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John Tschohl Seminars

Two Service Leaders Who Own and Dominate Their Markets Through a Service Strategy

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Very few companies understand the power of the Service Strategy. It is the most powerful tool for rapid growth. market dominance and record sales and profits. In the US most firms believe they deliver awesome service and almost no one can name even 5 service leaders. Many spend a fortune on their stupid customer satisfaction surveys that few people complete and rarely does the feedback make an impact. The surveys make the HR department and CEO feel good.

In this post, we are going to cover two firms that have provided Relentless Customer Service.

1. Amazon’s Relentless Customer Service

Amazon is a firm with 1.6 million employees and Northeast Delta Dental with 189 employees. Both had incredible results in 2021. Both are Customer-Centric and Service Leaders. Amazon started July 5, 1994 and Tom Raffio took over Northeast Delta Dental in June 26, 1995. Both have a CEO that understands the power of delivering great customer service. Different industries and different markets.

On February 3 Amazon released its Fourth Quarter and Year-End results for 2021. Its stock increased 14% which was a $375 increase per share. Sales increased by $83.7 billion. A 22% increase with total sales of $469.8 billion. Net income increased to $33.4 billion. The average starting wage for front-line employees is more than $18 an hour in the U.S. which includes health, vision, and dental insurance. AWS sales increased by $16,832 billion to $62,202 billion or 13% of Amazon sales.

When Amazon started Jeff Bezos the founder wanted to become the earth’s most customer-centric company. In my Proven Process for Driving a Service Culture, they are a “10” in all nine areas. They have mastered all nine:

  1. Service Strategy: no one has a better grasp of the power of being customer-centric.
  2. Reducing Friction: It is world-class at making it easy to buy and reducing friction. I stole the words from Jeff Bozos.
  3. Empowered: The employees are all empowered. I have never had anyone tell me NO, which is the first word most companies teach their employees.
  4. Speed: Amazon is better at speed than any other company in the world. Frankly, Amazon invented speed.
  5. Training: They spend hundreds of millions of dollars training their staff. They are willing to invest in their total workforce.
  6. Remember Your Name: When you call Amazon they remember your name. Only Apple and Amazon seem to understand the power of using your name.
  7. Service Recovery: When they screw up they are the best at service recovery. They always take responsibility for someone else’s mistakes and their own. They trust the customer.
  8. Reducing Costs: They are the best at reducing costs and passing the savings on to the customer. Sam Walton the founder of Walmart built its business around customer service and price. Under CEO, Lee Scott, Walmart gave up on customer service and today only focuses on price. In May 2003 I invested $1000 in Amazon and Walmart. As of February 4, my investment in Amazon is worth $100,889 a 9.944% gain and in Walmart $3,648 a 123% gain. Walmart lots if focus on customer service. Price alone will not improve your brand or stock value.
  9. Measures Results: At Amazon, the numbers above speak for themselves. Most CEO’s are not Relentless. They focus on being customer-driven for a few months some even for a few years. Walmart focused on customer service for 36 years until 2000 when Lee Scott became CEO. You have to remain Relentless for your lifetime.

Many readers say this is cool but I am not as big and powerful as Amazon. Keep in mind Jeff Bezos started with 2 employees.

2. Northeast Delta Dental’s Relentless Customer Service

Now let’s look at another man and organization with a Relentless vision and strategy, Tom Raffio, CEO of Northeast Delta Dental. This is a nonprofit dental insurance organization and is limited to only three small states, Vermont, New Hampshire, and Maine. Northeast Delta Dental has a 70% market share in New Hampshire with a population of 1.38 million, 60% market share in Vermont with a population of 623,251, and 50% market share in Maine with a population of 1,362,359

Tom started in April 1990 with a Service Guarantee and Delta Dental of Massachusetts. In 1995 Raffio was selected to become CEO of Northeast Delta Dental and brought the Service Guarantee (GOSE) with him. They got together with their customers which are companies in their three states to identify what are the seven most critical things they have to deliver on for their customers and then put a dollar figure on each one that they would pay to their customers if they ever failed to deliver. NOT an I’m sorry but MONEY.

Number 5 is ID cards. Each individual will be mailed 2 pairs within 15 calendar days or they will pay the group/organization $25 per person. If a firm had 100 employees and the cards were mailed on the 16th day they would have to pay $2,500. Every February I publish their results. You can see them here. In 2021 they had 24 requests vs 26 in 2020. The total payment in 2021 was $10,843.58 vs $4,016.81 in 2020. The detailed chart by month and each of the eight items is here.

Total revenue in 2021 was $422,985,566, Net income was $15,801,352, The Reserve/Surplus is $173,706,866. (In 2020 Northeast Delta Dental invested $27 million or about 8% of their annual revenue in stakeholder relief.) They have 517,429 subscribers/customers. They cover 963,674 individuals. While Amazon has 1.6 million employees Northeast Delta Dental has 189 employees. In 2021 they spent $744 per full-time employee on training which is .89% of their payroll. Tom Raffio wrote a book, Prepare for Crisis Plan to Thrive. The inside story of how one company did it right during the COVID crisis. You can buy it on Amazon here.