The best-selling author and world-renowned consultant will redefine ‘customer experience’ at the 12th Annual IHRSA European Congress
CBI: To begin, let’s talk about product differentiation—something that many clubs have to do in their markets in order to survive and thrive, particularly today. You helped British Airways differentiate itself from its competitors during its well-publicized turnaround. How?
Shaun Smith: One headline at the time said that BA stood for “bloody awful.” It takes a whole lot of money and time to reposition an airline, because of all the capital costs and complex infrastructure involved. So we started by focusing on the one thing that was easiest to influence quickly, and that customers notice first—and that was our people. So, initially, we focused on trying to improve the service.
We took a look at the complete life cycle of our employees—how we recruited, trained, rewarded, and promoted them. Our goal was to make sure that the way we treated our people was completely aligned with the way we wanted them to treat our customers. Within 18 months, we’d won an award for having the best cabin crew. The next headline said that BA stood for “bloody awesome.”
CBI: What parallels do you see to the club business?
SS: For one, they both have perishable products. Once an airplane takes off, and it’s half empty, you’re never going to sell those seats again. Similarly, with a health club, if you’ve got a half-empty club in the morning, you’re never going to sell that space again.
Secondly, both industries are fragmented and highly competitive, so you have a number of players in the market, each competing for very similar customers with very similar products.
Finally, both really depend on a “feel good” factor in order to prosper. With the exception of essential business travel, nobody has to fly. And nobody has to go to a club in order to exercise. So both of them are discretionary purchases, and getting people to voluntarily give their money to a firm in these sectors is based on having them feel good about the brand.
CBI: There’s a great deal of talk about “customer service” and the “customer experience.” Is there really a difference between the two? If so, please explain.
SS: A lot of people think that “customer experience” is just some consultant jargon, but it’s much more than that. Traditionally, customer service has to do with the interaction between employees and customers, but business has become much more complex. Today, we can interact with prospects and clients through a variety of channels, and the processes that we use to do so are very different, too. Amazon.com, for example, offers a very high-quality experience, but I’ll make a small bet with you that you’ve never ever spoken to an Amazon employee. People interact with Amazon through its Website, through its logistics, and through the packaging. All of these things create an “experience” with Amazon—it isn’t about dealing with a person.
CBI: In your book, See, Feel,
Think, Do—The Power of Instinct in Business, you claim that “short-term thinking, analysts, and research have replaced vision, leadership, and passion in many large businesses today.” Given that such a large part of the economy is now data-driven and knowledge-based, how do you achieve a balance between those two extremes?
SS: Look at the ways that organizations reduce their costs. One way is to be data-driven and steadily increase the efficiency of your processes and products, making you less reliant on that expensive component called people. On many low-cost airlines, you frequently don’t receive food or beverages on board, which reduces the amount of cleaning required, which, in turn, reduces the amount of labor. As a result, those companies operate at a much lower staff-to-customer ratio, which reduces overhead.
However, if you lower costs in those sorts of ways, you need to increase the quality of the interaction when some- body does, in fact, deal with one of your employees. And that’s where the passion comes in. When customers interact with people, you have to make sure it’s done very well indeed because, otherwise, you just look cheap. When you take away service completely, without compensating, it can lead to a low level of affection for the brand ... Allofwhichistosaythatyoucanbea budget operator in the fitness industry, but, to do so, you need great processes.
CBI: Tell us a little bit more.
SS: You can also take a much more intuitive, passionate, and aspirational approach to building a brand—one in which decisions are made because they’re consistent with your vision for the brand, not because they cost less, or because customer research dictates a particular course of action. Apple is a very good example of this. Steve Jobs often made decisions that flew in the face of customer research and short- term profit because it simply “was the right thing for the brand.”
In a recession, the market becomes polarized. Low-cost operators do very well, and so, too, do the high-quality brands. In the fitness industry, my bet is that the budget operators will thrive because of the low price, and that the very best operators will also thrive because they’ll be offering a great experience for their customers. The dangerous place to be is in the middle.
CBI: In your book Bold: How to Be Brave in Business and Win, you say, “Now more than ever before, businesses need to be bold: to defy conventional wisdom, to walk against the crowd, to try out new ways of doing things in the full glare of social media.” How do you use social media boldly, without being reckless?
SS: many organizations make the mistake of not having a social-media strategy. They feel as though they need to be part of the conversation, so they get a Facebook page, and then they try to micromanage everything. That’s very difficult work. Social media can produce a deluge of information—it’s like drinking from a fire hose—so you have to have a strategy for dealing with it. rather than micromanaging, you need to facilitate the conversation. There are three steps to doing that.
First, you’ve got to be “in the flow” of the conversation and listening to what people are saying. research shows that 36% of customers have used social media to comment on a brand, and that, in 50% of those cases, the brands didn’t respond.
Second, you have to be “in the know.” Your people should monitor what’s being said about your brand, have the ability to do something about it, and, then, respond appropriately. For exam- ple, SalesForce.com has an internal network that enables employees to quickly obtain information about issues raised by customers so they can respond promptly.
Finally, you have to be willing to “co-create” with your customers to make them a part of your brand. That’s where you’re facilitating the conversation. You’re allowing them to talk with one another, and, together, they’re actually coming up with new ideas, approaches, and products—which is a very powerful process.
CBI: In Bold, you also discuss the notion of “purpose beyond profit.” What does that mean for clubs, and how should it inform the way they think about customers’ needs?
SS: If you look at the brands that are really excelling, they’re ones that define themselves by, and are committed to, a purpose that’s tied to the value they create for customers and society. That purpose is what makes them profitable; it isn’t a single-minded focus on profit, which is a poor motive for being in business.
O2, in the U.K., for example, is a market leader in the mobile phone space, and its stated purpose is to help customers connect to the things in life that matter to them. That—as opposed to making money or selling a lot of phones—has led them to do some very bold things. Probably the boldest thing they’ve done was take a building called the millennium Dome, a huge space that was lying idle, and clean it up, refurbish it, and rename it the O2 Arena. It’s now the most successful music venue in the world.
If you’re an O2 customer, the company will text you to let you know when rEm, the rolling Stones, or some other big-name band is in town. As a valued customer, you’ll enjoy early access to tickets, and, if you’re a really valued customer, you might receive free tickets. Bold moves such as these have helped make O2 a market leader.
CBI: What advice would you give to clubs that want to embark on a new customer-experience initiative?
SS: First, be really clear about why you’re doing it. If there’s any ambiva- lence, don’t pursue it. Secondly, get good advice. If you go to my Website, smithcoconsultancy.com, you’ll find some articles and self-assessment tools that can help. Finally, treat the undertaking as a journey and not a destination—it’s not a quick fix, but, rather, something that you’re going to have to keep working at.
CBI: Finally, what topic will you be addressing during your appear- ance at the 12th Annual IHRSA European Congress?
SS: I’ll be relating more of the findings from my book Bold, focusing, specifi- cally, on the value of observing what people in different industries are doing, and considering how they’re grappling with today’s challenges. Doing so can often yield new insights about how to deal with issues in, for instance, the club industry, because many things are universal—the emergence of budget brands; the need to embrace social media; and the importance of branding, the customer experience, digital marketing, and creating a strong corporate culture. I’ll be looking at some of the different, dramatically interesting, and incredibly rewarding things companies have done with respect to those matters. I’ll draw parallels to the fitness industry and encourage the members of the audience to apply what they learn to make their own clubs even more successful.
Shaun Smith, 59, began his career in the airline industry, where he rose to become head of customer service, sales, and marketing training worldwide for British Airways. In 1987, he moved to Hong Kong to head up Cathay Performa Consulting, where he specialized in airline customer-service strategy, before starting his own consulting company for inter- national organizations based in Asia. In the late 1990s, he returned to the U.K. to serve as senior vice president of the Customer Experience Business, the consulting arm of Forum Corporation, a leading provider of workplace learning. In 2002, he founded the customer- experience consultancy smith+co, based in London. Smith has coauthored four best-selling books: Uncommon Practice: People Who Deliver a Great Brand Experience (2002); Managing the Customer Expe- rience: Turning Customers into Advocates (2002); See, Feel, Think, Do: The Power of Instinct in Business (2006); and Bold: How to Be Brave in Business and Win (2011).