Management Today November/December 2005: Cover story Service with a smile (C. Cooper) Exceptional customer service has now become a leading component in the mission and vision statements of many organisations. It is an area in which every business needs to excel. Cameron Cooper reports. Maxine Horne has made millions out of mobile phones over the past decade. She knows them inside out. Like the average user, however, she gets no joy out of programming phone numbers, charging batteries or setting up message banks. So Horne, the co-founder of Fone Zone – a $200 million mobile phone retailing empire with more than 120-stores – reasons that customers will appreciate a service that does away with such tedium. Such simple value-added help is one of a raft of customer initiatives that have allowed the Brisbane-based business to thrive in a highly competitive sector. Horne, who in 1995 opened her first mobile phone retail outlet with husband David McMahon, has staked her reputation on providing superior customer service. Her win as Customer Service CEO of the Year in the 2005 Australian Service Excellence Awards proves she is on track. "People buy value," says Horne, who immigrated to Australia from Britain in the early '90s. "If [customers] don't get good service, price becomes an issue. If they get good service, your customer does not purchase on price." Advantage server Australian companies have a mixed approach to customer service. Some are superb and others … well, it barely rates a mention on their business plan. Customer Service Institute of Australia (CSIA) Executive Director Brett Whitford says the common denominator in organisations that deliver great service is a commitment to robust recruitment strategies and staff training. "But the average run-of-the-mill company out there is still just throwing anyone in the deep end and not doing a particularly good job," he says. The aim for any business, Whitford contends, should be to create lifetime value out of customers. Confrontations with customers, even if they are in the wrong, come at a cost. "You might win the day, but you've potentially lost the lifetime value of that customer plus anyone they tell. And I don't think people account for that." Whitford says too often the front-line of customer service is left to young, inexperienced staff. Or it may be outsourced to an organisation that has a different culture and ethical standards. "It can damage the brand through no fault of its own." CSIA hosts the Australian Service Excellence Awards to acknowledge the nation's leading organisations and individuals. They are based on factors such as service, financial and operational performance, and growth. This year's winners include Colorado, Virgin Money, Redland Shire Council, Dominos, Yarra Valley Water, Woolworths, Westpac, Queensland Rail, Virgin Blue, and ANZ Personal Banking. Technology companies have shown they can provide a service edge, with Victoria's Pacific Internet a multiple award winner on the back of its focus on quality and continuous improvement, and Western Australia's B Digital winning the state prize for medium businesses for the third year in succession. And, of course, Fone Zone continues to excel. From day one, Horne and McMahon have sought to differentiate their business through superior service, rather than getting "down and dirty" on price. "Mobile phones are a very homogenous product," Horne says. "They all do the same thing, they are usually around the same price, and there's really not a big differential between retailers." Except for service. Horne's aim is ambitious: "What we are aiming to do is wow the customer. We want them to walk out of the door thinking: 'Wow, I'm glad we spent our money there'." Fone Zone leaves nothing to chance. A year after the launch of the business, management introduced a CARE program – Customers Are Really Everything – that still runs today. It ensures that a checklist of about 20 services is guaranteed free of charge for customers, including pre-charging phones, setting up message banks and programming numbers. "It's little things like that that don't require a lot of money but require a lot of effort," Horne says. Value for life In the best-selling business book Return on Customer: Creating Maximum Value From Your Scarcest Resource, authors Don Peppers and Martha Rogers reveal research that suggests three in four managers are hell-bent on hitting quarterly sales numbers, even if that means destroying an organisation's long-term value. And many managers are prepared to delay starting a business program to avoid minimising earnings targets. It is an approach that inevitably leads to an emphasis on the bottom line, not customer satisfaction. Those who understand good service agree on one thing – it is not easy to deliver. Brian Hartzer, Group Managing Director of ANZ's Personal Division, says developing superior customer service is a "multi-year process". At this year's CSIA awards, Hartzer's division received the Best of the Best gong. He believes the ANZ, named Money magazine's Bank of the Year for six years running, is reaping the rewards of a people-focused approach and its Restoring Customer Faith program, which was launched three years ago. "Retail banking, at the end of the day, is a people business," Hartzer says. "Banking is about trust and it's about the personal connections that customers make with staff because, for many people, banking is scary." Hartzer admits that years of closing branches and cutting staff at the Big Four banks – the Commonwealth, National, Westpac and ANZ – "...had torn the fabric of the relationship between the community and the banks". ANZ is hitting back. Local area CEOs have been empowered again and, despite technology advances, human contact is encouraged between staff and customers. The pay-off for a positive banking environment is significant: staff retention is up at ANZ, and the bank's ability to keep credit card and home loan customers is among the best in the world. ANZ is aware that it must not slacken off. Monthly "mystery shopping" at ANZ and rival bank branches ensures constant monitoring of standards. The bank is also trying to ensure better consistency of service delivery, regardless of staff changes and personalities, and fewer "process failures". "When it comes to customer satisfaction we are always glass half empty," Hartzer says. "There are always things we need to improve." A great selling point Toop and Toop real estate agency has been evolving its customer service standards for the past 20 years. Founder Anthony Toop says market-leading service is now a "self-fulfilling culture" at the Adelaide agency. He argues that most competitors can talk the talk but not walk the walk when it comes to delivering real service. "If you have, for instance, five real estate agents out there, everyone will sing from the same hymn book but hardly anyone knows the words." The agency's goal has always been clear, according to Toop: "I want people to queue for our business." A stream of service awards over the years is testimony to the success of the Toop philosophy, which maintains that customer needs must drive the structure and operation of the business. "The common thread in all of this is that the focus of the whole organisation and the decision- making process always gets back to what the customer wants," he says. "And then we try to resolve our issues from that." However, Toop agrees that there must be a limit. "You can't just do what the customer wants alone or you'll go broke. Customer service out of control is just trying to be loved by everyone." For Toop and Toop clients, tick-a-box feedback surveys are out. Brief questionnaires over the phone are in – but only if the customer indicates a willingness to participate. Toop concedes rapid growth of the agency in the late 1990s put pressure on service standards. "We were faced with the challenge of people who didn't have the culture embedded," he says. Now with about 100 staff, the natural order has been restored. Significant spending on technology allows staff to readily communicate through SMS and emails, while all salespeople are linked through personal digital assistants. In turn, these IT aids benefit customers. "It's come at a great bottom line cost," he says. "That is hard to justify to the accountants, but it has to be done." The finance sector has not always been known for its receptiveness to client needs. However, as new players enter the Australian market to challenge the dominance of the Big Four, a rethink is occurring. Nick Scott of Virgin Money, the financial services offshoot of British tycoon Richard Branson's corporate empire, has a simple message for businesses: listen. "It so often seems that companies, especially financial services companies, tell their customers that they are giving them good customer service, and they don't actually find out if that's what the customer thinks," says Scott, the CSIA Customer Service Manager of the Year for NSW. Virgin Money, which also won the small business category for NSW at the CSIA awards, utilises the findings of focus groups to develop its service policies. That has led to Virgin Money shunning Interactive Voice Response systems in its call centre. Representatives endeavour to resolve problems with one call rather than four or five. Scott believes many call centres make the mistake of concentrating on average handling times for calls. Employee bonuses rise according to how many calls are processed. Not at Virgin Money, where 95 per cent of a representative's bonus is based on their quality of work. "If someone has a 10-minute problem, the reps take 10 minutes to resolve it," Scott says. Other qualities that enhance service are humility and "actually saying sorry when a mistake is made", Scott says. Playing as a team At Fone Zone, Maxine Horne has no plans to rest on her service laurels. Aside from the CARE program, the business is committed to the TEAM initiative – Together Everyone Achieves More – and VIBE, a Vibrant Innovative Business Environment. Horne makes no apologies for the "regimented" approach. "My idea of great customer service is going to be different to yours, and what a structured program does is say: 'Well, this is a minimum standard that you can expect at Fone Zone'." On the 500,000-strong Fone Zone database, all customers are equal. "All of our customers are highly valued – whether they buy a $9 leather case or spend ten times that amount." Horne is confident Fone Zone will stay true to its service ethics and adds that culture "is something that you have to maintain constantly." Five-star service It is the hotel of choice for the famous and the very rich in Australia. Boxer Jeff Fenech, actor David Wenham, and Asian royal families are among an A-list of guests who have enjoyed the five-star service of luxury Gold Coast hotel Palazzo Versace. With such discerning guests, good customer service is a must. General Manager Sandra Tikal says while all hotels are made of bricks and mortar, service can separate the best from the rest. "The bottom line is: no customers, no jobs," she says. Palazzo Versace has about 340 staff on average at the 205-room hotel. It is a big property with a big reputation. Attention to fine detail is the hotel's calling card. A comprehensive guest profile system ensures that the likes and dislikes of return guests are well known. If, for instance, a guest prefers a particular pillow from the hotel's pillow menu, it is put in the room before check in. Tikal and her staff use three measures as a starting point for customer service: it should be friendly, efficient and professional. Staff should be "friendly but not too familiar". Celebrity guests, in particular, often want privacy. Five-star hotels often come with an attitude that borders on arrogance. Tikal and her team are determined to avoid this trap. From the general manager down, first names are used when staff address each other. There is one team with one goal: to provide a great environment for staff and guests. "What we've worked hard at since the day we opened is that there is no attitude," Tikal says. All the same, the hotel is committed to supporting staff in the face of rude guests. "There is a line that even a guest could step over in publicly humiliating staff. That would be a case where we could intervene if that occurred and we would demonstrate support for our staff member." Palazzo Versace estimates that 10 per cent of its guests over the past year have been return customers, demonstrating that good service pays dividends. Frank Lippi, Human Resources Manager at Palazzo Versace, says careful recruitment of staff underpins the hotel's success. Staff are put through extensive, but friendly, orientation programs. When hiring, Lippi looks for the right personality, arguing that "you can teach anyone with the right attitude". To help maintain staff motivation, Palazzo Versace has introduced "Medusa mulla" – paper money rewards that staff can use to buy hotel products and services. Exceptional customer service is rewarded. Lippi says as guests walk through the door they already have high expectations but that Palazzo Versace aims to "give the guest what they want before they even know they want it". At such a large hotel, Tikal says it is impossible to totally avoid guest complaints. "It's all about how you manage that complaint," she says. "This is an opportunity for us to turn this guest around and make them one of our greatest supporters." Cameron Cooper is a Brisbane-based freelance writer.