Growth Insights for CEOs

The Secret Formula to Guaranteed Customer Loyalty (L=HE^2)

Posted by Gary Fassak



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As a CEO, you have traveled extensively, and probably stayed in more hotels than you care to admit. You have likely experienced different service levels -- even at high-end hotels that purport to be customer focused. Even at the five-diamond properties with white-glove service and the “Heavenly Beds,” you never quite feel at home.

What if I told you there is a hotel that delivers a transcendent, unforgettable experience – each and every time? One that delivers a crisp, spotless facility, ease of transactions, a great website, and competitive pricing. One that doesn’t consider itself a stopping-over point, but a true home-away-from-home, with people who make you feel at home, and with whom you develop a neighborly rapport and fellowship. When traveling to the city where this hotel is located, this hotel becomes your FIRST AND ONLY choice. 

What if I also told you this particular individual hotel property is part of a global network of 40,000 hotels, and has developed this reputation in just 15 short months since it opened? What if I also told you this hotel has consistently earned the No. 1 ranking for customer satisfaction in its entire hotel network since its opening? 

If you are in the business of serving your customers (and we all are), wouldn’t you be eager to know how this hotel makes this happen? You would assume it’s probably very complicated, with lots of “customer service” initiatives, detailed plan books, time and motion studies, weekly meetings, quantitative employee feedback systems, facility utilization percentages, energy cost as percentage of revenues, and a host of other metrics and measures. 

Well, it certainly has some of those, but the magic formula for this hotel is surprisingly simple. It can be expressed as L=HE^2. That is, LOYALTY is equal to HAPPY EMPLOYEES SQUARED.

Well, you say, that’s obvious. Well yes it is, but executing a strategy centered on “Happy Employees” is not obvious – in fact, it is one of the most difficult things to do in any organization. Any one bad guest experience quickly leads to a downtick in ratings in our instant ratings culture. Conversely, a Harvard Business Review found that transaction-based business customers who had the most favorable experiences spent 140 percent more compared to those who had the poorest past experiences. So how in the world can this hotel sustain this every hour, every day, every week? 

Back to L=HE^2. The General Manager of this hotel believes that if he can create a community of engaged, happy employees, those engaged, happy employees will engage and create engaged, happy customers. They will feel empowered to make the 1,001 decisions in the course of a typical week that will result in amazing customer satisfaction.

Some of the things they do:

  • The General Manager models by example. At a recent meeting, almost every guest I ran in to knew who the GM was and had had a personal conversation with him. They manage by walking around, modeling the engaged behavior, making sure things are right with the guests, and supporting their team by quickly fixing anything that is not right. 
  • The Company is committed to employees. This is the “secret sauce.” The Company focuses on making it easy and fulfilling to work here. More than half the employees can walk to work, so the hotel has become part of the community, not just a business enterprise. That’s not by accident – the hotel reached out to the community to recruit residents, even if they had not worked in the hospitality industry. They made a bet that getting the “right people on the bus,” as “Good to Great” authors argue - friendly, upbeat, make-it-happen people – will result in outstanding employee-guest relations, as long as they are supported with the right commitment and training. 
  • The Employees are committed to hospitality. They are upbeat, make-things-happen people who are given the opportunity to make quick calls and resolve issues. 
  • The employees genuinely WELCOME and ENGAGE with guests. They LOOK proactively for opportunities.
    • On a cold night, two employees saw two guests walking out to dinner – they jumped in and offered a shuttle ride without being asked.
    • The guests are engaged as soon as they walk in the door, welcomed with a warm cookie, and escorted to check-in.
    • Details about all the hotel facilities are available at a fingertip. When one guest who had traveled all day wanted a quiet room, the front desk team members instantly pulled out a room chart, and made sure the guest felt comfortable with where their room was located.
    • A guest with an empty plate was looking for a place to put it down, and magically an employee appeared and cheerfully took it off their hands.

How do you feel as a guest in this environment? Like you are talking with a friend. Employees smile, listen, and gently find a way to help. Some hotels overdo this with a more formal, over-polite “yes, sir,” or formulaic vocabulary that feels forced. Other hotels whose employees are not motivated simply ignore the guest, or worse, are decidedly unhelpful. These employees are just right – they are just interacting with you in the way that a friend or colleague would.

So how can we make our own organizations more like this? How do we create this guest or customer experience? The first step is to understand the L=HE^2 equation. But that’s only the first step. The secret sauce is bringing that equation to life every day, in every guest interaction, in all sorts of very simple, helpful ways. 

Are you committed to that in your organization? Do you walk around, model the behavior, provide positive support to the team, look for opportunities to go above and beyond your standard service offering, and recognize employees who do that? 

Or are you overcomplicating it, with top-down instructions, formulaic language, or worse, letting impersonal “systems” take the place of one person talking to another?

If you are committed to the former and not the latter, maybe your organization, too, can be rated No. 1 for customer loyalty. And that loyalty will translate directly into revenue and profit growth for the enterprise. 

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Topics: B2B Marketing, Customer Feedback, Customer Value Alignment, Strategic Insights, Customer Satisfaction

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