Chapter Eight

Experience measurement

Every organization needs a way to ‘keep score’. In the case of the London 2012 games it was the number of satisfied spectators who returned home with fond memories of the games and the games makers. All too often, organizations keep score by measuring what is easy rather than what is important. Step forward the usual suspects: sales, costs, churn, average call-handling time, shrinkage, earnings per share (EPS). The list goes on. But how many of these can the average manager, let alone employee, really influence?

We advocate building a scorecard of linked measures combining employee engagement, customer experience, customer advocacy, brand reputation and business results (Figure 8.1). The employee and customer experience measures are the leading indicators that managers can directly influence. The brand reputation and business results are more lagging indicators that are a result of many variables, most of which are beyond the control of the individual.

Figure 8.1 Example Telecom score card
Note: CSI = Customer Satisfaction Index, ARPU = Average Revenue Per User, EBITDA = Earnings Before Interest Tax Depreciation Amortization

Source: © shaunsmith+co

CitizenM is a good example of an organization that uses this approach by linking customer satisfaction, which managers can influence, to brand reputation. Michael Levie explains:

‘We use a programme called Review Pro that screens some 250 third-party common sites, whether this is TripAdvisor or online travel agents, and they score the sites to create what they call the global index; so a guest satisfaction index.

‘We can measure the hotel against itself and against the other hotels within the chain; but we can also measure against others in the local area. I think third-party social media sites are where you get the broadest finger on the pulse, because it has become common practice for people to use them for reviews. We solicit directly and use a net promoter score for that. We ask if you would recommend us and, if you would, then we drill down into five key areas. Every Monday morning I get all those reports from the hotels.

‘The hotels only deal with anything and everything guest-satisfaction related. They are rewarded on a monthly basis with incentives that only relate to guest satisfaction; they do not have any sales targets or anything financial, purely 100 per cent guest satisfaction.’

The concept of managing leading and lagging indicators, and the relationship between the employee experience, the customer experience and business results, are well known. Joe Wheeler, Shaun’s co-author of Managing the Customer Experience: People who deliver a great brand experience, and our US partner, runs the Service Profit Chain Institute (SPCI), a consulting firm that specializes in this concept. Joe shares his best practice advice with us.

The service profit chain: reloaded

Just over 20 years since its first publication, the service profit chain still appears in the presentations of leading companies at conferences around the world.1 Perhaps no other management model has survived the test of time and scrutiny by both business and academic leaders. Why? Well, perhaps the premise is difficult to argue with. The chain describes how you create a ‘cycle of capability’ that:

ensures high levels of employee satisfaction, which

generate greater retention and productivity, which

create more value for customers, which

significantly improves satisfaction, loyalty and financial results.

A mouthful to be sure, but for organizations described as ‘service profit-chain leaders’ the results speak for themselves. The service profit chain enables an organization to take a holistic view of their business, make cause-and-effect relationships explicit and keep score of things that matter to all three stakeholders: employees, customers and shareholders. Our research with service profit-chain leaders reveals three major reasons why it has stood firm over time:

Successful change = D (dissatisfaction with the status quo) × M (model) × P (process) > C (cost).

What this means is that change is successful when dissatisfaction with the status quo (D) is enabled by an operating model that works (M) and a process for facilitating change that is effective (P) and, finally, the benefits are greater than the cost (C) of the effort. For countless organizations around the world, the service profit chain has been the ‘M’ in Professor Beer’s insightful equation.

In 2008, we wrote The Ownership Quotient, as a follow-up to the original Service Profit Chain book. We were struck by the degree to which service profit-chain leaders such as Wegmans Food Markets, SAS and others had created even higher levels of advocacy and ownership with both employees and customers. From co-creating new product and service ideas with customers, to applying digital and data science technologies to anticipate and predict customer needs, these companies had pushed the boundaries of what we could only imagine back in the mid-1990s. Today, these insights have helped us to accelerate the results achieved when our clients were determined to stand firm.

Based on our experience, we recommend that readers charged with leading their company’s efforts to enhance customer or employee experience take three recommendations to heart:

  1. Make sure you understand the ‘defining element’ of your customer experience: we learned this lesson back in 2002 when Shaun Smith and I wrote Managing the Customer Experience, but it is just as relevant today. A company that really understands this is IKEA, the Swedish furniture manufacturer. Although their products can be purchased through different channels, they have apparently figured out that if you are going to choose furniture that is going to be just right for the look of your home this is most effective while in the store, standing in front of that particular item. They understand the ‘defining element’ of the IKEA experience and don’t dilute it with distractions that move them away from something they are not.
  2. Apply technology that adds value – not just cost: building on the first recommendation, be careful not to be seduced by all that glitters. For example, one retail customer in the technology business removed touchscreen panels piloted in several stores and replaced them with simple round tables with bar stools. Another, a toy retailer, redesigned their customer experience with touchscreen technology that interconnected the whole shopping experience. Both realized substantial increases in average ticket and transaction volumes. There is no one right answer, there is just the brand promise you have committed to deliver and the most consistent, intentional and differentiated way you have designed for your customers to experience it.
  3. Be in the ‘relationship’ rather than the ‘transaction’ business: I’ll admit, it is tempting when you see the cost-effectiveness of introducing more digital transactions in your business. For large organizations managing millions of transactions, even a few basic points of channel migration can represent significant cost savings. Service profit-chain leaders understand, however, that they are not in the transaction business – they are in the relationship business. Their goal is to build lifetime value for their target customers and earn their loyalty by delivering an experience that creates significant advocacy. As a result, they drive down the cost of marketing and put those dollars to better use for real value creation. As Robert Stephens, the founder of Geek Squad, has said: ‘Marketing is the tax you pay for being unremarkable.’

Don’t be unremarkable. Leave that to your competitors. Stand up, stand out and most of all – stand firm.

Joe’s third point ‘be in the relationship rather than the transaction business’ is exactly right, but it requires organizations to value, measure and reward different things. O2 is looking at how it moves from being a transaction business to one that values relationships by reducing extrinsic rewards and increasing intrinsic ones.

We have had some great advice on how to hire people, train them, motivate them and finally measure the results. What does all of this look like when it comes together? We asked Francisco Sordo who manages the citizenM properties in Amsterdam to tell us.

Putting it together

Francisco Sordo, citizenM

CitizenM stands for creating a great environment for the staff and then from there you bring it out from within to the guest. It treats every single individual that is working for the company as an individual, and respects them for who they are and how they do things. I say many times that whenever I’m looking for a new ambassador, as we call them, I’m not looking for an employee. I’m looking for an individual who is going to enrich our team. And by encouraging people to be themselves you automatically bring out the best in them.

Many times people are put in little boxes and many times society doesn’t allow them to do things. You’re not allowed to do this or you are just allowed to do that. Here, as long as we explain to our people where we want to go, how they get there is actually part of the journey and is up to them. We have created a micro-society and we know what the values are, and we know that we need to be respectful and playful.

The words we use, the way we use them, when we use them, how we use them, and the joke that you can make with one person that is absolutely not the same joke that you can use with another – it’s about values and common sense.

It helps that our team are part of the generation that we target. They like travelling. They are young, or of the younger generation, so they are really into media. They like nice, expensive things and luxury items, but they don’t earn that much in comparison with others to be able to afford it, so they all believe in the affordable luxury concept… you need to believe in what you sell.

We’re looking for somebody who is outgoing, somebody who is not shy, somebody who wants to engage with others, who likes people, who likes to help people, from the heart.

I am not that interested in previous hotel experience. I think that if I were to hire somebody who has been in the hotel industry for 10 years he or she would not be as productive, because this person would have to erase everything they had learned. Sometimes to change behaviour is more difficult than to learn behaviour in the first place.

Our ratio of ambassadors to guests is about 1 to 10. A typical luxury hotel is 1 to 3 or even lower. For example, a formal restaurant within a hotel needs to have waiters, busboys; you need to have the chef, the assistant chef, the dishwashers, so you’ve got already a minimum of 10 people, easily. At the front desk you have the front desk manager, the front desk assistant manager. You have too many chiefs and to run it you have metres of front desk that requires four people to man at the same time. We don’t. We just do it with one or two ambassadors, because the guest is the one who checks themselves in. We assist them, and that is where we connect because by taking away the desk we take away the distance between us.

Our people stay with us because of the culture of the company and because of the way we treat them, because of the way we allow them to be themselves. For example, we don’t mind if they have a tattoo as long as it’s not offensive to anybody. And I think that my biggest role is encouraging them to flourish and open themselves. There is a girl who works at citizenM who, when I was interviewing her, was terrified. But I said, just let go and she became a bit more relaxed and started to come out of herself. And I thought to myself, she is going to be great because of her kindness, because of her smile, because of her friendliness. Everything else we can teach her. So we hired her and she opened up like a blossom, like a beautiful flower. Months later I came in and she was literally dancing along helping somebody to check-in; it was a beautiful thing to see.

One thing we do not tolerate is when somebody is not respectful. We were training one of the assistant managers, a young guy, who was a bit naive. One of our best ambassadors didn’t agree with the decision that this young guy took. He pointed at him with his finger and told him to learn. That ambassador was really one of the best people I had, but he crossed a line. So we sat down and I said, you don’t need to agree, but he is the assistant manager. He is running it. And if he says green, it’s green. You may see it blue, but it is green. And at the end of the shift, if you don’t agree you can sit down and say, ‘Can we talk about it?’ I finished by saying ‘Now we’re cool, but if it happens again we’re not going to be cool.’ And then he said, ‘Well, if you want to fire me, just fire me.’ And I said, ‘Okay, the conversation ends right now.’ He was one of the pillars of my team but I let him go because he was disrespectful. He crossed that line.

We’re here for a purpose and that purpose is the guest. We are very important but there is somebody else who is even more important: the guest. We focus on the guest’s satisfaction. We are measured on guest satisfaction. The financial numbers at the end are, of course, important. However, you can have fantastic numbers but if the guests are not pleased that is not going to be a sustainable model.

The difference between us and the Holiday Inn across the street is not the building, it’s not the technology – it’s the citizenM culture. And if we keep that in mind then whatever we do is going to be the right thing. I always say there’s no wrongdoing when you’re doing the right thing.

We interviewed Francisco and heard his comments. But to what extent are they accurate? To find out we stayed in the citizenM at Schiphol Airport and had a chat over a beer with one of their most regular customers to find out.

Michael ten Hove, mobile citizen

I first experienced citizenM in autumn 2010. I was coming to Amsterdam for one or two nights a week and was recommended by colleagues of mine who were commuting like myself, and spoke very favourably about the brand.

I describe citizenM as ‘affordable chic’, because they are trying to have more of a vibe, a groove to their place than just a standard hotel and they do it all in an affordable way. So you feel like you’re in a boutiquey kind of place without them having made a great investment in ridiculously expensive furniture. But it still achieves the vibe that they are going for. And they are consistent. In the three years I’ve been experiencing the brand they have always been very consistent with that.

It really comes down to two things: the first thing that comes to mind is the people. The people here are really extraordinary. I’ve rarely experienced this level of service-mindedness and attention to detail in any category. The second thing is the concept of the rooms themselves. Either you love it or you hate it. I think there are very few people who are in the middle ground. I hear people at the bar or at the restaurant who say ‘Gee, I just checked into my room, can you imagine how small it is?’ There’s no closet as such, there’s no real private space to go to the bathroom. For myself, I find it a lot more comfortable than many hotels.

I like the public area very much. I like the fact that it’s cozy, in a homely way, because when you look across there are books that you can just grab and read. There are interesting artefacts. So it’s got a funky, interesting, attitude and vibe to it. If you go to the airport Sheraton it’s just boring; the rooms are kind of, beige. The beds are great, I’ll give you that, but everything else is boring and sterile.

Turning to the people, I’m a special case because I’ve been here for so long, but even early on the staff call you by your first name. Other hotels don’t even know my last name let alone my first name. I call the staff by their first name as well. They’re very friendly. I don’t know how much of it’s in their training. I certainly think it’s in the recruitment because there’s a certain kind of DNA in people that tend to work here. It starts with the management, I think. Take Francisco, he’s somebody who really cares about his clients. He’ll go out of his way to stop and say ‘Hi, how’s things?’ Just last week, in fact, I was walking to my office, and he was walking to his office and he asked me ‘So how are they treating you?’ You don’t feel a sense of hierarchy here. It’s about rolling up your sleeves. It feels to me that that’s part of the internal culture.

The thing that impressed me the most of all my experiences was a couple of months ago I was speaking with one of the ambassadors, Georgia, and I was telling her that my wife was going to come up for one evening and would she be around, so that she could meet her.

I checked in that next week. I walked into the room. There was a beautiful bouquet of flowers for my wife and there was a message for me. I like to write music and songs, which I record, and post on the internet. They had taken the trouble to listen to the lyrics of my songs and find a song – I have this one song called ‘Home’ – and relate it to the fact that I was coming back to citizenM.

Image 8.1 citizenM at Schiphol Airport

All this goodwill has translated into additional business for them because there have been people who I’ve recommended who have stayed here. Whenever I’ve organized things in Schiphol I’ve said we’re putting everybody in the citizenM. Forget about the Sheraton, put them in citizenM.

Note

1  The service profit chain was conceived by James L Heskett, Thomas O Jones, Gary W Loveman, W Earl Sasser and Leonard A Schlesinger.