Customer Service Interview With Shep Hyken (Part 1 of 2)

Authored by Kayla Brehm

Published on November 10, 2014 team member Graham Moreno recently got a chance to sit down with Shep Hyken to talk about customer service. Shep is a speaker, thought leader, and evangelist of customer service who has been in the industry for thirty years. Below is the interview where we discuss everything from Shep’s favorite companies for customer service, his preferred metrics for companies to track customer service, and where he gets his clothes. Enjoy!

Shep Hyken Interview (Part 1 of 2):

Graham: Hey Shep, how’s it going?

Shep: Good thanks.

Graham: For those of you who aren’t familiar with him Shep Hyken is a customer service expert, a NYT, WSJ, and USA Today bestselling author, and a keynote speaker who has spoken at numerous Fortune 500 companies. Thank you so much for being with us today, Shep.

Shep: It’s my pleasure, thanks for having me.

Graham: For our listeners who don’t know as much about you, can you give them some background? Just an idea of how you got to where you are today.

Shep: Sure, let’s see, I’m from St. Louis, Missouri. I’m a customer service expert; I work with companies who want to build a loyal relationship with both their customers and their employees. I’ve been doing this since 1983.

I started out thinking I wanted to be a professional speaker. I’d seen a couple of motivational speakers and thought it looked like an interesting job. I had an entertainment background because I’d done comedy and magic in college and I also had a little bit of a business background having worked for a company for a number of years as a teenager.

When I realized I wanted to be a speaker, I needed a topic, and I quickly realized that customer service was important to me. I said, “This is everything I believe in.” When I worked in retail, when I had my own business as a teenager–the way I treated my customers was what I had always focused on. That’s how it all started.

My early clients were relatively small *chuckles* : Anheuser Busch, General Motors, Enterprise Rent A Car and so on. I had no problem picking up the phone and calling those people and being like “hey this is what I do.”

That’s how it started as clients go. Here I am today, having authored books and worked with hundreds of companies–it’s been great.

Graham: It’s incredible to think that you’ve been doing it for thirty years. You were about three decades ahead of your time. How were you initially received?

Shep: At the time, the company that was really into customer service was IBM. About a year into being a speaker, I said “It would be so cool if I did a speech at IBM” and about five years later, I did a speech at an IBM meeting. When you think about it, there weren’t a lot of companies thinking about customer service back then.

Back in the day you’d go to a bookstore (when they actually had books in them) and you’d go to the business section and there’d be one small shelf of books about business. That was it, one shelf.

I bought every book on that shelf and the ones I enjoyed most were focused on sales and service. Particularly the service side of it. To me sales is what gets people to buy the product, and service makes people continue to do business with you.

Over the years I also got into the concept of selling with service. It’s a consultative approach where the process begins the moment a customer thinks about doing business with you even if they haven’t done business with you yet.

Graham: Talking about selling with service, we had Jill Rowley on about a month and a  half ago. She and I talked a little bit about how customer service and sales are intersecting more and more. What do you think of that?

Shep: More than sales, I think marketing has crossed into customer service, or maybe it’s even more that customer service has crossed into marketing. What that’s saying is that it doesn’t take the place of traditional advertising, though I think it’s better than traditional advertising, because if you do a great job at what you do as a company and people go out and talk about you, that’s the best marketing that you have.

Morton’s Steakhouse is a good example. Years ago, I had a great opportunity to work with their president at the time, and future CEO, Tom Baldwin. He became a friend of mine, and he taught me that customer service isn’t a department, it’s every employee taking care of their guests so when they walk out of the restaurant they not only want to come back but they want to bring their friends and tell their friends.

There are all sorts of statistics that show that with traditional advertising there is a lot of distrust. It’s as much as 70-80%. The other side of that is that the customer absolutely trusts their friends, colleagues, and family members. That’s word of mouth marketing. That effect comes from the customer experience and a big part of the customer experience is customer service.

Graham: Customer experience is something that a Forrester report for 2014 suggested would be a tremendous source of spending for companies this year. Have you seen companies take major steps to ramp up their customer experience, and if so, are there any trends you notice as far as how they do it?

Shep: The reason companies are doing it more and more is that they recognize the value behind it. The other thing is that the consumers are becoming smarter. Companies are teaching them what good customer service is about.

Those companies are Nordstrom, Zappos, the Ritz-Carlton, Amazon, ACE Hardware (who was a role model in my most recent book about great customer service) and some others. Those great companies teach customers what it’s like to receive great customer service. They create a demanding customer, which is a customer that goes to other businesses and demands the same level of customer service.

If I’m a company, my competitor in customer service isn’t always in my industry anymore. Granted, there are always competitors within industries, but sometimes my competition is someone from outside of my industry who my customers compare me to.

Graham: Can you give me an example of that?

Shep: Sure. I won’t use the Ritz-Carlton because that’s too obvious. I was recently at a great hotel in Des Moines. The room was about $59 a night and I walked in and the woman at the front desk said to me: “Sir, we’re not a fancy hotel, but you’ll find that the room is clean. If you have any problems, please call me. We don’t have mints on the pillows, but what we do like to do with all of our guests is offer them a candy bar.”

She pulled out giant basket of candy bars and I was like “wow.” If you think about it, that candy bar costs about a dollar to a dollar and a half. They were willing to spend almost 2% of the cost of my room on a candy bar to enhance my experience. In addition to that, the people were so friendly and so nice that I thought to myself, “If this person were at a fancy hotel, the hotel would probably give them a promotion.”

The point of the story, though, is that the next time I go to a hotel, even if it’s a different brand name, I’m gong to expect (or hope for) the same level of service as the hotel that I stayed at in Des Moines. They’ve made me a demanding customer.

Graham: You mentioned ACE a few minutes ago. When I was reading over some of what you’ve written I was interested to see that 3,000 of 4,600 ACE stores are owned by individuals.

Shep: Yep, that’s in 70 countries. They have one chain of stores that they’ve gone ahead and bought because the owner of that chain was ready to sell and didn’t want to break it up, so they came in and bought it. They’ll eventually privatize it like the rest of their stores. For the most part they’re all individually owned. Some of the owners own more than one store, but the majority of the 3,000 own one or maybe two stores.

Graham: How do you feel like the fragmented ownership structure of ACE effects the level of service? it’s something you talk about at length in your book.

Shep: Obviously the stores aren’t all perfect, but a very very high percentage deliver an exceptional level of service. I chose ACE as a role model for a few reasons. They’re a large business with a billion dollar headquarters. That said, it’s really a co-op that’s owned by their dealer network. It’s a big company, but it feels small because of the individually owned stores. I love it because they go across all channels of business. Entrepreneurial to big business. They’ve also won, so far, eight J.D. Power awards in a row for highest customer satisfaction in their industry. Businessweek also listed them as a top 10 customer service brand.

I also love them because they have intense competition. You know who their competition is. Here’s a small little hardware store. Maybe six to eight thousand square feet. Maybe some are bigger, but that’s the average. They’ve got to go up against a Home Depot or a Lowe’s or another big box store that might be ten times their size. These big box stores outspend them 30:1.

So how do they compete? They can’t compete on size, they can’t compete on the selection of product. They really can’t compete on price because a lot of big box stores have low prices. So they compete with customer service.

They deliver an experience so valuable that customers still prefer your solution. And of course, they need to be fairly priced, they’re not high priced, but they are competitively priced.

ACE will, and they’ll hate that I’m saying this, but they’ll match the price of the product if you can find a better price elsewhere. The reason you go to an ACE hardware isn’t because you have this huge job you’re going to do in your home. You go there because you have a small project or a repair of some kind. They’re so good at what they do and they’re so helpful.

It’s the helpful factor that’s key. Helpful is what separates them from simply having good customers service. They have good customer service and they’re helpful. People, as a result, become loyal customers of these stores. And I think that’s what keeps them in business. The way they take care of their customers.

Graham: So ACE followed the Tom Peters advice that customer service is a barrier to entry and if you get over it you’ll find a space in the market?

Shep: I think customer service is table stakes. I love and agree with almost everything Tom Peters has ever said, though. I think he’s one of the great ones to emulate and I think there are a lot of people out there who don’t know who Tom Peters is. It’s unfortunate because there’s an age point, or maybe a year, where he semi-retired. He’s an absolute guru.

Graham: You have a captive audience right now–do you want to give a quick synopsis of Tom Peters?

Shep: The first book he wrote was called In Search of Excellence. I’m guessing the book came out when I first started speaking on customer service or shortly thereafter. To me that book was like a bible. A case by case study of the fifty greatest companies at the time.

The companies that I write about today, even a year from now, might fall out of favor for some reason. And there are all kinds of different competitive reasons.

One of my favorite companies out there is American Express. American Express is truly a company that has come from behind in customer service ratings. They have a phenomenal call center and a phenomenal member support system.

About a year ago they got mixed up with the rest of the industry when the entire industry tanked. There were some problems inherent to the credit card industry. American Express kept providing great service, but due to the industry debacle it hurt them tremendously. I could say that they went out of favor for a short time.

Companies will come and go. I’d like to say that Amazon, Zappos, and Apple ten, fifteen, twenty years from now are still going to be some of the top customer service companies.

Look at companies that have done well for many years. Nordstrom, ACE, you don’t hear about them as much, it’s not written about. They aren’t so much rockstars as solid as a rock.

Graham: When you wrote about ACE, they had actually out performed Ritz-Carlton in customer service rankings, hadn’t they?

Shep: *laughs* Yes, ACE was 10th and Ritz was ranked 12th. Here’s something to keep in mind though: the expectations that exist from industry to industry differ.

I love McDonald’s so I don’t want anyone to think that this is a slam against McDonald’s. That said, you don’t expect the same level of service at McDonald’s as you do at a Morton’s steakhouse or a Ruth’s Chris.

Given your expectations though, you might end up giving a McDonald’s a 10, just like you might a Morton’s or a Ruth’s Chris, because your expectations are totally different. Don’t think that at the end of the day, the level of service is going to be the same, it’s just that the service relative to your expectation of that business has exceeded what you expected.

Graham: It’s amazing that, with restaurants in particular, setting expectations can totally change an experience.

A question we talk about a lot at is customer service metrics. You’ve talked to a lot of Fortune 100 companies and even more Fortune 500 companies. Are there any metrics that you favor?

Shep: I have my favorites because I love simplicity. I love metrics, because the old saying is that you can’t manage what you don’t measure. I love NPS. It’s a simplistic formula to determine whether or not your customers are happy enough to recommend you. It doesn’t get you specifics, but it gives you an overall view.

Just the fact that they’re willing to recommend you says so much. I like a three question survey. Number one is the NPS–what’s the likelihood you’d recommend us to a friend, family member, or colleague? It’s a 1-10 scale. A 9 or 10 is a promoter. 7 or 8 is passive. Those folks are right in the middle. Satisfied but not so loyal that they definitely won’t move. Then a 6 or below is a detractor. You take the sum of your promoters, and subtract your detractors. What’s left is the NPS.

The second question should be, why did you give us that rating? That’s a great question because it provides insight into why you are where you are in the eyes of the customer.

The third question is great, particularly for happy customers, and it’s “what is one thing that we can do better?” If you have one-hundred happy customers that you’ve surveyed and you ask all of them what something is and twenty-three of them have the same suggestion and you’re not doing it, that’s something you should consider. It gives you an opportunity to improve on greatness.

Graham: I like that a lot. My favorite question is “how likely would you be to hire the person you just spoke with?” Zappos thinks that question is even more accurate than the standard questions because if a customer wants to hire who they just spoke with then they know the customer came away very satisfied.

Shep: I think that’s a different question. It’s more individual. It gives you an idea what happened with that specific rep. That’s not necessarily what a company is looking for. It’s not a bad question, but I like questions that look at issues that are slightly bigger than that.  I love the simple questions because it’s a 1-10 scale. I don’t want to spend 10 minutes filling out a survey. If I’m asked to, I’ll just check out.

Graham:  Agreed, it’s daunting when the surveys are huge. I imagine you’ve seen a lot of channels go in and out over thirty years in customer service. Are there any channels you see as rising or any you see as falling currently?

Shep: The original channel was pick up the phone and call and that was it. Today you have email, chat, Twitter, Facebook, and all sorts of other social channels. I think that Twitter and Facebook are strong right now as social channels go, though there are others. Companies today are stressed about how multi-channel they have to be, and it’s unfortunate that they have to monitor so many channels, but that’s what customers need.

There are more places they need to pay attention to, but you go where your customers are, and if you’re not willing to do that you have to be willing to lose your customers. If that’s the kind of business you’re in, and you’re willing to do that, you’re probably not going to be in business much longer.

If you tell your customers you don’t care what they say about you on Twitter then you’ll have people talking about you, positively or negatively, in a social channel and you’ll have no idea how your customers are feeling.

Great example: A grocery store chain had a frequent customer. This guy goes in and tries to buy his favorite prepared meal. The last several times they’ve been out of it, just haven’t made it. He got something else and was standing in line and tweeted, “They’re always out of my favorite dish.”

Someone at their corporate HQ was paying attention to the Twitter feed, as they should, and saw this tweet. They responded immediately and said, “Which store are you at, and which lane are you at, and will you please step out of the lane so that we can have a manager meet you immediately.”

Three minutes later a manager was there, took the customer to the food prep area, and made up the meal special for this customer. That’s a great story. And it shows the benefits of a company like a grocery store chain monitoring the twitter channel.

Part 2 will be released next Monday. Questions about the interview? Let us know in the comments or @helpdotcom

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