LMSM 45 | Customer Service

 

Does your company treat you like trash? In this episode, Frank and Ian dig into the underlying reasons for the miserable state of customer service. From unhappy employees to an overreliance on outsourcing and technology, we discuss steps any business can take to become more customer-centric (and thus, more profitable).

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Why Your Customer Service Sucks (And What You Can Do About It)

Thank you for tuning in to the show. Frank and I grumble like a couple of old men that we are, about the state of customer service in today’s world. This show was sparked by a conversation the two of us had, after which both of us had gone through the wringer with different companies but similar experiences. This episode is us talking about the ten reasons why most companies are terrible at customer service, why your customer service sucks, and what you can do about it. If you have not subscribed, do it. If you’ve not told anyone about it, share it. If you have not given us a review, what in the heck are you waiting for?

Frankie.

What’s up, Ian? You son of a bitch.

LMSM 45 | Customer Service

Customer Service: The more technology creeps into our world, the less people expect of actual human beings being human and treating them well.

 

I have had a shitty couple of days of customer service, Frankie. I’m pulling my hair out trying to wrap up a real estate deal. I’ve got some large transactions. It’s as if Bank of America has never worked with anyone who has sent a check for more than $2,000 to anyone. I’m at my wit’s end. I spend about three hours on the phone with 800 numbers trying to transfer money.

Is this for the collision center closing that out?

There’s some of that. I have three different things going on that all require large payments and transfers, and Bank of America can’t seem to understand any of them. Since they’re all happening at once, they are completely freaking out and thinking that someone stole all my accounts so they’ve blocked everything, which leads me into my typical rage when I deal with that fine institution. I probably should have dropped them by now but I have eight LLCs so I have eight different bank accounts with them. The one thing they do have is an app that makes it easy to move money in and out of all of it versus a small bank that would probably give me better service. I know you work with mainly small banks. Have you worked with Bank of America?

My best Bank of America story is this. In 2008, I had a lot of money in a checking account. I had sold the house, my residents, and I had a lot of money. This was when the market was going hell in a handbasket and I wanted to separate some of my deposits so if there were any problems that run on banks, I was protected. I had $1 million in the account. I went to Bank of America. I called the head and they gave me no fucks. I went there and sat in the lobby for an hour.

I was pissed off, I got up, drove across the street to a local bank, and they had a program called seeders like a tree. They would put your money in one account and then they spread it for you. I was done in seventeen minutes and they handed me a lollipop on the way out. That was the last time I’d ever work with Bank of America. I feel as bad about Wells Fargo. Wells Fargo used to be this pastoral thing. It was only out West. It was cool. It was like Back to the Future, it was the horse, the buggy and the carriage. During the whole short sale process, they suck too.

It’s not just big companies that are awful at customer service. In general, customer service is lame in most places that I turn. I feel like it’s an art that is going away. The more technology creeps into our world, the fewer people expect actual human beings being human and trying to treat them well. It’s a frustrating situation.

It amazes me that what we now consider customer service is such a low barrier of entry to get even considered customer service. An example of it is this, you and I’ve talked about this privately but I love American Express. I like the card. I pay a premium for it. Everyone in my company has an Amex card. I’m an Amex guy. I like it. There’s a bunch of reasons I like it. I like the points and all the different things. The thing I like the best about them is when you call them, you almost always speak to someone in America. You get a live voice. If you don’t get someone in America, you get someone that’s fairly well trained and you always get a live voice. It’s not a bunch of computer-automated crap. It’s incredible.

The other thing they did is in 2020, right after COVID hit, I had a $350,000 credit limit with them for my business, which is a lot of money. We don’t fill it. We use $100,000 to $250,000. That’s a lot on a credit card but we have a big business. Someone called me up and they said, “Hello, Mr. Cava. This is so and so from American Express. We wanted to check and see how you’re doing.” I’m like, “What?” They’re like, “We’re checking to see how you are.” In my head, I’m like, “She’s asking me, am I going to default on this credit card?” That’s what she’s asking. It was the only phone call that I got from anybody who gave a damn to call me during the pandemic to see how I was. It was staffed out from the top down. It was probably a real temperature check more than it was a caring effort, but it felt and confused me enough to feel like customer service where nobody else did a thing.

There’s a great scene in A League Of Their Own where the general manager is frustrated with Jimmy Dugan, the coach. He says, “Jimmy, if we paid you a little bit more, could you be a little more disgusting?” The coach, Jimmy, which was played by Tom Hanks, replies, “I could certainly use the money.” Everywhere I turn, whether I’m hiring a contractor, whether I’m trying to find a new partner for one of the businesses I’m involved in, I feel like saying that to most of them. There’s a general apathy around trying to delight people that you spend money with. That’s about anyone I hire to come to work in my house. Everywhere I turn, I see it. This episode is why your business sucks at customer service. We have ten items that we’ve listed out. We only have ten because we don’t want this to be a four-hour episode. It could have been 30, 40. We kept listing things that drive us crazy as we were preparing for this episode.

Let’s get into it.

You can’t start this conversation without talking about how the employees in the company feel about coming to work. This probably goes to any team I’ve ever run. Whenever I’ve had a problem with customers complaining a lot, it usually stemmed from the fact that my employees didn’t like coming to work whenever I had a morale issue or retention issue. Mostly, that starts with I had the wrong managers in place. For me, at least, that was usually the case. I promoted the wrong manager. They were over in the office. That office’s customer service quickly declined, and when you went and talked to the employees, you could see that it was in lockstep with the way they felt about coming to work.

For me, the bad customer service or bad morale started when I had my business and it started with my first few employees. We didn’t have a company culture yet. I couldn’t afford the level of employee I can afford now. Because of these things, I was nervous when there is outward contact of someone that was representing my company with a customer. Decade-plus later, we have health insurance, benefits, 401(k), we attract and pay way more, and the talent level has gone through the roof. Now, I feel much more comfortable. When a situation does come up now, something that would have caused me to lose sleep over a decade ago, now I’m like, “We got the right system.” It might be an annoyance but I know we didn’t do something fundamentally wrong. If we made a mistake, we can fix that. We’re not making bad decisions that are going to cost us major opportunities or a lot of time.

Use technology to delight customers and get more revenue, not to save money. Click To Tweet

Put yourself in an employee’s shoes. If you hate coming to work, you hate your boss, you hate your teammates, you don’t like being there, it’s impossible for the customer not to feel that when they talk to you. We’re all human beings. You can’t shut off how you’re feeling. On the contrary, if you love coming to work, if you laugh with your teammates all the time and your boss is always pumping you up and getting you in a good mood, you like working for your boss, you’re comfortable with them. That’s also going to rub off on how the customer feels because they have to interact with you when they go through it.

The DMV is always the whipping boy when you talk about bad customer service. You look at it and it looks like a miserable place to work. They pay people the lowest they can possibly pay in a government office. You sit on your ass all day and call out numbers for people coming there. Their technology sucks. There’s nothing inherently fun about working there and people feel it. It’s bad restaurants. We talk about banks. They don’t look like fun places to work.

I can’t think of a City Hall I’ve ever been to that was any good. The only two experiences in my life where pulling a permit was enjoyable were Prince William County and Fairfax. Both of those counties are insanely well run and they have a lot of revenue. They pay people. If you walk into the permanent office in Richmond, it’s in a flipping dungeon. It’s awful. In Prince William, it had huge windows that they looked out at and a counter. The people were friendly. It’s often that you’re stuffed in some broom closet and it’s not a good place to be. People hate it and you feel it. The service sucks. The product is terrible. It takes them forever to do things. It’s bad.

There’s a baseball tournament that we go to regularly where the interactions between the umpire and the coaches are always laced with friction. It’s obvious why it happens. At this one specific tournament, the parents always seem out of control yelling at the umpires. This town that we’re in, they’re adversarial with umpires. The environment for an umpire at these baseball games is awful. No matter what call you make, everyone’s chirping at you and yelling the whole time.

If you try to call timeout and go talk to an umpire at these tournaments, the umpire immediately has their guard up because they’re in a bad mood. They don’t like working in these tournaments. They’ll start fighting with you right away. Even if you treat them the same way you would anywhere else and you try to go out with respect to have a conversation, I noticed that it turns into a fight. I also noticed that the whole game has a different level of animosity. It makes you think that if the environment you’re in sucks, you’re going to treat the people that you’re supposed to work with a little bit worse.

The best way to improve customer experience, if you’re a manager or if you’re a company, is to make your employees feel a bit better about working there and treating them a little better. If you’re an executive, go look at your managers. If they’re losing people regularly, figure out why. It’s either training or you probably promoted the wrong people into management roles. Do something about it. You can physically change the way people feel about going to work. If you do that and you make them feel happier by showing up, customers aren’t going to feel like garbage. They’re not going to be treated that way.

That makes perfect sense. I did a webinar for a different set of reasons on team building. When you build a team in the beginning, it’s hard to find the right talent. There are two ways to go about this. If you have capital and you’re well-funded, you can start at the top. Most people who start businesses bootstrap their way up and you have to find who’s willing to work there. One of the major things I see through the mastermind group is these people are hiring low-qualified people. You have the wrong person. You don’t have any culture. The people don’t know what they’re doing. They’re not well trained. They can’t like what they’re doing because there’s a ton of uncertainty surrounding it. It’s a mess. It’s hard to build momentum. There are always problems. There’s constant turnover. If you’re having those internal conflicts during the course of your day, there’s no way in hell the customer can feel good.

I’ve had offices that have completely turned around in six months with the way their customer service ratings were by simply replacing a manager with someone good with customers. They didn’t do anything else. They put no other effort into it. They didn’t have a big customer service summit. They didn’t do training. They just changed the leader to someone good with people. All of a sudden, the customer service got better.

Number two, companies that look at technology as just cost savings. How do we get the best return on our technology instead of looking at technology to enhance the customer experience? For me, one that sticks out that was good at this was Quicken Mortgage with Rocket Mortgage. They spent tens of millions of dollars for years before that app came out. There’s no return. They weren’t a publicly traded company.

They built Rocket Mortgage to give customers the fastest possible loan application approval and closing. All Dan Gilbert wanted out of Rocket Mortgage was, “We are going to make the loan application process much less miserable because it sucks.” They took all this feedback from customers of what they hated with the loan app process and they built an app based on eradicating all the problems and they killed it. Their app was good and it worked.

What they did had nothing to do with cost savings. They spent years before they ever made a penny on the thing but they killed it. That app came out and they crushed the market share. They crushed everyone. Word of mouth was hot. People are probably like, “I used Rocket Mortgage. It took me ten minutes with the loan app. I never even met with anyone. They didn’t even call me. I got approval a couple of days later and then I talked to someone about a rate.” They did make it easy but they didn’t look at technology in that app as a way of, “How can we get rid of more loan officers? How can we get rid of more processors?”

Ultimately, did they do that? Yes, 100%. The app proved that people didn’t need to talk to people. Initially, they kept as many people if not more because they had to explain the technology a little bit to customers and people weren’t ready to not talk to someone. They kept everyone but over time, they’re like, “People don’t want to talk to us as much. We don’t need as many people.” It saved them money. They used technology initially to delight customers and get more revenue and not to save money.

LMSM 45 | Customer Service

Customer Service: If you’re having those internal conflicts during the course of your day, there’s no way in hell the customer can feel good.

 

That’s a great way to talk about it. Rocket Mortgage is an awesome way to think about it. Another example that popped into my head that I can think about is Carvana. It is very similar too. In our new office spaces, there’s a Carvana going up there. I’m watching it come to our market. They take out the frustration and the hassle. Who are the biggest scumballs on the planets? Used car salesman or car salesman. The mortgage process was ugly and time-consuming. Carvana has taken technology and made it stronger.

You’re going to buy probably your second most expensive investment. A house is usually first and a car is usually second. You’re not going to touch anybody on both of those two transactions. That’s a big deal because people have looked at it and said, “This was a pain point. We can streamline this using technology.” On the bad side of technology, whenever you get into one of those phone trees and you have to push buttons. Ultimately, the person who answers the phone is not from this country. I wish I could measure my blood pressure while that happens, it immediately starts going up.

Can’t you feel it on those 800 numbers when they’re trying to make it seem like they’re giving you options to make it easier on you? It feels to me like they’re trying to make sure that you don’t waste one of their employees’ time so they cut more people out of their organization and you keep hitting buttons. When you keep hitting zero, “Help, help, help.” They won’t even let you go talk to someone. It’s clear, they’re trying to not spend money, “We’re going to use this automated system and keep you in this tree forever.”

I’m a DIRECTV guy. I used to love DIRECTV before AT&T bought it because you’d always speak to someone in America. I would always ask, “Where are you?” “I’m in Oklahoma, I’m in Ohio, I’m in Tampa.” Now you get somebody overseas and you can’t get a damn thing accomplished. The other thing with it is they put you through that bridge or that board. If you’re on American Airlines or Delta and something goes wrong with your flights, you call. They’re like, “Your wait time is 5.5 hours.” It’s like, “Give me a break. I can fly from New York halfway to Australia and that’s my wait time. Staff up for God’s sakes.” When we were smaller, what we did is we used to outsource our call answer. We would outsource our call answer to a phone center in Georgia.

Explain your business real quick. You spend tens of thousands of dollars every month on postcards and marketing. You have all kinds of inbound people who saw an advertisement that is calling to see, “Could we sell our house to Cava? What would you buy?” Instead of direct employees working for you and picking phones up as these leads come in. I imagine the speed at which you answer a call is critical. They’ll call someone else. People are usually desperate to try to do something quickly. You tried to outsource some of this offshore instead of your own employees.

I tried it onshore, offshore and then back onshore before I built it from the ground up. Building from the ground up is a daunting task. First of all, you get to train these people, teach them, give them a script. It’s expensive. The first contact point that anybody has with my company is someone who’s on our team call, who’s passed several tests, who is interviewed, who we think is a cultural fit, who we think is smart and customer-focused. We’ve turned this position into a feeder ground for promotion. The people who start at the bottom in this role can move into other roles. We’ve got people that have been promoted 2, 3 times since we started this. When I first started, we didn’t have all that sophistication. We didn’t have the ability to do that. We went to a call center. We gave them a script and we said, “Put it into the CRM, which is your back office.”

Where were these people located, India?

No. They were all in America. They were in Georgia and Florida. They were making $8, $10 an hour and they were awful. They may as well have been on the moon or Mars. They were terrible. I would call in. My name is Frank Cava and the company is Cava Capital. I’m like, “I’m Frank Cava. I’m calling to check on this.” They would ask me questions. They couldn’t realize I was the owner of the company. They were so bad. There were these weird pauses and all this crap.

It was a script. If a customer asked a question that wasn’t on the script, they mangled it.

The worst part is when you call the airlines. You got to push a bunch of buttons, moved over here. There were always these pauses and delays. What we do is we answer the phone 80% of the time live. What we are able to do is we’re able to spend more money on advertising because our capture rate is better. If someone calls in off of a TV ad, you don’t want to send out some crappy call center. You want someone on your team who’s trained, who can answer a question who is educated and knows what we do, knows our product and can talk to them.

It’s even worse than customer service. A lot of times you think about customer service as a customer who’s already paying. You were mangling customers before they could even spend revenue with you. You were losing straight out business. You probably didn’t even hear about how bad the experience was because they were like, “This sucks. I’m out.”

What we’ve done is we’ve gotten to be a much better and profitable company because we invested in customer service. Upfront, on your first touch, it feels so much better than it used to. Now our business and our space have gotten much more crowded but we stand out because you can feel that people on the other end of the phone know what they’re talking about. In addition, what we do now is audit every call. We didn’t use to do that. We train on it. The whole team listens to calls together. They see how they can do a better job. We want to be the opposite of that phone call where you feel terrible when you get off the phone. We want you to feel good. We want you to know that if you’ve come to us, we are going to take care of you and your problem. You can stop looking. We are your best option. That’s what we want to communicate on the phone.

We support customers by supporting people on the front line. Click To Tweet

You’re talking a little bit about offshoring, whether it’s Georgia, the Philippines or India. You feel it when someone’s removed from the action. They don’t feel like they work for the company. They feel like they’re taking notes when you call. For me, number three is important. Within an organization, you don’t need to go outside of your organization and make people feel that way. A lot of companies, especially when they get bigger, they try to centralize certain functions. I feel like that’s a good strategy on things that don’t interface or impact a customer.

Accounting, IT, those are good areas to centralize. Having a core group of people near each other and working together, there are a lot of synergies that come out of that. That ends up being a better experience for the organization in a lot of cases. When you get into departments that are customer-facing when you centralize, I’ve always felt like the experience gets much worse. I worked for a home builder and a mortgage company. Some of the most friction in our entire company was always between our underwriting department and our offices.

The problem was our underwriting was housed mainly in an office in Pennsylvania that never saw people who worked in branches, never talked to customers, never saw anything. They had this silo mentality. What was interesting is we had remote underwriters in pockets. In one of our departments, we had 5 or 6 underwriters in our Cleveland branch. They interacted with processors, loan officers, people who talk to customers all the time, the home builder. Whenever we did ratings on the best underwriters to work with, it was always the folks that were out in an office because they had perspective and empathy for how hard the job was.

They could hear over their cube a process is getting shoot out by a customer on a conference call. They could hear a Ryan Homes Manager coming in and grumbling at a loan officer that they were doing a lousy job of getting approval and they were going to cost them a sale. They had this perspective that our centralized department never had. For that reason, our centralized office in Canonsburg, Pennsylvania always had a poor personal brand. Whereas the underwriters that were out in shops were loved because they treated people with a little better empathy and a little bit more respect.

The soft costs are hard to measure, that’s the only way you can put it. It’s hard to say, “We’ve offshored and we centralize this.” The empathy piece is clear. You think you’re saving money but what are you losing? I can tell you a funny story. Around 2014, 2015, I’m at the mastermind and I’m a member at the time. There’s a country guy that talks with a droll from North Carolina and he goes, “I realized I needed to think about my business and then restructure it. My entire call center business was relying on two guys in a cave in Afghanistan. The wind goes, they lose the internet. They don’t speak English. They’re the most critical part of my entire business and I’ve offshored all of it.” There’s some truth to that. You see it in big business and you feel it wrong all around you.

What we now measure as good customer service is simply service. The bar has been lowered so much. If you can streamline and put people who are educated, understand and have empathy. Empathy is the thing that can help the most. I was taking a flight back from Phoenix and my flight was supposed to be on Friday afternoon. It got delayed and they end up canceling it. I go back Saturday. I get there at 9:30 AM. At 5:30, I leave the airport. My flight had gotten delayed the whole day and then ultimately getting canceled. I ended up flying out Sunday. I’m getting home 48, 50 hours after I was supposed to.

The woman at Delta that I finally got on the phone with was incredible. She was bubbly, sweet and apologized. She called me two weeks later and followed up. I still was pissed I lost two days in my life. I’m like, “This is the best possible outcome.” The thing that she had is empathy. She made it seem like she missed her flight too. I think when you centralize, you lose empathy because people don’t understand or have the experience that people who do the job have.

Let’s talk about this. You’re a manager. You’re managing a company. You’ve got a problem with this. I would say centralizing can work. You have to make a concerted effort to drive some of that empathy into your organization. The way you can do that is you force interaction between that centralized department and the department that it supports. You get them out in the field every once in a while.

Maybe twice a year, you send them out into the field for 3 or 4 days to spend time with the team they support and understanding how can we support you better. You put a manager in there who thinks of the departments they support as a customer, who is trying to listen to them as a customer, “How do we do a better job?” You measure them on the service that the centralized department gives to the organization it supports.

A lot of times, those centralized departments get siloed that they don’t think of it that way. They don’t think, “We support a department who supports customers. In turn, we support customers by supporting the people on the frontline.” A lot of times, those silos don’t think of themselves that way. They think of themselves as all-powerful and gatekeepers. They start to build a reputation as the order prevention business, the people that are in the way of getting business instead of, “How can we become an accelerant? How can we become an enabler of good service and more sales? How can we provide service to the people who provide service to customers?”

Nearly every business can lose focus of its mission. You’ve talked here about how at Keep, a technology company, the engineers have gone sideways. We’re not even putting out the product we want to put out. This happens everywhere. It comes down to experience, being looped in, being part of a bigger picture, understanding what’s going on around you, having management liking what you’re doing, feeling what you’re doing is making a difference, and constantly being reminded like, “This is the whole purpose here. This is why we’re here.”

Number four is you measure your people too much. I can feel when I’m interacting with someone who has way too many reports that their manager cares about because it feels like they’re trying to force in a bunch of side conversations. For me, the best example of this is I had to go to Best Buy to get a new printer. Best Buy is the worst at this. They take you to the counter and it’s like, “Are you a Best Buy member or rewards member? Would you like to be a Best Buy member? Are you sure? Can I tell you how much you would save if you were a Best Buy member?” It’s like, “How many times can I say no, I don’t want that?”

Customer Service: The soft costs are hard to measure. You think you’re saving money, but what are you actually losing?

 

As soon as that’s over, “I see here that this is a $500 purchase. Would you like to pay another $85 for the extended warranty?” You cut them off, “No. I don’t want to pay $85 for your warranty.” “You do understand that with printers, these things can break sometimes.” “No. I don’t want the warranty.” The third time, he keeps asking me about the warranty. I’m like, “I’m not getting a membership or warranty. Check me out.” It then gets awkward and you feel bad because you know it’s his manager up to his butt. I bet there’s some report every morning, “How many people checked out? How many memberships did you sign up for? How many warranties did you close?” You’re making me say no so much that it makes me feel bad. You’re making me miserable sitting here.

When all of this is over, he launches into, “You’re going to get a survey.” He then shows me on the receipt where you’re going to get the survey and what his name is. I’m looking at him, like, “Do you want me to fill out that survey?” To me, it’s clear that there is some dumbass manager at Best Buy that is all over this poor kid. He’s a kid working at Best Buy. My experience was fine up until the checkout when the manager crept his way into making my process end on a miserable note.

It probably comes from above the manager. The manager is probably as much of a stooge as the kid at the counter. It’s coming from up top and corporate and they think this is important. Customer service has reached such a level by simply doing something decent. I hate banks. I don’t go to them often. I might have to go to a bank two times a year. I send somebody from my office. They ask you all these questions that are almost like a comedy skit. They’re asking you questions at the wrong time, “I’m glad I was able to help you provide the service you were looking for.” I’m like, “You haven’t. If you gave me a satisfaction survey, I would go to the left of zero. It’s ridiculous.” That’s where we’re at.

What I see that is funny and I see this a lot in my consulting, you have no measurables. You’re going to put measurables in place and you start with this incredibly granular stuff. If you’re going to measure something you haven’t measured, let’s start with the big picture stuff. Let’s start wide and narrow it, not the opposite where you get super narrow. If you look at dieting information, what they say is, “Change a couple of things that are small that you barely notice and it’ll help you work your way to where you want to get.” It’s the same thing with measurables. You have to start with the macro stuff, the big things that you can control, and then you can start focusing on the little things. For us, it was how many times we answered the phone live with a Cava employee? That’s a pretty big one. Once we change that, then we can work on a lot of the little things.

Number five for us on this agenda and you started to get into it already is you’re more focused on the survey result than the actual experience. When I see companies screw up, the CEO gets some JD Power report showing that they’re 6 out of the top 10 in their industry at customer service and it’s not great. They get frustrated and they say, “We’re going to measure more on results. We’re going to put it in all the managers’ bonuses.” I saw NVR do this all the time. They would come and go. Customer service came and went all the time in bonuses.

The madder the CEO was about our customer service, the more people got customer service put into their bonuses, “We’re going to pay on customer service. We’re going to pound it.” Instead of focusing on the experience, what happens is all those managers start reading every survey, and start looking at every report, the scores. They start putting more pressure on, “How many surveys did we get back? We need more surveys. We’re not getting a good return rate on our surveys.” The one thing you’re trying to do is make a good experience. You make it worse by pressuring everyone to make people fill out surveys.

You brought up a bank. This happened to me at a bank and it wasn’t me. I’m waiting in line and everything’s spread out 6 feet apart. I needed to wire a couple of different funds. I’m listening to this older couple probably in their late 70s. They are complaining the whole time I’m there about how bad their experience was before they got to this other rep. All the different things, “Bank of America screwed up.” They’re with a private banker. I’m listening to this and they didn’t seem like a pain in the butt people. They seem genuinely upset with the way they were treated. For good reasons.

As I’m listening to them, I’m like, “This sucks, the experience they put these people through.” This lady who works there takes them through and gets them to a better place. That was great. As soon as she resolves the process after I’m listening to this for twenty minutes, here comes the survey. She’s like, “I need you to understand that when you get that survey, you’re not grading the people that were before me. You’re grading me and my service.” I’m listening to this and I’m thinking, “Their experience was goddamn miserable.”

Now I got to listen to this rep sell these people and give them a guilt trip, “If you put a one on that survey, my manager will be all over me.” She must have said “My manager” five times. “You can write whatever you want in the comments but here on the 1 through 10, if you don’t give a 10, my manager will be all over me.” She kept saying it. I’m listening to this and I’m like, “Like these 78-year-old cute little couple gives a flying shit about what they write on your survey.” The worst part is I’m listening to them be like, “You’ve been great. We’re going to make sure to give you a good survey grade.” I’m cringing like, “This is moronic. These are a-holes running this place.”

Try and pitch me on filling out the survey for you.

If I were doing it?

Yes. You’re the person at the bank, pitch me. I’ll tell you how I handle this.

Frank, you’re going to receive a survey in the email and it’s going to reflect the service that I’ve given you and it would mean a lot to me.

You can go ahead and stop there. I’m not going to do it. If they asked me why, I’m like, “I don’t have the internet at home. Have a great day.”

I’ll lie and says, “I got you.” I fist pound them and then I’d delete them when I get the email.

You crinkle up the receipt and throw it in the trash.

It’s easier than starting another discussion.

Crinkle up the paper and then reach over the counter and be like, “Do you have a trash can back there?” Drop it right in front of them.

Number six on our list is one that comes down to management and a business that has too many controls and too many micromanagers. Number six would be no one in the company is allowed to make decisions except for managers. What this leads to is you’ve got managers who don’t trust their employees. If a customer asks for something that is even a little bit out of the box, every one of those things has to come to a manager. This isn’t just price. It could be anything, terms, timing, a date change.

You have to start with the macro stuff, the big things that you can control and then you can start focusing on the little things. Click To Tweet

You can feel it when you’re talking to someone in a company who has zero ability to help you and everything has to be, “I’ll have to talk to a manager.” What that ends up doing is it leads to delays, a lot of people are saying no to you, a lot of people that can’t negotiate, and that can ask the right questions. It feels frustrating when you work for a company that is clear that the employees that talk to customers are pawns, and the real decision-makers are somewhere behind a curtain.

What I hate in that interaction is the person is a good-meaning person who’s just trying to make a living and it feels like they have no footing around doing anything. They’re thinking through their head, “What line did I memorize that I need to say here?” I would rather work with a computer screen than a human in that instance because a computer screen is going to be better programmed. It’s terrible. There’s all this pent-up demand for people to get out of their house and travel. I usually rent with Hertz. I use the club called Gold. I don’t have to talk to a soul. It’s all on the computer. I walk up, get my keys and get my car.

I like to drive in a certain car and the only other company that has that besides Hertz is Enterprise. I’ve been having to rent with Enterprise and it’s awful. You work with these poor kids that are clones. If someone showed up at the campus and convinced them to take this job, the kid can make no decisions. They explain like, “This is where the gas pedal is.” It’s like, “No shit. I’ve been driving for over 30 years.” It’s like, “This is how you use the power windows.” I’m like, “Hand me the keys. I don’t need this. I’m competent. I’m running a Mercedes. I can afford it. I know how to drive. I have insurance. Get out of my way.”

Opposite here. A big problem in a lot of companies where customer service sucks is the executives have built a wide moat around their office and the actual customers. These are executives that don’t talk to customers. Their whole knowledge of the customer experience is based on reports, data and information they hear from other people without interacting with people that purchase from their company. We had a problem with staffing in our underwriting department. We didn’t have enough staff so they were overwhelmed with requests. We are growing too fast.

This executive, in his infinite wisdom, put in a process where every office only had three requests for rushes on any given day. That was it. On some days, that was fine. On other days, we might be closing twenty settlements in a day. That might mean that seventeen customers who had a little issue with their closing table were moving until the next month. Immediately, I and every other senior executive reported to him and said, “This idea is going to die in a fiery death. You can’t do this.” He was so frustrated. He put his foot down and said, “Something’s got to change and you guys need a little bit of tough love to get ahead of things.” We’re like, “We’re cool with tough love. This will blow up and you will go back on this in a month.”

He didn’t listen and he put out an email, “Here’s the process.” We called it the Golden Ticket Process where you only get three Golden Tickets like Charlie in Willy Wonka. We put it in place and within three days, it is an absolute disaster. I’m a senior executive. I have four other people who report to me. I haven’t talked to a customer in months, and all of a sudden, I talked to seven customers on the second day this thing was put out. The people in front of me that normally would handle the customer issues had no control. They were stuck. They wouldn’t know what to say and they’d be like, “You’re going to have to talk to someone higher than me because I don’t have any control.”

They all got to me so I was pissed. It’s because I had no control over it, I started giving his name and phone number to everyone. “I suggest you call our president.” I would give them his name and his direct phone number. I’ve never done this at any point in my career. All the other regionals conspired to do the same thing. We all started giving his name and phone number to any customer who is pissed. He got bombarded with phone calls, and then the first few, he would call me like, “This customer is pissed. You could have done this.” I’m like, “You’re right. We got to do a better job.”

After about two days of this, he took twenty-some phone calls of people lighting his ass up. We forced him to talk to customers about his dumb idea and he went back at it. He got humbled and was like, “What are some other ideas we have to go do this?” He would have never put that Golden Ticket dumbass idea in place if he had talked to customers before this but he hadn’t. We had to be the ones to go force him to get back on the front line and see the ramifications of his actions.

It’s the same in a different way. You don’t talk to customers. You’re disconnected from the process or removed. I’ll tell two funny stories. The first one is this. There’s a wildly popular TV show called Schitt’s Creek and the family is super-rich. The mother goes, “David, how much is the banana, $10? $20?” It’s one single banana. Bananas are still less than $1, $10 or $20. She’s removed. She has no clue what a banana costs. When I worked in NVR, our CEO or chairman was also part owner of the Washington football team way back, formerly called the Redskins. He had to go to a Monday night game and he had all these incredible things. He had access to a private jet, fly-up, be in the Owner’s Box, meet the coach, be on the sideline and all these different things.

At the time, I drove a twelve-year-old car. He’s telling all of us how little he wants to do what I would probably plop down a ton of money in a fantasy type of experience. I’m one of the people who work there. He talked about shitting on your employees and making them feel bad about their lot in life. You’re bitching about this incredible thing. You’re disconnected and you don’t know what’s happening. You should be in a glass box kept away from anybody who’s helping move the needle because you’re so far disconnected from the process.

This is one of the things that you learned, and your former boss was the best ever, Jack Welch. He used to fly around in the private plane but instead of bitching about going to the football game on Monday night, he would get in front of a roundtable of people who were touching the business and talk to them. He would get in front of them and say, “What are you seeing? What are you feeling? What aren’t we doing? What’s the supply chain problem? What’s the customer saying? What’s the impact on sales?” That’s how you stay connected. That is how you don’t become some jackass that comes up with a Willy Wonka ticket program. You stay in there and you listen.

Not only would Jack go get in front of all the employees. Before he would do that, he would go meet with a bunch of executives. When he went to Cincinnati and he’s talking to a bunch of employees in the aircraft engines, he would say, “I met with the CEO of Boeing last night and his top executives. Here’s what they think about our newest product. Here’s what they like and here’s what they don’t like. Here’s what they told me about the service.” He was never disconnected from the customer either because he would sit in front of them and say, “Why don’t we have more business with you?” When you’re a superstar CEO, you get that interaction all the time. One thing Jack was awesome at was always staying in front of the biggest customers.

That’s how you stay connected and relevant in a business. No matter how big or small your business is, you have to get down and dirty with the people who are doing the stuff, you must talk to them. I have a small business. Since we’ve started this show, I’ve gone from roughly 20 to 40 employees in about a year, but what we pay attention to is all the little things. We have a daily call. We talk about good news and who’s stuck. I can hear frustrations. We encourage you if you’re frustrated with something to talk about it here. That’s the important thing. I stopped what I’m doing to focus on that stuff because it’s critical. Once you stop that focus, centralize it, get away from it and lose sight of what’s important, it’s when it falls apart.

Number eight, back to talent a little bit, you can feel it in a company when you interact with a company that sees talent as a commodity, as a cost to be minimized and be shred. You can feel it if it’s a company that doesn’t invest in people. If you’re paying at the low end of the market the lowest you can possibly get for people, you’re paying for the lowest possible service you can give customers as well. Bezos, the Amazon, had an awesome quote, “I’d rather interview 50 people and not hire anyone than hire one person who isn’t focused on customers.” That’s relentless. If you’re going to get someone who’s amazing with customers, you’re not going to get away with paying them at the bottom of the market. It’s impossible to talk about a fantastic customer experience without talking about the compensation of employees. Maybe it’s possible but I would find it nearly impossible to run any organization, pay at the bottom of the pay scale, and get top of market customer experience.

You might get lucky and you’re going to get lucky once or twice but you can’t get lucky as a business strategy.

Getting lucky means you hired some good people who didn’t quite know their market value yet.

They’re going to figure it out.

You’re hoping they’re going to stay ignorant forever to the fact that you’re underpaying them because if they’re not good with customers, someone’s going to pay them more at some point.

Customer Service: If the customer is always right, your employee is often wrong. And if you’re making your employee wrong, that’s really bad for morale.

 

Let’s talk a little bit about the companies that make you feel good. Since 2007, I’ve lived in Charlottesville and Richmond, neither of which has a Neiman Marcus or a Nordstrom. I’ve had to rely on the internet to do shopping. I’ve been a huge fan of Zappos for years and what I love about Zappos is they tell you it’ll be there in two days and it’s usually there in one. You can go and buy 30 things, try it all on in your bedroom, put 29 of them back in the box and get reimbursed before the credit card is due.

They have all your favorite brands and plus sizes.

That being the case, I love Zappos from that perspective. They pay incredibly well, retain their talent and make the customer feel good. I don’t stay at the Four Seasons a lot but I do stay at the Ritz but if I’ve stayed in either, you can feel the difference when you walk in. They’re trained well. The people who work at the front desk at the Ritz or the Four Seasons are compensated differently and trained differently than people who are at a Holiday Inn or a Hyatt, even a higher-end hotel. You can feel that difference. They’re able to answer your questions, understand the resort, and know what the issues are and the questions. They’re helpful.

I’m like, “My temporary home for three days is here. These are the things that are important to me.” They have all the answers. “At 8:00 AM on a Tuesday, how long is it going to take me to get to the airport?” “Probably about 25 minutes with traffic.” That’s a good thing. If you ask somebody at a normal hotel, they have no idea. They’re like, “Use Google.” That’s the difference between a nice hotel. It’s training and compensation.

Number nine is a little bit contrary. This is one of those best intentions that go wrong. When you’ve got a “customer is always right” mentality as a company, and you are a company that will make any exception for any customer. I’ve always felt this way. I feel like exceptions are often the least customer-friendly policy or process when you make a lot of exceptions to what is your normal strategy. If you charge someone a fee on one interaction but you waive it for the next person and there’s no difference between the two people on what service they got other than one asked you to waive.

The reason why that’s awful on customer experience is that word gets around. Sometimes they waive the fee and sometimes they don’t. If you don’t waive the fee for me, I feel like now I have to ask and if I don’t ask, I’m the fool because I didn’t ask. It makes me stressed. Now I got to go through a process of back and forth. It’s a little bit like the car buying process. It’s always been miserable. I don’t like negotiating for a car but every time I’ve ever negotiated on a new car, I’ve negotiated $5,000 off. If I went in one time and bought a car and didn’t negotiate, I would feel miserable leaving knowing that I probably could have got another $5,000 off. I would feel like a fool if I haven’t gone through those three hours of, “Let me talk to my manager. Write the number down.” All of that process every time I’ve ever bought from any dealership, I hate it but I feel like if I don’t do it, I’m a fool. The fact that there are exceptions and you have to push that hard to get it makes it a terrible customer experience.

Did you ever see the movie The Aviator with Martin Scorsese and Leonardo DiCaprio? That was on one time and I watched it. Leonardo DiCaprio is playing Hughes and he gets called in Washington. One of the senators is trying to ask him, “You’re bribing people in the Air Force.” Howard Hughes played by Leonardo DiCaprio goes, “That’s the system, Senator. If you tell me there’s a different system, I’ll play by the different system but this is the system you all set up so I just play by the rules.” It’s a good way of stating what we’re talking about with car purchasing. Car purchasing sucks.

Carvana is trying to do what Rocket Mortgage did to shuffle the deck in a little different way. I learned early in my career and Raynor was the one who taught me this. This is a senior executive and he had tons of money. I was in my twenties. He would talk about he always bought a Mercedes. What he would do is he would go to the Mercedes dealership and he would test drive and find out what car he wanted. This is before the internet was what it is now. He would call 2 or 3 car dealerships and he would negotiate the entire thing over email or the phone. That’s how he did it. He took control.

It’s easier to be firm when you’re not in front of somebody. What I do in my car buying purchase is I do something similar. I usually beat up on them before I get there. To me, I want to be in and out of that sleeve bucket environment as fast as possible. When I bought my last car, I bought it during COVID and I told the guy before I got there, “If I’m in and out under twenty minutes, I’ll pay you $100.” I gave him $100. I did not want to be there. What you have to look at is, is this system flawed? How do you write it so it is better for you? Some of these things suck.

If you’re a manager and people are always having to come to you with exceptions, you have to look at, “What is wrong with my process? This process is broken.” If there are that many exceptions, you don’t have a process.

As a manager, you’re making yourself too self-important. We’re talking about the thing we talked about above, which is you don’t let your employees make decisions. What you’re doing instead is you’re making yourself the star and feeling important. You’re not empowering people under you.

Not all customers are worth keeping. There are customers that are flat-out wrong and that you don’t want. The “customer is always right” is just bad for customer service half the time. That customer is usually right but they’re not always right. There are some jackasses out there that want to be your customer that you should say, “Find someone else to buy from.”

The other thing is if the customer is always right, your employee is often wrong. If you’re making your employee wrong, that’s bad for morale and all the things that we talked about. You must set criteria, metrics and things in place on what is and what is not allowable. If your employee is doing the things that you allow, then you need to support your employee and not the customer. The employee is more important. If you want to look at why customer service falls, it’s because you prioritize a jackass customer over a talented, well-compensated, competent employee. That’s where you start getting askew.

I love what you said there. There’s nothing more deflating than when you’re on the front line and you fight like hell to hold price, terms, delivery, and all the things your managers are always on you about, that your job is to be on the front line and defend it. That person works their way up the chain and they get 2 or 3 levels higher than someone who’s not that important too. They send an email out saying, “Give this customer what they want,” largely to save themselves time. There’s nothing more deflating because when a manager does that, it makes the front line think, “What the hell am I fighting for? I’ll just give everyone who asks this. You made me feel stupid. You made me feel like all that work I put in to fight for my company wasn’t worth it.”

If you're going to make an exception to your rule, you must say why, and you must deal with it and you must own it. Click To Tweet

At NVR, this happened all the time. If you got up to the chairman, you got whatever you wanted. He’s like, “Go away. Treat the customer right.” The truth is that’s the same guy in the quarterly meeting that was on you about margins. You would look at him like, “How do you think those margins happen? Is it because we give everyone what they want? No. On a daily basis, we are fighting for price so that you don’t get those emails but you don’t see most of them.” Everyone that gets to you, you just say, “Drop your pants and give everything away.” It would be deflating to the people that are out there trained to hold the line on value and price.

It undermines the work of the people on the front line. If you’re on the front line and you’re not supported by your manager, you start to look at it and think, “Maybe this company isn’t good for me. Maybe this company doesn’t have my back. Maybe I shouldn’t push so hard.” You start to ask yourself questions, “Why am I doing this if nobody really cares?” To me, that is what leads to bad customer service. It leads to bad morale with employees and eventually turnover because you start to undermine it.

Let’s say you undermine your employee and you do it because you want to get something off your desk or something happens. The bad way to handle it is to get it over with and be done with it. The good way is you call the employees and say, “I made an executive decision. I know you fought for this. You did everything right. I am here to tell you that I want you to continue to do that. In this particular instance, I saw an issue that was bigger. I made an exception to my rule because of this. What you did was right. I don’t want you to stop doing that.” You have to because if you don’t, then it all starts to unravel.

Give them the why of why you had to do it and why you felt compelled to break policy that time, but then encourage them, “The next time, do everything the same way you did it this way.”

We do that in sales training. We’ll say, “Last week, this situation came up. I’ve already spoken to so and so about it. Let’s address it as a group. This is why we made an exception to that rule but you get ahead of it and talk about it.”

Number ten, our final item on our list is hubris, which is your product is too good or you have a monopoly in some ways. The best example that we could come up with this is there’s a fantastic Seinfeld episode, The Soup Nazi.

“No soup for you.”

This guy makes the best soup in town and everyone loves the soup but he is particular about how you must behave as one of his customers or he will kick your ass out and give you no soup. There’s a bar in DC.

Before you get into the bar, let’s get into a couple of things. What are your favorite things to do with beers? Drink it and chug it.

Isn’t that what everyone does with beer? They drink beer.

Most people sip it. You’re more of an aggressive drinker.

I didn’t know what you were getting at there. I drink beer faster than the average bear. There’s a bar called the Saloon on U Street in DC. It was a block from my house. Most of the bars around that area serve crappy beer

In plastic cups. It’s sticky floors.

This bar had something like 1,000 different brands of beer and we call the owner the Beer Nazi. He was particular about how you behaved when you were in his bar. It was a little basement saloon. There was no standing. If all of the stools and the chairs were taken up, you had to go wait outside. It was only for sitting and beer was to be enjoyed. He had Belgium beers. He had beers from all over the world. His menu was fantastic. It was a great place to go enjoy a few beers before you go out. Every once in a while, I’d get a little too excited. I turned up and keyed up to go out. He knew me by name. He knew Divo and Brett by name. He knew a bunch of us by name.

I’ve been in there a couple of times.

If you got a little too loud, he didn’t like yelling, which I also like to yell when I drink beer. If you chug a beer and he saw you, he’ll send one of his triple buck beers from Belgium nine degrees. He’ll bring you your receipt and he’ll say, “It’s time for you to go.” They will kick you out. The reason why we kept going back is you can look at that as bad customer service, but this goes with the exception that he wanted to have a certain environment there where people felt comfortable. It wasn’t too loud and wasn’t too crazy. He believed strongly about beer should be enjoyed and enjoyed slowly and tasted. He didn’t want craziness so he would say, “Go across the street. They serve pops there. You can slam that all you want.” He will kick us out like, “No more beer for you,” and that was okay. That worked for me.

I’ve been a DIRECTV member forever. The only reason I’m with DIRECTV is the NFL package. I want to watch the Lions on Sundays so I keep the shitty cable service for over twenty years and they treat you like garbage. If everyone else had the NFL package, I would not be with DIRECTV and that’s hubris. Truthfully, they’ve been hemorrhaging customers for years. AT&T bought them and they’ve already tried to sell them. They’re getting rid of them because they treat you like garbage. Captive businesses like that tend to give much worse customer service.

There’s a service that is ripping you off and nobody thinks about it. There is a fantastic documentary called The Social Dilemma and it talks about all the social media stuff. It’s incredible to me what pops up in my news feeds. They’re listening to you, monitoring us and popping it in there. It’s insane. That is not customer service. We’re captive. The product is incredible. How many times a day do you open Google? I must do it 100-plus times a day. You get in and you do something. How often do you look at Facebook? These people do not treat you well but their product is insane. You don’t need to remember anything anymore. You can just go to Google and you can look anything up. That’s a cool trade-off. Because Google is insanely profitable, it spends money on anything they want and they treat you like shit. That is where the hubris is. It’s a funny example with The Soup Nazi. It’s less funny, in my opinion, with Google and Facebook because they’re doing things to you that you don’t even realize.

Sometimes your product can be so good. Think about any major city you’ve ever been to. You don’t want to eat at a restaurant near the Eiffel Tower in Paris. You don’t want to eat at a restaurant near the Colosseum in Rome. You don’t want to eat at a restaurant near the Washington Monument in DC. There’s nothing within walking distance other than hotdog stands and Times Square. You think about all these major cities in the world. The higher the rent is, usually the crappier they treat you because they know you don’t know where else to go. They don’t have to put a lot of time into their menu and their service. That tends to be the same with all businesses that feel like they have a captive audience. Bring us home, Frankie. If you’re an owner of a business, a manager or an executive, what do you take from all this stuff that we talked about?

As the owner of a business, if you don’t believe in these policies, neither does anyone. If you are going to enforce these policies, you must back them up in your own actions. If you’re going to make an exception to your rule, you must say why, deal with it, own it and talk about it openly, “We made an exception for these reasons.” I was telling a story before we started the show. I have a situation unfolding in my business. Someone’s filing a complaint and it’s going to get ugly.

I was doing a webinar and I had finished the talk at 6:00. As I’m leaving two of my employees, they should have been home and left by now. One of them gets here at 7:00 AM and she usually leaves at 3:30. She was waiting for me and I go, “What’s wrong?” They came up inside and they told me about this situation that’s brewing. The way that I felt as an owner of a business that’s been in business for over twelve years that has a culture and has good people, I said, “This seems like an annoyance.” What I didn’t feel is what I would have felt many years ago. I didn’t have a culture and I didn’t have these talented people. I didn’t feel worried. I don’t feel like we’re in the wrong. I don’t think we did something that was egregious. We have an issue. It’s going to become something that we give to our attorney and we deal with. It’s going to be a problem.

Customer Service: If you’re paying at the low end of the market for the lowest you can possibly get for people, you’re also paying for the lowest possible service you can give customers.

 

It isn’t something that’s a major gaffe or that causes me to lose a lot of sleep because my team did the right thing and it’s well documented. We have pictures and we have proof. Everything we could possibly have that shows that we’re on the right side of this, we have in the file. We have everything papered and it’s done right. The other thing is it’s communicated. As soon as we heard about it, everyone started to talk. By the time it made it to me, everyone had talked about it that needed to. That’s a system. That’s through the right training. That’s through people who are bought in, who want to be here and value the customer, but value the company even more, value the mission and what we’re trying to accomplish. By having those things in place, we take something that could be a major issue. It’s been neutralized because it was handled properly upfront.

You trust the culture and the team that you’ve built. You know you have an issue and that there wasn’t any malicious wrongdoing or incompetence leading to it. You build the right team and culture. You trust in those things and you deal with customer issues as they come up. You consider them one-offs, which is what they are.

We might have made a mistake but we didn’t do something shady. We didn’t treat you like the airlines, a crappy bank or a car dealership. We might have made a mistake in here and we can fix that but we didn’t do something intentional, shady or any of those things. Not only that, we have it all papered and there’s proof because we have a culture, a system and we follow up and we talk. That’s what it comes down to. It follows everything that we said to either do or don’t do. We’re on the right side of those decisions. It’s because we have intent around not having crappy customer service.

I am in a business where most of the people in my business who I compete against are wholesalers. Wholesalers are the people that you see on the internet flinging $100 bills or standing on Lamborghinis. What they talk about is how great they are and they don’t focus on the customer. What we do is focus on the customer. Are we always perfect? No. Is every customer right? No. If we make it about you, the customer, what we end up doing is differentiating ourselves. Everybody else makes it about price. We make it about you. How do we help solve your problem? By doing that, we get a better deal because we’re getting at the heart of what the problem is. We’re helping solve it and provide solutions, and we’re doing it the right way.

One thing I know Frank, as cohosts, we make sure that we take care of our dozens and dozens of amazingly loyal customers that tune in every episode. You can keep trusting, as our loyal audience, that we’re going to give you everything we got. Our customer service is perfect.

Not only that, we got a text asking for shout-outs. Mr. Paxson, we love you. I bet you can use this stuff to continue to dominate the real estate market in Indiana.

Fantastic episode, Frank.

It’s always a pleasure, Ian.

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