Does it Pay to Be a Service Leader?

Most firms do not understand the financial impact of being a service leader. For many firms it is just too much work. Actually, it does not take a lot of money but, it does take a fierce and unwavering focus by the CEO and everyone in management.  If you want to drive a service culture, take some time and track the financial performance of service leaders.  Following are invaluable examples you should track.

Amazon grew 22% in 2013. An increase in revenue of $13 billion. Jeff Bezos the founder increased his net worth $13 billion last year. Very few firms are willing to copy Amazon’s strategy. Amazon opened on the World Wide Web in July 1995. The company is guided by three principles: customer obsession rather than competitor focus, passion for invention, and long-term thinking. Everything at Amazon is built around the customer experience, service recovery, speed, technology and price.  Part of their mission statement has always been “to focus relentlessly on their customers”.

I will give you an example of a vendor to Amazon. I bought a battery charger named Mophie through Amazon about 6 months ago. About 2 months ago it stopped working. I contacted Mophie to get a replacement. (My mistake was not just sending it back to Amazon and letting them handle it). I sent Mophie, at their request, 2-3 times the order information from Amazon.  Mophie customer service wanted me to read them the numbers on the charger. The charger is all black and impossible to read. They wanted me to copy it and fax to them. The fax of course was all black. They finally said I could send the charger to them and they would see if they would replace it. After over a month I got the replacement.  I paid about $70 for the charger. Their real cost of goods is probably not more than $15. The labor cost to handle my bad charger had to cost more than $100. It wasted their time and mine.

Amazon trusts its customers. The focus is on repeat business and word of mouth advertising. Mophie will never be an Amazon. They do not trust their customers and treat them as if they are all cheating. They have no service recovery and NO customer service. The product may be good but who wants to walk through hell to do business with a firm. In May 2013 I bought $1000 worth of stock in 9 service leaders. As on September 9, 2014 that investment in Amazon is now worth $10,955. It pays to be a service leader.

My research shows that a firm that builds their brand around the customer experience will increase its value by over 25% and will dramatically increase sales. Are you willing to be obsessed over the customer and become Customer Centric with everything you do?

Costco is another service leader. They just ended their fiscal year August 31, 2014. Net sales were $110.2 billion, an increase of seven percent from the $102.9 billion in fiscal year 2013. Costco ended its fiscal year 2014 with 663 warehouses in operation, including 468 in the United States and Puerto Rico, 88 in Canada, 33 in Mexico, 26 in the United Kingdom, 20 in Japan, 10 in Taiwan, six in Australia and one in Spain. They plan to open an additional nine new warehouses before the end of 1014.

I shop there a lot. I refer to them a couple of times in my book, Achieving Excellence Through Customer Service. Sam’s, which is owned by Wal-Mart, is a major competitor. The sales at Costco are double. At Sam’s they might have 14 check out lines and have staff at 3 of them. Returns are more difficult and the quality of the products is not as good.  Employees at Costco are paid significantly more than Sam’s employees. At Costco they care about their customers and employees, The $1000 I invested in May 2003 in Costco is now worth $4,401.  It pays to be a service leader.