Transforming Customer Service into Revenue with Shep Hyken

Episode Transcript

Niraj Ranjan Rout: Today, we are joined by Shep Hyken, who is absolutely a luminary in the field of customer service and customer experience. He’s the author of two very widely acclaimed books, Moments of Magic, a very widely sought-after keynote speaker, and has spoken for companies such as Facebook and Microsoft. He currently heads Shep Presentations, which helps companies create consistently great, amazing experiences and help them turn their customer service logs into revenue streams.

Shep Hyken: Well, thank you very much. I appreciate that. And yes, you mentioned Moments of Magic, which was my very first book I ever wrote and everything. It is still valid today as a matter of fact, I still talk about that idea in virtually every speech that I do. I have since written another six books. Each one of those books does a recap of what that Moments of Magic concept is all about. It’s really, to me, part of the backbone of every great experience. So, excited to be here. Thanks for having me.

Niraj: Absolutely. Can we start with the kernel of the idea that you might have hit upon in Magic of a Moment of Magic? Great.

Shep: Sure. Many years ago, when I first started my business, I read an article by a gentleman named Jan Carlson, and he was the president of Scandinavian Airlines. He talked about this moment of truth concept. There are several different definitions of moments of truth, but his really struck me. A moment of truth, according to Jan Carlson—since he was in the airline business, he referred to his customers as passengers—is whenever one of our passengers comes into contact with any aspect of our airline, they form an impression. You can paraphrase at any time a customer, client, guest, patient member, whatever you want to call your customers, comes into contact with any aspect of your business, whatever it is, they’re going to form an impression.

Shep: That’s the moment of truth. He talked about how moments of truth can be good and bad. And I thought, great, great idea. But there is a third way, too. So I refer to bad moments of truth, by the way, as moments of misery. Those are complaints, problems, or just not a great experience. And then there is this middle one that Jan Carlson didn’t talk about. That’s what I refer to as a moment of mediocrity, that’s just average or satisfactory. Just okay.

Shep: Irony is, just before you and I got on to record this conversation, I was writing up my findings from one particular question that I asked in this year’s annual survey that we do every year. We do a survey. I’m going to read you the question. I’m going to put on my glasses so I can read it. That’s okay.

Shep: And that is we asked if you were to rate a customer experience on a scale of 1 to 5, where one is bad, two is fair, three is average or satisfactory, four is good, and five is excellent. How likely is it that you would return to this company if your brand, your company, your brand, if you are rated, if the customer were to rate them a three? Okay, that’s important. So three is average. Almost a quarter of the customers, 23%, said that if they had a satisfied experience, they would, they are either not likely or would never come back. Only 77% said they would. Now, that sounds pretty good. Well, if all you are is average, losing a quarter of your customers, you don’t want to do that. However, the information gets even further when we ask this question. What’s basically the question: Would you switch to a competitor brand or company if you found out they provided a better experience? Okay. Better than what? Better than something bad, better than average. Here is the answer. 79%. In other words, almost four out of five customers would switch if they knew there was somewhere else to go. That was better.

Shep: And the importance of that is if all you’re doing is actually delivering an average experience, guess what happens? You’re a huge risk. They’re satisfied, and they don’t complain. And that’s important. They’re not going to complain about something that’s just okay because it wasn’t bad, but it wasn’t that good either. So really important. So back to that moment of magic thing, average is not good enough, and we want to create what I referred to as a moment of magic. Now, that is not about blowing me away over the top service. A moment of magic is just anything that’s a little bit better than average. And you know what else it could be? It could be exactly what’s expected, provided that you do what’s expected all of the time.

Shep: So what is a consistent and predictable experience where customers say things like they always get back to me, they’re always so knowledgeable, they’re always friendly. The word is always followed by a basic expectation, even if it’s just a tiny little bit better than average. This is what’s going to get your customers to come back. So that’s what a moment of magic is all about, is to avoid moments of misery. You’ve got to try to get away from mediocrity and average, that’s for sure, and try to create that moment of magic. So I know I gave you a long-winded answer, and I’m excited because you are the first person to hear this information based on this year’s annual survey, which just came back to me, all the findings within the last week.

Niraj: Very happy to know that. I think that the key idea there is consistency. I think consistency is extremely important.

Shep: Yes. Consistency, predictability. And either consistently meeting the expectations or doing just a tiny little bit better. And by the way, when you have a problem, and it falls in your lap, then you get to go over the top and deliver, you know, that wow level or that over-the-top amazing level. But otherwise, my definition of amazement is just consistently and predictably doing exactly what’s expected or being a tiny bit better than average at minimum. Which is so interesting. Right. And then also, so, you know, counter to a lot of thought leadership that you generally hear customer service that you need to get a lot of these unicorn moments by doing something. Absolutely off script and, you know, borderline, you know, unexpected rather than, you know, doing what is expected very, very consistently. With a problem with doing it. You know, like doing what’s unexpected how often do you get a chance to do that? Somebody calls to ask you a basic question or in the process of doing business with somebody; I mean, where do you surprise them? I mean, you could surprise them if we’re going to overnight it to you instead of send it to you regular, which is one of the things that Zappos used to do so well is they would surprise you by sending their delivery faster than expected. But really, at the end of the day, I think that customers love consistency and predictability. They want to be comfortable.

Shep: So what happens if you look at what a customer’s what I refer to as a customer hierarchy of needs really at the top, you know, you’ve got this idea of an emotional connection that’s the cornerstone. At the bottom, you’ve got products, do what they’re supposed to do, and then you need to trust the company that they’re going to keep your data safe and and they’re going to be, you know, I guess so you can trust them to do business with them. They’re ethical. You’ve got to maybe they have a cause or something you believe in. But all of these things build toward creating this emotional connection. But here’s the thing. If you let them down in any way, you create an inconsistent experience that’s not building trust, that’s eroding trust, that it just takes a lot to get there. You’re not going to have that emotional connection other than maybe you’ll make them angry. I guess that’s emotional, but that’s not the emotion you’re looking for.

Niraj: With these useful insights, I now have my answer as to exactly what was the the the root or the kernel of idea behind moments of magic that you started for me. But then how have you expanded on it and how have you elaborated and probably tweaked and improved that basic idea over the years as you’re going to do so many more docs and writing so many more books.

Shep: So, have I expanded on that? Well, that’s the basic. I mean, here’s the thing. If you don’t deliver it, that simple idea and that’s conceptual, but what is tactical is asking your employees, once they understand what that moment of truth is and how you want to try to create that moment of magic versus mediocrity versus a complaint or a problem, a moment of misery. By the way, when you have a complaint or a problem, customers tell you, you get to fix it. You know, they’re not going to fix it was just okay. But to your point, once we understand what that is now, you can start to teach everybody this is how you go about it. You’ll have some basic minimum requirements, like you will return a phone call within X amount of time. You respond to an email with an extra amount of time. There are certain tactics that you will use to engage your customer in such a way that allows them to say this was a good experience and I’m looking forward to going back to doing business with them the next time I need whatever it is that they do or sell.

Shep: Now I want to give you an idea. I call it the loyalty question, which ties into what I just said. At any given time in your interaction with a customer, simply ask yourself this question is what I’m doing right now going to get that customer to come back next time? And it doesn’t need to be a confrontation. It just is the way I’m managing the experience and experience that they would say, I don’t want to go anywhere else if it is a problem and they’re upset, is the way I’m managing that complaint or that issue going to be strong enough to get them to come back to us next time instead of consider a competitor. Now, when you always are focusing on the next time, the next time becomes every time. So that’s where I believe customer loyalty stems from, is it’s it becomes a stepping stone. If every time you can deliver that predictable experience that the customer says, Yeah, I’ll come back next time that turns into loyalty could turn into a lifetime. Make sense. And I think that is probably the key, to turning a customer service. Org into a new revenue stream. Yes. Yes.

Niraj: Absolutely. So another thing that I was curious about, you know, when I looked at your work is the variety of experiences you have in looking for and doing speaking for a lot of companies, enough of the likes of Microsoft and say, what I would like to learn is, you know what differences in in priorities sets of problems that you’ve seen in what they grapple with and try to solve it so far through their engagement to you and any trends and patterns that you have seen in how that is evolving to be.

Shep: Gosh, my number one trend that I talk about year after year, it hasn’t changed in the last number of years, is simply this customers are getting smarter than ever. And what that means is they are learning from great companies who provide great service what that’s all about and what happens is they’re there, for lack of a better term. The bar gets raised in their minds and they go, Why can’t this company I’m dealing with be. As good as. Whoever my favorite company is? And by the way, this goes beyond just business to consumer. This is B2B as well, because if you’re in the B2B world, all of your customers are at one point consumers. The way they rate you in their mind is based on the best experience they had from anybody. It could be a consumer type of company or it could be another B2B organization, but they’re rating you on the best service they’ve had. Why can’t you be as good as what I get from someone else? And if you, and by the way, I’m not expecting that you’re going to be able to hit that every time.

Shep: But there are certain things you can do to create that trust and predictability, which we’ve been talking about already. And when you can do that, then in a sense you are. I can’t be as good as Amazon, by the way, when I do speeches. And we’ve got to I’ll say that just say, you know, somebody just young out of company who’s your favorite company to do business with Almost every time. The first company that’s mentioned is Amazon. Now, I’m never going to be as good as Amazon, but I tell you what Amazon does, they will send you a confirmation email the moment you place the order. They’ll let you know that it’s on its way and they’ll even give you tracking information, and then they let you know it arrive. Well, guess what? We don’t have the sophisticated, you know, programs that Amazon does. But as soon as we get your order, if you’ve ordered a book or anything, we will immediately tell you we receive the order. It’s going out. Here’s the tracking information, and then we want to make sure that you received it. So let’s go into a company. We will actually look at the tracking information ourselves and we will see that it was signed by whoever it is in shipping and receiving and will email our client just like

Shep: Amazon takes a picture and shows you that that package is leaning against your doorstep. We kind of do the same thing. You see, people don’t mind emails if I’m giving them good information in that email to give them a sense of control. And so while we’re not as strong and as powerful as Amazon, we can still do some of the same things. And that’s what I’m talking about. When they’re comparing you to Amazon, we’re giving them an Amazon type experience at our level. Makes sense. Makes makes a lot of sense. And this is also the kind of things that how it is important to look at customer experience as something that is so far beyond just customer service because that will impact your customer experience. But that’s an automated image that there’s no aspect of your customer service as to how we traditionally think about that subject in there. But it’s just such a good part of Christmas music. But then that brings you to another question, that of talking about consumer businesses in general. Why is Amazon such a huge outlier and why can you let businesses generally have customer service and customer experience that people tend to hate? And what do you think is at the core of a company that has outstanding customer experience like like Amazon and then so many others that thrive in state? What are the quirks that.

Shep: It’s simple, by the way, big company, small company doesn’t matter. There’s a leader and the leader decides we want to be customer-focused, customer-centric, customer-obsessed, whatever you want to call it. That’s where it starts. Jeff Bezos said, We need to be so good that we don’t even need a customer support department. Obviously, that’s impossible because once that that package goes out back in the day, now they have a lot of their own delivery system built into their own Amazon system. But back in the day, it was FedEx, UPS, the post office here in the U.S. and whatever carrier you’re using over in your part of the world or anywhere else, once it got out of their warehouse, they didn’t have any control over it. However, if that third-party shipper fails to deliver the package, who does a customer call? They call Amazon. Right? So that’s why you do need the customer support department to help your customer find the package that somebody else lost. Right. But here’s the point. The leadership decided we wanted to be that good. And when you look at the best companies, you will almost always find a leader; whether it’s a tiny little company or a huge company, you’re going to find the leadership is so far behind.

Shep: When I say so far, so they’re totally behind creating the experience. You know, you mentioned Bill, and Microsoft several times. Bill Gates, who I featured in my most recent book, I featured him in several books, but recently I wrote a book called I’ll Be Back: How to Get Your Customers to Come Back Again and Again. In that book, and I believe it’s in chapter six, I talk about the story of a woman who called Microsoft for customer support, and she was talking to this gentleman who was so helpful that she actually called back and said, Is this guy still available? I don’t know what his last name is, but his first name was William. Well, it was Bill Gates who was actually taking customer support calls so that he could better understand what problems customers were having. He was obsessed by making sure customers were happy. And that is why, you know, these huge companies, you know, they do sometimes they get hit because somebody just takes a shot at them and they had a bad experience and they decided to go viral with it. But at the end of the day, for the, I don’t know, hundreds of thousands, if not millions of customers that some of these companies have, if such a small, small percentage of them are these customers aren’t happy. You know, you’re not going to make everybody happy all the time, but you do your best to do what you can.

Shep: Bill Gates recognized that I had to become customer-focused. I’ve got to find out what my customers are saying because that’s the best way. I’m not going to rely upon just reports. I’m not going to make my perception become a reality when my customers may have a different perception. So I know I’m going a little long-winded with this answer, but it’s a really important thing to understand. Leadership sets the tone and leadership needs to be in tune and in sync with what’s really happening and how their customers feel about them delivering customer service and creating a great experience. It makes sense. And then, you know, I think you said very clearly that it starts at the top rate and then the the the the leader actually plants the seeds or the DNA of exactly how this happens. And goes in the. Okay. But didn’t one follow up in a thought that I have is is why don’t more leaders do it why is it not applied in board meetings for example or Central Park cultivate? I mean, it’s clearly very, very important. Just not as visibly important as probably is to. What you just can’t say it’s supposed to happen. You have to live and do it, you know.

Niraj: You just can’t say it’s supposed to happen. You have to live and do it, you know?

Shep: Exactly. It’s about authenticity and commitment from the top down. You know, leadership has to not just talk the talk but walk the walk. And what often happens is that leaders don’t integrate these principles into the operational fabric of their businesses. They might mention customer service in meetings or put it on a poster in the break room, but it’s not woven into the daily actions and decisions of the company. This needs to change if they truly want to transform their customer service into a defining strength of their business.

Niraj: That’s a powerful insight, Shep. Thank you for sharing your wisdom and experiences with us today.

Shep: Thank you, Niraj. It’s been a pleasure discussing these ideas with you. I hope they prove useful to your listeners as they strive to elevate their customer service.