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Service Encounters Of The Third Kind

by Singapore based author Ron Kaufman

Loyal relationships of the future are built by your actions today!

What makes a company successful over the long, long term? What characterizes the service relationship between companies and customers who do business together for decades, even centuries?

How can your company stay close to your customers even as times change, technologies change and expectations keep steadily rising?

What can you do to ensure that your company's future offers are relevant and valuable in the market? One step you can take is to explore your customers' future needs and interests through cultivating "Service Encounters of The Third Kind". But first, let's look at Encounters of the First and Second Kinds.

Service Encounters Of The First Kind

In "Service Encounters of the First Kind", your company approaches the customer with the most basic of all customer service questions: "What do you want?"

Your customer replies with equal simplicity, "I want your product "X" by time and date "Y" at your listed price "Z".

Your company's priority and service focus should be clear: "Get the customer's order right, and get it right the first time!"
Campaigns to accomplish this objective are widespread and easy to spot. "100% Right!", "WordPerfect", "Zero Defects" and "Six Sigma Quality" are all examples of slogans companies use to focus their workers on getting the basics right, first time, each and every time.

In this kind of "Encounter", breakdowns in the service delivery system are bad news. They are to be ferreted out, analyzed, problem-solved and, most of all, eliminated. The service system must be streamlined and standardized in every possible way.
Companies that consistently succeed in this undertaking (delivering your product "X" by time and date "Y" at your listed price "Z") earn their reputations in the market as steady and reliable suppliers. This leads, as it should, to customer satisfaction.
Training in these organizations is focused on product knowledge, technical skills, thoroughness, accuracy and adhering to proven procedures.

Marketing consists of powerful efforts to "push" proven products into the market. In these companies, the customer is "sold to".

Looking into the management mindset of such an organization, we frequently find a keen interest in cutting costs, increasing volume and decreasing cycle time.

This "need for speed" is important. Competitors are often closing in with similar products, shorter delivery schedules and identical or even lower prices. In this competitive situation, profit margins are paper thin and companies can only thrive through consistent increases in volume.

So far so good. But if we look into the staff mindset of such an organization, we often find a different way of thinking altogether. Frontline service employees, focused on "getting it right the first time", trained to "carefully follow all procedures" and encouraged by management to achieve "more and more results in less and less time" find themselves answering the phone, opening the mail or meeting the next customer in person while thinking to themselves, "I hope this customer is not a pain in the neck!"

After all, customers with questions and unusual requests usually take more time, lead to more errors and can result in a general slowing down of the whole system.

No wonder so many customer requests for anything "out of the ordinary" are met with the retort: "We don't do it that way", "It's not how our procedures work", or in popular Singaporean shorthand, "Cannot".

Service Encounters Of The Second Kind

In "Service Encounters of the Second Kind", your company approaches the customer with a question that goes beyond standard offers of "X" product at "Y" time and "Z" price. Instead of only the basic question "What do you want?", your service representative poses an additional, and more inviting question: "How do you want it?"

Faced with such an open ended question, the customer naturally replies, "I want it special. I want it... my way."
Your company's priority and service-focus changes. You deliver what your customer requests, just the way your customer requests it! Special products, unique combinations, odd-hour deliveries, different schedules for pricing and/or payment; all are challenges for your service team to understand, and accomplish.

With these "Service Encounters of the Second Kind", breakdowns in the service delivery system are to be expected at first, and then overcome. Responsiveness and flexibility become your prime objectives. The organization focuses on being adaptable, accommodating and open to changing requests. Your service system improves, not through vigorous efforts to standardize, but through your willingness and commitment to customize!

Companies that succeed in this challenging undertaking (giving the customer what he wants, when and where he wants it, and in just the way he wants it) earn their reputations in the market as quick, responsive and open to ongoing change.
When a company is recognized for welcoming and fulfilling unique, often "one of a kind" customer requests, the result is not only customer satisfaction, but a well-deserved and valuable reputation for customer delight!

In these responsive organizations, training programs include active listening, creative problem solving, and attitude building activities to "find a 'yes' for the customer" instead of rolling out the standard company "no".

Marketing is not a broadside of mass advertising. It is a selection of specially modified programs "gently pushing" custom products into key segments of the market. The customer isn't just "sold to", he is "served".

In the staff and management mindset of these organizations, we find a shared sincere commitment to "bend over backwards" for the customer. For example, one newly adapting company in Singapore proudly proclaims, "We'll go out of our way for you!" This catchy phrase reveals the remnants of a "first encounter" company being forced into "second kind" levels of service. Here management say: "We do still have OUR way, but don't worry...we'll go OUT of our way just for you."
See an example of this contrast in the advertising of two fast food chains in Singapore. A&W Root Beer used to have a large advertising billboard near the national stadium that reads "You'll love our way!" (Service Encounter of the First Kind.)

Compare this with the slogan and jingle for Burger King: "Have it your way, have it your way!" (Service Encounter of the Second Kind.) Which establishment would you feel more comfortable going to and saying. "Give me two hamburgers, please; one with extra ketchup and no pickles, and one cooked rare, hold the onions and 2 packs of mustard on the side."
Burger King goes even further with its button and poster campaign: "Sometimes You've Just Gotta Break the Rules." That's a direct invitation to highly customized Service Encounters of the Second Kind: "Have it your way."

Service Encounters Of The Third Kind

In Service Encounters of the Third Kind, your company welcomes the customer in a manner completely different from the standardized "What do you want?" or customized "How do you want it?"

In a Service Encounter of the Third Kind, your company looks to the customer with sincerity, interest and patience, and asks the somewhat unlikely question: "What do you want to become?"

Most customers, if they are given an opportunity to reflect on this open-ended question, realize that they are, in fact, still a bit uncertain about the future and will reply, "Actually we are not entirely sure yet." And then, availing themselves of the sincerity and interest you have shown, might add "Could we talk about it together?"

Your question, and their response, opens the door to a new and collaborative conversation; a Service Encounter Of The Third Kind.

Your company's priority shifts again. You enter into this new dialogue with the customer, seeking to understand and add value to his plans and possibilities for the future. These conversations, held in a mood of mutual discovery, are concerned with more than just overcoming a customer's existing business breakdowns. Exploring scenarios and possibilities together, you and your customers work to resolve breakdowns that can only emerge in the future.

For example, innovative financial service companies in Japan consistently ask their customers, "What do you want to become?" And customers consistently answer, "I want to become a homeowner, and I want to pass the home on to my children." But housing prices in Japan have climbed beyond the average customer's ability to pay. What was the jointly planned and innovative solution? Mortgages with payment terms spanning two generations and customer relationships that endure beyond a lifetime.

In this "Third Kind" of unfolding customer service, companies must be willing to adapt, modify, and in some cases entirely reinvent the purpose and procedures of the business. Rather than simply standardize, or even customize existing products and service systems, "Third Kind" companies must commit to "customerize" and become whatever the customer requires.

Railroads in America thought they were in the train business years ago and nearly went bankrupt asking the customer "What type of train car do you want to travel in, where do you want to go to, and at what price do you want to travel?" Since they never asked the customer, "What do you want to become?", railroad companies did not foresee the need for airborne shipping and travel, and missed investing in airline companies altogether. Today, government support is necessary to keep the American railroads alive.

Companies that evolve get noticed, and earn the respect of customers as a relevant, dynamic, and constantly changing organizations; focused on and committed to the future, not stuck rigidly in the successes of their past.

Committing to Service Encounters of the Third Kind means that you and your customers can enter together into an intimate and closely-linked evolution. As changes in the business environment demand greater innovations and even quicker response, you and your customer will learn to adapt, anticipate and actively support each other.

This is not an association based on customer satisfaction, nor even customer delight. Instead, the inventive and interactive quality of this relationship is founded on a level of customer loyalty that is precious to both parties, and can become vital to their shared futures.

Competitors can steal away a "satisfied" customer by offering a little bit more satisfaction, and can lure away a "delighted" customer by offering a little more delight. But a "loyal customer" is one who sees his future emerging in part, due to your joint commitment. "Win-win" agreements and "building synergy" become passwords for communication between your company and the customer. Adding long term value is a goal you take responsibility for... together.

Training programs in "Third Kind" companies highlight the principles of cooperation, collaboration, creativity, invention and design. Real customers and suppliers are featured, and frequently included, in the training and retraining programs.

The customer is no longer "sold to", nor simply and politely "served". He is genuinely "cared for" through a conscientious relationship that builds trust and momentum over time.

Your service representatives do not "hard sell" or "gently push" their products. Instead, they work closely with customers to ensure that appropriate products are "pulled" from your organization's current capabilities, influencing your future competencies and commitments.

Staff and management share the same mindset towards the "Third Kind" customer: "We make your concerns, our concerns". And in such an atmosphere of growing trust, your customer can make similarly long-term and loyal commitments back to you. The customer comes to count on you, rely on you, evolve with you.

In the fast-food industry, for example, McDonalds is now test-marketing an all soy and vegetable "burger". This is in direct response to customers who said, "We are becoming more health conscious, and we want to eat healthier foods."

Insurance companies reap an ever greater slice of the savings and investment pie. Agents no longer ask the simple question: "Do you want whole life, term or endowment?". Instead, leading companies provide their agents with entirely new categories of investment and insurance products that address individual concerns and respond to changing needs.

While these are some of the admirable success stories, other companies have missed the importance of "Third Kind" service, and teeter dangerously towards the edge of obsolescence.

General Motors, for example, suffered a serious erosion of market share and loyalty before they heard what their customers were saying: "We want to become more efficient, more cost conscious, and more environmentally friendly." Other companies listened, and delivered appropriately designed new cars. Customers responded, and delivered back profits and gains in market share.

Intricate physical slide rules were famous for aiding calculation in my father's day. Manufacturers diligently asked the engineers, "How do you want it?" and built an impressive range of slide rules in response. But they never asked what customers were "becoming", and did not hear their customer's growing urge to become instantaneous, hard-copy and electronic. Many firms that built a wide range of precision slide rules are now gone. And not one slide rule maker is included amongst the calculator or computer manufacturers of today.

Carbon paper to photocopies, buggy whips to stick shifts, typewriters to computers, copper wire to fibre optics, smoke signals to cellular. Each evolution asks the questions: "What happened to those companies?" Did they make the switch? Did they survive? Did they move from "What do you want?" to "What do you want to become?"

In an environment of continuously accelerating change, the only certainty we have is that the future will be different from today. The opportunities for evolution and collaboration with our customers will be endless.

What about your company? Will you gradually go out of business with a standardized service system that provides efficient answers to questions your customers no longer ask? Or will you change the tone and tenor of your Service Encounters from the order taker "What do you want?" and the order maker "How do you want it?" to the friend and business partner who patiently, sincerely and intelligently asks, "What do you want to become?"

This requires a new mindset and methodology for engagement with customers and suppliers. Learn it.

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