Service Encounters Of The Third Kind
by Singapore based author Ron Kaufman
Loyal relationships of the future are built by your actions
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
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
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,
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
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
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
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
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
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.