Investor Meeting on a Sandbar

I once hosted an investor meeting on a sandbar on behalf of the President of the Philippines.

This experience forever changed my view on the value, importance and significance of delivering the ultimate customer experience to our clients.

Delivering great customer service is sometimes easier said than done. Most businesses claim to provide great customer service, but in the real world, their customers probably aren't nearly as satisfied as they think. In fact, they could be downright angry. A 2013 “Customer Rage” study by Arizona State University’s W.P. Carey School of Business found that 50 percent of American households had a bad customer experience over the prior 12 months—up from 45 percent in 2011 and 32 percent in 1976. What's worse, 56 percent of those who reported a complaint to a business got nothing in return, and many got very angry, even raging mad, due to their experience.

“The moral of the story: Don’t invest in improving your customer service unless you’re going to do it right,” Mary Jo Bitner, executive director of ASU’s Center for Services Leadership, said in a news release about the study. “If a company handles your complaint well, then you typically become a more loyal customer. However, if they don’t, then you become 12 percentage points less brand loyal than if you never complained at all.”

This leads me to ask, “What are so many businesses doing to create such angry customers?” Truly amazing service doesn't come from having a mantra or putting on a smile when a customer walks in the door (though, sure, those things can help). It’s about embedding a customer service mentality throughout your organization. Many of today’s most successful companies have figured out how to delight customers—and keep them coming back for more.

Here’s how to design and deliver the ultimate customer experience.

1. Hire Friendly, Helpful People

Hiring people with the right personalities—not just the right skills—is the first key step in ensuring customers are happy and well-served. Drybar, an Irvine, California-based chain that serves up hair blowouts and cocktails in about 40 salons nationwide, aims to only hire stylists and other staff who are focused on providing friendly, caring customer service.

The partners decided to create a different type of salon experience—one where they hope customers always feel welcome. First step: They train their employees never to greet a customer with the question, “Do you have an appointment?” Landau says, adding, “That’s one of my pet peeves—like nails on a chalkboard. We want our customers to be treated like they’re our best friends coming over to our house.” One early bad hire—a talented stylist with a bad attitude who was eventually let go—taught them the importance of hiring right.

At last count, Drybar had 2,200 employees and was on track to generate $50 million in revenue. Every interview with a prospective employee includes a series of “company culture” questions aimed at ensuring the person has the right upbeat attitude and friendly personality. The company strictly adheres to a "heart & soul” philosophy. “We believe you can always train skills, but you can’t train someone to be human,” Landau adds. “That has permeated how we approach hiring.”

2. Train Them to Serve Customers Well

Once the right person is hired, they need to learn how to serve their customers most effectively—and that takes training. This includes a mix of product or service knowledge training—so that they can answer questions about those products or services—but also lessons on how to work together most effectively and deal with real-life situations, such as an angry customer or someone who wants to return a defective product they purchased.

Rackspace, a San Antonio, Texas-based cloud services and website hosting provider, has won numerous awards (including several “Stevie Awards”) for its “Fanatical Support” customer service and employee training practices. The 5,800-employee company has employees (the company calls them “rackers”) at all levels and areas of the organization undergo extensive training. New hires go through orientation—called "Rookie O" internally—where they learn about the company's history and its core values, meet the leadership team, and participate in exercises and games that teach them how to work better on teams and when serving customers. The company uses the StrengthsFinder assessment tool—one of my absolute favorite assessments—to help each employee learn his or her top five personal strengths and how to maximize those strengths on the job. Rackers also employ role-playing to improve the way they assist clients with various questions or needs.

Larry Reyes, Rackspace’s 14th employee and the man who oversees the company’s Fanatical Support culture, says the emphasis on training helps Rackspace provide unmatched customer service in its industry and be a nimble organization that can quickly and ably help its customers, no matter their need. Each client gets a devoted team of Rackspace employees to help them and who can answer questions 24/7.

3. Train Continuously

Employee training at many companies is often limited to the first few hours, days or weeks on the job. But companies known for having the best customer service make training a continuous process and embed strong customer service in its culture. Rackspace, for example, hosts numerous different training programs for employees and provides certification for many different key skills that its employees may need. One program called “Manager Detox” trains newly promoted managers on leadership and team-motivating skills. Top 3@3 is a biweekly event at which Rackspace senior leaders explain the company’s current top three initiatives and how they affect employees.

4. Create a Great Service Culture

Companies that want to stand out for their customer service know they have to ingrain that quality throughout their organization—and not just among their frontline employees. Every employee, from the bookkeepers to the computer technicians, needs to be on board.

“Great customer service starts at the top, with the leader defining what the service will be,” says Shep Hyken, a customer service consultant and speaker who’s written several books on the topic. “But then you have to define it, disseminate it, deploy it through training, demonstrate it through your own actions, defend it and celebrate it.”

Hyken points to one company that’s done a great job of building a culture around customer service: Ace Hardware. The hardware store chain, which has more than 4,500 stores worldwide, competes head-to-head with big-box home improvement stores like Home Depot and Lowe’s. Yet the chain manages to stay strong even as many neighborhood hardware stores close their doors. Its secret is that it's built a culture around strong employee training and, Hyken says, “not just being nice, but being helpful. There’s a difference.”

Ace Hardware employees go through extensive product and service training that even teaches them about the various types of customers they'll encounter and how to be helpful to them. Employees are told they can’t say “no” to a customer unless they get a manager’s approval, Hyken says. The idea is to ensure Ace customers always feel valued and well taken care of, even if they might have to spend a little extra than they would for the same purchase at a big-box store.

Hyken, who’s written a book about Ace’s customer service practices, recalls one story of when an Ace customer wanted a specific lawnmower model that Ace didn’t carry. “Rather than say, ‘Sorry, we don’t carry that,’ the employee said, ‘Let me check with my manufacturer's rep,’” Hyken says. With a little extra effort, the Ace employee was able to locate and sell the requested lawnmower to the customer. Ace employees will also often deliver items they can carry themselves to customers' homes.

“That’s the kind of thing they do,” Hyken says. “If you have the best product in the world but you’re not nice about how you deliver it, customers will go find somebody [who will be]." Not only that, he adds, but you can be the nicest person in the world and still not be able to answer customers' questions or be helpful. The best companies recognize it takes both to succeed.

5. Create the Ultimate Customer Experience

Many companies are so focused on their bottom line that they overlook how their policies affect the customer experience. Take free shipping, for instance. Survey after survey shows that consumers like free shipping when buying things online—and some even abandon their shopping cart when a higher-than-expected shipping fee unexpectedly pops up. Yet many online retailers continue to charge for shipping.

We can all learn from Apple when it comes to creating the ultimate customer experience. The tech giant has extensively analyzed what consumers like—and hate—about shopping and has taken steps to address those issues. For example, customers can schedule appointments with a “Genius” at the Genius Bar in Apple retail stores so they don’t have to wait around for the next available clerk. They really respect their customers’ time so they have greatly streamlined its checkout process by emailing customers their receipts rather than having them wait for the receipts to print out at a checkout counter. Have you ever seen a printer at an Apple store?

6. Create Happy, Engaged Employees

We can’t have a double standard when it comes to great customer service. Companies that do it best know that they need happy, engaged employees to have happy customers. In fact, a 2013 Gallup survey confirms this: The survey found that nearly two-thirds of U.S. employees are disengaged from their jobs. This is having a dire effect on the customer service companies are providing.

"In almost any company, employees who aren't customer-facing play a quality-and-support role," says John Fleming, Gallup's chief scientist of marketplace management and author of Human Sigma: Managing the Employee-Customer Encounter. "One of the critical elements for every worker is a direct line of sight to the customers and how their work affects customers."

Southwest Airlines continually gets named as one of the best places to work—and, unsurprisingly given Gallup’s research, for having the best customer service in the airline industry. The company is known for providing great employee benefits, including free flights for employees and their family members as well as putting together many employee activities, including “Spirit Parties,” chili cook-offs and volunteer days.

7. Make Customer Service Fun and Rewarding

What a concept, right? Companies that expect their employees to provide great service also need to make it a rewarding and fun experience. For instance, grocery chain Trader Joe’s encourages its store employees to have fun on the job, such as by striking up casual conversations with shoppers, wearing Hawaiian shirts and calling each other by such titles as “Captain” and “First Mate.” I like the bell at checkout. The hope, of course, is that having upbeat employees will inevitably influence their customers and create an enjoyable shopping experience.

“It’s not only about the product but also an attitude and lifestyle that extends to the people in the store,” Neil Stern, a senior partner at McMillanDoolittle in Chicago, told MIT’s Sloan School of Management in 2010. “This makes [Trader Joe’s workers] markedly different from employees in traditional supermarkets. It’s like being part of a club.” Since I shop there regularly, I must agree.

Rackspace has a monthly celebration at which one Racker is honored with the prestigious title of “Customer Service Fanatic.” The star employee gets to put on a special jacket, and family members join them on stage to be cheered on by the staff. The company buys pizza when employees have to work late, and employees sometimes get sung “Happy Birthday” to over a loudspeaker, according to a Forbes article about the company. As Reyes explains, “We want to let them know it’s OK to have fun on the job.”

Here’s a quick recap on how to design and deliver the ultimate customer experience.

1. Hire friendly, helpful people
2. Train them to serve customers well
3. Train continuously
4. Create a great service culture
5. Design the ultimate customer experience
6. Create happy, engaged employees
7. Make customer service fun and rewarding

Remember the investor meeting I hosted on a sandbar mentioned at the beginning of this article? It is one of my top two capital raises in 30 years.