Breaking the Cycle of Failure in Customer Service: A Strategic Approach for Department Stores

QUESTION

A classic Sloan Management Review article by Schlesinger and Heskett, titled, “Breaking the Cycle of Failure in Services” teaches us that customer satisfaction depends on a number of things, including employee satisfaction! They basically say, if you were smart to be selective in hiring, and you try to enrich your employees by training them well, and keep them happy by paying them well and giving them other perks, they’ll stay with your firm. Their staying is impor- tant because they know the company and the brand, and whenever customers have questions, the employees can answer them fully. Similarly, if the customer has a problem, the employees are better able to help the customer and fix the problem. The customer service is good, and the customers go away happy, which also makes the employees happy, etc. In contrast, imagine a “cycle of failure.” If you hire people without much screening, and train and pay them minimally, they’re not likely to give a hoot about your brand or customers. The customers will pick up on this attitude. The employees are also going to be less likely to be motivated to “go above and beyond the call” to make the customers happy, and, indeed, the customers are likely to leave being dissatisfied, or at least unimpressed. Here’s the tricky part. What if you are in such a cycle of fail- ure? How do you break it? Imagine you are the CMO for a chain of department stores whose reputation for service is, well, shy of Nordstrom’s. How do you intervene? Do you start paying your people more, hoping to make them happy? (But they were hired haphaz- ardly and may not be “worth” it.) Do you fire your current employees in order to start over? (Can you spell “lawsuit”?) Here is a simple version of the cycle. Where would you break in to fix it? Cycle of Employee-Customer Satisfaction Employee Satisfaction Employee Training Employee Selection Good Customer Service Customer Satisfaction Customer Loyalty

ANSWER

Breaking the Cycle of Failure in Customer Service: A Strategic Approach for Department Stores

Introduction

In today’s highly competitive business landscape, exceptional customer service is a critical differentiator for success. The classic Sloan Management Review article by Schlesinger and Heskett, titled “Breaking the Cycle of Failure in Services,” emphasizes the strong link between employee satisfaction and customer satisfaction. A cycle of failure, where low employee satisfaction leads to poor customer service and dissatisfied customers, can be detrimental to a company’s reputation and growth. In this essay, we will explore how a hypothetical Chief Marketing Officer (CMO) for a chain of department stores can intervene and break the cycle to improve customer service and overall performance.

Understanding the Cycle of Failure

The cycle of failure starts with haphazard employee selection, leading to a disengaged and unmotivated workforce. Inadequate employee training and minimal compensation further contribute to low employee satisfaction. Consequently, these dissatisfied employees are unlikely to deliver exceptional customer service, resulting in unhappy customers and decreased customer loyalty. This negative feedback loop perpetuates itself, hindering the growth and success of the department stores.

Breaking the Cycle: A Strategic Approach

 Employee Assessment and Development

To break the cycle of failure, the CMO must first assess the current workforce and identify areas for improvement. Implementing a comprehensive employee assessment process will help identify individuals with the potential for growth and excellence in customer service. Investing in employee development programs, both in technical skills and soft skills like communication and problem-solving, will empower employees to deliver outstanding service.

 Compensation and Recognition

While increasing employee salaries alone may not guarantee immediate success, fair compensation is essential for employee motivation and retention. The CMO should conduct market research to determine competitive pay rates and benefits within the industry. Additionally, implementing recognition programs and rewards for exceptional customer service can boost employee morale and encourage a positive work culture.

 Redefining Hiring Practices

Improving hiring practices is crucial to breaking the cycle of failure. The CMO should introduce a more selective and thorough hiring process, focusing on individuals who display a genuine interest in the company’s mission and values. Cultural fit and customer-oriented attitudes should be prioritized during interviews to ensure employees are aligned with the brand’s vision.

 Empowering Employees

Empowering employees to take ownership of customer interactions is key to providing exceptional service. Granting them the authority to resolve customer issues within certain guidelines can enhance the overall customer experience and strengthen employee-customer relationships.

Continuous Improvement

To sustain the positive changes, the CMO must establish a culture of continuous improvement. Regularly seeking feedback from employees and customers can help identify areas of improvement and address any lingering issues in the service delivery process.

Conclusion

Breaking the cycle of failure in customer service is a challenging but essential task for a department store chain’s CMO. By strategically intervening at various points in the cycle, such as employee selection, training, and compensation, the CMO can create a positive feedback loop that leads to improved employee satisfaction, outstanding customer service, and enhanced customer loyalty. Emphasizing a customer-centric approach and nurturing a culture of excellence will help the department store chain transform its reputation and achieve long-term success in a highly competitive market.