Sam Walton, founder of Walmart, once said “There is only one boss. The customer ― and he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”  That reflected Walton’s understanding that the key is to keep customers happy.  It was that kind of thinking that grew Walmart from a single department store in 1950 in Bentonville, Arkansas to 24 stores in Arkansas by 1967, and 125 stores in dozens of states with over 7,500 sales associates and $340 million in sales by 1975.  Today, of course, Walmart has 11,000 stores in 27 countries.  It started by delivering great service and low prices.  But, ironically, Walmart’s customer service has declined to the point where it now is ranked among companies known for poor service.

But if Walmart is seen as an example of why service doesn’t matter (since they continue to grow and thrive despite poor service), think again. For companies that think customers don’t mind or will understand if they receive lousy service (for any reason including the pandemic), think again.  A recent Qualtrics XM Institute study found that over half of consumers (53%) have cut spending after a single bad experience with a company and businesses globally stand to lose $4.7 trillion in consumer spending (that amounts to nearly 10%) due to poor customer experiences.  Moreover, 60% of consumers say they would buy more from a company if it treated them better.

While customer experience ratings — and the likelihood of customers recommending a product or service to a friend — increased somewhat in 2021 after dramatic drops during the early days of the pandemic in 2020, macro-economic pressures, supply chain problems, and a labor shortages have dealt companies a wallop in customer experience ratings and sales for delivering poor service in 2021.  Increasingly, customers switched providers in a quest to find better service.  So service still matters… and it will always matter.

If many large companies have become known for bad service, then what companies (if any) exemplify great service? Last week, we looked at Zappos and Amazon as examples of companies that delivered great service in 2021 (despite the pandemic).  And if you thought that “those companies are the exception,” be glad about that.  To be the only company delivering stellar service within an industry or sector is an enviable distinction indeed.  In fact, it is the one area that can be a game-changer for any business.  So what constituted great service in 2021?  Which companies should business leaders emulate in 2022?  Names that are touted over and over include:  Trader Joe’s, IKEA, Virgin Atlantic Airline, Starbucks, Freshworks, Rackspace, Aldi, Costco, Ritz-Carlton, Ralph Lauren, and Chewy.

Let’s look at the last three companies mentioned because they’ve chosen to differentiate based on service in industries that are highly competitive.

Ritz-Carlton:  Anticipatory Service

The hospitality industry is, by definition, all about service.  Providing a place for people to rest and dine is the cornerstone of what is means “to serve.”  So for a hotel chain to stand out for its exemplary service in this sector is, well, exemplary, especially in light of how many hotel chains now compete for favorable ratings.  But few are as exceptional in delivering service as the Ritz Carlton chain of hotels, which has been delivering six-star service for nearly four decades.

The Ritz-Carlton is renowned for its bespoke luxury and incredible hospitality experiences.  Between 1983 — when the company was formed – and 1992, the Ritz-Carlton expanded from one hotel to 23 hotels throughout the U.S., and earned its first Malcolm Baldrige National Quality Award.  Key features setting them apart included:  lighter fabrics in the guest room to allow for more thorough washing;  white tie and apron uniforms for the wait-staff, black tie for the Maître d’ and morning suits for all other staff, conducive to a formal, professional appearance; extensive fresh flowers throughout the public areas; a la carte dining, providing choices for diners; gourmet cuisine, utilizing the genius cooking methods of Auguste Escoffier; and intimate, smaller lobbies for a more personalized guest experience.  But that’s not all.  They looked to anticipate a customer’s needs and deliver that before it was requested.  In that, they excelled.

In fact, Ritz-Carlton was the focus of a book in 2008 about how to deliver a new “gold standard” for a legendary customer experience called “The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of the Ritz-Carlton Hotel Company.” Written by a customer, not RC employee or leader, the book by Joseph Michelli focuses on how leaders can deliver service that is on par with the Ritz-Carlton, which is hailed as the Gold Standard.  Michelli uses a question to synthesize what business leaders should aim for to achieve Ritz-Carlton-level service:  “What is your 45-minute massage that lasts an hour?”  He was referring to how individual hotels should seek a way to offer a higher value than advertised in different areas. His advice to business leaders is to talk personally to customers instead of doing consumer research.  But the Ritz-Carlton’s ultimate goal was to deliver anticipatory service.  That was the gold standard.  And that is the differentiator that other hotels have emulated but never replicated.

These days, RC staff and customers both have access to technology to make lives easier.  While hotel staff use chatbots to ask feedback questions and offer personalized services, customers get access to smartphone-connected rooms and services that also remember guests’ preferences.  By adopting the right technology, the Ritz-Carlton is effectively delivering even better customer service throughout the customer journey.

Ralph Lauren:  Virtual Shopping in a Virtual Store

When the pandemic started, retailers were devastated by lockdowns and social distancing fears.  But it pushed some retailers to up their online game.  Arguably, no company made the shift to online sales with more style than iconic brand Ralph Lauren.  Whereas most “virtual stores” are little more than an online collection of images of products, Ralph Lauren wanted to offer customers a much more realistic “in-store” memorable shopping journey.  For that, they created 3D walk-throughs of the company’s physical stores allowing customers to have an ‘almost like I’m there’ in-store shopping experience. Customers can explore various sections, check the interiors, and listen to music while shopping.  Except for the piped-in scents, the look and feel of their virtual store is just like their real stores, complete with lighting, air vents in the ceiling, rich wood paneling, perfectly-organized shelves of colorful clothing, beautifully-dressed mannequins and gorgeous accessories.  During a visit to the virtual store, customers can move around, select displayed items, check prices, and buy them. Customers can also add items to their “Favorites” list and check if they are available at a brick-n-mortar store nearby.

This is not only service at its best, it is also brilliantly reinforces Ralph Lauren’s iconic brand across both real and virtual spaces.  Ralph Lauren’s superior service pivot has proven quite successful.  Started toward the end of 2020, the concept has gained momentum and helped the company generate $783 million in gross profit for the fourth quarter of fiscal 2021.  In this way, Ralph Lauren translated “delivering great service” into a shopping experience that was a major differentiator.

Chewy:  Passionate about Pets

While many leaders might say that delivering exceptional service to guests paying thousands of dollars a day at a hotel should be expected and designing a beautiful shopping experience is to be expected from a fashion brand that caters to the wealthy and is an expert in design, there are other companies delivering that same level of service in other industries that do not cater to the well-heeled and wealthy.  Take Chewy, for instance.

Chewy – the online portal that sells pet products for home delivery — hangs its hat on phenomenal customer service, going above and beyond to make customers happy.  The founders of Chewy knew that Chewy had to be the best at customer service or else they would be pushed out by the bigger brands that could offer faster delivery times, cheaper products, and more.  That’s why Chewy adopted a company-wide “customer-first culture.”  Chewy tries to go above and beyond customer expectations with every interaction.  What does that look like?  One objective is to pick up the phone within six seconds of the first ring. Another is to answer all customer questions without having to transfer or escalate the customer.  They believe in getting a person.  For example, they sent handwritten holiday cards to their customers which cost the company over $100K in postage alone, not to mention the time it took for 18,000 Chewy employees to write 6,000,000 holiday cards (which comes to about 333 cards written per employee!).  They even write condolences cards and send flowers if the pet passes away.  Much like Zappos, the people at Chewy interact with customers in a very real and personal way.

Chewy’s employees – which are carefully vetted before hiring — view pets (and pet parents) as family and are devoted to providing the absolute best customer experience through every interaction.  Customers can choose from a massive selection of more than 60,000 products (including private brands and healthcare products), all at competitive prices and with fast 1–2-day shipping. Their convenient Autoship subscription program allows customers to schedule orders so they never run out of food, supplies, or medication needed for their pets.  This is great for customers and also a great part of their business model.  In this way, the company leveraged service as the key differentiator between them and other companies selling pet goods online.  In this, they are a lot like Zappos… a service business that happens to sell things for pets.

In short, customer service is an increasingly significant part of the customer experience, and brands need to find creative and unique ways to go above and beyond the customers’ expectations.  Service becomes the great differentiator.  Why?  Because customers are more likely to remain loyal and/or refer a brand after having a positive experience.  According to a study conducted by American Express, “7 out of 10 U.S. consumers say they’ve spent more money to do business with a company that delivers great service.”  Great service is the only true and lasting differentiator in an increasingly high-tech, low-touch world.  So how will your company deliver game-changing service in 2022?  If you don’t know the answer to that, stay tuned til next week when we explore strategies for taking customer service to the next level.

Quote of the Week

“You’ll never have a product or price advantage again. They can be too easily duplicated. But a strong customer service culture cannot be copied.” Jerry Fritz

© 2021, Keren Peters-Atkinson. All rights reserved.