Lessons From The Overlook: Pricing Strategy

Jeff Toister September 19, 2017

Note: Lessons from The Overlook is a monthly update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

Pricing strategy can be tricky.

One thought is customers naturally want to pay as little as possible. So you can bring in more customers if you cut your prices. That's what Amazon is betting on by dramatically cutting prices at newly acquired Whole Foods. The challenge is lower prices equal lower profit margins, so you'll need to sell a lot more to make more money.

Another approach is to charge a premium. This way you can sell to fewer customers and still make money. Of course, you want to avoid raising prices so high that nobody will pay them.

My wife, Sally, and I decided on a third pricing strategy. We wanted The Overlook to be an excellent value for the customer we wanted while appearing too pricey for customers we didn't want.

Here's what we did and how you can do it, too.

We like to think The Overlook is a little nicer than our competitors. Image courtesy of JoniePhoto. — We like to think The Overlook is a little nicer than our competitors. Image courtesy of JoniePhoto.

Define Your Target Customer

One thing you'll notice about The Overlook is each room has just one bed.

There are no side-by-side twin beds. No bunk beds. The sofa isn't a pullout sleeper. We have four bedrooms and four beds (two king, two queen). Our advertised guest limit is eight.

This is very intentional.

We want a certain customer who will enjoy the peacefulness of our cabin. It's often extended families (mom and dad, the kids, plus grandparents), a couples weekend, or two families meeting in the mountains. Our guests enjoy the cabin's amenities plus a little elbowroom.

There's also a customer we don't want—the bargain hunter who is looking to cram as many people as possible into a cabin to maximize the cost per person.

Those guests create extra wear and tear without any extra revenue. More things go missing and more damage occurs. We've had a couple of renters sneak in more than eight guests and the cleaning alone was always a challenge after these guests had gone.

Other cabins in Idyllwild pack 'em in. Guests sleep on bunk beds, in lofts, or air mattresses in the living room. These cabins typically offer fewer amenities. We think the bargain hunters are willing to make that trade-off and will stay in those places instead of ours.

A good pricing strategy starts with your target customer. What are the characteristics of the customer you want and can you serve them profitably?

Competitive Analysis

Serving customers profitably brings us to the next step: conducting a competitive analysis of your pricing.

This means comparing your prices to what your competitors are charging. We started with the other cabins managed by our property manager that slept six or more guests with three or more bedrooms.

The Overlook was the least expensive of the four-bedroom cabins. While our cabin also sleeps fewer people than the other four-bedroom options, it also has more amenities.

For example, our cabin is the only one with a view. And only one other four bedroom cabin has a spa. Our research shows that our guests want a spa, good views, a nice fireplace, and it should be pet-friendly. The Overlook checks all four boxes.

Here's how our pricing looks compared to just those cabins with the same amenities:

Not as many options! And the lower-priced cabin is much smaller and is really only comfortable for two couples.

We also compared The Overlook to cabins in the area that weren't managed by our property manager. There were plenty of lower-priced options, but The Overlook was on the low-end of the scale when you just compared cabins with similar amenities.

And our price includes the cleaning fee, which can be $100 or more at other vacation rentals.

Our Pricing Decision

We ultimately decided to raise our nightly rate to $325 for the first two nights, $275 for each additional night.

Here was our new positioning when compared to our property manager's other cabins:

We wanted to price on the higher end of the market to deter bargain-hunters who were not our ideal customer, while remaining an exceptional value for the customers we were trying to attract.

The results have been good so far. Our guests have been very pleased with the cabin and the amenities. They've consistently commented on enjoying a peaceful and relaxing stay.

Best of all, revenue is up 5 percent over last year and none of our guests have trashed the place.

The Best Way to Ask Employees About Training Needs

Jeff Toister September 14, 2017

You may be tempted to survey employees to ask about their training needs. Don't.

Asking employees what training they need is like asking young kids what they want for dinner. An enthusiastic answer doesn't mean that's what they need.

I once worked with a payroll department that was struggling to serve its internal customers. They frequently couldn't process payroll on time and made many errors. The team was denied a request for additional staff so they asked me for time management training.

It turned out they really needed a better process.

We worked together to map the existing process, identify bottlenecks, and implement a new workflow. Productivity immediately improved by 25 percent and errors went down to nearly 0.

No training required.

This won't always be the case. Employees often need training to help them do their jobs. Unfortunately, asking them what training they need will often yield what they think they need, not what they actually need.

Here's a better way to ask employees about training needs.

A group of business colleagues sitting around a conference table.

How to assess employee training needs

The biggest mistake managers make when assessing training needs is to assume employees need training. There are many cases, like that payroll department, where another solution is needed. In other situations, employees need less training or training on different skills than you originally thought.

There are a few steps you should take before asking employees about training.

Step 1: Identify business goals

The purpose of training is to help employees develop the knowledge, skills, and abilities they need to do their jobs or a task more effectively. Start the training discussion by thinking about a problem you're trying to solve, such as improving customer service, reducing complaints, or using a new piece of equipment. Resources are limited, so we want to focus our training investments on areas of business need.

Step 2: Identify success drivers

The next step is to identify the key drivers that contribute to that goal. For example, Palo Alto Software decided to focus on customer retention.

In an interview with Celeste Peterson, a Customer Advocacy Supervisor, Peterson described three key drivers of customer retention:

Customers logged in to the software more than once in the first week they signed up.
Customers were able to easily access help when they're confused or frustrated.
Customers understood the value of paying for a full year of service upfront.

Customers who cancelled their subscription were more likely to have experienced a problem in one or more of those areas.

Step 3: Determine key behaviors

Once you identify what drives success, determine what employee behaviors lead to good results with your key drivers. This step usually involves observing your employees work or having discussions about what’s working and what’s not. (Notice you’re not discussing training just yet.)

When in doubt, I always look for a Betty. A Betty is that successful employee who figured out a great way to do things. I call this employee Betty because that was the name of the employee who taught me the concept.

Palo Alto Software determined that its customer advocates (customer service reps) needed to do two things in particular:

Provide helpful support to guide new customers through the account setup process.
Use positive phrasing when customers are confused about annual billing.

Once you know what your employees need to do, it’s finally time to assess employee training needs.

Training Needs Analysis Questions to Ask Employees

Once you've identified what employees should be doing the next step is to find out what employees are actually doing.

The best way to do this is to observe employees in action. Here is when you can ask a few questions:

What do you do now?
Why do you do it that way? (If it's different than expected.)
What's preventing you from achieving your goals?

For instance, Peterson observed her team at Palo Alto Software to see how they handled situations where a customer complained about billing issues. Many customers signed up for annual billing to get a discount, but didn't realize they would be charged for a year's worth of service upfront.

In the past, customer advocates would offer to refund the charge and convert the customer's account into a monthly one.

This seemed like a customer-friendly, low-friction approach but it was actually costing customers money in the long run since monthly accounts billed at a higher rate than annual subscriptions. Monthly customers were also more likely to cancel.

This observation revealed a simple training need—customer advocates needed to learn a better approach to handle complaints about annual billing.

Here's how Peterson described the new approach she trained her team to use:

"Now, rather than immediately addressing their confusion and apologizing, giving a negative impression, we empathize, and focus on the positive, that the annual subscription provides the benefit of a 40% discount by collecting for 12 months in advance. We also let the customer know that we're happy to convert it to the monthly option or cancel and refund if they prefer, since we have a 60 day money back guarantee."

Notice Peterson used data analysis, employee observations, and dialogue with her team to identify this very specific training need. No surveys were involved.

There is a case for surveys when there's a larger audience.

For example, I worked with a client where 700 people will need training on the organization's customer service vision. In this case, the survey is a convenient way to ask people for their current understanding of the vision so the training can be tailored to their specific knowledge gap.

Conclusion

Asking the right questions up front made a huge difference at Palo Alto Software. These questions were focused on what employees needed to do their jobs, not what training they wanted.

Peterson's employees may have asked for customer service training if she simply asked what training they wanted. That might have resulted in a half-day training class on serving angry customers or having each person take my one-hour Working With Upset Customers course on LinkedIn Learning.

Doing an upfront needs analysis allowed Peterson to make a bigger impact by offering very limited training on a specific technique for a particular situation.

You can learn more about assessing employee training needs by taking my Needs Analysis course on LinkedIn Learning.

Welcome from Instructional Design: Needs Analysis by Jeff Toister

Report: Companies Have the Tech to Ease Phone Pain

Jeff Toister September 12, 2017

Calling customer service is a pain.

Most of us don't want to call customer service. Three things in particular make the call miserable:

The first is Interactive Voice Response (IVR) systems that try to deflect calls by repeatedly offering self-service. It's the reason why we repeatedly press "0" or yell "Live Person!" into the phone.

The second is being put on hold. This feels like a waste of time because it is. Anxiety and frustration increase the longer we wait.

The third is repetition. It's annoying to repeat information the company should already know, such as our name and contact information..

There is some good news. A new report from cloud-based contact center platform NewVoiceMedia reveals that most companies already have the technology to avoid this mess.

About the Report

NewVoiceMedia partnered with the market research firm, Opinion Matters, to survey 1,018 people who work in contact centers.

The report is called Contact Center Technology Survey: Why businesses are failing their customers. As the title suggests, there are opportunities for contact centers to improve their technological infrastructure.

I also see a glimmer of hope.

Many companies already have technology to deliver better service.You can download the full report or read a summary of key findings below.

IVR Self-Service is Unnecessary

Companies primarily offer IVR self-service to deflect callers away from live agents.

This was a customer benefit prior to the age of online self-service. IVR self-service suddenly made it easier to handle a simple request such as checking your account balance with a few touchtone commands.

The NewVoiceMedia report shows 85 percent of respondents now offer online self-service. My research indicates customers today tend to call customer service only if online self-service doesn't work or they believe their issue is so complicated a live agent is needed.

This means customers may perceive IVR self-service as an annoying obstacle to live help rather than a customer benefit. The simple solution is to shut it off.

Customers Don't Need to Be on Hold

Nobody likes to wait on hold.

The NewVoiceMedia report shows that 42 percent of contact centers regularly make customers wait longer than five minutes. This understandably irritates customers.

The good news is there are many ways to reduce hold times without hiring more agents. Here are just a few:

Adjust schedules to better meet demand
Improve online self-service (which deflects calls)
Respond to email faster & better
Focus agents on first contact resolution (prevents future calls)
Offer a callback option such as Fonolo

In my interview with Fonolo's CEO and co-founder, Shai Berger, he explained that a callback feature can actually smooth out spikes in call volume.

"Demand spikes tend to have a cascading effect. Hold times stretch longer, so you have to juggle around your agent lunch and break schedules, which means there might be fewer agents available later in the day when you need them. It sometimes feels like you can never catch up."

Many contact centers use multiple approaches to reduce demand spikes and prevent this chain-reaction from occurring.

Eliminate Repetitive Repetition

Imagine you're upset about an unresolved billing issue that you emailed about last week. You call, enter your account number into the IVR, deflect a series of useless self-service offers, and then hold for ten minutes.

You finally get a live agent and face a barrage of annoying questions:

May I have your account number, please?
Will you please confirm your first and last name?
Will you please confirm your phone number?

You eventually get to the help phase of the call only to have to repeat everything you wrote in your email. By now, you're fuming.

The NewVoiceMedia report suggests this is often unnecessary:

89 percent of agents can identify a caller before answering the call
82 percent of agents can access information about previous interactions
79 percent of agents can follow customers across multiple channels

Contact centers would serve their customers much better by humanizing the service approach. This means leveraging existing technology to allow agents to skip the repetitive questions and quickly getting to the heart of the issue.

Five Ways to Humanize Customer Service

Jeff Toister September 5, 2017

Humanity in customer service is getting rare.

We shop online without ever interacting with a person. Go on a trip and you can check in for your flight, summon a ride to the airport, and check into your hotel room all from your smart phone.

Got a problem? There's a self-service portal for that. Try to call and an interactive voice response system will do its best to dissuade you from talking to someone.

Even when you do interact with a live person, it doesn't always feel that way. There's a whole class of transactional employees whose jobs are at risk of being automated because they don't add any uniquely human value.

Self-service is great and makes a lot of things easy. Yet there's still times when a friendly word and a genuine smile is needed to create an exceptional experience.

Here are five ways you can make sure that happens on your watch.

Start with Vision

Unite your team with a shared definition of outstanding customer service, called a customer service vision.

The vision should focus the team on people, not transactions.

Shake Shack was one of the customer-focused companies profiled in The Service Culture Handbook. The company's customer service vision is Stand for Something Good.

You can see this vision in action when you visit a Shake Shack. Employees are smiling, engaging, and helpful. Their humanity is contagious. Even at a crowded New York City location, you somehow find yourself enjoying other people.

Create Connections

Interesting things happen when service providers and customers see each other on a human level.

In restaurants, one study revealed that satisfaction increased 17.3 percent when customers and cooks were able to see each other.

One of my favorite restaurants is Glen Ellen Star in the Sonoma Valley wine region. Here, you can sit at the chef's counter and have a conversation with the chef while you eat. Its website has a great video of this in action.

Find ways to help people who don't normally interact with customers make real connections.

One exercise Clio used to develop its award-winning culture was a "Know Your Customer" campaign, where each person in the company interviewed at least one customer. The idea was help employees do their jobs with more empathy.

Give People Time

Time pressure often prevents human-to-human connections.

Employees feel the need to rush through interactions to get to the next person in line. People instinctively struggle to maintain a warm and friendly demeanor when they are focused on speed.

Increased staffing is one solution. Another way is to focus employees on first contact resolution. While counterintuitive when we're pressed for time, slowing things down can actually prevent additional contacts which frees up more time in the future.

Use Connecting Techniques

Help your employees develop specific skills to create human connections.

One of my favorites is the 10 and 5 Rule. This is used in retail, hospitality, and other settings where you have face-to-face customer interactions.

Employees use this technique by giving a non-verbal greeting to anyone within 10 feet. This can be a nod, a wave, or a smile. Give people a verbal greeting when they're within 5 feet.

Another option is the Five Question Technique. Employees think of five questions they can potentially ask customers that break the ice and uncover an additional need to serve. At least one of those questions will likely be useful in nearly any situation.

Create Human Procedures

Whenever I call for customer service, I like to introduce myself and greet the other person by name.

This often breaks the ice and creates a warmer interaction.

Some customer service reps must follow procedures that discourage them from doing this. They must follow a script that requires them to ask for an account number or some other information.

These procedures are typically created for efficiency. This can backfire if the customer bristles at the lack of warmth. Studies show that people are less open to ideas when they're angry, which means the interaction can take longer than it would if the employee was able to develop rapport with the customer.

Want to Practice?

These certainly aren't the only five ways to make customer service more human.

You can practice your human-to-human skills by making this a two-way conversation and leaving a comment or dropping me a line. Let me know how you humanize your service!

New Report Reveals Big Challenges From IoT

Jeff Toister August 29, 2017

The Internet of Things (IoT) is changing our lives.

IoT refers to everyday devices connected to the internet. Our appliances, door locks, thermostats, vehicles, and many other items are suddenly "smart." For example, my wife and I enjoy watching out of town games streaming through the internet thanks to an app on our television.

Only now we ran into trouble.

We couldn't get the game to play on our smart TV. There was no in-application support. An internet search proved fruitless. This prompted a call to support, but the agent had very little information.

The support rep ultimately wasn't able to fix the issue.

This isn't an isolated case according to the Next Generation Service report from the International Customer Management Institute (ICMI) and Oracle. A survey of 354 contact center leaders revealed companies are struggling to keep up with IoT support.

Here are three of the biggest challenges.

Good Data is Hard to Find

A recent IBM Watson commercial depicted an elevator technician arriving to fix an elevator. The elevator wasn't broken, but Watson's sensors indicated the elevator would malfunction in two days. The technician was automatically dispatched as a pre-emptive measure.

Self-diagnosing problems like this relies on the device sharing relevant data. This is a struggle:

47 percent of contact centers are unable to use data from connected devices.

One reason the agent struggled to help my wife and I fix our smart TV app was she couldn't access any diagnostic data. She had to guess at the problem using her limited experience and training.

Arming agents with more data is an obvious step towards better support. It's much easier to solve an issue if you can see what's causing it.

Agent Training is Changing

Supporting IoT requires new knowledge, skills, and abilities.

67 percent of contact centers have to train differently to support IoT.

Joseph Kolchinsky knows these challenges first-hand. He's the Founder and CEO of OneVision Resources, a company IoT device manufacturers and installers rely upon to provide support to their customers.

"There are two incredibly difficult components to supporting IoT, especially in the home environment. The first is that when technology fails it usually affects some time-sensitive life moment—family movie night is ruined when Netflix doesn't work, or the kids can't do homework when the internet is down—which means that the first 15 minutes of any tech support issue is really about providing human support with a listening ear and empathetic approach. The second is the broad and interconnected nature of IoT—when a symptom appears on your Apple TV, the issue could be any number of unrelated problems with your ISP, credit card, the streaming provider, or even the HDMI connection with your TV—this requires broad training across many technologies."

Let's go back to the support agent who tried to help my wife and I watch the game. She wasn't empathetic, so our frustration about not watching the game remained. The agent also lacked training and information to sort out whether the problem was with the app or our TV.

Customer-focused contact centers are training agents to listen with empathy and solve issues holistically. These centers are also agile enough to quickly update training as technology rapidly changes.

Complexity is Increasing

IoT devices are making support more difficult.

37 percent of contact centers have seen live agent contacts become more complex.

This follows a general trend in support. As noted in this post, customers increasingly solve simple issues on their own. When they contact a live agent, it's usually because issue is too complex for routine self-service.

Let's go back to the agent who tried to help my wife and I watch the game. She clearly lacked the skills to solve our issue, which created a frustrating encounter for everyone involved.

Smart contact center leaders are changing the profile of their support agents. Kolchinsky emphasizes hiring the right people and then putting them in a position to succeed.

"Our solution to this is to hire creative, take-control individuals who genuinely enjoy helping people, removing the burden of having to follow scripts, and giving them the freedom to create a positive support experience in their own way."

You can download the report from the ICMI website to learn more about the future of IoT support.

Avoid Angry Customers with The No Fault Technique

Jeff Toister August 24, 2017

A subscriber recently sent me the transcript from a chat session she had with a customer.

Her customer had gotten angry and ended the session abruptly. He then complained in a survey about the service he had received.

The subscriber asked me, "What did I do wrong?"

The gist of the chat session is the customer wrote his payment wasn't going through. The customer service representative responded by saying that, based on the error message the customer received, the most likely causes were an incorrect debit card number, insufficient funds, or a bank error.

I have no reason to doubt these responses were technically correct. It was the delivery that likely angered the customer.

In my reply to this subscriber, I commended her for reaching out to me. Not enough people make an effort to continuously improve.

Then I suggested she try the No Fault Technique.

It's helpful to start by understanding why the customer got angry and then explore how the No Fault Technique can help in the future.

Why The Customer Got Angry

Let's take a moment to understand why my subscriber's original, fact-based response likely didn't go over so well.

It might help to imagine yourself as her customer. Picture a website with an online payment screen. You enter your payment information, but receive an error message.

How would that feel?

Most of us would feel a little anxious and frustrated. This experience engages part of our brain responsible for emotions, called the Limbic System. It's one of the three parts of the Triune Brain, with the other two being the primitive brain, which controls basic functions such as breathing, and the neocortex, which handles rational thinking.

The danger is the Limbic System can limit our rational thinking when it gets riled up.

Now, imagine contacting customer support via chat and the support rep tells you the problem is on your end. You either typed in the wrong debit card, you don't have enough money, or your bank made a mistake.

Now, how would you feel?

It's very likely our fired up limbic system gets defensive and really shuts down logical thinking. It doesn't matter that the support rep's response was entirely rational and accurate. From the customer's perspective, it feels like blame.

The No Fault Technique

Blame can really send a customer over the edge. It's a good idea to side-step a fiery limbic system by avoiding blame as much as possible.

The No Fault Technique is a way to do this by steering the conversation away from blame to focus on solutions instead.

Lisa Dezoete, an Accounting Administrator at Truckstop.com, often has to contact customers to collect payments for unpaid accounts. Here's how she uses the No Fault Technique.

"I start all calls off with a cheery voice, emphasizing it was 'probably an error' so they don’t feel embarrassed their payment did not go through."

Dezoete then tries to work with her customers to find a solution, such as giving an extension when needed or canceling an unwanted account. Her goal is to disarm the customer's emotional defenses by avoiding blame.

One way to practice this technique is to use it in small situations where the stakes are low. For example, if someone sends an email but forgets the attachment, you could write, "The attachment didn't come through. Will you please resend?"

Let's apply the No Fault Technique to the payment processing error the subscriber wrote to me about. Here's how that conversation might look:

CSR: Let's try a few things to see if we can solve this!

Try re-entering your debit card number, expiration date, and security code. Make sure the billing address is also correct.
Double-check the account linked to your debit card to make sure there are sufficient funds.

Customer: My card information is correct and I have enough money in my account.

CSR: Ok, here's another possibility. Some banks set up special fraud protection rules that prevent certain online purchases. If this happens, a quick phone call to your bank will allow the charge to go through.

If that still doesn't work, it may be easiest to try another debit card. We also accept credit cards and PayPal.

Notice the root causes are still the same. The customer entered information incorrectly, lacked sufficient funds in his account, or his bank prevented the charge for some other reason.

The difference here is they've been reframed as suggested action steps, which shifts the focus away from blame.

The No Fault Technique won't work in every situation and customers may still get upset. But it will give you a better chance at finding a resolution!

How Palo Alto Software Used Metrics to Improve Service

Jeff Toister August 22, 2017

A question posted on the Inside Customer Service LinkedIn group recently caught my attention. Celeste Peterson, a Customer Advocacy Supervisor at Palo Alto Software, asked:

What do you think are the most important metrics to track for a small customer service team?

There were a few nice responses. Celeste's question intrigued me personally because I've heard it a lot recently and even wrote this blog post about it. So I reached out to her and we eventually set up a call that included Sean Serrels, Palo Alto Software's Director of Customer Advocacy

During our conversation, we discussed what the company's executives were most concerned about when it came to customers. I learned that company leaders were particularly concerned with reducing customer churn for its LivePlan online business planning software.

LivePlan is a subscription-based software as a service product, so customer churn (when a customer cancels their subscription) represents a loss of recurring revenue.

I gave them a few suggestions and Celeste promised to follow-up and let me know how things went. Here's their update.

Palo Alto Software's Customer Advocacy Team

Jeff: What's new since we had our conversation?

Celeste: "Since we talked, we did some brainstorming, particularly about reducing churn for LivePlan. Our Development team informed us of data they've collected about groups who churn more than others, and we've made some changes to try to reach out to those groups and give them more attention.

"For instance, we noticed that a lot of the churners seemed to feel like they had to get in, complete their plan in the first day, and then not come back. Those that came back a second, or third day in the first week, were way more likely to stay for at least 90 days.

"I wondered, do new users who communicate with CA in the first week churn less than new users who don't? If so, how can we reach more of those users?"

Jeff: It's a smart idea to start with a few questions and then dig into your data to find the answer. What did you learn?

Celeste: "Sean added live chat triggers to the page in the app where people are setting up their business plan the first time they log into their new account. [Editor's note: this means customers are invited to start a live chat session with a customer advocacy agent when they reach this page.]

"We've been getting lots of questions from users via those chats. Many request help changing their account settings, or finding the features they’re interested in, and we have been able to help them with that instantaneously, which produces satisfied customers. We also use the information gathered from those chatters to create or edit our Help Center content. If a few users have questions about a feature, others probably do, too.

"We've also added a chat trigger on the cancellation page of the app to see if we can resolve anything someone is frustrated about before they click the cancellation button! Those chats have been very active, too.

"Another purpose for these chats is to try to get more feedback from users who are canceling so we can learn more about what causes churn. We share that feedback with our development team. Sharing data and customer feedback with other departments is an important part of what our Customer Advocacy department does. The data we received from the Development team about churn helped us decide where to best implement new chat triggers, and the feedback we receive from those users helps the Development team decide what changes to implement in the app."

Jeff: Connecting with customers right when they need you is a great idea! Has this made an impact on customer churn?

Celeste: "We have to have patience to wait and follow cohorts to track how it's affecting churn, but we'll take a look at those users down the road and see if they are staying longer than people who didn't chat with us when they started. Overall, our churn has recently decreased, so we are excited to stay the course.

"We are discussing ways to change our delivery or framing of responses to maintain a positive user experience, even if a feature was not what that user expected.

"For instance, we discussed better ways to respond to people who were confused about the annual pricing. The site explains the lower monthly price and that it's 'billed annually,' but sometimes a customer complains they weren't expecting the 12 months of charges to hit their bank account at one time.

"In the past our customer advocates apologized for the confusion and offered to convert the account to a monthly one. Now, rather than immediately addressing their confusion and apologizing, giving a negative impression, we empathize, and focus on the positive, that the annual subscription provides the benefit of a 40% discount by collecting for 12 months in advance. We also let the customer know that we're happy to convert it to the monthly option or cancel and refund if they prefer, since we have a 60 day money back guarantee. With that positive framing, along with collaboration with the marketing team to test various wording on the sign up page, we’ve been seeing a decrease in churn and refunds of annual subscriptions."

Jeff: You mentioned earlier that it will take awhile to see if your overall churn rate improves. Are there any other metrics that are giving you more immediate feedback?

Celeste: "An important metric for Customer Advocacy and preventing churn is our customer satisfaction rate. Our average rate has been a wonderful 97% this year, but I did notice, by looking at metrics for satisfaction and first reply time simultaneously, that there is a strong relation between the two.

"We are often at 100% satisfaction when our first reply time is below 8 hours. Most of the unsatisfied ratings happen around Monday when we have a larger email queue built up over the weekend when we're closed. I have adjusted our schedules and workflow to try to keep the first reply time low on Sunday and Monday, and we achieved a complete week of 100% positive satisfaction survey results, recently."

Jeff: In Chapter Six of The Service Culture Handbook, we learn how customer-focused leaders use metrics differently than most managers. Celeste, Sean, and the rest of the Customer Advocacy Team at Palo Alto Software provide a great example.

They are learning more from customers by going beyond the numbers to see what story the data is telling. This, in turn, gives them actionable insights they can use to improve service and ultimately drive more revenue.

Lessons From The Overlook: Go and See the Problem

Jeff Toister August 17, 2017

Our property manager called with a problem.

The Overlook was too hot. A summer heat wave caused temperatures to soar in Idyllwild and our cabin doesn't have air conditioning. Even at night, the house was still hotter than 80 degrees.

One group of guests asked to move to a different property. Our property manager convinced them to stay after she managed to borrow a couple of portable air conditioners for the weekend. We weren't so lucky with another group of guests who wanted to stay at The Overlook, but decided to book another property when they learned about the heat.

My wife, Sally, and I were presented with three options:

Spend $800 to install window-mounted air conditioners.
Spend several thousand to install central air conditioning.
Do nothing and accept a decline in revenue until the weather cooled.

We decided to investigate the issue before jumping to solutions. In the end, we identified a great solution that cost just $119.27.

The Problem With Solutions

It's instinctive to skip the investigation and jump to solutions.

That can sometimes be a liability, especially if the solution is offered without first observing the problem and identifying the root cause.

One of my favorite examples comes from a client who hired me to train his employees on phone skills. He felt they weren't friendly at times and assumed that training would fix the problem.

I spent just 15 minutes talking to his customer service team and found the real issue. Customers sometimes had to wait on hold for as long as 30 minutes during peak times. This caused employees to rush through calls which inevitably created a perception that they were brusque and unfriendly.

A simple adjustment to align the schedule with call volume eliminated the long wait times. Employees were suddenly friendly with no training required.

When we applied this principle to The Overlook, it's hard to choose from three crummy options without first understanding why the place is too hot.

Go and See

There's a concept in process improvement called Gemba.

It's a Japanese term that means, "the real place." In business, you can often solve problems by taking what's called "a gemba walk" to go and see the issue first-hand. This often reveals unexpected causes and solutions.

Sally is fanatical about this. She's a process improvement expert whose Twitter handle is @gembagirl. I've learned a lot from her about the value of observation.

Fortunately, we had a long-planned visit to The Overlook in July that allowed us to experience the heat first-hand.

The first thing we noticed was the ceiling fan in the family room. It was set in winter mode, which draws air up and pushes warm air down. It was actually heating the room rather than cooling it!

The fan should have been set to summer mode, which pushes cool air down. I see how this could easily be missed. You look at the fan spinning like crazy and naturally assume it's doing its job. I only realized the problem when I stood directly under the fan and felt the warm air.

The room instantly started feeling cooler once the fan was on summer mode. We'll be adding this item to our inspection checklist so it doesn't happen again!

Next, we opened up windows to let the cool air in. The night air was a cool 65 degrees when we arrived at 9:30pm. Inside it was 82, so the cool air could help lower the inside temperature if we could find a way to pull the cool air in.

Sally and I once lived in Massachusetts without air conditioning, so we've experienced hot summers. We learned that a window fan can cool a room better than an oscillating fan, because it pulls cool air into the room at night and can be set to expel warm air during the day. So we spent $119.27 at Home Depot to purchase three units of a highly-rated model. Home Depot has a generous 90-day return policy, so buying the fans ahead of time wasn't a risk.

The fans have three big advantages over window-mountained air conditioners. First, they're much less expensive. Second, they can quickly be taken out of the window when the weather turns cold. And third, they're much less unsightly than bulky window box ac units.

We installed the fans in three of the four bedrooms and they instantly worked! The master suite is on the bottom floor and has twin ceiling fans, so was already much cooler than the rest of the house.

Just one hour later, the temperature inside The Overlook was a pleasant 70 degrees.

Check Again

It would be easy to think the problem was solved.

As I wrote in this post, you can learn a lot by experiencing what your customers experience. We decided to keep an eye on the thermostat throughout our stay.

It was good that we did. The temperature started to rise steadily at mid-morning, even with the fans running. By mid-afternoon, it was back up to 80 degrees in the house. It was tough to keep the cabin cool when the air outside was warm.

That's when we noticed the sun pouring in from our large windows. We had closed the blinds on the lower windows, but there was still a lot of heat coming through the upper windows. I closed those blinds, too, and the temperature began to cool again.

Now we hoped the problem was really solved, but there was only one real way to check. We had to hear from actual guests.

Sally and I waited anxiously to hear from our property manager the next time we had guests booked for the weekend. We wanted to get guest feedback on the temperature.

Good news! Our solutions worked!

Why the Huddle Is Your Most Important Meeting

Jeff Toister August 15, 2017

UPDATED: December 22, 2023

Ugh, not another meeting.

It seems like our calendars are full of them. Most of these meetings seem pretty pointless. Many of us work on other tasks during meetings, which suggests that whatever we're meeting about isn't too amazing.

There's one meeting that's different: the huddle.

Alternatively known as a stand-up, pre-shift, line-up, or tailgate, the huddle is a short meeting designed to get everyone on the same page, discuss any pressing issues, and quickly get people back to work.

I reached out to a number of customer service leaders to see how they use the huddle to prepare their teams for success.

Why Huddle?

Patrick Maguire is a a hospitality consultant and author of the Server Not Servant blog. He suggests huddles (often called pre-meal or pre-shift meetings in restaurants) are a great way to develop a healthy service culture.

"Effective and consistent internal communications are critical in building and nurturing a culture of trust and mutual respect within every business. Pre-meal meetings in restaurants ensure that your team is prepared, confident, and aware of as much information as possible to maximize hospitality and meaningful engagement with guests."

Jeremy Hyde, Customer Service Manager at UCare, used huddles to help his team handle rapid growth. He continues to use them to keep the team up to date.

"Initially we implemented them because we on-boarded 185,000 new members and wanted to make sure we identified issues and trends and could disseminate information quickly. We've continued them as an ongoing way to share information in place of longer and less frequent team meetings."

How to Huddle

Huddles should be short, focused meetings. Most teams have no more than three topics:

Reinforce the service culture
Share critical updates
Identify any issues

Many customer service leaders use the Customer Service Tip of the Week to provide ongoing service reminders to their team. Others use the time to reinforce some aspect of the customer service vision.

Maguire outlines a number of topics that restaurant managers can draw upon. "Hospitality tips, menu and drink specials, professional and amateur reviews, social media activity, upcoming events, staff questions, and neighborhood news, are all great content for pre-meal meetings."

The Ritz-Carlton has four items on the agenda for its daily huddle:

Gold standard of the day
Share WOW stories about great guest service
Celebrate birthdays and service anniversaries
Discuss property-specific information, such as special events

Keep in mind that the huddle should be a discussion, not just announcements from the boss. Encourage participation from everyone and even consider asking others to help lead the discussion on various topics.

Alex Wyatt, Vice President of Customer Care at Gardner Dixie Sales Inc. tries to limit huddles to three to five employees plus the supervisor.

"We like to utilize small group huddles for updates or Q&A's when call volume allows. We tend to get better participation and questions as a small group."

How Often and How Long

Huddles should be short.

The consensus among customer service leaders I asked was no more than 15 to 20 minutes. In my experience, you can have an effective huddle in 10 minutes.

Employees typically remain standing during a huddle to encourage a short and focused session.

Some leaders advocate daily huddles while others prefer to meet less frequently. Nate Brown, Director of Customer Experience at UL EHS Sustainability, suggests that customer service leaders consider what works best for their teams.

"I will be the odd man out here and say daily huddles are excessive in my opinion. At least in our environment it became a waste of time. I've moved to two huddles a week (Monday and Wednesday) which has been a very good fit for us. A good checkpoint would be immediately after the huddle to think about if it makes any actual difference to your day or not."

Maguire reminds managers hosting pre-shift meetings to give their team a little bit of extra time to get ready for the day. "Leave at least 10 minutes between the end of the meeting and the start of service for final station checks, bathroom/smoke breaks, etc."

Discussion

The customer-focused companies I examined in The Service Culture Handbook relentlessly discussed customer service with their employees. The huddle is a great way to foster this discussion.

What is a Good Survey Response Rate?

Jeff Toister August 10, 2017

It's the most common question I get about surveys.

Customer service leaders are understandably concerned about getting a lot of voice of customer feedback. So my clients want to know, "What is a good response rate for our customer service survey?"

The answer may surprise you—there's no standard number.

There are situations where an 80 percent response rate might be bad while a 5 percent response rate might be phenomenal in other circumstances.

In fact, I'm not overly concerned with the percentage of people who respond. My advice to clients is to use a different set of criteria for judging their survey responses.

Here's how to evaluate your own survey response rate the same way I do.

Three Response Rate Criteria

There are three criteria that you can use to determine if you're getting a good response to a customer service survey:

Usefulness
Representation
Reliability

Usefulness is the most important consideration.

Any response rate that provides useful customer feedback is good. That's not to say you can't do even better than your current rate, but the whole purpose of a customer service survey should be to yield useful data.

For example, let's say you implement a contact opt-in feature that allows you to follow-up with customers who leave negative feedback. That survey could become tremendously useful if it allows you to contact angry customers, fix problems, and reduce churn.

Representation is another important way to gauge your response rate.

You want your survey to represent all of the customers you are trying to get feedback from. Imagine you implement a new self-help feature on your website. A representative survey in this case would ask for feedback from customers who successfully used self-help as well as customers who weren't successful and had to try another channel.

Sometimes you need to augment your survey with other data sources to make it more representative. The authors of The Effortless Experience discuss the self-help scenario in their book and suggest having live agents ask customers if they first tried using self-help.

This question can help identify people who didn't realize self-help was available and therefore wouldn't complete a survey on its effectiveness. It could also capture feedback from people who tried self-help, were unsuccessful, and didn't notice a survey invitation because their priority was contacting a live agent to solve the problem.

My final criterion is reliability.

This means the survey can be relied upon to provide consistently accurate results. Here's a summary of considerations from a recent post on five characteristics of a powerful survey.

Purpose. Have a clear reason for offering your survey.
Format. Choose a format (CSAT, NPS, etc.) that matches your purpose.
Questions. Avoid misleading questions.

Many surveys have problems in one or more of these areas. For instance, a 2016 study by Interaction Metrics discovered that 92 percent of surveys offered by the largest U.S. retailers asked leading questions that nudged customers to give a more positive answer.

For example, Ace Hardware had this question on its survey: