Does The Customer Come First?

Only 4% of unhappy customers complain about bad service; the other 96% go home angry.

April, 2002

Each weekday, swarms of people pop into the busy Starbucks on the corner of Bishop and King streets for their daily dose of caffeine. And whether they’re a newbie or a three-times-a-day regular to the bustling downtown Honolulu branch of the trend-setting mega-chain, all customers are treated equally: like gold.

“One of the girls even went so far as to ask me my name so that she could say, ‘Good morning Carmen,’ when I come in,” recalls Carmen King, a student at neighboring Hawaii Pacific University and frequent patron of the downtown coffee stop.

Unfortunately, Starbucks’ customer service model isn’t being emulated across the board in Hawaii. There is a growing indication that as Hawaii’s economy staggers through yet another downturn, complaints about customer service are on the rise.

Last year, the Better Business Bureau of Hawaii received 6,500 customer complaints, up from 5,000 complaints the year prior. Nationally, the annual American Customer Satisfaction Index, which measures how happy consumers are with the goods and services they purchase, has declined in each of the last three surveys.

In the push to shore up bottom lines, it seems, the customer is all too often left behind.


While the trends point toward declining levels of customer service, a number of companies are setting new standards for customer service.

It takes significant effort to reach their levels of coddling, but they also show you don’t have to be a tony, white-glove boutique to connect with the customer.

Consider Safeway, the California-based supermarket giant, which in the 1990s put in place an aggressive customer-service training program. Safeway jealously guards its customer service training playbook; who wouldn’t in an industry that often measures its margins in pennies per unit? But all it takes is a stroll through your neighborhood Safeway to see (and hear) the program at work.

“We feel our service is a distinct (competitive) advantage, and that’s why we focus so hard on it,” says John Obrey, general manger of Safeway Inc. of Hawaii. “It’s a strong reason for our customers to want to come back. In retail, repeat business is the key to our future success.”

Aggressive customer service training programs, such as Safeway’s, set company standards for all of a store’s employees. They not only teach the employees how to deliver exceptional customer service, but also the importance of doing so. Safeway, like many other companies that are serious about providing outstanding customer service, follows up on its training by using “secret shoppers” to cruise the aisles.

Obrey remains tight-lipped about Safeway’s clandestine shopper program. But he says mystery shoppers reinforce the values learned during training, and put an emphasis on Safeway’s commitment towards customer service. “We’re very specific about what’s expected of our employees, and when expectations aren’t met, we’re held accountable to it,” says Obrey.

“Secret shoppers reveal if we’re doing our job or not,” adds Paul Kosasa, president of ABC Stores. “Are the employees using ‘Aloha’ and ‘Mahalo’? Are they suggestive-selling other products and being courteous?”

ABC Stores, which has 59 stores in Hawaii and Guam, has been using secret shoppers for as far back as Kosasa can remember. He says it’s a reliable way to keep tabs on the company’s 600-plus Hawaii employees.

Safeguard Services Inc., the company that sends secret shoppers to ABC Stores, also plays watchdog for about another 500 clients statewide. “When people employ us to do tests on their employees, it’s usually because they think they’re having employee integrity problems, or they’ve gotten complaints about service,” says Bob Flating, manager of Safeguard Services’ Loss Control Division. “Bad customer service tends to happen when companies grow but forget what allowed them to grow. Good customer service made for sales and growth, and somehow they got away from that. That’s when we’re called in.”

Safeguard charges approximately $45 per test, or “shop,” in which a pair of mystery shoppers critiques an employee or employees’ service. Flating says a secret shopper service can often greatly reduce the number of customer complaints a company receives. But he warns potential clients to choose carefully. Select a company licensed to do business in Hawaii. He cites the example of a company in which four employees were caught stealing and fired. The judge ruled that since the secret-shopper company was not licensed to do business in Hawaii, the company had to reinstate all four employees, with two years’ backpay.

How low can you go?

If anyone has a sense of how well, or poorly, Hawaii businesses are doing on the customer service front, it is Anne Deschene, president of the Better Business Bureau of Hawaii, which monitors 15,000 businesses. “It’s getting worse and worse, and I don’t know what it is,” says Deschene. “My unsubstantiated theory is that, with a lot of the cutbacks of either staff or training or supervision, you seem to have an awful lot of either part-time or poorly trained or uninvested employees dealing with the public.”

And if recent figures are any indication, Hawaii’s customers are also becoming increasingly picky about which companies they’re willing to give their money.

For example, the number of inquiry calls to the BBB of Hawaii nearly doubled, from 128,000 in 2000 to 250,000. “These are calls by consumers trying to find out about companies before they do business with them,” says Deschene. “The number has virtually doubled, and what that says is consumers are becoming increasingly picky about who they want to do business with. It’s clear that good customer service can make or break your business in these times.”

And with the inception of the BBB’s easy-to-navigate Web site ( late last year, the bureau has made it even quicker and easier for consumers to both track down, as well as file formal complaints. Deschene says that although less than 4 percent of the 15,000 companies monitored by the BBB have unsatisfactory records, it definitely pays to have a satisfactory rating with the organization.

There are 405 companies in Hawaii that have an “unsatisfactory rating” with the Better Business Bureau. The ratings are based on customer complaints.

“The BBB is such a brand name, and it’s so credible, and so recognizable, that a satisfactory or unsatisfactory record can make a difference,” she says. To have a satisfactory record with the bureau, a company must properly and promptly address matters referred to it by the bureau, and must not exhibit an unusual volume or pattern of complaints.

Never underestimate the irate customer

It may be obvious, but it’s worth restating: a business owner ignores customer service issues at his or her peril. A Harvard Business Review study found that two-thirds of customers stop doing business with companies because they feel unappreciated, neglected or treated indifferently – regardless of the industry.

“What people who are in business need to remember is that they can spend a whole bunch of money on an ad, but the person who walks out tells their experience time and time again. They need that person to walk out and say, ‘I had a great experience at that store,’” says Safeguard Service’s Bob Flating. “Not only has the message been told, but there’s a heck of a lot more credibility from a satisfied customer saying it than any ad on the radio that the company paid someone to do.”

The Bottom Line

How does a company establish an effective customer service program? “First and foremost, an organization has to have a set of core values that are a part of every single step in the decision-making process, from the top on down,” says Kaipo Ho, human resources and hookipa hostconsultant for Outrigger Hotels and Resorts.

In 1994, the family-owned hotel chain decided it would differentiate itself in the crowded resort marketplace by incorporating Hawaiian cultural values into the very fabric of the company. The company hired Dr. George Kanahele, the respected expert on Hawaiian values and traditions who passed away in October 2000, to outline a plan for their unique customer-service approach. Ke Ano Waa — the Outrigger way — soon followed, and from the corporate executives to the housekeeping department, all Outrigger employees found themselves not only working, but living Ke Ano Waa.

Employees attended classes to learn more about Hawaiian culture. Executives were taught to treat their subordinates with the utmost respect. “Right off, you could see the changes. The faces on employees, their attitudes, all these intangible changes you could see taking place almost immediately,” Ho says.

The most vital component of the Outrigger program is rewarding, recognizing and emulating the internal customers: employees. “To do that you really have to exemplify the same hospitality toward your employees that you expect them to give to your guests,” says Ho.

While there is no cut-and-dried formula for determining if your customer service strategy is working, there are a number of ways to gauge the success of your program. Employee turnover, guest/customer satisfaction surveys, employee reviews, secret shopper critiques, sales commissions, loyalty programs and, of course, increased revenues, are all ways to measure returns.

And consider this: The Strategic Planning Institute found that companies that placed great emphasis on customer service earned 12 times the return on sales of those that did not stress customer service.

ABC Stores’ Paul Kosasa says that as long as your doors are still open for business, it’s never too late to start improving your customer service. “Invest in good customer service, and then keep at it. It sounds old and trivial, but it’s not,” he says.

“Especially in this market, and in this state. We really need to be the ambassadors of aloha. It’s awful for tourists to spend that kind of money and have a bad time or an unruly clerk. It’s not only bad for your company, but it’s bad for the industry and the entire state.”

Kosasa says the important thing to remember is that the only profit center is the customer. You can sell the best widget on the face of the planet, but if you don’t deliver it with exemplary customer service, you won’t be in business long enough to see a profit.

“Just recall your own personal experiences in customer service,” he says. “Put yourself in the shoes of the customer and think of all the companies you will no longer do business with as a result of poor service.”

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Jacy L. Youn