This weekend I stayed at a hotel booked by Expedia.com. I booked it for two nights a few weeks ago. But a few days before my trip, plans changed. I had to leave after one night.

No problem?

Wrong! Big problem!

The two nights had already been charged to my credit card. I called Expedia a few days before the trip to tell them I would be there for one night instead of two. They said I would have to talk to the hotel manager and get his or her approval. Then Expedia would have to talk with the manager before they could issue me credit.

Bureaucracy! This already went against the basic Savage Strategy "Make it easy to do business with your company." But it was gonna get worse!

I checked in and told the front desk clerk I would be there one night instead of two. I told her Expedia would like to call the manager. She said fine. She would handle it.

I got to my room and called Expedia. The woman was very nice, but told me to wait on hold while she talked with the hotel manager. Five minutes later she came back and said the manager had approved it.

I said, "Great!" I thought we were done.

Wrong! We were not finished!

Now she had to talk to her supervisor! She put me on hold for another five minutes. Then she came back and told me she was going to give me credit for one night.

The decision was fine. I got my credit. But I was annoyed and decided not to do business with Expedia again.

It could have been so easy. Expedia should drive decisions down. They should have allowed the very first person I called to issue me that credit – immediately. It would have saved them time and money. It would have made me a happy customer.

Remember these two Savage principles:

© Copyright 2009, Stephen Savage

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Last week I told you how FedEx and Northwest drove decisions down. Let me tell you about my own business. It gives me great pride to tell you that we gave our employees all kinds of power back in the 1980s—that was before the idea of “empowerment” became popular. We gave them much more power than FedEx gave their people with the hundred-dollar credit, and we went way beyond Northwest’s free round-trip ticket. We told our customer-service reps that they could do anything to make the customer happy.

We had a small company with a big name: Institutional Financing Services (IFS, for short). Our business was fund-raising, specifically for schools. Our specialty was fashion jewelry, and our average school bought $5000 worth of products.

Anna was our first customer-service rep—I wish you could have met her. She was twenty-eight years old, enthusiastic, intelligent, and passionate about her work. Within three months, she was managing ten other customer-service reps. I told her, “Look, Anna, my two partners and I want you to make customer service decisions. You’re smart. We trust you. And we want your people to make decisions. Don’t ask us what to do. Just do whatever it takes to make the customer happy. Pretend IFS is your company, Anna, because you really do own the customer service department.”

Then we got all ten of the customer-service reps together and told them, “We have asked Anna to make decisions without consulting us. Now we want you to make decisions without consulting Anna.”

About the same time we hired our first professional manager, a controller. His name was Dave. So picture this: The company, IFS, had three crazy entrepreneurs full of ideas, ten customer-service reps full of enthusiasm—and Dave.

Dave thought we were nuts. He did not like letting those customer-service reps make important decisions. “It won’t work. They’ll give away the company. We’ll go broke.”

Within six months, however, Dave began to come around. He analyzed the decisions our customer-service reps had made. Although he did not like to admit it, most of those decisions were sensible, with very few mistakes.

Yes, they made mistakes, but we said to Anna, “Go ahead and make mistakes. It’s OK. If you ask us to make the decisions, we’ll make mistakes also. And you’ll never grow. If you make a mistake, we’ll analyze it calmly, but we’ll never get mad.”

We told the customer-service reps, “Look, these schools are buying $5,000 a year from us, on average. That means they will buy $25,000 over the next five years. Let’s not lose that school over a stupid little fifty-dollar misunderstanding. If you think they deserve credit, or a prize, or extra merchandise, that’s your decision. Even if the worst should happen and the school wants to cancel the sale and get a $5000 refund, you can accept it without consulting us.”

You should have seen the letters we got from the schools we worked with. I remember a school principal who wrote me: “IFS is the best company I have ever dealt with. Your customer-service people are enthusiastic, and they can take care of every situation on the spot.”

You are probably thinking, “OK, Steve, that works fine with ten employees. But I work with a thousand employees. I can’t let them make those kinds of decisions.”

Well, let me describe how our company grew. We went from ten employees to six hundred. And our sales went from zero to $60 million in six years. And our philosophy never changed.

It was not easy. As we grew, we had to hire more professional managers, like Dave. We needed experts in production, operations, quality control, and management-information systems. And you know what they wanted? More rules! Yes, every day we discovered a new rule—they would impose a rule; we would remove a rule.

You may be wondering about training these people, and you’d be absolutely right. You must train them. You don’t simply tell your people, “OK, you’ve got power. Make decisions. You’re on your own!” We had weekly sessions in which all employees who dealt with customers brought up case studies of problems they’d confronted and strategies they’d created. Everyone got to talk. We learned from and stimulated each other.

You also may be wondering about employees who simply don’t want to make decisions. That’s fine; there are plenty of jobs for them. But keep them out of the front line. Don’t let them deal with customers. You want your customers to deal with people who can make decisions.

© 2009 by Stephen Savage

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Drive decisions down to the lowest possible levels. Mull over decisions you are making, and see which ones you can delegate. This strategy will get your controller nervous! My next three newsletters will be devoted to this critical topic. By the end, I will convince you that you can drive decisions down and still maintain control.

You probably use FedEx for shipping, but you may not realize that each FedEx employee has quite a bit of decision-making power. If you have a package that is delivered late, did you know that if you call FedEx, you can get credit on the spot? You won’t have to wait while the customer service rep consults a supervisor. You get a decision on the spot. Doesn’t that make you feel good? Doesn’t that make you want to keep doing business with FedEx?

I was doing a consulting assignment for a winery in Argentina. We shipped a case of wine by FedEx so I could demonstrate the excellence of Argentine wine at a wine tasting in New England. The shipment got held up at US Customs in Memphis. It did not arrive in time for our special event. I was disappointed and furious.

I called FedEx. My shipping bill was $168. I explained the situation. The customer service rep could have blamed US customs. She could have told me she had to talk with her supervisor. But she made an immediate decision. She gave me instant credit for $168. That was 15 years ago. I have been a faithful FedEx customer ever since!

Have you ever been put on hold for five minutes while someone consulted a supervisor for a decision? Did you get just a bit irritated? What if you had to wait thirty minutes? You likely got very annoyed. And what if you had to wait a day? You probably went to the competition.

Have you ever flown on Northwest Airlines? Do you remember when it used to be referred to as “Northworst”? Northwest had the lowest ratings of any airline in customer-satisfaction surveys. A few years ago, however, the airline gave each flight attendant and each ticket agent a book of coupons. If a passenger had a problem, the employee was to give away a free round-trip ticket anywhere in the country. Northwest now gets high customer-satisfaction ratings. (Now that they have merged with Delta, I hope this same spirit will prevail!)

Some people were worried that the ticket agents and flight attendants would take advantage of this freedom and give away tickets to their friends and relatives. But it did not work that way. It made them feel like Northwest was
their airline. They felt like owners. They wanted to make it work. They were proud to have the power to decide and they used that power responsibly.

In my next blog, I will tell you how we drove decisions downward in my own company – and how we gained enormous credibility with our customers.

© 2009 by Stephen Savage

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You can compete and beat powerful and large companies by giving fantastic customer service. Most large companies simply cannot contend with you when it comes to giving personal attention to your customers.

The worst example is AT&T. They don’t get it. It is no wonder that dozens of cell phone companies and other telephone companies have gradually eaten away at their one-time monopoly.

I bought an iPhone a few months ago. I loved my iPhone. Apple did an incredible job of designing a state-of-the-art product that did everything you ever imagined you would want in a phone – and more.

The only problem with the iPhone is that you had to have AT&T as your carrier. That was OK at first. I got this “special” deal where the iPhone cost me “only $299″ as long as I signed a two-year contract with AT&T. Fine. I was happy to do it.

Everything went well. I loved my iPhone. And I even liked AT&T. The best thing was that I could make calls from any country in the world, like Nicaragua, where I travel frequently for sales consulting and seminars in Spanish. I love Nicaragua, but I was not able to use my USA cell phone until I got an iPhone.

Then I took a trip to Angola in Africa to be a keynote speaker at a marketing conference. Somewhere along the way, I lost my iPhone. My beloved iPhone was gone. I was heartbroken. But I was sure AT&T would take care of me when I got back to the USA. Wrong!

I was prepared to spend another $299 to get another iPhone. But imagine my surprise when the folks at AT&T told me I would have to pay $499! Yup! They lamely told me that the price of $299 was a special introductory price, and they could not afford to give it to me twice! Can you believe it?

Now, I can’t blame it on the poor AT&T store manager. He was embarrassed and pained to give me the news. But it was corporate policy and he could not change things. If he had owned the store, he would definitely have sold me another iPhone for $299.

I understand Apple is negotiating with Verizon to be an optional carrier for the iPhone. I hope they make deals with Verizon and with every other carrier on the planet. This was not Apple’s fault. It was the policy of that lumbering elephant, AT&T. If you are a telecom operation that has some vision and sense of customer service, you have a huge opportunity to beat the giant.

In fact, if you are a small to medium-size company in any industry, you can beat the giants by giving amazing and astonishing customer service. Everyone talks about customer service. But most big companies don’t get it. You should be out there every day, in the trenches, talking to your customers. You will beat the big guys every time!

© 2009 by Stephen Savage

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