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254: Incentives That Drive Service Behaviors · Customer Service Revolution | Customer Experience & Employee Experience for Business Leaders

• 0:47
  Welcome to the customer service revolution podcast.
• 0:50
  I'm your co-host Denise Thompson and I am here with the John DiJulius How are you John?
• 0:58
  I'm great, great.
• 1:00
  You know, we talked recently that I was entering my...
• 1:10
  I'm in it.
• 1:11
  I'm in it.
• 1:12
  I'm in it.
• 1:12
  I'm doing more than just a little pause.
• 1:14
  right now, everyone thinks you're 70 because we said that.
• 1:18
  and you are as well in your seventh decade and you've got a birthday coming up.
• 1:24
  I do, I do, but I think I've seen some good uh posts on like TikTok saying men don't celebrate their birthdays.
• 1:33
  I don't know.
• 1:33
  Don't feel, no, no, I never.
• 1:37
  Other than it's excuse to get my kids to come visit me, which they are, Cal's flying in.
• 1:45
  He's actually flying in for a.
• 1:46
  uh
• 1:47
  or believe in dreams, you know, gala, but it's also, yeah.
• 1:53
  So it's the one time my kids will make me a priority.
• 1:58
  Yeah, I'll definitely take advantage of that.
• 2:01
  Yeah.
• 2:03
  Well, happy early birthday, John.
• 2:05
  Thank you, thank you.
• 2:07
  Did you enjoy yours?
• 2:08
  Of course, I was into birthday.
• 2:11
  any.
• 2:12
  Did Ken spoil you?
• 2:14
  We went to Chicago where his kids are and so it was his youngest daughter's uh 30th birthday was the same week and so they had a birthday party for her but we did dinners
• 2:29
  every night and the party and yeah it was great.
• 2:33
  It was good.
• 2:33
  was fun.
• 2:34
  you gain recognition there or was it overshadowed by?
• 2:37
  I didn't want that.
• 2:39
  Who wants to be, oh, happy 30th and then, it's my birthday too?
• 2:43
  No.
• 2:45
  No, definitely did not want
• 2:49
  Anyhow, today we're talking about
• 2:51
  something that shapes not only the customer experience, but the employee experience as well, incentives.
• 2:57
  Every company has them.
• 2:58
  Some are formal, bonuses, commissions, contests, scorecards, or performance reviews and promotions.
• 3:05
  And others can be a little less formal, praise, attention, flexibility, who gets celebrated in the meeting.
• 3:12
  But here's the real question.
• 3:15
  Are your incentives creating the customer experience you say you want?
• 3:19
  Recently, as you know, Starbucks announced a new incentive rewards program for their hourly partners, giving eligible baristas
• 3:27
  and shift supervisors the opportunity to earn quarterly bonuses, which are tied to sales, operational, and customer service targets.
• 3:36
  And this matters because Starbucks is not just saying the coffee house experience matters.
• 3:42
  It's trying to connect employee rewards to the behaviors and outcomes that shape that experience.
• 3:49
  And at the same time, we talked about this last week, Spirit Airlines shut down.
• 3:54
  And that reminds us of a different lesson.
• 3:57
  Spirit faced major financial and operational pressures.
• 4:00
  So we're not saying service alone caused the shutdown, but it does raise an important business question.
• 4:07
  What happens when a company competes heavily on price and the customer experience becomes increasingly strained?
• 4:15
  So today, John, you and I are going to be talking about incentives that drive service behaviors, how companies accidentally reward the wrong things, and how leaders can
• 4:27
  reinforce the right behaviors and why customers ultimately feel whatever the company rewards internally.
• 4:35
  So a lot of companies don't say customer experience is top priority, but when you look at what the employees are measured on, rewarded for, promoted for, customer experience barely
• 4:45
  shows up.
• 4:47
  Why do incentives have such a powerful impact on service behavior?
• 4:52
  Well, it's sending a message several ways.
• 4:58
  One, it's what you're telling employees that is important uh as a company.
• 5:04
  um And so it's top of mind.
• 5:08
  Employees, I think intuitively, to do a good job and they want to...
• 5:14
  And what gets recognized gets repeated.
• 5:17
  um So...
• 5:19
  what you, it's like incentivizing your children, right?
• 5:23
  If you're incentivizing them to get great grades or, but then there's always unintended consequences, even with the best of uh incentives and you have to watch those.
• 5:37
  So yeah, a silly example is if your kid feels pressure to get straight A's, maybe they're cheating, um you know, to do that or, cause they feel the pressure or,
• 5:49
  they are uh stressing out taking um Adderall to stay up for days on end.
• 5:59
  There's always unintended consequences.
• 6:03
  also, so we talk about uh incentives which align with KPIs, key performance indicators, what are you tracking?
• 6:13
  And is it tracking the right behavior?
• 6:15
  So it's so important.
• 6:17
  And I was thinking about this,
• 6:18
  the other day.
• 6:19
  Employees will do what you, for the most part, I believe this, good employees will do what you tell them.
• 6:25
  So we have an employee that's been with us at least, I think 24 years, Lindsay.
• 6:30
  And people are shocked when I tell this story.
• 6:33
  Lindsay is a rock star at customer experience, but she always wasn't.
• 6:38
  um
• 6:39
  You know, when she first started 24, five years, four years ago, she was a receptionist at our first business, John Roberts Salon.
• 6:49
  And we told her, you know, this is the policies and oh my God, Lindsay would, you know, enforce the policy even when it shouldn't have been like, you know, no, no, not in that
• 7:05
  case, Lindsay, but,
• 7:06
  You didn't know.
• 7:07
  And at first I was like so mad at her thinking, why would she do that?
• 7:10
  And then I realized, well, that's our policy and Lindsay will, she's a good employee.
• 7:16
  So when I changed it on her to, all right, forget policy, make the customer happy.
• 7:24
  That's what she did.
• 7:25
  And she did anything it takes and she still does.
• 7:27
  ah But she does, and you still see this.
• 7:31
  I know you see it too.
• 7:32
  She has that knee jerk.
• 7:33
  defensive reaction to protect the brand.
• 7:37
  And you kind of have to help her pull back.
• 7:40
  there's nothing wrong with it, but she doesn't want anybody taking advantage of us.
• 7:47
  so, know, employees do what you tell them.
• 7:50
  And so if you tell them this is policy and don't let people, you know, go against our policy, they will.
• 7:56
  um And then you got to be careful with that, you know.
• 7:59
  Yeah.
• 8:00
  So is it fair to say then a company's incentive system reveals what it truly values and what it believes?
• 8:09
  Yeah.
• 8:09
  And you have to be careful with that.
• 8:11
  You have to be really careful with that because again, it's giving them a roadmap on how they should treat the customer.
• 8:20
  unintended consequences is if we want to get payroll down in the call center or keep in check, and then we say, you you only have, you you have to average two minutes and 30
• 8:32
  seconds per call.
• 8:35
  Well, now you're rushing everyone and you might be missing sales because, you know, want to make an appointment and, you know, okay, all right, Thursday at two.
• 8:44
  All right.
• 8:44
  You know, maybe there was other things I wanted to book or I was talking about having uh a, cater a party, you know, for my son's graduation, you know, besides just the
• 8:57
  transactional nature of trying to get me off the call of calls so you can, you know,
• 9:02
  do so many calls per hour or keep your average call handle time around what you're being uh measured for.
• 9:13
  We talked at the top about Starbucks recently announcing a program where hourly partners can earn bonuses tied to store performance and operations plus customer service targets.
• 9:25
  What does it signal when a company connects employee rewards directly to the customer experience?
• 9:31
  Well, that they're truly customer uh obsessed um and they're trying to send it and reward that type of behavior.
• 9:45
  The one thing I want to ask you, Denise, so I think there's a fine line.
• 9:52
  You got to be careful with incentives.
• 9:54
  But I also am not sure if...
• 9:56
  um
• 9:58
  If incentives is the only thing that gets you to be nice to customers, I'm not sure that's a good thing, right?
• 10:06
  It's the old palm down versus palm up giving.
• 10:10
  um David Wagner talks about this in his book, Life as a Daymaker.
• 10:15
  A palm up giver is I give you something and my palm is waiting for a tip or whatever that uh is.
• 10:25
  Palm down giving is you just take care of someone and you know, don't even care if they know you did that or you get the recognition.
• 10:33
  So let me ask you this, know, 30 years ago, you started off as an aesthetician in John Roberts Spa.
• 10:41
  And since day one, I only remember you as a customer service rock star.
• 10:46
  You always put the customer first.
• 10:49
  You weren't someone we had to, you know.
• 10:52
  Coach that much.
• 10:55
  Did incentives work for you?
• 10:57
  I'm sure we've had incentives along the way, but how does that work for you?
• 11:02
  Did anything make you want to do that more than like, you know?
• 11:07
  So I think there are some of us that were just good hires.
• 11:10
  oh I think there are some of us who, whether it's in herance, whether it's how we were raised, the job we had prior, school, whatever it might be, that it was instilled in us.
• 11:25
  And I think once you realize doing those things makes you feel good too.
• 11:31
  Yeah, I always say the day maker feels the best at the end of the day.
• 11:35
  right?
• 11:35
  that's, that I think becomes your incentive.
• 11:39
  But for people who haven't experienced that yet, I think it's good to have an incentive until they learn it and feel it.
• 11:47
  And then, you know, it becomes.
• 11:50
  Yeah, because I don't want it to be unauthentic.
• 11:54
  I want it to be, you know, and then the best thing is that it transpires in other areas of their life, not just to the customer that I always say my favorite compliment I've ever
• 12:06
  gotten is maybe by a parent who their daughter works for us and they come in and say, I don't know what you did to this person, but she's not the same, you know, person.
• 12:16
  that she was six months ago.
• 12:18
  Like I know that, you know, that's really a uh compliment to our culture.
• 12:24
  When you think about this and how to incentivize and that, what do leaders need to be careful about when designing incentives around customer service?
• 12:37
  So we talked about like average call time.
• 12:42
  um And you mentioned Spirit Airlines, uh which I think was a total victory for customers, customer experience, customer experience, business models uh that they failed because they
• 13:02
  made, they could, they...
• 13:04
  I guess made price irrelevant the opposite way that how cheap they were still didn't matter.
• 13:10
  So here's an example, Spirit Airlines incentivized their gate agents to catch people that had too big of carry-ons.
• 13:22
  you know, and then, but they got, got $30, 10, 20.
• 13:27
  Congress did something on this where they were incentivizing.
• 13:31
  I know there's a balance between not getting take advantage of safety, whatever those things are, but it just wasn't a good system.
• 13:42
  But not all profits are good profits.
• 13:47
  And I'm going to read something from our most recent book, The Employee Experience Revolution.
• 13:56
  This part is titled, not all profits are good profits.
• 14:00
  When organizations apply short-sighted thinking, focusing solely on sales and profits, they often enact bad profit policies that exploit customers.
• 14:13
  Think hidden charges, excessive late fees, overdraft fees, flight changes fees, et cetera.
• 14:20
  Short-term profits incentivize
• 14:23
  Incentives push many companies in the wrong direction.
• 14:28
  Bonus plans reward executives for boosting short-term profit, even if they embrace practices that take advantage of customers and exasperate customer-facing employees, who
• 14:39
  are the messengers taking the brunt of the customer's frustration.
• 14:44
  you know, going off script here, you know, if I'm yelling at you because I was...
• 14:49
  you five minutes late and you won't take me or whatever the silly thing is.
• 14:53
  And you're like, sorry, that's our policy, you know?
• 14:57
  You you're getting beat up 10 times a day by enforcing that policy and that's, you don't like your job, but you know, you could get fired if you did.
• 15:05
  All right, back to my thing.
• 15:08
  The truth is most incentive programs hold teams accountable primarily for meeting costs or revenue targets.
• 15:17
  Whenever profits are squeezed, an organization's tendency is to seek short-term profit opportunities such as bad profit policies.
• 15:27
  Companies rely heavily on bad profits, alienate customers, and offer opportunities for emerging brands to capitalize.
• 15:35
  For example, Blockbuster.
• 15:37
  Back in the early 2000s, Blockbuster wouldn't go to a subscription model because
• 15:44
  They made $800 million in late fees or 16 % of its revenue was because you brought the VHS back late or DVD, whatever it was.
• 15:58
  Enter Netflix so long blockbuster.
• 16:01
  Okay, so here's really my favorite part, eradicating bad profit.
• 16:05
  So one of my favorite all time CEOs is, was, he's still alive, but he just retired in the past two years, Walt.
• 16:14
  Bettinger found out early on in his tenure as CEO of Charles Schwab that one quarter of Schwab's revenue, 25%, resulted from bad profit.
• 16:28
  So he asked his team to rank in order the offending policies, putting the worst at the top of the list and committed the company
• 16:38
  to working from the top down, eradicating each policy so that within several years, they all would be gone.
• 16:45
  Bettinger realized this practice was essential to creating a customer service culture.
• 16:50
  And here's the best part.
• 16:52
  Under Bettinger's leadership, the value of Schwab stock has grown from $13.59 at the beginning of 2009 to $100, over $100.
• 17:04
  per share in 2022, with market capitalization increasing tenfold.
• 17:10
  Not surprisingly, the CEO has received numerous rewards over the past decade, including Fortune magazine business person of the year four times as well as Landy, its number seven
• 17:20
  global business person spot.
• 17:21
  Charles Schwab's offer is an outstanding example of what can happen when leaders have a true understanding of the customer service experience and structure their policies with a
• 17:32
  moral compass.
• 17:33
  firmly in place.
• 17:34
  Probably more than you wanted to know, but I just thought it was an excellent example of both bad and good.
• 17:40
  It's a fabulous example.
• 17:42
  It's a great exercise for leaders to go through too.
• 17:45
  I how many realize what that number looks like in their business.
• 17:54
  Yeah, you uh you talk about relationships and a company can say we care about relationships.
• 18:01
  But like you said, if employees are only rewarded for speed, transactions, volume or sales, that's what they're gonna optimize for.
• 18:08
  How do incentives show up in the customer experience, even when customers never see the incentive plan?
• 18:16
  Yeah, so, you know, I think it should all be around what, you know, a great experience is and a great experience sometimes can, you know, in the short term not be the best, but in
• 18:30
  the long term, the retention, the referrals, the word of mouth.
• 18:34
  So, you know, anything to do with retention and referrals forces...
• 18:41
  The bottom line is...
• 18:42
  you're not going to move the needle significantly in resign rates, retention, and referrals if you're not giving a great experience.
• 18:55
  so anything that reinforces a great experience.
• 18:58
  Now you have to spell out what that experience looks like and you have to celebrate it and do all those things.
• 19:05
  the customer is the benefactor of it.
• 19:09
  But which means
• 19:11
  I have no problem with our businesses and uh giving incentives, paying more, a higher commission, a bonus on resign rates, referral rates, because that means the company's
• 19:28
  saving money on marketing and advertising and uh client attrition.
• 19:36
  listen, the opposite's true.
• 19:39
  retaining a significant percentage of your customers and that it's different for every industry.
• 19:45
  Well, that means they're doing brand terrorism about your brand to other people if they're not coming back.
• 19:54
  Or you got to advertise more and discount more.
• 19:58
  And so if someone's oh crushing it with the experience and we can track their
• 20:05
  Resign rate, retention rate, referral rate.
• 20:08
  We can share that with them.
• 20:12
  Where do you most often see companies accidentally rewarding behaviors that could actually hurt the customer experience?
• 20:19
  Well, again, a lot of things we just explained um with the uh average hold time or enforcing policy or uh even in a salon business, uh when we were going into early on, we
• 20:42
  were just a hair salon, as you know, um and then whenever we hired you, because I think you were
• 20:48
  our first spa employee.
• 20:50
  Is that true?
• 20:51
  Is that safe to say?
• 20:52
  ah I think so, or Catholic.
• 20:56
  Yeah.
• 20:56
  So you were, know, one of the first two when we opened the spa, which is, you know, pedicures, massage, facials, you know, the full gamut.
• 21:06
  So one of the, uh when we were doing research on if we should go down that was how much gift cards you will sell being a spa.
• 21:16
  Mother's Day, Valentine's Day, holidays.
• 21:20
  Totally true.
• 21:21
  Like, you know, that's unbelievable how, you know, just it explodes from a gift card, which is great for cashflow.
• 21:30
  But the one thing that almost every spa owner bragged was, like, you know, we'll sell 100,000 gift cards for Mother's Day and less than 50 % of them will redeem them.
• 21:43
  And, you know, that's 50,000 profit that, you know, and
• 21:49
  And so they put expiration dates and then when you try to come in, they're like, sorry, it expired.
• 21:54
  Maybe it was a year long or whatever it was.
• 21:57
  But that's backwards.
• 21:59
  Because instead of having, let's now bring it to an individual, a husband buys his wife a $250 gift certificate that she never uses or doesn't use before the expiration.
• 22:14
  Well, instead of having her $250,
• 22:17
  If we know if we get her to come in and she becomes an average client, she's gonna spend $800, this was back in the 90s, who knows what the, I should know, but I don't, what the
• 22:31
  guest spends per year.
• 22:32
  She's gonna spend $800 back in 95 and refer to people, the average, every year.
• 22:40
  So.
• 22:40
  I'd rather have the $850 per year plus two more people that are gonna do the same, that compounds every year, than keeping her $250.
• 22:50
  So not only do we not enforce expiration dates, we would reach out to people that hadn't used their gift card and say, you know, and the only reason why I liked an expiration date
• 23:02
  was sense of urgency.
• 23:03
  But everyone knows this, at least internally, they don't expire.
• 23:09
  you could bring it in five years later and we're gonna allow for it.
• 23:14
  So like I said, we did the opposite instead of hoping you didn't use it and profit that $250.
• 23:21
  We'd read it out to you and say, hey, do know you have a gift card that was bought for you last year and do you want us to extend the thing or do you want us to book it?
• 23:30
  Which was counterintuitive to what people think.
• 23:34
  It's kind of like the blockbuster thing.
• 23:36
  you know, you know, 16%, $800 million came from late fees.
• 23:41
  Why would you mess with that?
• 23:42
  crazy.
• 23:43
  Spirit Airlines, their shutdown was tied to major financial and operational challenges, but it also gives leaders something to think about from a customer experience perspective.
• 23:54
  What should leaders learn from companies that compete heavily on price and under invest in the experience?
• 24:01
  Well, they're gonna get that.
• 24:03
  mean, exactly that.
• 24:05
  uh When they invest in their advertising, it's a race to the bottom.
• 24:12
  um I guess the old saying was you better to be the cheapest or the best and there's no in between.
• 24:22
  um But even being the cheapest, we've seen a lot of case studies that we've talked about.
• 24:28
  where Vanguard and just other companies just went for being the lowest cost and it backfired on them because of the frustration.
• 24:39
  They didn't have the budgets to staff a call center properly.
• 24:45
  So people were on hold times for 25 minutes.
• 24:49
  Any business, you walk into a big...
• 24:53
  Home Depot or DIY or whatever those things, which I have no idea what they are, because I've never been to one.
• 24:59
  But you go into them and they have, you know, they've cut staff out and you're sitting there and trying to find and you ask someone and the best they can do is say it's an aisle
• 25:09
  36.
• 25:10
  And aisle 36 is a long, massive aisle.
• 25:14
  And if they don't walk you there because they can't.
• 25:16
  You know, now I'm 10 minutes into my shopping experience and I still haven't gotten the first item on my list.
• 25:24
  I give up and maybe go home and just order on Amazon.
• 25:28
  um And they lost all my business because they were being cheap.
• 25:35
  They can't afford the staffing um because their prices are so low.
• 25:42
  But I mean, everyone loves Amazon.
• 25:46
  I don't know, most people realize Amazon's not the cheapest by far anymore, but their convenience, their customer experience action statement is to be the most customer
• 25:58
  obsessed company on the planet Earth.
• 26:02
  And everything they do and every decision they make revolves around that.
• 26:06
  Just planet Earth.
• 26:07
  we get the virus, it's not going to
• 26:09
  right.
• 26:10
  guess maybe, yeah, yeah.
• 26:11
  Well, it sounds like there's a point where low cost becomes high friction for the customer, especially in the Home Depot example you gave.
• 26:21
  Yeah, yeah, 100%.
• 26:23
  Ease of doing business is one of the six key factors to making a brand, an organization, a brand people can't live without.
• 26:31
  em So all the things that we can measure, you when we talk about efficiency, productivity, sales, it's not bad to measure those, but it becomes dangerous when they're the only
• 26:42
  things that matter.
• 26:44
  How can leaders tell when their incentives are starting to create the wrong customer behaviors?
• 26:50
  Hire complaints.
• 26:51
  um Ask your employees what's their number one or top three frustrations.
• 26:58
  And one of them could be getting beat up by customers, having to give customers bad news.
• 27:06
  And that's, you can't eliminate that, but you could dramatically reduce that.
• 27:11
  um And contact centers are your greatest source.
• 27:18
  to find, and now AI does this, um voice of the customer, customer sentiment, where you can track it um and see what is most commonly said.
• 27:30
  um You your website sucks, couldn't find this, uh you know, return, whatever that may be.
• 27:37
  But also just speaking to your uh contact center really gives them a voice, what are you hearing?
• 27:46
  What are people's customers, clients, guests, whoever they are venting to you about?
• 27:52
  uh All those things.
• 27:54
  But again, AI, that's a really powerful tool uh of AI that tracks uh customer sentiment.
• 28:03
  And that replaces almost focus groups with customers because you're hearing in real time uh what they like and what they dislike.
• 28:12
  They have a, I was recently on a Zoom type call, a Google call.
• 28:20
  And afterwards when uh I received the notes from the call, there were a list of, I'm going to say sentiments that came along with it.
• 28:30
  And it showed like when people were paying most attention, when they were paying least attention based on the video.
• 28:37
  they tell that?
• 28:38
  I don't know, it must have to do with when somebody's doing this or...
• 28:42
  Yeah, but I always wanted to put, there's a couple things that, know, actually Harvard Business School was doing an AI case studies and they called me and it was just too short
• 29:00
  of notice, but I said, all right, dream anything I want.
• 29:03
  I want to be able to track a customer's and I'm not sure what it is.
• 29:10
  you know, whether it's, you know, one of those wearables, right?
• 29:14
  It could be your Apple watch, it could be your, the, uh or a ring or whatever they call it, or the whoop band, whatever it is.
• 29:21
  But during the journey of when they call, when they walk in, whatever your journey is, and to track their mood, lack of a better word, it's kind of an,
• 29:35
  ring.
• 29:35
  Yeah, right, right.
• 29:36
  Instead of an EKG, really I called it, instead of an EKG, I wanted it to be an XKG, an experience, you know, I don't even know what KG stands for.
• 29:45
  What is it?
• 29:46
  EKG, echocardiogram.
• 29:48
  Yeah, so experience cardiogram.
• 29:51
  And then it shows us what point of the journey, you you got frustrated versus, you know, your oxytocin went up.
• 30:00
  And I even wanted it as a speaker to know when people were listening and laughing versus starting to look at their cell phone or the things we do when we start being disengaged.
• 30:14
  I think that's so cool.
• 30:17
  Yeah, they loved it, but oh it was just, they contact us, me too late.
• 30:27
  They were like, well, this is due next week.
• 30:29
  I'm like, all right, that's not going to be possible.
• 30:31
  But yeah, I think it's an AI opportunity just to see where the frustration points are.
• 30:37
  like, you know, I had an example with a great brand.
• 30:42
  couldn't believe it.
• 30:43
  American Express, I think, think, you know, they're they're excellent.
• 30:46
  But I had booked a trip using points.
• 30:51
  And had to cancel it.
• 30:52
  And so.
• 30:54
  I said to the person, she said, well, you you can use it as credit.
• 30:58
  I go, can I get the points just returned?
• 31:01
  And she said, absolutely not.
• 31:03
  And I was so like, like when she said absolutely, I'm like, ah, I was like, you know, and then, but then she added not.
• 31:09
  I thought that was like really, I don't know, like a nasty way to say it and said, oh gosh, I wish you could, unfortunately.
• 31:19
  you know, whatever, but absolutely not.
• 31:22
  I thought it was really insulting.
• 31:24
  Yeah, I was so surprised because I think America Express is one of those brands I can't live without.
• 31:29
  Yeah, wow, that is surprising.
• 31:33
  That sounds like someone was reading a script and didn't realize the next word was there.
• 31:38
  because she said it so happy.
• 31:42
  Absolutely not.
• 31:46
  Alright, John, if there is a leader out there listening that wants to build a world-class service culture, what specific behaviors should they be looking at recognizing and
• 31:56
  rewarding?
• 31:56
  So anything that reinforces the experience you want them to provide.
• 32:04
  uh we've talked on past podcasts, my favorite, NPS, that's another one that even Fred Rykel, the founder of it says uh had unintended consequences.
• 32:18
  uh people were just obsessed on that and...
• 32:22
  you know, it created some bad behaviors.
• 32:26
  uh So earned sales growth, which Fred Rykel now came out with that I absolutely love, is tracking um repeats.
• 32:35
  How much of your sales is repeat and referrals versus bought, which is advertising?
• 32:43
  So I think that to me, that's the number one way if your business model tracks where your customers come from.
• 32:50
  uh
• 32:51
  you know, not every business model does.
• 32:53
  um know, um Ford, tracking Ford, uh if uh family, occupation, recreation and dreams, a lot of our clients, most of our clients that have CRM systems have implemented Ford in their
• 33:10
  CRM system.
• 33:11
  So now I can see that Denise had, you know, eight Zoom meetings or face-to-face meetings or clients.
• 33:20
  or whatever it is based on the business model, and you could run a report that says of those, whatever number I said you had, eight this week, how many of those clients did she
• 33:32
  update their Ford fields?
• 33:34
  And now, could, whether you reward them or not, we've done it, where at the end of the month, the person that had the highest percentage of Ford, um
• 33:47
  accumulation, documentation, whatever it is, uh one an iPad or an Apple Watch or whatever gadget, but just seeing that report every week showing you that you're in the 50
• 34:01
  percentile, low, bottom 25 percentile or upper made you more aware of it.
• 34:09
  And then not only does it make you more aware of it and doing it more,
• 34:16
  uh you start seeing the impact it had not only on your customers, but you and that you felt better.
• 34:22
  Cause when you were listening and hearing that they had a graduation next week or a wedding or a funeral, you were then able to take action on that.
• 34:32
  you know, all these things are great, but also at the end of the day, you know, it's Toma, top of mind awareness.
• 34:41
  So besides just financial rewarding, getting a higher commission,
• 34:45
  Or um in the salons, have uh level ones through 10 designer.
• 34:51
  And the way you get to a level one is this entry level just went through training, they're gonna be less expensive for their haircuts.
• 34:59
  And how you get to each level is based on the experience we want you to provide.
• 35:05
  Your retention rate, your return, your referrals, um all the things.
• 35:12
  And so when you get, when you hit those numbers, you know, three or four months in a row, you get promoted to level two.
• 35:19
  You get a price increase, a commission, so you get double raise.
• 35:22
  You get a higher, you are now charging more, and you also get a higher commission at that, you know, price rate.
• 35:30
  But those are all things that, you know, you have to be doing, which is all benefiting the experience.
• 35:37
  If you're just solely focused on giving a great experience,
• 35:41
  All those things take care of themselves instead of just, so top of mind awareness, you know, so I'm getting off track.
• 35:47
  So companies like Above and Beyonds, all right, yeah.
• 35:52
  So our, the John Roberts Spa customer experience actually may be the best experience in our guest day.
• 35:58
  And then the pillars are no more, love more, give more.
• 36:01
  The give more is the Above and Beyond.
• 36:03
  But now we can celebrate every day, every week in whatever, in live, in communication shows.
• 36:09
  Hey, I want to tell you,
• 36:10
  how Lindsay was the best part of our guest day.
• 36:14
  Here's what the client said, my God, I couldn't believe she did that from here, she remembered this or that.
• 36:20
  And then you could focus on what pillar that is.
• 36:23
  That's the no more pillar, that's the love more pillar, or that's the give more pillar.
• 36:26
  And the third pillar, if you've been following us in a customer experience, I actually say it has to do with the above and beyond.
• 36:33
  Own it, ours is give more.
• 36:36
  And so we have a give more award.
• 36:38
  that we celebrate the best story.
• 36:41
  But all those are creating top of mind awareness.
• 36:44
  All those are creating FOMO of like, know, God, I should be doing more of this, you know, and oh, what Denise did yesterday for a client, I've had that happen to me 20 times.
• 36:55
  I never thought to do that.
• 36:57
  Never thought to go start her car, brush up for snow, walk her out with an umbrella, whatever that case may be.
• 37:04
  And so it's all top of mind awareness.
• 37:07
  advertising this is who we are, this is our culture.
• 37:10
  I love that because great service, to tell someone to provide great service is just too vague.
• 37:15
  And to have them actually change behavior by doing these things is huge.
• 37:22
  Recognition is what leads to a lot of it, don't you think?
• 37:26
  I mean, it becomes a teaching tool for the rest of the organization.
• 37:29
  Yeah, it doesn't always have to be a financial reward or a car or whatever the heck the thing is.
• 37:37
  People love the recognition part.
• 37:40
  But again, I have no problem uh if someone's actions are saving the company money, sharing that in, like I said, a higher commission rate.
• 37:53
  our consulting, our uh re-sign rates
• 37:57
  with our consulting clients, the consultant gets a higher commission on the re-sign rate because they are asking to do more work with us.
• 38:07
  That sales cycle compared to a client that Googled uh consulting companies and we are one of five that came up and we gotta go through a dog and pony show and a three to six month
• 38:21
  sales process with a bunch of Zoom calls and proposals.
• 38:25
  That all gets eliminated on a re-sign rate.
• 38:30
  They're not checking with anyone else.
• 38:32
  They know our prices.
• 38:33
  They're saying, sign us up for more.
• 38:35
  The consultant deserves a higher commission rate.
• 38:39
  All right, listeners, before we continue, if your organization is serious about creating a customer experience revolution, the DiJulius Group can help you turn service from a slogan
• 38:50
  into a system.
• 38:51
  Our team works with leaders to define the experience that you want to deliver.
• 38:56
  help you create non-negotiable service standards, train your teams, align your leaders, and make the right behavior stick across the organization.
• 39:04
  Because world-class service doesn't happen by accident, it has to be designed, it needs to
• 39:09
  be taught, has to be measured, and it has to be reinforced.
• 39:13
  To learn more about working with the DiJulius Group, visit thedijuliusgroup.com or schedule a call at tdg.click forward slash call.
• 39:24
  Okay, now back to our conversation, John.
• 39:26
  um I like that you talk about incentives don't have to mean big money, commissions, giant prizes, because a lot of leaders think we just don't have the budget for a big incentive
• 39:38
  program.
• 39:39
  But culture's not built through big checks.
• 39:42
  It's built through what gets noticed.
• 39:45
  What are different ways that leaders can recognize the service behaviors consistently without making it feel forced or cheesy or having the same person show up every time as
• 39:57
  the winner?
• 39:59
  Yeah, I think it's uh celebrating.
• 40:03
  It's the Give More Awards.
• 40:05
  It's the Cameron Mitchell, I learned this, uh restaurants, uh the Milkshake Award, which was, know, their slogan was the answer's yes, now what's the question?
• 40:17
  you know, if you, what they did at every, so the milkshake in their world, their uh chain of high end.
• 40:26
  brands in the restaurant industry and traditionally, you know, they don't have high-end brands don't have milkshakes on their menu.
• 40:33
  uh And if you bring your kid to that, which they probably don't want, not Cameron Mitchell's, but high-end restaurants don't want you bring in their kids, your kids to the
• 40:44
  restaurant.
• 40:45
  um But their whole thing was, hey, if someone asks for something like a milkshake, we can do it.
• 40:51
  There's blenders in the bar, we have ice cream on the menu, you know, do it.
• 40:57
  And so that is kind of what, you know, would signify the answer is yes.
• 41:04
  What's the question?
• 41:06
  uh Mantra and philosophy and how they wanted everyone to treat their customer, right?
• 41:14
  If the kid wanted French fries and they don't sell French fries or have French fries,
• 41:20
  but there's a McDonald's next door, run next door and get the kid french fries, keep the kid happy, keep the parents here spending money, ordering drinks, appetizers, things.
• 41:29
  So the way they marketed, branded that metaphor, that icon, the milkshake is, orientation you heard about, the answers you asked, what's the question, the milkshake.
• 41:40
  And several examples of how they would make things happen.
• 41:45
  And so then whenever you walked in, there was milkshake.
• 41:48
  employees might wear a milkshake pin and that was that they got recognized for going above and beyond.
• 41:55
  Let me tell you about what Denise did and here's a milkshake pin and it'd be a conversation starter.
• 42:00
  At every company meeting, whether it's a new employee orientation, a manager's meeting, or their annual general manager's conference uh in Vegas, because I was at all of them, every
• 42:15
  meetings started with everyone had a milkshake in front of them and they would, you know, do a toast and they'd tell a story.
• 42:22
  And it was just, I mean, you couldn't not think about the answers you asked, what's the question, make it happen.
• 42:29
  And, you know, it's just those things and just people love recognition and celebrating that recognition with their loved ones, whether, you know, you're gonna go home and do
• 42:38
  that, hey, you wouldn't believe I got recognized, hey, I won an award, you know, whatever, or,
• 42:43
  us hopefully telling their family what a rock star they are.
• 42:47
  I I always say you got to get the family members, spouses, uh significant others to love oh their job, uh their spouse's job.
• 43:00
  Otherwise, they're going to be on the opposite side of fence and saying, can't you find a job that's not so demanding that maybe pays you more?
• 43:08
  All those things that we compete, I think we compete with
• 43:12
  spouses, partners, more than we compete with other companies trying to ah take our good employees away.
• 43:21
  The milkshake, I think it's brilliant for multiple reasons.
• 43:25
  mean, it has become embedded in their culture.
• 43:27
  They practice it through, you know, in multiple storytelling.
• 43:33
  Storytelling is so huge.
• 43:36
  How do, if someone wants to create that kind of culture, now they have pins and that kind of thing too, right?
• 43:43
  So you see it, keeps it tapper.
• 43:45
  How do you bring something like that into your culture and how do you collect those stories on a regular basis?
• 43:53
  Yeah, and that's the key.
• 43:55
  And hopefully we've visited this on, I don't know what the podcast was called, but I know the topic was creating above and beyond, you know, because that's one of our commandments
• 44:07
  and that this is exactly what we teach companies.
• 44:10
  it's, you know, I remember early on, and hopefully I could be still guilty of this, but someone will find out.
• 44:17
  that I own John Roberts or the DiJulius Group or Believe in Dreams and say, my God, um I want to tell you, this literally happened to me last week.
• 44:26
  um Someone says that I go to Chagrin Falls and I go to Gina and she is like, I'm like, I know.
• 44:35
  And they're telling me how great Gina is and what she does and she remembers and, um you know, just all these incredible stories.
• 44:41
  I go, know.
• 44:43
  I mean, Gina's the best.
• 44:44
  But I didn't do anything with that.
• 44:46
  I didn't, and I should have, you just reminded me of it, and I preached to it.
• 44:50
  I usually would say, would you send me an email or a voicemail so I can share it company-wide and make Gina feel seven feet tall, but also make people jealous of Gina's
• 45:04
  recognition and that they need to do it too, that's who our culture is.
• 45:08
  And so documenting every story.
• 45:10
  And so then you have these stories that maybe people vote on.
• 45:14
  Hey, who is the, should, so John Roberts, uh their milkshake is uh what Larry Gold uh used to bring us.
• 45:24
  What is that called?
• 45:25
  The Bear Claw.
• 45:26
  Yeah.
• 45:27
  So it's called the Bear Claw.
• 45:29
  So we have a long time client that went above and beyond for us every Friday and would bring in a Bear Claw, which is
• 45:37
  pastry.
• 45:38
  Oh, you might be able to explain it better than I can.
• 45:40
  To every location.
• 45:42
  And he just did things for our staff, like for their weddings.
• 45:47
  He'd have a bear claw delivered to their...
• 45:49
  It was just unbelievable.
• 45:51
  So when he passed, I mean, the guy was 95, 96 when he passed, he was just such an incredible...
• 45:57
  We named a room after him.
• 45:59
  We've only done that for employees.
• 46:01
  So the bear claw became our milkshake.
• 46:06
  And now we have the bear claw award and bear claw stories and all that.
• 46:12
  So you find your story, you gotta collect your stories.
• 46:14
  You wanna create a database of stories.
• 46:17
  So new employee orientation, you wanna share the top 10, top 20 with them.
• 46:22
  So their eyes pop out of their heads saying, oh my God, you're allowed to do that?
• 46:27
  At my last job, I would have gotten fired for doing it.
• 46:29
  No, no.
• 46:29
  Here you'd get fired if you didn't do that.
• 46:32
  Like, you know, we want you to do that.
• 46:34
  We praise you for doing that.
• 46:36
  You'll never get in trouble for something you do.
• 46:37
  You only get in trouble for something you don't do.
• 46:39
  So getting those stories and then sharing them every week on our videos that go out to all employees of who did the milkshake, who did the bear claw story.
• 46:54
  That's great.
• 46:56
  how do, is there a way that you collect those stories from clients?
• 47:02
  Yeah, so again, anything that's emailed, voicemail, you collect them, you forward them, you share them.
• 47:09
  Well, yeah, yeah, yeah.
• 47:11
  you know, asking people, know, hey, did we miss the mark today?
• 47:18
  Please share it with us so we can make it right and reduce it from happening again.
• 47:22
  You'll never eliminate it.
• 47:24
  And then the second part is, um was someone a hero?
• 47:29
  I don't know the terminology.
• 47:30
  We wanna know that so we can celebrate it.
• 47:32
  And it might be in a different order, maybe we, but just advertising that we wanna know how we're doing so we can celebrate it or address it in a positive way of reduce it from
• 47:42
  happening again to you or anyone else.
• 47:45
  And then you have a document, wherever you keep your thing of, it starts off as a dozen great stories and it becomes 202,000.
• 47:55
  And then you can see, what haven't we shared in a while?
• 47:59
  or ever, and you can share it in your daily huddles, weekly, know, town hall meetings or videos, uh orientation, whatever it may be.
• 48:10
  So you're just, that's who we are, that's our culture.
• 48:13
  Like you think that story's impressive?
• 48:15
  I could tell you 20 stories that make that, you know, blow it away.
• 48:19
  But then you go to the opposite end of the spectrum.
• 48:23
  You wanna be careful that your stories aren't only heroic stories.
• 48:28
  um Because, you know, I always use this example.
• 48:32
  When I was working with Starbucks or when we were working with Starbucks, one of their stories was that their barista literally donated a kidney to a customer.
• 48:42
  Great, but if that's your celebration story, well, I only have two kidneys, you know, so I can only do that maybe once in my life.
• 48:52
  Or I don't wanna do that for a stranger that I really don't know.
• 48:56
  I wanna save it for a loved one.
• 48:58
  So you wanna make sure they're low hanging fruit stories.
• 49:01
  Like I said, it's raining, give her an umbrella, walk her out to the car, brush off her snow.
• 49:08
  Low hanging fruit that anyone could do if they're paying attention and not just saving the baby in a burning building stories.
• 49:19
  While those are great,
• 49:20
  those opportunities are gonna be few and far in between, and they're gonna fall kind of on deaf ears because I'm not willing to go into a burning building for my customer, which is
• 49:31
  totally okay.
• 49:32
  But are you willing to go out in cold weather and start a car and brush off for snow?
• 49:37
  Well, if you're not willing to do that, then this is the wrong place for you.
• 49:40
  How do you create that kind of culture that gets employees to do these things and gets the clients to write about it and encouraging them to give the feedback without incentivizing
• 49:54
  something that's going to create bad behavior?
• 49:56
  Because we've all had the car dealership that give us a 10 out of 10.
• 50:01
  Right.
• 50:04
  Right.
• 50:04
  right.
• 50:05
  um I think it's just um everything we're saying.
• 50:13
  It's collect.
• 50:14
  First off, wherever you are in your journey as a leader, whether the company is, you know, two months old or 30 years old, there are stories that just happen organically.
• 50:27
  Start collecting.
• 50:28
  ask your employees, what's the best story you've ever done or heard that we've done here?
• 50:32
  And now you start with the database and then you're building it.
• 50:35
  Then you're advertising your customers exactly in your emails, point of sale, anything, you know.
• 50:42
  And people love to share good news.
• 50:44
  Sometimes they have to be coaxed.
• 50:46
  Like I just said, like I can't believe, and you made me think of it, this wasn't planned, that I failed to share a great story with Gina.
• 50:55
  because I hear so many about her that I'm like, yeah, that's Gina.
• 51:00
  So, right?
• 51:01
  I mean, so I had an opportunity to make Gina feel better, you know, or feel even better and, you know, demonstrate to everyone, you know, oh why can't they be like Gina?
• 51:13
  um So it's just collecting those stories.
• 51:16
  Clients love to share.
• 51:18
  So if you're reminding them, hey, is there any stories you want to share with us?
• 51:22
  We'd love to celebrate.
• 51:23
  They want to be part of that.
• 51:24
  That's why people like to testimonials.
• 51:28
  And something that someone told me about was when you give a testimonial, it's also doing something to your brain, the customer's brain, reconfirming why you want to stay with this
• 51:40
  brand.
• 51:40
  Well, I got to tell you, every time I've done business with...
• 51:43
  XYZ, they're always consistent, they always make me feel like, and then they're like, it's why you're in their brain that you're a brand they can't live without.
• 51:51
  So there's so many benefits of that.
• 51:54
  And then it's just then, you know, taking the best and celebrate.
• 51:57
  And then on the interview process, you share those and you say, hey, you know, give me a story when you went above and beyond and that they may have a great story or they, you
• 52:07
  know, their story may be, I smiled at a customer, right?
• 52:11
  That's okay, that's okay.
• 52:13
  I'm not saying that that's uh a deal breaker because of where they came from that might not be, know, they were encouraged to do anything more.
• 52:21
  All right, let me tell you some stories here that we've done.
• 52:25
  And again, not the Herculine stories.
• 52:27
  You could give one, but then, but just the simple, you know, umbrella, brush you off the snow, hearing something on phone that, um you know, you're going on a trip.
• 52:38
  Next week, you're my client and I send you the link to the best hiking trails, because I know you're a hiker or a runner or pickleball, whatever, or the best Italian restaurants,
• 52:49
  ah because it's the first time in that city.
• 52:52
  Those little things that take less than 30 seconds to do, but you can read an employee, they could say, uh wow, you expect your employees to do that?
• 53:05
  Yeah, right, and that's a filter.
• 53:07
  or they get energized, like, my God, your employees are allowed to do that.
• 53:12
  Yeah.
• 53:13
  You know, so it just, starts from the recruiting standpoint all the way to, you know, recognizing them, you know, weekly, yearly, annually, all that.
• 53:23
  Great.
• 53:23
  uh How do you feel about employees recognizing other employees?
• 53:30
  Because I know there are some that are unsung heroes, right?
• 53:33
  That...
• 53:36
  Yes.
• 53:36
  do things for people because they want to do things, but they want no recognition.
• 53:46
  so I used to complain about that.
• 53:48
  Like, Denise, you have to tell us when you do that so I can celebrate that story.
• 53:52
  But you didn't want the recognition.
• 53:53
  So you did this.
• 53:55
  And I wrote about it in one of my books is when you first got promoted into leadership back at John Roberts Spa.
• 54:03
  in early 80s, um you, that was a joke, early 80s, Denise.
• 54:09
  um I gave you, no, uh 100, right.
• 54:22
  I gave you, you know the story better, I gave you, I don't uh know, 100, caught you doing some write cards and said you gotta get rid of these in the next 30 days.
• 54:31
  which would been really hard.
• 54:32
  I'm sure it was way too ambitious of a goal.
• 54:35
  And you sent out 50 with a blank one stapled to it.
• 54:41
  And so you, you know, send out something to Chris Woj for something amazing that she did.
• 54:45
  And you caught her doing something right.
• 54:47
  And then the one stapled was blank and you told her she had to now do it, which was brilliant.
• 54:53
  Yeah.
• 54:54
  You know, you only needed to send out 50 to get a hundred.
• 54:58
  But yeah, we need people to think on each other.
• 55:01
  So having contests, whatever, to get more of those stories.
• 55:06
  Their stories are out there.
• 55:07
  ah But if we don't get them, solicit them, and then not do what I did when someone tells me how great my input, which all the time I hear, and now you got me thinking I'm probably
• 55:19
  not doing this hardly ever, is then taking that story.
• 55:23
  And it's always best in the customer's
• 55:26
  voice, whether they leave you a voicemail, text you or email you, whatever, you want it to come from them.
• 55:33
  Because I'll be like, like right now, like I'm not doing, I'm literally, after this podcast, gonna reach out to that person and ask her to send me an email about how great
• 55:41
  Gina is because she's gonna go into detail and you know, it's the telephone thing.
• 55:49
  You know, if I try to remember what she said, I'm not gonna do it any justice.
• 55:53
  John, if a leader remembers only one thing from this conversation today, what should it be?
• 55:57
  What's the simplest truth about incentives and service culture?
• 56:02
  have your uh incentives and recognition based on what you want and not profit.
• 56:14
  Profit's a byproduct of this stuff.
• 56:17
  Chick-fil-A, Amazon, Zappos, all the great companies.
• 56:24
  Profit to me is like oxygen.
• 56:26
  We don't wake up saying, all right, I got to...
• 56:29
  take a breath in, I gotta take breath out.
• 56:32
  If we stopped breathing, we'd cease to exist.
• 56:35
  But whatever the behaviors are that you want your employees oh to give, that should be what's recognized, talked about, and incentivized.
• 56:45
  And if you're listening to this, it's probably the experience.
• 56:49
  And the experience uh done right is the most uh profitable thing you could have.
• 56:56
  because you don't have to compete on price and you don't have to advertise as much because your customers are doing it for you.
• 57:08
  A, you're retaining the majority of your customers so we don't have to replace all the ones we're losing and they're doing the marketing for you.
• 57:17
  So your incentives uh and recognition should be...
• 57:22
  uh
• 57:24
  aligned with the experience you want delivered.
• 57:26
  Listeners, I hope you got a lot out of this important conversation.
• 57:30
  And I hope it forces you to look in the mirror.
• 57:32
  Most companies don't have a service problem because their employees don't care.
• 57:37
  They have a service problem because the system is not designed to reinforce behaviors they say matter most.
• 57:44
  If we reward speed, we get speed.
• 57:47
  If we reward shortcuts, we get shortcuts.
• 57:50
  I feel like it's a tongue twister.
• 57:54
  If we reward sales, we get sales.
• 57:58
  And if we reward survey scores without looking at the behaviors behind them, we get employees chasing the score instead of serving the customer.
• 58:07
  We recognize ownership, empathy, follow through, personalization, teamwork, problem prevention and service recovery.
• 58:16
  Those behaviors start to become the culture.
• 58:19
  Customers do not experience your mission statement.
• 58:22
  They experience what your company rewards, measures and coaches.
• 58:27
  So for everyone listening, here's your challenge.
• 58:30
  Look at what your company rewards.
• 58:32
  Who gets praised?
• 58:34
  Who gets promoted?
• 58:35
  What metrics dominate?
• 58:37
  your meetings, what behaviors are quietly tolerated, what stories get repeated, and then the hard question, are we incentivizing the experience we actually want to deliver?
• 58:50
  If you want to learn more about how the DiJulius Group helps organizations create world-class customer and employee experiences, visit thedijuliusgroup.com or schedule a
• 59:00
  call at tdg.click forward slash call.
• 59:05
  Thanks for listening to the customer service
• 59:07
  Revolution podcast.
• 59:08
  Thank you, John, for being with us today.
• 59:11
  Thank you, Denise.
• 59:12
  Thank you, revolutionaries.
• 59:13
  We'll see you next time.