Tuesday, June 12, 2012

Service Encounters of the Third Kind

Service Encounters of the Third KindWhat makes a company successful over the long, long term? What characterizes the service relationship between companies and customers who do business together for decades, even generations?

How can your company stay close to your customers even as times change, technologies change and expectations continually rise?

What can you do to improve customer service quality and ensure your company's future offers are relevant and valuable in the market?

One powerful step forward that will improve customer service quality is to explore your customers' future needs and interests by cultivating Service Encounters of The Third Kind. In these unique encounters, your precious and loyal relationships for the future are built by your words and actions - today. You can improve customer service quality over the long haul by thinking proactively.

Let's start by looking closely at Service Encounters of the First and Second Kinds and how they improve customer service quality.

Service Encounters Of The First Kind

In Service Encounters of the First Kind, your company approaches the customer with the most basic of all customer service questions: "What do you want (or need)?"

Your customer replies with equal simplicity, "I want your product X, by time and date Y, at your listed price Z."

Your company's priority and service focus should now be clear: Get the customer's order right, and get it right the first time to improve customer quality!

Campaigns to accomplish this objective are widespread and easy to spot. "Do It Right!", "Zero Defects" and "Six Sigma Quality" are all examples of slogans companies use to focus their workers on getting the basics right, first time, every time to improve customer service quality.

In this kind of encounter, breakdowns in service delivery are bad news since they don't improve customer service quality. They are to be identified, analyzed, solved and, most of all, eliminated to improve customer service quality. The service system must be streamlined and standardized in every possible way to improve customer service quality.

Companies that consistently succeed in this undertaking (delivering X by Y at Z price) earn their reputations in the market as steady and reliable suppliers. This leads, as it should, to customer satisfaction and will improve customer service quality.

Training in these organizations is focused on product knowledge, technical skills, thoroughness, accuracy and adhering to proven procedures to improve customer service quality.

Marketing consists of powerful efforts to push proven products in the market. The customer is "sold to."
Looking into the management mindset of these first kind organizations, we usually find a keen interest in cutting costs, increasing volume and decreasing cycle-time.

This need for speed is important: Competitors are often closing in with similar products, faster delivery and even lower prices. In this kind of competitive situation, profit margins are paper-thin and companies thrive only through continual increases in volume.

So far so good. But if we look into the staff mindset of such an organization, we find a different way of thinking altogether that doesn't help improve customer service quality. Frontline service employees, focused on getting it right the first time, trained to carefully follow all procedures, and encouraged by management to achieve more and more results in less and less time, find themselves answering the phone, opening the mail or meeting the next customer in person thinking to themselves, "I hope this customer isn't a pain in the neck!"

After all, customers with questions and unusual requests generally take more time, lead to more errors and can result in a general slowing down of the whole system.

No wonder so many customer requests for anything out of the ordinary are met with the retort: "We don't do it that way" or "That's not how our procedures work here."

Service Encounters Of The Second Kind

In Service Encounters of the Second Kind, your company approaches the customer with a question that goes beyond standard offers of X product at Y time and Z price. Instead of the basic "What do you want," your service representatives now pose a more inviting question: "How do you want it?"

Faced with such an open-ended question, the customer naturally replies, "I want it the way I want it. I want it special. I want it my way!"

Your company's service focus must change if you are to deliver what your customer wants just the way your customer wants it. Special products, unique combinations, odd-hour deliveries, different schedules for pricing or payment - all are new challenges for your service team to understand and accomplish to improve customer service quality.

In Service Encounters of the Second Kind, breakdowns in the service delivery system are to be expected at first - and then overcome to improve customer service quality. Responsiveness and flexibility become your prime objectives to improve customer service quality. The organization focuses on being adaptable, accommodating and open to changing requests that improve customer service quality and satisfaction.

Your service system improves, not through vigorous efforts to standardize but through your willingness and commitment to customize to improve customer service quality!

Companies that succeed in this challenging undertaking (giving their customers what they want, when and where they want it and just the way they want it) earn their reputations in the market as quick, responsive and open to ongoing change. In short, they understand how to improve customer service quality.

When a company is recognized for welcoming and fulfil-ling unique customer requests, the result is not only customer satisfaction, but a well-deserved and valuable reputation for customer delight.

In these responsive second kind organizations, training programs include active listening, creative problem-solving, and attitude-building activities to improve customer service quality. Staff learn how to find a "yes" for the customer rather than rolling out the standard "no."

Marketing isn't a broadside of mass advertising. Rather, it's a selection of specially modified programs gently pushing customized products to key segments of the market. Clients aren't "sold to" here, they are served to improve customer service quality.

In the staff and management mindset of these organizations, we find a shared and sincere commitment to "bend over backwards" for the client to improve customer service quality.

For example, one adapting company proclaims, "We'll go out of our way for you!" But this catchy phrase reveals the remnants of a first-kind encounter company being forced into second-kind levels of service. Here management is essentially saying: "We still have our way.

But don't worry, we'll go out of our way just for you."

You can see this contrast in the advertising of two fast food restaurant chains. A&W features large posters that read: "You'll love our way!" (That's Service Encounters of the First Kind.)

Compare this with the slogan and jingle for Burger King: "Have it your way!" (That's Service Encounters of the Second Kind.)

At which establishment will you feel more comfortable saying, "Two chicken burgers, please. One with extra ketchup and no pickles, and one cooked rare, hold the onions and two packs of mustard on the side?"

Burger King goes even further with its follow-up campaign: "Sometimes You've Just Gotta Break the Rules." That's a direct invitation to highly customized Service Encounters of the Second Kind: "Have it your way."

Service Encounters Of The Third Kind

In Service Encounters of the Third Kind, your company welcomes the customer in a manner completely different from the standardized "What do you want?" or customized "How do you want it?"

In a Service Encounter of the Third Kind, your company looks to the customer with interest and patience, and asks the somewhat unlikely question: "What do you want to become?"

Most customers, if they are given an opportunity to reflect on this very open-ended question, realize that they are, in fact, still a bit uncertain about the future and will reply, "Actually we're not entirely sure yet." And then, availing themselves of the sincerity and interest you have shown, might add, "Could we talk about it together?"

Your question, and their response, opens the door to a very different and collaborative conversation: a Service Encounter of the Third Kind, which can work over the long haul to really improve customer service quality.

Your company's focus shifts again as you enter into a new dialogue with customers, seeking to understand and add value to their plans and possibilities for the future to improve customer service quality. These conversations, held in a mood of mutual discovery, are concerned with much more than just meeting a customer's existing business requirements. By exploring scenarios and possibilities, you and your customers work together to resolve breakdowns that might emerge only in the future and you improve customer service quality as a result.

For example, innovative financial service companies in Japan consistently ask their customers, "What do you want to become?" And customers consistently answer, "I want to become a homeowner, and I want to pass the home on to my children."

But housing prices in Japan have climbed beyond the average customer's reach. What was the jointly planned and innovative solution to improve customer service quality? Mortgages with payment terms spanning two generations - and customer relationships that endure beyond a lifetime. Talk about a measure to improve customer service quality!

In this third kind of customer service, companies must be willing to adapt, modify and in some cases entirely reinvent the purpose and procedures of their business to improve customer service quality. Rather than "standardize" or even "customize" existing products and systems, third-kind companies must make a commitment to "customer-ize" - to become whatever customers need them to become in order to work together in the future.

For example, railroads in America thought they were in the train business many years ago and nearly went bankrupt asking the customer, "What type of train car do you want to travel in, where do you want to go to and at what price do you want to travel?" They built coach cars, dining cars, sleeping cars and more to improve customer service quality.

But since they never asked the customer, "What do you want to become?", railroad companies did not foresee the need for airborne shipping and travel, and missed evolving into airline companies altogether.

Today, government financial support is necessary just to keep American railroads alive.

Companies that do evolve and improve customer service quality get noticed and earn the respect of customers as relevant, dynamic and constantly changing organizations. They are focused on and committed to the future and taking steps to improve customer service quality. They are not stuck in the success of their past.

Committing to Service Encounters of the Third Kind means you and your customers enter into an intimate and closely linked evolution to improve customer service quality. As changes in the business environment demand greater innovation, more flexibility and even faster response, you learn to adapt, anticipate and actively support each other to improve customer service quality.

This association is not based on customer satisfaction or even on customer delight. Instead, the inventive and interactive quality of this relationship is founded on a level of customer loyalty that is precious to both parties, and can be vital to a vibrant future.

Competitors can steal away a satisfied customer by offering a little bit more satisfaction, and can even lure away a delighted customer by offering a little more delight. But a loyal customer is one who sees his future emerging in part due to your commitment to improve customer service quality. "Win-win agreements" and "building synergy" become passwords for communication between your company and your customer.

Adding long-term value is a goal you take responsibility for together and it will improve customer service quality.

Training programs in third-kind companies highlight the principles of cooperation, collaboration, creativity, invention and design to improve customer service quality. Real customers and suppliers are featured and included in the real-time training programs that improve customer service quality.

The customer is no longer sold to, nor simply served. He is genuinely cared for through a conscientious relationship that builds trust and momentum over time while helping improve customer service quality.

Your service representatives do not "hard-sell" or "push" their products. Instead, they work closely with customers to ensure that appropriate products are "pulled" from your organization to improve customer service quality.

Customers also influence the development of your organization's future competencies, capabilities, and commitments to improve customer service quality.

Staff and management share the same mindset toward the third-kind customer: "We make your concerns our concerns." And in such an atmosphere of growing trust, your customer can make similar long-term and loyal commitments back to you. The customer comes to count on you, rely on you and evolve with you. All of this because you took the steps to improve customer service quality.

In the fast-food industry, for example, McDonalds is now test-marketing an all-soy "veggie burger." This is in direct response to customers who said, "We are becoming more health conscious and we want to eat healthier foods."

Third-kind insurance companies now reap an ever greater slice of the savings and investment pie. Agents no longer ask the simple question, "Do you want whole life, term or endowment?" Instead leading companies provide their representatives with entirely new categories of investment and insurance products addressing individual concerns and responding to changing needs to improve customer service quality.
While these are some of the success stories, other companies have missed the importance of third-kind service and teeter dangerously close to the edge of obsolescence.

General Motors, for example, suffered a serious erosion of market share and loyalty before they heard what their customers were saying: "We want to become more efficient, more cost conscious, and more environmentally friendly." Other companies listened, took steps to improve customer service quality and delivered appropriately designed new cars. Customers responded, giving back profits and gains in market share.

Intricate slide rules were famous for aiding calculation in my father's day. Manufacturers diligently asked the engineers, "How do you want it?" and built an impressive range of slide rules in response: wooden, plastic, steel, large, pocket-sized, flat, round and double-sided.

But they never asked what customers were "becoming," so didn't hear their customers' growing urge for things instantaneous and electronic. The firms that built a wide range of precision slide rules are now gone. Not one slide rule maker is among the calculator and computer manufacturers of today because they did nothing to improve customer service quality.

From carbon paper to photocopies, buggy whips to stick shifts, typewriters to computers, copper wire to fiber optics, smoke signals to wireless, each evolution begs the question, "What happened to those companies?" Did they make the switch? Did they survive? Did they move from "What do you want?" to "What do you want to become?"

In an environment of continually accelerating change, the only certainty we have is that the future will be different from today. The opportunities for evolution and collaboration with your customers will be endless.

What about your company? Will you gradually go out of business with a standardized service system that provides efficient answers to questions your customers no longer ask?

Or will you change the tone and tenor of your service encounters from the order taker asking, "What do you want?" and the order maker's, "How do you want it?" to the loyal business partner who patiently and intelligently asks, "What do you want to become?"

This change requires a new mindset and new methods for engaging with your customers and suppliers. It's called Service Encounters of the Third Kind. Learn it and you will improve customer service quality for the better.


Ron Kaufman is the world's leading educator and motivator for upgrading customer service and uplifting service culture. He is author of the bestselling UP Your Service! books and founder of UP Your Service! College. Check out articles and tips about how to improve customer service quality.

Service Encounters of the Third KindWhat makes a company successful over the long, long term? What characterizes the service relationship between companies and customers who do business together for decades, even generations?

How can your company stay close to your customers even as times change, technologies change and expectations continually rise?

What can you do to improve customer service quality and ensure your company's future offers are relevant and valuable in the market?

One powerful step forward that will improve customer service quality is to explore your customers' future needs and interests by cultivating Service Encounters of The Third Kind. In these unique encounters, your precious and loyal relationships for the future are built by your words and actions - today. You can improve customer service quality over the long haul by thinking proactively.

Let's start by looking closely at Service Encounters of the First and Second Kinds and how they improve customer service quality.

Service Encounters Of The First Kind

In Service Encounters of the First Kind, your company approaches the customer with the most basic of all customer service questions: "What do you want (or need)?"

Your customer replies with equal simplicity, "I want your product X, by time and date Y, at your listed price Z."

Your company's priority and service focus should now be clear: Get the customer's order right, and get it right the first time to improve customer quality!

Campaigns to accomplish this objective are widespread and easy to spot. "Do It Right!", "Zero Defects" and "Six Sigma Quality" are all examples of slogans companies use to focus their workers on getting the basics right, first time, every time to improve customer service quality.

In this kind of encounter, breakdowns in service delivery are bad news since they don't improve customer service quality. They are to be identified, analyzed, solved and, most of all, eliminated to improve customer service quality. The service system must be streamlined and standardized in every possible way to improve customer service quality.

Companies that consistently succeed in this undertaking (delivering X by Y at Z price) earn their reputations in the market as steady and reliable suppliers. This leads, as it should, to customer satisfaction and will improve customer service quality.

Training in these organizations is focused on product knowledge, technical skills, thoroughness, accuracy and adhering to proven procedures to improve customer service quality.

Marketing consists of powerful efforts to push proven products in the market. The customer is "sold to."
Looking into the management mindset of these first kind organizations, we usually find a keen interest in cutting costs, increasing volume and decreasing cycle-time.

This need for speed is important: Competitors are often closing in with similar products, faster delivery and even lower prices. In this kind of competitive situation, profit margins are paper-thin and companies thrive only through continual increases in volume.

So far so good. But if we look into the staff mindset of such an organization, we find a different way of thinking altogether that doesn't help improve customer service quality. Frontline service employees, focused on getting it right the first time, trained to carefully follow all procedures, and encouraged by management to achieve more and more results in less and less time, find themselves answering the phone, opening the mail or meeting the next customer in person thinking to themselves, "I hope this customer isn't a pain in the neck!"

After all, customers with questions and unusual requests generally take more time, lead to more errors and can result in a general slowing down of the whole system.

No wonder so many customer requests for anything out of the ordinary are met with the retort: "We don't do it that way" or "That's not how our procedures work here."

Service Encounters Of The Second Kind

In Service Encounters of the Second Kind, your company approaches the customer with a question that goes beyond standard offers of X product at Y time and Z price. Instead of the basic "What do you want," your service representatives now pose a more inviting question: "How do you want it?"

Faced with such an open-ended question, the customer naturally replies, "I want it the way I want it. I want it special. I want it my way!"

Your company's service focus must change if you are to deliver what your customer wants just the way your customer wants it. Special products, unique combinations, odd-hour deliveries, different schedules for pricing or payment - all are new challenges for your service team to understand and accomplish to improve customer service quality.

In Service Encounters of the Second Kind, breakdowns in the service delivery system are to be expected at first - and then overcome to improve customer service quality. Responsiveness and flexibility become your prime objectives to improve customer service quality. The organization focuses on being adaptable, accommodating and open to changing requests that improve customer service quality and satisfaction.

Your service system improves, not through vigorous efforts to standardize but through your willingness and commitment to customize to improve customer service quality!

Companies that succeed in this challenging undertaking (giving their customers what they want, when and where they want it and just the way they want it) earn their reputations in the market as quick, responsive and open to ongoing change. In short, they understand how to improve customer service quality.

When a company is recognized for welcoming and fulfil-ling unique customer requests, the result is not only customer satisfaction, but a well-deserved and valuable reputation for customer delight.

In these responsive second kind organizations, training programs include active listening, creative problem-solving, and attitude-building activities to improve customer service quality. Staff learn how to find a "yes" for the customer rather than rolling out the standard "no."

Marketing isn't a broadside of mass advertising. Rather, it's a selection of specially modified programs gently pushing customized products to key segments of the market. Clients aren't "sold to" here, they are served to improve customer service quality.

In the staff and management mindset of these organizations, we find a shared and sincere commitment to "bend over backwards" for the client to improve customer service quality.

For example, one adapting company proclaims, "We'll go out of our way for you!" But this catchy phrase reveals the remnants of a first-kind encounter company being forced into second-kind levels of service. Here management is essentially saying: "We still have our way.

But don't worry, we'll go out of our way just for you."

You can see this contrast in the advertising of two fast food restaurant chains. A&W features large posters that read: "You'll love our way!" (That's Service Encounters of the First Kind.)

Compare this with the slogan and jingle for Burger King: "Have it your way!" (That's Service Encounters of the Second Kind.)

At which establishment will you feel more comfortable saying, "Two chicken burgers, please. One with extra ketchup and no pickles, and one cooked rare, hold the onions and two packs of mustard on the side?"

Burger King goes even further with its follow-up campaign: "Sometimes You've Just Gotta Break the Rules." That's a direct invitation to highly customized Service Encounters of the Second Kind: "Have it your way."

Service Encounters Of The Third Kind

In Service Encounters of the Third Kind, your company welcomes the customer in a manner completely different from the standardized "What do you want?" or customized "How do you want it?"

In a Service Encounter of the Third Kind, your company looks to the customer with interest and patience, and asks the somewhat unlikely question: "What do you want to become?"

Most customers, if they are given an opportunity to reflect on this very open-ended question, realize that they are, in fact, still a bit uncertain about the future and will reply, "Actually we're not entirely sure yet." And then, availing themselves of the sincerity and interest you have shown, might add, "Could we talk about it together?"

Your question, and their response, opens the door to a very different and collaborative conversation: a Service Encounter of the Third Kind, which can work over the long haul to really improve customer service quality.

Your company's focus shifts again as you enter into a new dialogue with customers, seeking to understand and add value to their plans and possibilities for the future to improve customer service quality. These conversations, held in a mood of mutual discovery, are concerned with much more than just meeting a customer's existing business requirements. By exploring scenarios and possibilities, you and your customers work together to resolve breakdowns that might emerge only in the future and you improve customer service quality as a result.

For example, innovative financial service companies in Japan consistently ask their customers, "What do you want to become?" And customers consistently answer, "I want to become a homeowner, and I want to pass the home on to my children."

But housing prices in Japan have climbed beyond the average customer's reach. What was the jointly planned and innovative solution to improve customer service quality? Mortgages with payment terms spanning two generations - and customer relationships that endure beyond a lifetime. Talk about a measure to improve customer service quality!

In this third kind of customer service, companies must be willing to adapt, modify and in some cases entirely reinvent the purpose and procedures of their business to improve customer service quality. Rather than "standardize" or even "customize" existing products and systems, third-kind companies must make a commitment to "customer-ize" - to become whatever customers need them to become in order to work together in the future.

For example, railroads in America thought they were in the train business many years ago and nearly went bankrupt asking the customer, "What type of train car do you want to travel in, where do you want to go to and at what price do you want to travel?" They built coach cars, dining cars, sleeping cars and more to improve customer service quality.

But since they never asked the customer, "What do you want to become?", railroad companies did not foresee the need for airborne shipping and travel, and missed evolving into airline companies altogether.

Today, government financial support is necessary just to keep American railroads alive.

Companies that do evolve and improve customer service quality get noticed and earn the respect of customers as relevant, dynamic and constantly changing organizations. They are focused on and committed to the future and taking steps to improve customer service quality. They are not stuck in the success of their past.

Committing to Service Encounters of the Third Kind means you and your customers enter into an intimate and closely linked evolution to improve customer service quality. As changes in the business environment demand greater innovation, more flexibility and even faster response, you learn to adapt, anticipate and actively support each other to improve customer service quality.

This association is not based on customer satisfaction or even on customer delight. Instead, the inventive and interactive quality of this relationship is founded on a level of customer loyalty that is precious to both parties, and can be vital to a vibrant future.

Competitors can steal away a satisfied customer by offering a little bit more satisfaction, and can even lure away a delighted customer by offering a little more delight. But a loyal customer is one who sees his future emerging in part due to your commitment to improve customer service quality. "Win-win agreements" and "building synergy" become passwords for communication between your company and your customer.

Adding long-term value is a goal you take responsibility for together and it will improve customer service quality.

Training programs in third-kind companies highlight the principles of cooperation, collaboration, creativity, invention and design to improve customer service quality. Real customers and suppliers are featured and included in the real-time training programs that improve customer service quality.

The customer is no longer sold to, nor simply served. He is genuinely cared for through a conscientious relationship that builds trust and momentum over time while helping improve customer service quality.

Your service representatives do not "hard-sell" or "push" their products. Instead, they work closely with customers to ensure that appropriate products are "pulled" from your organization to improve customer service quality.

Customers also influence the development of your organization's future competencies, capabilities, and commitments to improve customer service quality.

Staff and management share the same mindset toward the third-kind customer: "We make your concerns our concerns." And in such an atmosphere of growing trust, your customer can make similar long-term and loyal commitments back to you. The customer comes to count on you, rely on you and evolve with you. All of this because you took the steps to improve customer service quality.

In the fast-food industry, for example, McDonalds is now test-marketing an all-soy "veggie burger." This is in direct response to customers who said, "We are becoming more health conscious and we want to eat healthier foods."

Third-kind insurance companies now reap an ever greater slice of the savings and investment pie. Agents no longer ask the simple question, "Do you want whole life, term or endowment?" Instead leading companies provide their representatives with entirely new categories of investment and insurance products addressing individual concerns and responding to changing needs to improve customer service quality.
While these are some of the success stories, other companies have missed the importance of third-kind service and teeter dangerously close to the edge of obsolescence.

General Motors, for example, suffered a serious erosion of market share and loyalty before they heard what their customers were saying: "We want to become more efficient, more cost conscious, and more environmentally friendly." Other companies listened, took steps to improve customer service quality and delivered appropriately designed new cars. Customers responded, giving back profits and gains in market share.

Intricate slide rules were famous for aiding calculation in my father's day. Manufacturers diligently asked the engineers, "How do you want it?" and built an impressive range of slide rules in response: wooden, plastic, steel, large, pocket-sized, flat, round and double-sided.

But they never asked what customers were "becoming," so didn't hear their customers' growing urge for things instantaneous and electronic. The firms that built a wide range of precision slide rules are now gone. Not one slide rule maker is among the calculator and computer manufacturers of today because they did nothing to improve customer service quality.

From carbon paper to photocopies, buggy whips to stick shifts, typewriters to computers, copper wire to fiber optics, smoke signals to wireless, each evolution begs the question, "What happened to those companies?" Did they make the switch? Did they survive? Did they move from "What do you want?" to "What do you want to become?"

In an environment of continually accelerating change, the only certainty we have is that the future will be different from today. The opportunities for evolution and collaboration with your customers will be endless.

What about your company? Will you gradually go out of business with a standardized service system that provides efficient answers to questions your customers no longer ask?

Or will you change the tone and tenor of your service encounters from the order taker asking, "What do you want?" and the order maker's, "How do you want it?" to the loyal business partner who patiently and intelligently asks, "What do you want to become?"

This change requires a new mindset and new methods for engaging with your customers and suppliers. It's called Service Encounters of the Third Kind. Learn it and you will improve customer service quality for the better.


Ron Kaufman is the world's leading educator and motivator for upgrading customer service and uplifting service culture. He is author of the bestselling UP Your Service! books and founder of UP Your Service! College. Check out articles and tips about how to improve customer service quality.

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