Differentiating through customer service the way to go

Companies that do so will emerge winners in the long run

With tough times looming, industry experts believe that now, more than ever, companies that have the edge on customer service will be the ones that get through to the other side stronger.

Indeed, these experts believe that companies who manage to differentiate themselves through customer service will emerge the winners.

Dr Judy Siguaw, Dean, Cornell-Nanyang Institute of Hospitality Management, Singapore, says this is because "high quality customer service is difficult to emulate, and unlike price or products, customer service is actually a stronger differentiator".

Mr Giovanni Angelini, formerly Managing Director of Shangri-La Hotels and Resorts and who now sits on the board of Asia's leading hotel group, agrees, adding that quality employees are key to the tourism industry.

"How many times have we met and talked at length about market position, use of new technology, attractive advertising, segmentation management and other revenue generating opportunities?

"But after all those meetings and the discussions, the one overriding factor that comes into play in our industry is how an organisation deals with its employees especially during difficult times.

"How employees are motivated, trained, evaluated, promoted, and most importantly, how an organisation can ensure that the interaction between its people and customers can create those memorable experiences are things that we as an industry, strive for. It is a fact that customers are motivated to come back to a hotel not because of a new physical product in the room, but because of the special attention they received from one of the employees."

Service and innovation critical to performance

Mr Michel Geday, who runs MG Consultancy and Management and who specialises in service training, sounds a note of caution. He says that companies that have succeeded in differentiating themselves through customer service are those who have "a proven and consistent track record of officially recognised service excellence".

Any company can practice service excellence and if consistent enough, customers will judge these companies differently. "Word of mouth is a very powerful advertising media as we know," says Mr Geday.

He cited Singapore Airlines as one company that had been successful in differentiating itself through customer service.

An SIA spokesperson said, "Customer service is basically the cornerstone of Singapore Airlines' mission, directing and guiding every single one of us in whatever we do and in whichever division we are in. To this end, the importance of service is not only manifested in our mission, which is to provide air transportation services of the highest quality, but is also reiterated in one of the Singapore Airlines Group's six core values, "Customer first" - that our customers are foremost in our minds all the time and that we go the extra mile to exceed their expectations."

"Much emphasis is placed on service (and innovation) because we believe it is an important differentiating factor and even more so when the global economy is not at its most robust."

Capella, the one to watch

Ms Siguaw cited the Ritz-Carlton and Shangri-La hotels as examples of hotel companies that have managed to differentiate themselves through customer service. "One new hotel chain to watch is Capella, which has some interesting service standards and is really seeking to differentiate itself on customer service." (Capella is developing a high-end resort on Sentosa island in Singapore.)

She listed some examples of Capella's service standards. 

• The suggested hours of operation are guidelines, not limitations for satisfying individual guest desires and preferences. "In other words, guests can check-in or check-out times anytime in a day without extra charges, unless a guest stays past midnight.  If the restaurant is closed but a guest wants to use the restaurant to sit with some friends, the restaurant will be opened and everyone will be served from room service menus," she said.

• Staff are empowered and required to fulfill their guests' needs. She explains,"Identify their unique requirements and preferences both prior to the arrival and during their stay in order to individualise their experience."

Time to invest in staff, not reduce training

And as tempting as it may be, the experts agree that it is dangerous to cut training in tough times. Ms Siguaw explains, "Reduced training means poor staff performance, which negatively impacts the guests and brand equity. A loss in brand equity can have long-term effects and be very difficult to turn around later."

Urging companies to "not just cut overheads but invest in human resources", Mr Angelini says that it is "extremely dangerous" for companies to cut back on employees-related programmes such as training, employee surveys and the overall human resources functions. By taking this approach, the memorable customer experiences will disappear.

"Soft periods and recessions are the best times to invest in people and ensure that staff are motivated and fully engaged in exceeding customers' expectations and good organisations realise that this is a great opportunity to provide that unforgettable experience and have those customers return time after time."

"This type of investment doesn't cost very much, especially when you look at the cost of a non-returning guest or the cost of uncontrolled turnover, or even worse, layoffs during soft periods and rehire when business improves."

Mr Angelini called it the perfect time to heighten the focus on service delivery, "which means knowing what your employees are thinking and perceiving, making sure they are well trained and motivated, and that you are doing all that is necessary to ensure an engaged team."

He concluded that not only would this approach pay off during the softer periods, but also pay very high dividends when the markets improve," as the ups and downs in our industry come very regularly."