious value for their money. They are more informed about the choices available, smarter in choice-making, and more selective in whom they elect to join. They are fickle in that they are much quicker to leave if unhappy. They show a lower tolerance for error, and will exit even when the service is merely indifferent.

Customers today are vocal in that they are both quick and loud in registering concerns based on their higher standards for value and their expectation of getting a tailored response. They assertively tell others their views of an organization’s service; they also pay attention to fellow customers’ negative reviews and make choices without even giving the organization a chance. A 2009 Nielsen online survey of 25,000 consumers in more than fifty countries found that customers trusted friends, family, and peers for product recommendations 90 percent of the time.³ Finally, they are vain in that they expect treatment that telegraphs they are special and unique.

Now we know, as customers ourselves, that the picky, fickle and vocal parts are spot on. The vain label may seem harsh. Few of us look in the mirror and see a vain person looking back. But, the “Have it your way!” perspective we have acquired is the natural byproduct of pampering by service providers. Customer self-centeredness has been enlarged by our newfound muscle in the marketplace. Be honest. How would you react if you bought a product that turned out to be defective and the merchant refused to take it back? What if the McDonald’s counter clerk told you they would not “hold the cheese” on your Big Mac? We enjoy some degree of service personalization; we also expect it!

The picky-fickle-vocal-vain moniker represents a dramatic shift as we look at what is required to ensure customer loyalty—the stuff of growth and profits. Customer requirements for value are way out of sync with the tried and true methods organizations have relied on for years. When frontline employees deliver service that fulfils the customer’s stated needs, they are taken aback when customers give them less than satisfactory grades. When a small gaffe triggers volcano-like customer uproar, many frontline employees believe they have met a deranged deviant with an attitude problem, not just a typical customer acting on instincts honed from countless disappointments.

The more dissonance there is between what the server provides and the served receives, the more the problem exacerbates. Customers declare the organization’s frontline ambassadors are indifferent, difficult, and uncaring. Further, the connections customers now have with one another via the Internet and social media give them the power to transform an organization overnight from service champ to service chump. Customers formerly loyal to a particular brand now regard brand identification as just PR drivel or corporate snake oil. Add to this cacophony a global playing field, razor-thin margins, warp-speed change, and depleted staffing levels, and you have a recipe for employee wear-out and customer walk-out.

It is not that organizations are responding less but that they are responding incorrectly—out of sync with what new customers require. They are “efforting” but not achieving. Those who recast their engagement strategy in innovative ways are resonating with the “new” customers and winning their loyalty.

Take a look at award-winning Zappos.com, now a part of Amazon.com. They took a simple business—online buying of shoes—and added the experience enhancers that make them the talk of the neighborhood (and cyberhood). Sure, you can do all your buying without communicating with a soul. But, every Zappos web page has a deliberate invitation to interact. When the customer clicks to talk, they get over-the-top attention, customized communication, and a live rep who wants to be your new best friend. Zappos merchandise arrives at your front door way before you have a chance to wonder when it will. It is the perfect blend of self-service with full service that respects the service covenant while bolstering convenience and cost savings. And, how has the market rewarded them? Their profits went from zero when they started to over $1 billion 10 years later.

Customers are primed and ready for uprising. Some have already jumped ship to pursue a new service provider that offers greater value. Under the surface of picky-fickle-vocal-vain is a level of frustration (sometimes anger) that is fueling their mutinous and sometimes dangerous behavior. This book is about the tainted groundwater of customer discontent—and how to fix it. Addressing the symptoms while ignoring the cause is like taking an aspirin for bronchitis—it may make you feel better temporarily, but failing to address the real issue can lead to customer churn and, more devastatingly, a customer-led uprising trafficked on the Internet. Turning a potentially dangerous customer into an advocate is not only possible but it is also eagerly desired by those you serve.

The Museum of Customer Service

A stroll through a museum filled with artifacts of an earlier time can be enlightening; that trip down memory lane can teach us a lot about where we were. In the words of George Santayana, “Those who do not learn from history are doomed to repeat it.”⁴ The museum shows us how we have changed.

Pretend there was a Museum of Customer Service. You would see objects of the past, like fax machines and floppy disks. You would see hotels with phones in guest rooms that guests actually used for more than a request for a wake-up call. In the museum, plumbers cost less than dentists; all banks were open until noon on Saturday. Retail stores had sales clerks on the floor, not just at the register. Grocery stores had bakers, gas stations had a mechanic, and mail-order catalogues were all-purpose, not just specialty. Stores had layaway plans and returns clerks; banks had signature loans. Doctors made house calls and treated whatever malady they encountered, rarely referring the patient to anyone else.

Looking forward from the past, what has changed? The most obvious change has been a dramatic trend toward self-service. We skip the check-out counter with the long line and moving-in-slow-motion cashier to do self-checkout. We let our fingers do the walking, not in the antiquated phone book but through search engines like Google, Bing, and Yahoo, for what we want to buy. We look at Overstock and eBay for bargains, YouTube for entertainment, Wikipedia for reference, and Mapquest for directions. Buying online has altered the service experience as dramatically as the disappearance of the friendly elevator operator who could tell you that Housewares is on the third floor.

Self-service has had a positive side. Shifting the lion’s share of the service experience to the customer has lowered operating costs. It has freed up human resources to be used in roles and functions truly requiring a human touch. Self-service has also made the customer more self-reliant, as “do-it-yourself” has replaced “I’ll take care of that for you.” Learning to fend for oneself can trigger acquisition of both knowledge and confidence. Customers are less dependent and far more competent.

Let’s go back to our French history lesson for a minute. In 1789, reading Voltaire or hearing tales of freedom from French soldiers just back from the American Revolution were both double-edged swords. French commoners were inspired, but they were also emboldened. Similarly today, self-service is a tool for independence that has a “revolutionary” or dark side as well. That under-the-surface component, properly managed, can be an opportunity for service greatness leading to customer growth and bottom line profits.

Service is the act of giving assistance to a customer. When most of the “assisting” is shifted to the recipient by the provider, resentment often ensues: “Why am I having to do this myself?” As customers, we ultimately get over it, learning to pump our own gas, find our own size, and wash our own cars. We stop using tellers and librarians and go straight to a machine. But with the change of balance between serving and being served comes an alteration in the true meaning of service. Many years ago, if the elevator operator was out on break, we felt underserved. Today, an elevator is not even viewed as a context for service, it is just a functional device to move us up and down.

Self-service changes our standards for service. Obviously, when we “do it our way” we get highly tailor-made service. As customers, this changes how we view those who serve us. We assume they will know us almost as well as we know ourselves. We think they can read our minds. We assume that getting us what we want, the way we want it, will be as big a deal to them as it is to us.

Looking forward from the Museum of Customer Service also reveals a migration toward service isolation. There was a time when a call to a business yielded a switchboard operator on the other end who sent our call to just the right person. Not only did operators sound like neighbors but they also knew who in the organization did what. Today, an IVR (interactive voice response) computer screens the call. Insist on speaking to a live person and you are likely to get an operator in Mumbai or Singapore—someone who probably does not sound like a neighbor. The 2010 Contact Center Satisfaction Index (CCSI) from the CFI Group found that offshore contact centers scored 27 percent lower in customer satisfaction than those based in the United States.⁵

As social animals, we enjoy the experiential and interpersonal side of service. Removing the “assistant” leaves us going it alone. We rely on customer reviews since there is no helpful clerk to tell us the features we might have missed. We order online in silence without benefit of banter with the service provider. While the time-saving, service-at-any-hour components are very appealing, in our hearts we sometimes wish for more of a connection, even at the expense of less convenience.

A front page USA Today article highlighted the return of travel customers to travel agents from online travel sites. Quoted in the article, travel agent Suzanne Burr said, “Customers would push the button on some of these websites, and that was it. There was nobody to ask a question. Nobody to ask for help. When it comes to really spending money and wanting an advocate, people are turning back to agents because people care. A computer doesn’t.” To confirm the point, a study by Forrester Research found that, in the first three months of 2010, 28 percent of leisure travelers in the United States who booked their trips online said they’d be interested in going to a traditional travel agent.⁶

The Museum of Customer Service also reveals that there has been a swing toward a reliance on experts or specialists. We often hear “We don’t carry that item, check with…” or “I need to refer you to … ” or, the unkindest cut of all, “You might look it up online.” The “all-purpose” has been stripped out of most service encounters. Where did you buy your last TV—at Sears or at Best Buy? How about the last book you bought—did you check out the book section of Wal-Mart, or go to a Borders bookstore, or log on to Amazon.com? We go for fishing gear at Bubba’s Bait Shop only for convenience. Otherwise, it’s Bass ProShops, Cabela’s, or—again—online. Most of our clothing comes from stores that sell only clothing, not from a J.C. Penney. Need a new bicycle? The specialist at the bike shop down the street probably takes care of the cyclists en route to the next triathlon.

So, there are mixed blessings. With specialists comes expertise not found in the generic service encounter. Service providers with unique competence give us confidence in our purchase or experience. Good ones mentor us, leaving us smarter than we were before; poor ones anger us with their arrogance and “hide the ball” tactics. With specialists comes the proliferation of “silos,” organizational turf boundaries put in place for the convenience of those who “manage” processes that supposedly serve the customer. In reality, these artificial boundaries can make the customer’s experience much more challenging.

John recently tried to refinance a home-equity line with a large bank where he has been a customer for thirty years. His loyalty to the provider mattered not! He was repeatedly subjected to the dreaded “That is not my department, you will need to call another 800 number,” making the process frustrating and cumbersome. All in the name of speaking with experts. Guess what John did? He went to a smaller bank that maintains the service covenant the old-fashioned way—face-to-face conversation with bankers who work to build a relationship, not service a transaction.

Chip recently purchased a television, sound bar, and receiver from Best Buy for his rather remote second home. Connecting the TV to the receiver was easy. However, connecting the sound bar to the receiver was not. Nothing in the three manuals covered the unique connection (sound bars typically are plugged directly into the TV, not a receiver). When he called Best Buy to ask “Into which receiver hole do I plug the sound bar cord?” he was transferred to tech support. Ready to explain his situation and get a quick answer, he was instead told that a technology professional would have to come to his house and show him where to plug in the cord—at a fee of $150. He had just spent $1,500! When he then tried to schedule an onsite visit by Best Buy’s notorious Geek Squad, after a 90-minute phone call he was finally told he was outside their service range. What would Sears have done, ten or fifteen years ago?

One annoyance that comes with relying on the expertise of specialists is the search for the right one. Being dependent on experts also undermines the classless nature of being served by someone “like us,” who has only slightly more knowledge than we have. Being served by a generalist was rather neighborly and egalitarian. There is now a potentially uncomfortable distance between customer and specialist. We sometimes miss the bond and wish for a richer relationship, not just a smarter one. We want to be a partner, not a patient!

Constantly dealing with experts has already altered our standards for the service provided by non-experts. Customers assume the competence of every expert and assume expertise in every service provider. Will customers now expect all frontline employees to be the smartest, best resourced, most empowered service providers imaginable?

The shift toward self-service with reliance on experts has taken the conversation out of service. Social media is filling the void. The twenty-something customer, skilled at text messaging, views a phone call as an interruption. For the teenager, being able to communicate “PAW” (parents are watching) to a friend via text, or just code number 9, keeps the cyberlog intimate. Yet the removal of all non-verbals (body language, facial expressions) from the conversation increases the risk of misunderstanding.

The foundation for great service is grounded not in the superficial tenets of contemporary service but in the core of the human condition when partnering is present. Even as customers enjoy the blessings of high-tech service, they want a high-touch partner when they need help. Partnerships with customers work if they are participative, egalitarian connections rich with compassion and humanity, filled with the collective capacity to personalize, and inspired by the nobility of giving assistance to another. The profits of companies like Amazon.com, Netflix, Zappos.com—companies that work to blend high tech with high touch—provide evidence that a partnership philosophy pays off.

Voltaire, a popular writer during the era of the French Revolution, was as prophetic as he was poetic. His line “Better is the enemy of good” has been oft quoted (and misquoted) but stands as one of the tenets of remarkable service.⁷ He also wrote (without realizing it) about the antidote to the woes of current customer service: “We are rarely proud when we are alone.”⁸ Viewing service as an economic watering hole is a critical path to remarkable service.