Customer Servicing by Chuck Reaves

Customer Servicing

Chuck Reaves




  • Your customers will compare your level of customer service with that of every vendor they deal with, both personally and professionally. This means that if your customer shops at Nordstrom’s, that is the standard of service to which you will be accountable.


  • Customer service is a department somewhere in your company, whereas customer
  • servicing is a corporate mindset. How can you go a little bit further with your customer service? How can you differentiate yourself with customer service? The window of opportunity for differentiating yourself with customer service is closing because everyone is jumping on this bandwagon.


  • Think about the most significant customer service event (either positive or negative) that has occurred recently where you were the customer.


  • When your customers get together (at trade shows, meetings, etc.) and the topic of customer service is raised, do they talk about your company? If so, is it positive or negative?


In this country, we play a game called “that’s nothing.” Inevitably, if people are gathered together, someone is bound to tell a story about an event in his or her life and when that person is finished, someone else will say, “That’s nothing.. .let me tell you about what happened to me!” Can you set the standard in your industry (e.g., Nordstrom or Lexus)?


  • Too often, customer service is thought of as an expense item. We need to start looking at it as a profit center. It may be that expanding your customer service will actually contribute more to the bottom line than hiring a new marketing director, etc. Maybe you can do some things with customer service that would stimulate sales, not just retain clients.


Maybe it’s time you took a fresh look at your customers and the way they see you. When Reaves was asked to develop a customer service program, he went out and talked to his customers’ customers to get their points of view instead of looking at existing programs and why they did or did not work.




The best book Reaves has seen on the topic of customer service is called Moments of Truth by Jan Carlzon, president of SAS Airlines. Carlzon went to work for SAS’ tour division fresh out of college. He went around asking people what the net-net profit should be for his division, but because of the way he was wording the question, they were telling him gross profit. He figured that in order to make “x” amount of net-net profit, they had to price the product accordingly.


As soon as he did that, his price was higher than everyone else’s and people assumed that the SAS package was better. Volume remained almost constant, but the profits went through the roof.


SAS then gave Carlzon the commuter airlines division, where he promptly went over and told the pilots how to fly, the flight attendants how to be flight attendants, and the ticket agents how to sell tickets. Consequently, the airline did not do particularly well. So, he changed his strategy and went to the pilots and told them to be the best pilots they could be, the same with the flight attendants and ticket agents, and the airline took off.


Meanwhile, the big airline was in trouble. They had lost $10 million in one year. They asked Carlzon to take over the airline and fix it, but he declined. One of the board members figured out his buying price and told him that if he didn’t take over and fix the airline, all of the people were going to lose their jobs. After studying the airlines for 30 days, he went to the board with his recommendation to fix the airline with customer service. This, he felt, was the only way to differentiate them from the rest of the competition. Carlzon sat down with his people and asked them two questions:


  1. What business are we in? Most answered that they were in the airline business. This was false. After looking closer, they decided that they were in the business of getting business travelers to their appointments on time. This automatically answered question 2 for him —


  1. Who is our customer? The business traveler.


Carlzon convinced the board that, by concentrating on customer service, they would lose another $10 million the next year, break even in the second year, and make $10 million in the third year.


Carlzon used empowerment techniques to get his people to start thinking. Customer service and gave them parameters within which they could operate:


  • Safety: If it compromises safety, you can’t do it.


  • On-time departure and arrival: If it compromises on-time departure or arrival, you can’t do it.


  • Anything else the customers ask for, give it to them.

If this last prospect scares you, consider the statistics which show that, in business-to-business situations, only .3% of your customers are out to rip you off. By putting up safeguards and regulations, you penalize the remaining 99.7% of your customers.


Carlzon turned his people loose and every time he heard of an episode of outstanding customer service, he played it up. He called his book Moments of Truth because he figured that the typical traveler has seven encounters with an SAS employee on a flight. The employee had seven opportunities to try to make an impression on an individual and to try to convince him to fly SAS again. Following are three examples of the kind of service Carlzon was looking for:


  1. An SAS flight was stuck at a gate waiting to get clearance and went through the dinner hour. They had no food on the flight so the flight attendant called the purser’s office to request some food. The purser had not gotten the customer service message yet and informed the attendant that she was not authorized to make this request. At the next gate, there was~ a Lufthansa airplane which SAS happened to cater for. The attendant went over to that plane and had the f1ightattendant~order the same food. She paid for it out of the petty cash off the airplane and delivered it to the waiting passengers.


  1. A man went to the SAS ticket counter expecting a big hassle because he had left his ticket at his hotel. Instead, the ticket agent asked for the name of the hotel he had stayed in, issued another ticket, and sent him to the gate. When he arrived atthe gate, the agent handed him his original ticket and a book he had left at the hotel. They had simply sent a car to his hotel and picked up his misplaced ticket. The cost to SAS was minimal; yet how many times do you think that man will repeat his story?


  1. SAS employees came up with the idea to sell empty seats by issuing student coupons in the summer. The coupons would be $20 each, sold in books on lOO% standby. In this way, they were filling up all of the seats and Carlzon was on his way to reaching $10 million in his third year.


Toward the end of Carlzon’s third year with SAS, the data processing person came to him requesting a new computer because the business traveler: expects outstanding service and everyone else had the new computer. The computer cost SAS $l5.miuion,~therefore, Carlzon did not make the $10 million he had predicted.. Instead,, using nothing. but customer service, flying fewer routes, and using less equipment, they made $80 million.   Maybe it’s time we started seeing customer service as a profit center, not as an expense center.. Maybe if we start focusing on what the customer really wants, then we can start delivering a higher and higher level of customer service.




A TEC member in Atlanta runs a chain of furniture, appliance, and electronics stores. Circuit City came to town. Circuit City’s retail prices were less than what the TEC member was paying from the distributor. He realized he could no longer compete on price, so he called in his people and gave them this assignment:


Fill in the blank: “We will deliver                                              customer service.”


They came back with the word “outrageous.” Then they began talking about how they would do this.


  • Everyone in town had next-day delivery service, so they went to same-day delivery, seven days a week.
  • The salespeople wanted access to gift certificates so that if there was a problem, they could keep customers happy. After a year, only one certificate had been issued.
  • The delivery drivers came to the CEO requesting shirts because the ones they had were white and didn’t stay that way for long as they were loading and unloading products.
  • The drivers also requested Dustbusters and belt clips to hang them on. In this way, after delivering a sofa, etc., they would walk around it with a Dustbuster. There was not much of a mess to begin with, but this spelled “outrageous” customer service to the customer.




Reaves worked with the National Heating and Air Conditioning wholesalers. The typical contractor in this business does not enjoy selling; he likes installing furnaces and wrapping ducts. Because housing starts were down and everybody was cutting prices, when prices got down to cost and kept going, they decided they needed to do something different. Reaves suggested to the wholesalers that when they got to the house for the installation, they give the contractor the following: a trash bag, a yard sign, 10 doorknob hangers, two magnets, and a pair of surgical booties.

  • The trash bag is for the workers to clean up after themselves. Once they have done so, they take the bag to the residents and ask them what to do with it. In this way, you let the customers know you are providing them with excellent customer service; if they don’t know, it does no good.
  • The yard sign is for advertising purposes.
  • The doorknob hangers were for the neighbors, letting them know that the company is doing work at xxx address, and if the contractor inadvertently parks in their way, come tell him and he’ll move immediately. Also included was a note that read, “By the way, while I’m in the neighborhood, if you are interested in any of these services, please check the box and hang it on the mirror of my truck and I’ll be by to see you.”
  • One of the magnets is for the refrigerator and one is for the unit itself. While the refrigerator magnet may not last long, the one on the unit will probably still be around when it comes time for servicing.
  • The surgical booties are to allay the customer’s fears that contractors are tracking dirt in the house. Even if a contractor has brand new boots on with no sign of dirt, there is a perception that he is tracking dirt all over the house. Wearing these booties shows the customer the contractor is dedicated to excellent customer service.





When the Japanese started selling automobiles here, it didn’t bother the American automobile industry too much. But, when they started encroaching on the market with the big margin products like the Lexus and the Infinity, they made the American automobile companies very nervous, especially when the reports started coming out, not only on the quality of the machine, but on the customer service.


Not long after Lexus entered the market, they recalled all of the l500~18O0 cars that had been sold, prompting one of the American auto makers to issue a press release that said, in effect, “See, they are no better than we are.”


It turned out that two Lexus owners had experienced problems. One had a brake light bulb bum out; another one had a brake cable that was sticking a little. So the service managers made appointments with all of the Lexus owners at their places of business. They brought them loaners — which were Lexus — took their cars in to check them out, washed them, topped off the gas, brought them back, apologized, and followed up with a letter. What could have been a marketing disaster turned into a coup for Lexus.


Reaves recently bought a car from Lexus. Not only did the salesman take the time to show him how to operate every control in the car, but for the first 75,000 miles, all of the normal maintenance is taken care of at no cost. At the 1,000 mile mark, his wife called, the service. department in the morning and was able to take the car in the same thy, where it took just 19 minutes (in a clean waiting room with fresh coffee and recent magazines) for the service people to tune it up, wash it, fill the gas tank, and thank her for bringing it in.



Fill in the blank: “Whenever one of our customers is dissatisfied, _____ made a mistake.”


The answer is: “I.” Take personal ownership of every incident of customer dissatisfaction.


  • It takes fourteen to fifteen positive incidents to overcome one negative. This doesn’t mean fourteen to fifteen more transactions. You can get multiple positive incidents on a single call. Some examples are answering the phone on the second ring, not fighting a customer on a complaint but, instead, taking ownership, etc.
  • For every dollar we spend to retain an account, it takes six dollars to close a new one. No wonder it is more profitable to retain customers. If we resolve customers’ problems to their satisfaction, they will continue to buy from us 75% of the.time. That figure rises to 96% if we resolve the problem immediately, based on the customer’s definition of “immediately.” There is tremendous value in responding quickly to our customers’ requests.




Reaves has a friend who recently purchased a Chrysler New Yorker. In two weeks, the battery went dead, so he took it in to the dealer. Instead of assuming responsibility, the dealer blamed the problem on the manufacturer, but replaced it free of charge. Another two weeks passed, and the battery died again. This time, the dealer again blamed the manufacturer and replaced it. The third time the battery went dead, Reaves’ friend, irate, told the dealer there must be something wrong with the car and he wanted them to find it. They replied that they knew what was wrong with it, but didn’t know how to tell him. It was. their contention that he had been leaving his lights on at night and draining the battery. Fuming, he told them that was ridiculous and they’d better find out what was wrong with the car. Three days later, the service manager called to inform him that they had found the problem — when the trunk was closed, the light didn’t turn off and it was draining the battery.


Reaves’ friend picked up his car and proceeded to the airport. He returned late one night, opened the trunk to put his bags in; and there was no light. The dealership had “fixed” his trunk light by removing it.


He has three single-spaced pages of problems he has had with the car.~ He has received two letters back from Chrysler. The first apologized for any inconvenience. The second asked him to stop bothering them with all of his petty complaints. Maybe the problem is at the top.




The upper triangle (referring to the handout) represents satisfied customers; the bottom half represents the dissatisfied. About half of your customers are dissatisfied. Just because customers are buying from you does not mean they are satisfied customers.


Customer service begins internally. If you call your people together and tell them they are the best employees ‘you could ask for and praise them for their, good work, they will treat your external customer much differently than if you told them they were the worst excuse for human beings. You must set the scene at the top.


It is not enough to define your customers as satisfied or dissatisfied.


  • “Endorsers” represent about 5% of the typical customer base. This is the unpaid salesperson, the customer who goes out and tells other people about your company. Typically, the new customer comes in as an endorser, which you should capitalize on.


  • “Buyers” represent about 15% of your customer base. A buyer will continue to buy from you, often exclusively, but no longer aggressively endorses your company. In most cases this is because of a negative incident. Maybe an invoice was incorrect or a shipment wasn’t complete. If there was only one negative., incident that moved your customer from endorser to buyer, it will take fourteen to fifteen positive incidents to get him or her back as an endorser.


  • “Satisfied Mutes” get their name from the fact that they don’t talk to you and you don’t talk to them. This group comprises 30% of your customer base. These people are still satisfied, but they are not really talking to you. If you ask a customer how they are doing and they answer, “Fine,” they are a satisfied mute.


  • “Dissatisfied Mutes” comprise another 30% of your customer base. This customer has moved from the ranks of the satisfied to the dissatisfied and you didn’t know it. The reason you didn’t know it is because no one was talking. At this. stage, it will take sixty positive incidents to make this person an “endorser” again.


  • “Grumblers” represent another 15% of your customer base. These are the customers for whom you can do nothing right. No matter what happens, they complain, about it, because they have had too many negative incidents. They have become martyrs.


“Complainers” comprise 5% of your customer base.~ The difference between a grumbler. and a complainer is whom they talk to. (3rumblers constantly give you ‘grief. Complainers go out and tell everyone how badly they’ve been treated by your company.


You need your service people talking to your satisfied customers for two reasons: (1) If they are moving down from endorser to buyer, the service person needs to start moving them up, and, (2) your people need to hear some good stories once in awhile. Your salespeople need to start spending some time with the dissatisfied customers as well.


Suppose a company has 1,000 customers and they have 1,000 customer service man-hours. They can spend one hour with each customer. We axe allocating our time disproportionately. Most of our time is spent with the endorsers and the complainers, while those customers in the middle represent budding problems being ignored. Try a newsletter or an “800” number with recorded tips. The money spent is also spent disproportionately with mugs, etc., for the endorsers and with redoing invoices, orders, etc., with the complainers.


  • If you take the 5% endorsers and the 15% buyers, that’s almost 80% of your revenue. Down toward the bottom, those customers aren’t buying anymore and the conclusion many CEOs come to is to let them go.


  • The people at the top are buying from you because they want to the people at the bottom are buying because they need to or have to. The buying motivation is completely different, as is the quantity. People who buy on want will buy as much as they can possibly buy, and people who buy on need buy immediately.


  • The emotion at the top of the pyramid is love; at the bottom, it’s hate. Salespeople need
  • the customer to give them something to sell to. If a customer tells you, “You’re doing great, the orders are always on time, etc.,” he is telling you he values timeliness and is satisfied with your service. If a customer tells you, “You are doing lousy, your deliveries are always late, etc.,” he is still giving you information you need. However, if a customer says you are doing “fine,” you have a problem.






At the top of your triangle (referring to handout), write the term “potential customer.” In. the universe, there are more potential customers than you have identified. Are you missing an entire industry? Until you ask the question, you won’t find it. When you assume you are missing an industry that is when you find one.


Former customers typically come in as endorsers and leave as complainers. :You must take some of the responsibility for this. At the bottom of your triangle, draw another triangle — this is for your competitor, which is where your former customers are going to go in as endorsers. Now they have two stories to tell: one negative about your company, and one very, positive about the new company they are working with — your competitor. This . is why you cannot afford to lose a single customer. To replace that customer you will have to spend six times as much as it would have cost to keep him.

If customers say to you, “I will never do business with you again,” what they are really saying is that you have to earn their business back. Given enough time and energy, you can do that. What you have to decide is whether it is worth it, given the amount of resources needed to keep that customer.






How do we respond to every contact with every customer? With SERVICE:


  • Set the tone: On every contact with every customer, set the tone. Most buyers are better at buying than sales people are at selling, especially when you are dealing with a professional buyer. When you sit down with a customer, you are repositioning yourself. The customer already has an idea or an attitude about you before you even meet.


The tone that you set with irate customers is to determine their expectations. Let them know that your goal is to resolve whatever problems there are and to make them happy and ask them how you can do that. Then sit down and talk through the issue.


For example, there is a department store trying to compete with Nordstrom’s that has. their customer service people answer the phone with the company name, their name, and the question, “What have we done to ruin your day?” Imagine you have just had a terrible experience in their store, you call up ready to explode, and you get a greeting like that! This serves to diffuse the situation and lets you know they are willing to help.


  • Expectations: Determine the customer’s expectations. Typically, you have to ask this question three limes. They start out unrealistic, then get closer to what you can realistically do to rectify the situation. The more unrealistic a customer’s demands are, the further down that customer is on the pyramid because this is probably not his or her first negative experience with you. You need to find out where the negotiable areas are.


  • Reality: Ask the customers what their perceptions of reality are. Have them quantify the problems in their terms.


  • Variance: There is sometimes a gap between the reality of what you can do and what the customer may want.


Identify an action plan (benchmarks): This is the area where you under promise and over-deliver. If you tell customers you are going to respond to them within an hour and you call them back in 30 minutes, they will be impressed and satisfied.

  • Categorize the customer: At a long distance company Reaves worked with, he trained them on the DISC personality styles. On their screen they had a box that showed their customers’ personality styles as well as whether they were endorsers, satisfied mutes, etc. The idea was, on every contact with every customer, to move them up a notch in their customer service levels. If they were complainers, when the conversation was over, the goal was to make them grumblers.


Your goal is to continually attempt to move your customers back up to endorsers. You

do this by asking them to demonstrate that level of behavior. For example, “Mr.

Customer, if we rectify this to your satisfaction, would you give us another chance?

Would you place another order with us so we can show you how good we really are?”


  • Execute: The worst thing that can happen now is to come up short. If you do, you have more and more negative incidents which bury the positive ones.






It can be difficult to get people to change. The following acronym offers some ways we can cause our people to change:


  • Cause and effect: If you do this, then that will happen. There is a direct correlation. Is what you are doing causing you to get the results that you want? Most people spend their lives complaining about the effects instead of looking at the causes.


A lot of time is wasted in your office due to lack of planning and discipline. Teach your people to “hit the ground running” and to plan their workloads. Help your people set goals.


  • habits: We are all creatures of habit.


EXERCISE:      List your top three predominant habits.


You have thousands of habits. You need to look at the ones you have fallen into that you need to take control of. For example, if you teach someone how to drive, you’ll discover all of the bad habits you’ve picked up. The way you get around accumulating bad habits is to change something every thy. Tell your people to change one thing about their jobs every thy even if it’s a little thing like moving pictures around on their desks.


  • Attitude: Have an attitude about change — that change is good. If your people aren’t saying “here we go again,” you’re not changing often enough. Change brings opportunity and is inevitable. Therefore, opportunity is inevitable.
  • Non-traditional: Allow your people to do some things different than you have done them ~before. Like SAS, set boundaries for your people (i.e., safe and on time). For example, it has to be ethical, legal, and profitable. Your people will come up with ideas you wouldn’t think of in 100 years, and they will be cheaper than what you’d come up with because you think on a different level than your people.


For example, how many of you went out to dinner recently on the spur of the moment and spent $25 or $30 per person without thinking anything of it? For over 95% of the population, that is an anniversary dinner that they have saved up for all year long. You do it and don’t even think about it. You’ll come up with a $10,000 solution, while they’ll come up with a $100 solution.


  • Goals: Have clearly defined goals.


  1. These goals must be written.


  1. They must be quantified. For example, you may say your goal is happier customers, but how do you measure that? You know a goal is quantified if, and only if, it is measurable.


  1. Written goals must be dated. When will you reach these goals?


When you go through this process, the goals happen sooner and better. You need to get your people in the habit of setting and attaining goals.


  • Expect success: If you do not expect success, you will not attain it.


We do not know what criteria others use to evaluate us because the criteria is always changing. The way to find out is to ask. People will live up or down to our expectations.


Systems do not respond to change as quickly as people do. Review your systems and find out if the system accommodates the input of the customer.


For example, Reaves put up a mailbox in front of his house. He came home the next day to a note on his door that said, if he wanted his mail, to call the post office. The post office explained that he had put the mailbox up on the wrong side of his driveway and that it was difficult to get to. Reaves explained that if he switched it to the other side of the driveway, it would be on his neighbor’s property. The post office insisted that it would be easier for Reaves to switch it to the other side. The question is, easier for whom? Certainly not the customer.


Can you be one percent better at 1000 things? You do not need to revolutionize the company. Making subtle improvements in the way your company does things can make a big difference.



Following are three different ways of running your company based on sports analogies:


  • Football: This represents the traditional mindset — it is the concept that we were using during the industrial revolution. Every individual on the team is responsible when his running back is tackled short of the scrimmage line, from the individual members to the competitors, to the field (or market conditions, etc.). Since everyone is responsible, therefore, no one is responsible — no one is held accountable.


In the assembly line mentality, that is what we have. If you don’t do your job right, who cares, no one will know. The same is true if you do well; you don’t get any credit.


The same people who are responsible for the loss of yardage, are responsible for a touchdown; however, it is the receiver or the running back who gets all of the credit. In a traditional company, if you do your job right, there is no recognition, if you do your job wrong there is no punishment, so people continue with avenge performance.


  • Tennis: This sport represents head-to-head competition. To win, you have to beat your opponent. Do you have to be better than Jimmy Conners to win at tennis? Only if you are playing Jimmy Conners. In any situation, with any customers you have to outsell and out-service whomever their favorite vendors are. You either figure out their game and play it better than them, or you change the game to your dynamics and the competition loses.


  • Golf: This sport represents excellence. (i.e., TQM). The next. acronym to become popular, Reaves hopes, is CSQ or Common Sense Quality. When does it stop making sense to continually improve the quality? Is there a point where it just doesn’t make any difference anymore? In golf, you want to be as good as possible, comparing yourself not to others, but to your previous game. What can you do that is better? This is how you want your people to work, with a detail attitude. It is the little things that eat you alive.




Dramatize quality. Every time someone does something good, play it to the hilt. Give people accolades for doing a good job, including verbal praise, a memo, or certificate.


Sometime in the last six or eight weeks, you walked past some of your employees and gave them compliments on something they did. As soon as it came out of your mouth, you probably forgot

  1. However, your employees probably sat down at Thanksgiving dinner and relayed your compliments to everyone. Recognition is very important to your employees.

People want and need to feel meaning and connection to their work. If you can say one thing to your employees this week, say this: “If your job wasn’t important, no one would pay you to do it.” When they understand their importance, quality and productivity go up.


If you had to choose, would you choose to have employees who are happy or proud? People who are proud of what they do deliver the best customer service.




Within 30 days of closing the next major contract, call the principle decision maker and ask him or her why they bought from you?


The answer may surprise you (e.g., your truck was clean, the driven was-courteous, etc.). This is why you concentrate on the details; it is costing you business if you don’t.


The first time Reaves closed a major utility he found out that the contract had come down to his company and another’s and the difference had been that his glasses were clean. The two companies were very comparable so they went with Reaves because they figured if he attended to details like keeping his glasses clean,, he would take care of them. You do not know what criteria people are using to evaluate you.

CUSTOMER SERVICE QUESTIONNAIRE                                     /

Rate your company on a scale of 1-10:

  1. How well do you deliver what you promise?
  2. How often do you do things right the first time?
  3. How quickly do you respond to customer requests?
  4. How accessible are you to your clients?
  5. How well do you understand your customers’ problems?
  6. How well do you understand your customers’ expectations?
  7. How well do you listen?
  8. How much confidence do your customers have in you?
  9. What percentage of your customers are endorsers? (10% = 1, 100% = 10)


  1. How well do you adapt to the special needs of your customers?


Add up your score. Sit down with people from different departments inside your organization and have them fill out this questionnaire. Where their answers deviate three or more points from yours, you need to talk.


For example, if you gave an 8 on delivering what you promised and someone on the receiving dock (who sees all the returns) gave a 2, you’re not doing too well and need to discuss it further.


Once you get within two points throughout the company, send the same questionnaire to external customers. This will give you insight into how the customer sees you. and how well you are really doing.


To conclude the presentation, Reaves conducts a Q & A session of specific member issues.



Customer Servicing by Chuck Reaves

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