Why Customer Service is a Leadership Issue

I’m sometimes asked how I made the transition from a focus on customer service to a focus on leadership.

“What transition?” is my usual reply.

When I wrote Five-Star Customer Service in 2005, I opened with a story that illustrated a culture of service: George Boldt, who was paid $1 million a year to manage the Waldorf-Astoria hotel in New York City.

That was one hell of a lot of money for a hotel manager way back in 1893 (or today, for that matter), but after Boldt named his price and they shook on it, Astor remarked, “I would gladly have paid you more!”

It’s a remarkable story involving two remarkable men: one who understood the value of unrivaled customer service; the other who lived and breathed it, and who made sure every member of his staff did as well.

Service is what the customer sees and feels, but it doesn’t doesn’t happen because some trainer talked to the staff for an afternoon. The customer experiences terrific service because the staff shares a culture of service: when you pick the right people and put them in the right environment, their sincere need to delight is self-pertetuating – culture ensures it.

That culture? It’s started by a savvy leader, someone like George Boldt who gets it. This leader knows his sole responsibility is to tend to the culture, as a master gardener tends to his flower beds. A healthy, service-obsessed culture doesn’t happen by accident – and it certainly doesn’t keep going without a tremendous amount of support.

Thus the only formula I’ve ever needed in business:

Leadership + Culture + Service = Profits

I’ve never talked to a business leader who doesn’t desire profits for her company. Profits are any company’s lifeblood; without them, the game quickly winds to an end.

Profits can come from a variety of areas, of course: monopoly, a must-have innovation, a massive sales force; mammoth economies of scale. What I’ve noticed about any of these advantages is that they’re fleeting, which is to say that over time competitors whittle away at them, until yesterday’s differentiator is today’s me-too.

The one area where companies can differentiate themselves in a sustained way, though, is through commitment to service on an organizational scale – and yes, I mean organizational: not just customer-facing staff, but also engineering, finance, legal, R&D… everyone.

You see, very few business leaders get service. Most think it’s a necessary expense at best, and relegate it to the ghetto of the customer service organization.*

So if your leader is smart enough to grasp the central role service can play in a company’s success, your company will break from the pack. You can charge a premium to a discerning clientele, like Singapore Airlines, or you can attract more customers at price-competetive rates, like Southwest Airlines.

Show me a leader who fails to grasp this, and I’ll show you… well, I’ll show you most leaders. And that’s a shame. It’s bad for customers, it’s demoralizing for staff, and it’s really bad for stockholders.

As Herb Kelleher, former Chairman of Southwest Airlines, said,

“We don’t teach our people customer service, their parents do.”

CEO: did your parents teach you customer service?  My guess is, the answer to that question explains an awful lot about the performance of your company.

And that, my friends, is why customer service is first, last, and only a leadership issue.

 

*Hat tip to friend of Switch and Shift Micah Solomon for this phrasing.

 

What more? Start here: Does Great Customer Service Still Matter?

 Graphic by Shawn Murphy

Ted Coiné is a Forbes Top 10 Social Media Power Influencer and an Inc. Top 100 Leadership and Management Expert. This stance at the crossroads of social and leadership put him in a unique perspective to identify the demise of Industrial Age management and the birth of the Social Age. The result, after five years of trend watching, interviewing and intensive research, is his latest book, A World Gone Social: How Companies Must Adapt to Survive, which he co-authored with Mark Babbitt. An inspirational speaker and popular blogger, Ted is a pioneer of the Human Side of Business (#humanbiz) movement. He is also a serial business founder and three-time CEO. When not speaking at conferences and corporate functions, Ted advises CEOs on how to become Truly Social Leaders, or “Blue Unicorns” as they put it in A World Gone Social, in order to bring their companies into the Social Age. Ted’s advice: “Change is only scary if it’s happening to you. Instead, bring the change your competitors dread. That is something only a Social Age business leader can accomplish.”

  • http://www.endgamebusiness.com/blog Steve Borek

    Shock the customer!

    Give the customer what they want before they realize it themselves.

    I wrote about a Wow experience I had last year. Enjoy. http://endgamebusiness.com/blog/give-me-some-wow/

  • http://treasurycafe.blogspot.com david k waltz

    Ted,

    There is a lot of talk these days about self-directed teams – from Tahrir Square last year to last week’s Inc. magazine aritcle titled “Want Happier Employees? Get Rid of the Bosses”.

    Does your equation hold even if we drop the leadership term? Can Culture + Service = Profits as well?

  • http://www.ttmitchellconsulting.com/Mitchblog Mitch Mitchell

    I have always believed customer service and leadership go hand in hand. If the leaders don’t care the employees won’t care, and then where will business be? With the competitors of course. Like Steve, I write on this topic often, and will call companies out that provide bad customer service, and give kudos to those companies that give great customer service. All people want is to be treated right.

  • http://www.stevebaines.biz Steve Baines

    Awesome! I just finished a presentation on this exact subject. It was an hour keynote, but I could have turned it into an entire week seminar series.

    Company culture is key for prospect conversion, creating loyal fans of your business and turning your customer service program into a driving force of your marketing and sales programs. The culture of a business comes directly from the leader of that business.

    Seems so clear and simple, its a wonder why (as you mentioned) alot of businesses don’t see the connection.

    Thanks for the post, Ted –
    Steve

  • http://Website Helen Dewdney

    Classic example in the UK Tesco. Sir Terry Leahey (previous CEO) understood his customer, even wrote back personally to letters. His successor? Appears to have contempt for his customer. Ignores emails from customers and customer service has gone down as an apparent result. Ignorance from the top. If he treats his customers so poorly how does he treat his staff etc etc . result? Tesco lost its position of top supermarket in the UK and was ranked 4th worst for customer service in a Which? survey of 11,000 people.

  • Brad Roderick

    Great message! Leaders bring along other leaders with the same values who multiply throughout the organization.

  • http://professorthink.wordpress.com/ Darin Gerdes

    Well Written Ted. Most people discount the value that leadership brings to the table here (reducing it to simple motivation). You are right in your equation:
    Leadership + Culture + Service = Profits
    Nicely done.

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  • Matt

    I enjoyed reading this and can relate. I have been in leadership roles as well as doer roles…I find that much of my complaining about why things do not work well, falls right back on the precedent / tone set in the office. Direct leadership may say say one thing, but actions are presented otherwise…the actions always win, and the words confuse us as to why we’re not successful in our mission.
    When I break ranks to give the customer what’s truly needed to solve the problem, the appearance of “not following direction” or insubordination of sorts is perceived…only my actions were following the “words” previously discussed as our “mission”…not the leader’s actions.
    Vice versa at other times. An impossible target to ever hit, yet leadership rarely takes responsibility for this, or is held accountable.
    :-\

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  • Ranjan Deshmukh

    Agree & should we think customer success? While this article focuses mainly on customer service angle, leadership defines the culture, attitude & team passion for success. However, with the quarterly approach to business today & other complexities, short-term focus has taken priority and marketing & customer success taken a back seat in many companies!

  • Lauren Schneck

    At the level above leadership, good customer service is at the core of a world view that morally values treating people better than we treat ourselves; which is the foundation of a service mentality children should get from their parents, but often don’t. It seems that when companies divorce what they can get out of customer service and provide it regardless of it’s profit potential, they benefit from it’s effects the most. Just like a society that benefits from parents teaching their children to be kind and help others, because it’s the right thing to do. The key here is the metric of treating customers how we would like to be treated or better. That goal will always result in excellent service. It’s a simple principle, but it is the recipe for successful service that improves a bottom line.

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  • http://www.shiftandswitch.com Ted Coine

    Steve, that’s an awesome post you wrote – two WOWs, not just one! [Folks, click his link – you’ll thank me!]

    I completely agree. One think you always want to do, regardless of industry, is give your customers what they want. If you can pull that off consistently, I’d say you’re probably in some very rare four-star company. Few businesses can achieve this.

    Want Five-Star (heroic) status? Figure out what your customers would want if they could even imagine it, and give them that instead!

    The trick here is, you don’t want to be too clever by half, giving customers what you think they should want and, in so doing, denying them what they’ve asked for. Having the wisdom to know the difference: there’s nothing simple about that.

    This is a dance, my friends, not a formula: art, not science!

  • http://www.frymonkeys.com/blog Alan Kay

    Yes, and when the leader makes this a key part of strategy the organization moves. The best way I have seen it work is when the chief exec says, ‘here’s how I am measured (compensated) on customer experience and satisfaction’.

    It get even better when the customer is invited to the table to co-create. How do I know this works? Been doing it for organizations for many years. http://sforganization.com/marketing-customer-experience/why-bring-customers-to-the-table-to-co-create-strategy/

  • http://www.shiftandswitch.com Ted Coine

    Outstanding, Alan. Thank you for the link. That’s terrific validation.

    Folks, if you want a customer for life, someone who feels like an insider and so is an advocate and an extension of your staff, invite them to co-create your business with you.

  • http://www.shiftandswitch.com Ted Coine

    David, there is no such thing as an organization without a leader. Companies without bosses, you’ll notice, have a CEO or founder who facilitate bossless work. In these rare (and incredibly effective!) cases, the leader protects the culture and gives it a chance to operate. If that isn’t leadership, I don’t know what is.

    In cases of true leaderless uprisings such as the Arab Spring or Occupy Wall Street, I think (sadly) we’re seeing what happens: when there truly is no leader, the opposition is able to hold onto power (Egypt, so far) or chaos ensues, or things wind down. This part of the conversation is “to be continued,” fortunately.

  • http://www.shiftandswitch.com Ted Coine

    You’re exactly right, Mitch. The best friend of any customercentric leader is her clueless competition. Throughout my life I’ve watched companies grow large through acquisition, incredibly expensive marketing efforts, or temporary monopoly. Time and again those firms that abuse their customers create opportunities for competitors who get it to swoop in and grab their numerous disgruntled customers. There’s a word for this in business: foolish.

    All people want is to be treated right, indeed. Thankfully for new companies, they don’t seem to teach this much in business school.

  • http://www.shiftandswitch.com Ted Coine

    Steve, that’s how I feel about my keynotes on the topic as well! So much to say, so little time…

    I really think that companies don’t get this because it’s squishy, right-brained, and if they teach it at all in B-school, they only gloss over it. What did Demming say? “The most important things cannot be measured.”

    I feel a new post coming on…!

  • http://www.shiftandswitch.com Ted Coine

    Ouch! I’m really sorry to hear that about Tesco, a brand I’ve studied for the lessons it exemplified. I have similar stories of Conrad Hilton and J. Willard Marriott, and just look at HP! Founders often have pride of passion that successors lack. It’s beyond foolish.

  • http://www.shiftandswitch.com Ted Coine

    Exactly, Brad – for better AND for worse!

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