A heartwarming customer service story

by Rita Gunther Mcgrath: Associate professor at Columbia Business School.
The more automation we introduce into the customer service experience, the less likely you are to offer excellent customer service. In fact, the self-serve options are so good that by the time someone reaches out to find a human being to help them, they are already super-frustrated and irritated.

This is against a backdrop in which customers with high expectations for quick and efficient solutions to their problems are confronting more digital confusion, a labour shortage and the chaos of robots trying to figure out what our problems really are. In the post-pandemic world, McKinsey reports that companies are struggling to bring their systems up to speed, train and retain their customer care people and provide customers with the kind of experience that will keep their loyalty.

For far too many companies, the people in their call centres and manning their front lines are looked at just as units of cost. Indeed, as Wharton’s Peter Cappelli points out in a recent article in the Harvard Business Review, the way we account for people expenses only encourages skimping on investing in your human talent. We don’t treat it as an investment, we treat it as an expense, even though many CEO’s will tell you “our people are our most important asset.” In extreme cases, companies take human beings out of the service equation entirely.

There is an alternative. Imagine if you saw, as Zeynep Ton writes about, all those people as sources of potential customer delight and loyalty – indeed, as sources of revenue growth? Let’s see how that might play out.

A shopping story

My husband has been in the market for a winter coat for a while, and at the urging of our son, we took ourselves to the Patagonia store on New York’s Upper West Side on a recent weekend to see what might be there. The person helping us was knowledgeable, sorted through what was on offer, discouraged us from taking an item that he didn’t think would meet our needs and just generally offered a great experience. So far, so good, a retail story with a happy ending (he found a coat he liked, has now worn it a bunch and declares it a great purchase). And Patagonia advertises its “kind, knowledgeable, energised staff” as a selling point which turned out to be very true.

Here’s where it gets interesting. As my husband was at the counter to pay for his coat, I joked to the person helping us that I would have to come back. “Why is that?” he asked. “Oh, I said, I have a Patagonia sweater that I absolutely love, but I’ve worn it so much that it has started to have holes in it.” “Oh,” he said, “we consider that a product failure.” “Oh, no,” said I, “I really have been wearing it non-stop in the colder months for years, I don’t think it owes me anything.” “Well,” he said, “that’s how we look at things – we regard that product as having let you down, and I’d be happy to replace it with a new one.”

And just like that, he did – without any questions at all, took back my old sweater (with a bit of an emotional farewell on my part) and offered me a brand-new one in a slightly different style. I tried it on in the same colour as my previous sweater and (at my husband’s encouragement) liked it so much that we added a second one in a different colour to our order. Of course, we paid full price for that one.

Now let’s understand what just happened here. A person on the front lines, whose employer obviously trusts him to provide customers with a great experience, was able to make an on-the-spot decision to swap out a product that they deemed had “failed” with a brand-new one. But that isn’t all – the self-same customer (me) bought a second product at full price, a product I wasn’t even in the market to buy. I don’t know Patagonia’s economics, but I bet they did well on that transaction.

Even better, they were able to locate the items in a nearby warehouse and have them shipped straight to our house with no shipping charges. Keeps the inventory in the store for the next customer, makes it easier for us to tromp around New York without lugging bags and ensures that the product gets to where it needs to go efficiently.

Not only that, I’ve been telling everybody with the patience to listen this story! That has some great PR and reputational benefit, right?

Unleashing the power of the permissionless organisation

This is a stunning example of the mindset that Zeynep writes about. Combining operational excellence with a good jobs system allows employees at the front lines of the organisation to use their judgment to do the right thing called for by the issues of the moment.

Imagine, instead, a typical interaction with a harried retail service person. If it had even occurred to them to go beyond what the customer said they wanted, they would have probably had to ask permission, get a waiver, worry about being marked up for inventory shrinkage, who knows?

In addition to Zeynep’s amazing work (she has a new book coming out in June), Ram Charan and I have also been exploring the context of what we call the ‘permissionless’ organisation – one in which employees are empowered to address situations as close to the “edges” of the organisation as possible. We focused in that article on how technology fits into that picture, but organisational culture does as well, as the Patagonia story suggests.

As their CEO notes with respect to the people who work at Patagonia, “If you care about having a company where employees treat work as play and regard themselves as ultimate customers for the products they produce, then you have to be careful whom you hire, treat them right, and train them to treat other people right. Otherwise, you may come to work one day and find it isn’t a place you want to be anymore.”


Useful resources:
Rita Gunther McGrath
Rita McGrath works extensively with leadership teams in Global 1000 companies who wish to develop their capability to drive growth.
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