Chapter 3
Serving Customers at a Higher Level

Ken Blanchard, Kathy Cuff, Vicki Halsey,
and Jesse Stoner

The second step in leading at a higher level is to treat your customers right. While everybody seems to know that, organizations with exceptional service are rare. When an organization delivers with such excellence and consistency that its service reputation becomes a competitive edge, that’s Legendary Service.

In high performing organizations, management has regular face-to-face contact with customers—not only with devoted customers, but also with those who are frustrated, angry, or not using the organization’s products and services. Leaders are passionate about developing sophisticated knowledge of customers and sharing the information broadly throughout the organization. Working with the people they serve and listening intently allows high performing organizations to respond rapidly and flexibly to changing conditions.

Connecticut’s Trader Joe’s Grocery exceeds expectations by making sure the customer gets the best of what he wants. One of the HPO SCORES researchers, Fay Kandarian, had an experience with this when she brought red tulips to the checkout line. The associate checked the tulips before ringing them up and suggested looking for a fresher bunch. Together they went to look at other tulips, and after checking for color preference, the associate picked out the freshest-looking tulips, which were pink and white. After ringing up the new tulips, the associate said, “Since I need to throw away these red tulips, I’ll give them to you to enjoy for the few days they will last.” This is another example of how high performing organizations encourage those who touch the customer to create the best possible customer experience and act on their ideas.

Nordstrom’s core ideology, “service to the customer above all else,” was a way of life for the company long before customer service programs became stylish.¹ Planning starts with the customer, and execution focuses on the customer. For example, planning the sale environment exceeds the effort put into planning sale advertising. To ensure customer comfort, sale planning may involve valet parking, extra fitting rooms, and additional sales staff. A key aspect of the orientation of new associates is teaching them how to say “no problem” and mean it. To ensure that their frontline people put all their initiative into serving customers, Nordstrom’s rule of thumb and main guideline for employees is that they should always use their best judgment. In fact, that is the only rule that is really enforced. Combining the service ethic with best judgment has resulted in legendary tales of clothes being pressed, Macy’s packages being wrapped, outfits being personally delivered, and two different-sized shoes being sold as a pair to fit a customer’s different-sized feet. The result? Customers are dedicated to Nordstrom with almost as much passion as Nordstrom’s long-term associates, who also enjoy profit sharing year after year.

According to Kathy Cuff and Vicki Halsey, the designers of Blanchard’s Legendary Service program, exceptional service starts with leaders serving their people at the highest level, so that people on the front line can in turn serve their customers at the highest level. Creating Legendary Service is everyone’s job—not just the people standing at the cash register or dealing directly with customers.

Legendary Service consists of five basic elements:

I  Ideal service: Consistently meeting or exceeding the customers’ needs on a day-to-day basis by acting on the belief that service is important.

C Culture of service: Creating an environment that focuses on serving customers—both internal and external—at the highest level.

A Attentiveness: Listening in a way that allows you to know your customers and their preferences.

R Responsiveness: Demonstrating a genuine willingness to serve others by paying attention to and acting on their needs.

E Empowerment: Sharing information and tools to help people meet customer needs or exceed customer expectations.

Together, these elements spell I CARE, which is fitting, because great customer service hits people at an emotional level and creates a connection. We’ve all experienced the counter clerk who takes our money and bags our goods, but leaves us feeling cold. One of our consulting partners describes it this way:

“I was at this little family-owned pet store, buying a collar for my puppy. You’d never know the lady behind the counter was trying to build business. Her face and mood were as flat as a pancake. I said, ‘I wanted to support my community pet store instead of going to the chain store.’ Instead of smiling, she frowned and said, ‘They’ll reel you in based on cheap food, but they won’t keep you.’ And I thought, Hey, you’re not keeping me either, lady.”

Compare that experience with the Legendary Service received by Milt Garrett, a resource trainer who has worked with us over the years. At the end of a week of training, Milt and his wife, Jane, took a walk on Friday night. Jane said to him, “Milt, you missed my anniversary this week.”

Surprised, Milt said, “What anniversary?”

“Five years cancer-free,” said Jane. Five years ago, Jane had had a mastectomy. She and Milt celebrated every year that she was cancer-free.

Milt felt awful. He couldn’t believe he had forgotten. The week before, when he and Jane had been talking one night, they’d decided that she needed a new car. Since their son was still in college in Australia, they’d decided to wait a year until he graduated. That night, Milt said to himself, “Why am I waiting? I am so lucky that Jane is still in my life.”

The next morning, he called the Saturn dealership in Albuquerque and talked to one of their salespeople, whose name was Billy Graham. (No, we’re not kidding.) Milt explained the situation to Billy, saying that his kids had told him Jane really wanted a white car. “Could you get me a white Saturn by next Saturday when I get back home from training?” Milt asked.

Billy told Milt that white Saturns were hard to get. “But if you’ll come in next Saturday, I’ll have one ready,” he said.

The next Saturday morning Milt told Jane that he was running a bunch of errands, but he invited her to come with him so that they could go out to lunch. During their drive, they passed the Saturn dealership. Milt told Jane he had to stop in for some materials, because he was giving a speech about Saturn to the Chamber of Commerce. When they entered the dealership, they saw only one car: a white Saturn in the center of the showroom.

“Milt, that’s the kind of car I’d love to have!” Jane said. She ran over to the Saturn and, with a big grin on her face, got in. When she got out of the car and walked around to the front of it, she let out a scream and began to cry. Milt had no idea what had happened. When he got to the front of the car, he saw a beautiful sign on the hood of the car that read:

When Billy saw them coming, he got everyone out of the showroom and into the parking lot so that Milt and Jane could be alone. As they were crying in each other’s arms, all of a sudden they heard applause. They looked up to see everyone giving them a hand.

The people at the Saturn dealership in Albuquerque took Legendary Service seriously and lived it on an ongoing basis. Saturn became known for these kinds of stories. For example, a pregnant woman bought a Saturn from a dealership in San Diego. She loved the car, but three months later, she learned she was expecting twins. The car wasn’t big enough, so she called the dealership and told them about her situation. They told her that they would give her money back and help her find another car that better met her needs.

Legendary Service inspires customers to tell stories about your company. When customers tell positive stories about you and your level of service, you cannot ask for better publicity.

Recovering quickly from your mistakes will also make your customers want to brag about your service. If you make a mistake with a customer, do whatever you need to fix the problem and create or win back a devoted customer. Legendary Service is not about arguing over who is right or finding someone else to blame—it’s about fixing the problem for the customer. Research has shown that 95 percent of the time customers will continue to do business with you if you can solve their concern on the spot.²

For example, a hotel in Southern California had a history of poor guest ratings. When foreign owners took over the hotel, they felt the poor ratings were mainly because of the aging, dilapidated condition of the property. They decided to put millions of dollars into refurbishing the hotel. Management decided not to tell the customers about the renovations, which would take nine months to a year. They felt that if the customers knew the extent of the renovations, they would move their meetings to other locations. Given that strategy, the general manager brought all the hotel workers together and told them this:

“It will be tough sledding around here for the next twelve months or so. The noise and inconvenience may not be popular with our guests. Do whatever it takes to recover from any inconvenience caused by our remodeling. If you want to send someone a bottle of champagne, do so. If you want to hire a babysitter for them, do it. Do whatever it takes to recover from this trying situation.”

With that recovery strategy in place, the hotel entered the remodeling phase. To the amazement of management, during the renovations, their guest ratings were the highest they had ever received. Even though things were bad for the guests, their memories of their experience with the hotel were formed by the customer-oriented staff who recovered quickly when things went wrong for guests. Management had empowered their frontline people to be all-out recovery experts. The results showed in highly satisfied customers.

If you empower people to do what’s necessary to serve the customers’ best interests to begin with, you are more likely to exceed customer expectations and minimize the need to recover. Most businesses believe that only a small percentage of customers are out to take advantage of them, while the vast majority are basically honest and loyal. That’s why Nordstrom decided to train its customer contact people to use the phrase “no problem” as their first response to customer concerns. Yet because many businesses set policies, procedures, and practices to try to catch the small percentage of unethical customers, they miss servicing the honest majority. Have you ever attempted to try on clothes that have so many safety gadgets that it’s almost impossible? There are risks to providing Legendary Service, but the gains can far outweigh the drawbacks, particularly when your customers start acting like part of your sales force. That’s when you know you’re treating your customers right. As Sheldon Bowles and Ken Blanchard contend, your customers are now raving fans.

A good example of how this works is Domo Gas, a full-service gasoline chain in Western Canada cofounded by Sheldon Bowles. The customer service vision that Sheldon and his cofounders imagined was an Indianapolis 500 pit stop. They dressed all their attendants in red jumpsuits. When a customer drove into one of Sheldon’s stations, two or three people ran out of the hut and raced toward the car. As quickly as possible, they looked under the hood, cleaned the windshield, and pumped the gas. A California station that got excited about the concept gave customers a cup of coffee and a newspaper and asked them to step out of their cars while the interior was vacuumed. As customers pulled away, they were given flyers that said, “P.S. We also sell gas.”

In deciding what experience you want your customers to have, you are creating a picture of what things would look like if everything were running as planned. World-class athletes often picture themselves breaking a world record, pitching a perfect game, or making a 99-yard punt return. They know that power comes from having a clear mental image of their best potential performance. Developing a clear picture of how you want to serve your customers is almost like producing a movie in your mind.

We had a chance to work with the top management and heads of dealerships for Freightliner, a leading manufacturer of large trucks. Jim Hibe, the president at the time, spearheaded the creation of a new picture of service for their dealerships—one that permitted them to go way beyond their competition. In preparation for their key annual conference, Freightliner produced a 30-minute video that illustrated two hypothetical dealerships. The first, called Great Scott Trucking, typified the present mode of operating for many of the dealerships: limited hours (8 to 5 Monday through Friday and 9 to 12 on Saturday); uncommitted employees; few, if any, extras (like donuts and coffee for truckers waiting for their vehicles); and so on. When you entered the dealership, everything seemed to be organized to serve the policies, rules, and regulations and not the customers. For example, suppose the manager comes in about 11:45 on Saturday. Seeing a long line in the parts department, he says, “Make sure you shut her down at 12. The line will make for a good Monday.”

The other hypothetical dealership, called Daley Freightliner, was a customer-centered operation with 24-hour service. Seven days a week, committed and trained employees were willing to go the extra mile and provide all kinds of services for the truckers. They had a lounge with recliners and a huge TV showing movies. There was a quiet, dark room with bunk beds in case the truckers wanted to sleep. Employees drove repaired trucks to the front rather than making the drivers retrieve them from the back lot.

Many of the dealerships were closer to Great Scott Trucking than they were to Daley Freightliner. So when the conference opened with the video, it made some people squirm. But it beautifully depicted the new service vision for all to see and experience. Throughout the conference, dealers who were closest to the positive image shared their success stories. That program was an excellent way to convey a customer service vision.

The Moments of Truth concept that Jan Carlzon used to create a customer-focused culture when he was president of the Scandinavian Airlines System (SAS) is most helpful in deciding what you want your customer experience to be. A Moment of Truth can be described as follows:

Any time a customer comes in contact with anyone in our organization in a way that they can get an impression. How do we answer the phone? How do we check people in? How do we greet them on our planes? How do we interact with them during flights? How do we handle baggage claim? What happens when a problem occurs?

For Carlzon and other great service providers, Moments of Truth could cover every detail, including coffee stains. When he was chairman of People Express Airlines, Donald Burr contended that if the flip-down trays were dirty, customers would assume that the plane’s engines were not well maintained either.⁴ When looking for a place to stay after a long day’s drive, how many people would choose a motel with a sign that has some burned-out lights?

While most of our examples have focused on external customers, it is important to recognize that everyone has a customer. An external customer is someone outside your organization who you serve or provide with a service. A person who takes orders at a quick-service restaurant is a good example of someone who serves external customers. An internal customer is someone within your organization who may or may not serve external customers.

For example, people who work in the human resources field have mainly internal customers. And some people, like those in the accounting department, have both external and internal customers. They send bills and invoices to external customers, and they provide reports and information to internal customers. The point is, everyone has a customer.

Great customer service organizations analyze every key interaction they have with customers, whether they are external or internal, and they determine how they would like that scenario to play out. One of the ways to think about that is to suppose that word has gotten out about how fabulously you are serving customers. Ecstatic customers are running all over the place, bragging about you. A well-known television station gets word of this and decides to send a crew in to film what is going on in your organization. Who would you want them to talk to? What would your people tell them? What would these folks see?

Creating raving fans starts with a picture—an image of what kind of experience you want your customers to have. Analyzing your Moments of Truth for each department and deciding how you want them played out is a good start. This will serve as your guide as you target new customers and adjust to changing conditions.

Organizations that provide Legendary Service are masters of listening to their customers. When a customer tells you something, you have to listen without being defensive. One reason people get uptight when they listen to customers is because they think they always have to do what the customer wants them to do. They don’t understand that listening has two parts. As Steve Covey says, “Seek first to understand.” In other words, listen for understanding. Try saying, “That’s interesting. Tell me more. Could you be more specific?”

The second aspect of listening is deciding if you want to do anything about what you heard. You have to separate that from the understanding aspect of listening. And it is important to realize that you don’t have to decide right after you understand what the person is suggesting. You can do it later, when you have some time to think about it or talk it over with others. Realizing that you have time to think something over will make you less defensive and a better listener. First listen to understand, and then decide what you want to do about what you’ve heard.

In the mall, one of our colleagues saw an example of defensive listening. He was walking behind a woman who had an eight- or nine-year-old son. As they walked past the sporting goods store, the kid looked over and saw a beautiful red bicycle outside the store. He stopped in his tracks and said to his mother, “Boy, would I like a bike like that.” His mother nearly went crazy and started screaming: “I can’t believe it! I just got you a new bike for Christmas! Here it is March, and you already want another one! I’m not buying you another $%&*^ thing!” Our colleague thought the mother would nail this kid’s head to the cement. Sadly, she didn’t distinguish the need to separate listening for understanding from deciding. If she had said to the kid, “Honey, what do you like about that bike?” he might have said, “See those streamers coming out of the handlebars? I really like them.” And those streamers could have been a cheap birthday present. After listening to what he liked about the bike, the mother could have said, “Honey, why do you think I can’t get you that bike?” The kid was no fool. He probably would have said, “I just got one for Christmas.”

Listening without being defensive is also helpful if you make a mistake with a customer. Defending what you’ve done will only irritate the customer. When customers are upset, all they want is to be heard. In fact, we have found that if people listen to a complaining customer in a nondefensive, attentive way and then ask, “Is there any way we could win back your loyalty?,” more often than not the customer will say, “You’ve already done it. You listened to me.”

If a customer makes a good suggestion or is upset about something that makes sense to change, you can add that suggestion to your customer service picture. For example, we got a letter from a man who owns three quick-service restaurants in the Midwest. Some of the restaurant’s elderly customers suggested that during certain parts of the day, the restaurant should use tablecloths, have staff take orders at the tables, and deliver the food to the customers at their tables. After thinking about it, the owner realized it was a pretty good idea. Now, between 4 and 5:30 in the afternoon, the tables have tablecloths and candles, and the people behind the counter come out and wait on the customers. The elderly are pouring in to his restaurants during those hours.

When you put together what you want your customers to experience with what they want to have happen, you will have a fairly complete picture of your desired customer service experience.

As we emphasized in Chapter 2, “The Power of Vision,” the responsibility for establishing a shared vision rests with the senior leadership. And that responsibility includes strong images of what excellent customer service looks like. Once your desired customer experience is set and people are committed to it, the implementation aspect of leadership begins. It is during implementation that most organizations get into trouble. The traditional pyramid is kept alive and well, leaving customers uncared for at the bottom of the hierarchy. All the energy in the organization moves up the hierarchy as people try to please and be responsive to their bosses, instead of focusing their energy on meeting the needs of their customers. Now the bureaucracy rules, and policies and procedures carry the day. This leaves unprepared and uncommitted customer-contact people to quack like ducks.

Wayne Dyer, the great personal-growth teacher, said years ago that there are two kinds of people: ducks and eagles. Ducks act like victims and go “Quack! Quack! Quack!” Eagles, on the other hand, take initiative and soar above the crowd. As a customer, you can always identify a bureaucracy if you have a problem and are confronted by ducks who quack: “It’s our policy. I don’t make the rules; I just work here. Do you want to talk to my supervisor? Quack! Quack! Quack!”

Implementation is all about equipping people throughout the organization to act and feel like owners of the vision. It’s about allowing people to take a proactive role in carrying out the organization’s vision and direction so that they can soar like eagles and deliver great customer service rather than quack like ducks.

Our colleague’s experience trying to rent a car in New York is a perfect example of this phenomenon. He is a trustee emeritus at Cornell University. A while back, he was heading to a meeting in Ithaca, New York, the small upstate town where Cornell is located. He wanted to rent a car that he could drop off at Syracuse, which was about an hour and a half away. Those who travel enough know that if you drop off a car at a different place than where you rented it, the company charges a big drop-off fee. You can avoid that drop-off fee if you rent a car that came from where you are going. Knowing this, our colleague asked the woman behind the counter, “Do you have a Syracuse car?”

She said, “You’re lucky. I do.” Then she went to the computer and prepared his contract.

Our colleague is not a particularly detail-oriented person, but as he was signing his contract, he noticed a $75 drop-off fee. He said, “What’s that $75 drop-off fee?”

She said, “I didn’t do it. Quack! Quack!”

He said, “Who did?”

She said, “The computer. Quack! Quack!”

He said, “How do we tell the computer it was wrong?”

“I don’t know. Quack! Quack!”

He said, “Why don’t you just cross it out?”

She said, “I can’t. My boss will kill me. Quack! Quack!”

“You mean I have to pay a $75 fee because you have a mean boss?” he asked.

“I remember one time—quack! quack!—my boss let me cross it out.”

“When was that?”

“When the customer worked for Cornell. Quack! Quack!”

He said, “That’s great. I’m on the Cornell board of trustees!”

She asked, “What does the board do? Quack! Quack!”

“We can fire the president.”

“What’s your employee number? Quack! Quack!”

“I don’t have one.”

“What should I do? Quack! Quack!”

It took our colleague 20 minutes of psychological counseling to get out of this drop-off fee. He used to get angry at these frontline people but doesn’t anymore because he realizes that it’s not really their fault.

Who do you think this woman worked for, a duck or an eagle? Obviously, a duck. If she worked for an eagle, the eagle would eat the duck. We call the supervisory duck the head mallard, because they just quack higher up the bureaucracy. They tell you all the rules and regulations and laws that apply to your situation. Who do you think the supervisory duck works for? Another duck, who works for whom? Another duck, who works for whom? Another duck. And who sits at the top of the organization? A great big duck. Have you ever been hit by an eagle turd? Obviously not, because eagles soar above the crowd. It’s the ducks that make all the mess.

How do you create an organization where ducks are busted and eagles can soar?

Here the frontline people can be responsible—able to respond to their customers. In this scenario, leaders serve and are responsive to people’s needs, training and developing them to soar like eagles so that they can accomplish established goals and live according to the vision you have of the customer experience.

Figure 3.1 The Implementation Role of Leadership

If the leaders in an organization do not respond to the needs and desires of their people, these folks will not take good care of their customers. But when the frontline customer-contact people are treated as responsible owners of the vision, they can soar like eagles and create raving fans rather than quack like ducks.

“About 30 minutes,” he said.

“Fine. I’ll go get it, bring it back, gift wrap it, and have it ready for you when you leave.” This woman left Nordstrom, went to another store, got the perfume our colleague wanted, came back to Nordstrom, and gift wrapped it. You know what she charged him? The same price she paid at the other store. So Nordstrom didn’t make any money on the deal, but what did they make? A raving fan.

Ken had a beautiful example of the different experiences you can have with organizations depending on whether they are duck ponds or they permit people to soar like eagles. Several years ago, he was heading to the airport for a trip that would take him to four different cities during the week. As he approached the airport, he realized that he had forgotten his driver’s license and didn’t have a passport with him either. Not having time to go back home to get them and make the flight, he had to be creative.

Only one of Ken’s books, Everyone’s a Coach, which he wrote with Don Shula, has his picture on the cover.⁵ So when Ken got to the airport, he ran into the bookstore; luckily, it had a copy of that book. Fortunately, his airline was Southwest Airlines. As Ken was checking his bag at the curb, the porter asked to see his identification. He said, “I feel bad. I don’t have a driver’s license or passport. But will this do?” And he showed him the cover of the book.

The man shouted, “The man knows Shula! Put him in first class!” (Of course, Southwest doesn’t have first class.) Everybody out by the curb check-in started to high-five Ken. He was like a hero. Then one of the baggage handlers said, “Why don’t I go in the terminal with you? I know the folks in security. I think I can get you through there, too.”

Why did that happen? Herb Kelleher—who cofounded Southwest—and colleagues Colleen Barrett and Gary Kelly, who followed him in the executive suite, not only want to give customers the lowest possible price, but they also want to give them the best possible service. They set up the whole organization to empower everyone—right down to the frontline baggage check folks—to make decisions, use their brains, and be customer maniacs so that they could create raving fans. These customer-focused leaders feel that policies should be followed but that people can use their brains in interpreting them. Why do they ask for identification at the airport? To make sure that the person getting on the plane is the same person as the name on the ticket. That was an easy decision for the Southwest Airlines frontline person.

When Ken showed the book to the woman at the ticket counter, she said, “You’d better talk to my supervisor.” Ken was moving up the hierarchy fast. He thought maybe pretty soon he would get to the mayor and then finally to the governor. Quack! Quack! Quack! In this troubled airline, the hierarchy was alive and well. All the energy was moving away from pleasing the customers and toward serving the hierarchy—following the policies, procedures, rules, and regulations to the letter.

The next day Schultze was wandering around the hotel, as he often did. When he got to Housekeeping he said, “Where’s Mary?” Her coworkers said, “She’s in Hawaii.” He said, “Hawaii? What’s she doing there?”

He was told, “A guest left his computer in his room, and he needs it for a speech today at one o’clock—and Mary doesn’t trust overnight carrier services.” Now you might think that Mary went for a vacation, but she came back on the next plane. And what do you think was waiting for her? A letter of commendation from Horst and high fives around the hotel. That’s really empowering people and giving them wings.

You might wonder if this story is true. The answer is yes. If you create an environment where the customers rule and your people can use their brains to take care of customer needs, stories like this become commonplace, even legendary. People who spread these stories—including your customers—sometimes love to embellish them. For example, a well-known story developed about Nordstrom’s “no questions asked” return policy. It was rumored that somebody returned snow tires to Nordstrom and, even though they didn’t sell them, the store took them back. When cofounder Bruce Nordstrom was asked about this, he laughed, because Nordstrom actually does sell snow tires—in its Alaska store.

First, people need to have worthwhile work. To make the world a better place, people need a higher purpose and shared values that guide all plans, decisions, and actions. Worthwhile work gets people up in the morning with a spring in their step.

Second, people need to be in control of achieving the goal. When people know why they are working and where they’re going, they want to bring their brains to work. Being responsible demands people’s best and allows them to learn and act like owners.

Third, to continue to generate energy, people need to cheer each other on. Of all the things we’ve taught over the years, we can’t overemphasize the power of catching each other doing things right and accentuating the positive.

In many ways, Chapter 2 was all about worthwhile work. Being in control of achieving the goals and cheering each other on turn our focus to Section III, “Treat Your People Right,” the third practice that is characteristic of organizations where leading at a higher level is alive and well. The next chapter, “Empowerment Is the Key,” zeroes in on being in charge of achieving the goal.