Companies carefully craft the products they sell to customers, but rarely do they give the same thoughtfulness to designing what could be the most critical part of the sales process: customer experience. In the book, Woo, Wow, and Win: Service Design, Strategy and the Art of Customer Delight, authors Thomas A. Stewart and Patricia O’Connell show businesses how they can give customers positive “Ahhh” moments, instead of negative “Ow” experiences — all of which lead to “Aha” realizations by management. And pleasing the customer doesn’t mean always giving in to what they want. — Stewart, a former editor of the Harvard Business Review, and O’Connell, president of Aerten Consulting, talked to Knowledge@Wharton about these and other management insights in their book.
An edited transcript of the conversation follows.
Knowledge@Wharton: Maybe we can start with you, Patricia, for our first question. What inspired you to write this book?
Patricia O’Connell: I confess I had never heard of service design until four years ago. I was working with a client, the Savannah College of Art and Design, and they started talking about service design classes, and I said, “What’s that?” And they said, “Service design is when we teach people how to imagine and think through, and then design a customer experience. People think about user experience. There’s been a lot of emphasis on user experience because of all the emphasis on things going online. (But) when you walk into a restaurant, you walk into a hotel, you interact with a company, you go into the lobby of a business, every step of that interaction between you and that company, that brand, that business, needs to be designed in order to give you a satisfactory customer experience.”
And I thought, this is fascinating. I started looking around and realized that there was not a lot written on that for the service market. There’s a lot about design for manufacturing. I realized that there was really a gap here to connect the idea of service to strategy. And that’s where Tom came in.
Thomas A. Stewart: What inspired me to write the book was Patricia, obviously. But, seriously, one of the things that’s really interesting is a lot of what we know about management comes from automobile assembling plants — [Edwards] Deming and Frederick Taylor and all of that. But when it comes to a service, these things need to be, can be, should be designed as carefully as products are. When you think about it, this is also the strategy connection. That’s the difference, really. And more and more — studies are starting to show this — the difference is not the product or the service per se, it’s not price. It’s the experience you have. What it’s like to go into that restaurant? What it’s like to work with that law firm? And it goes from B2B, B2C and in all areas. It also connects to what it’s like to go to that auto dealership. That’s really hard to copy. I can match you on price and I can match you on how many thread counts are on the sheets in the hotel. But what it’s like is a point of strategic differentiation that’s hard to beat.
Knowledge@Wharton: I’d like to come back to the question of strategy in a bit. But what you said reminded me of something really fascinating that I read right at the beginning of your book. You start with this astonishing fact: Most companies are not set up to design services well. And I was wondering why not?
Stewart: I think it’s partly that in many respects the discipline is relatively new. In management literature, managing services has been done by analogy with managing manufacturing for a long time. That’s part of it. But I think so much of what companies do is about organizing internal operations. But when it comes to services, the act of production is with the customer. It’s not in the factory and then we hand it to the customer. You’re right there with me when it happens.
“One of the first clichés anyone hears who has ever worked in service of any kind is that the customer is always right. That is not really true.” –Patricia O’Connell
O’Connell: The customer is co-creating the experience. One thing we’ve got to say is products are about handoffs. Services are about handshakes. A service requires the participation of both parties. That is a very different thing than what we know about products and manufacturing. That’s why there has been so little written about it. The shift in our economy is now such that 80% of our economy is services based. That is everything other than agriculture, manufacturing and mining. So that is just about everything people have multiple interactions with every day, whether it’s B2B, B2C, whether it’s something mundane, getting a cup of coffee, whether it’s something really important, calling your insurance company.
People so often confuse customer service with customer experience. Those are two very different things. Customer service is something you do. Usually it’s designed around when something has gone wrong. Customer experience is the totality of my interaction with you, from the moment I first come across your name … to when I’m done, whenever our business is finished.
Knowledge@Wharton: You hear a lot about things like design thinking these days, or industrial design, manufacturing design, or designing user experiences. How do you separate service design from some of these other buzzwords that you hear about design? Is that helping or hurting the situation?
Stewart: I don’t know if you separate them. You might integrate them. But I think that’s one of the things that’s interesting. We were talking to Tim Brown of IDEO (innovation and design firm). He said that if you think about it, the ATM, which is 50 years old this year, was one of the first cases where people had to design in a thoughtful way how the customer interacted with the user interface. Before that, the user interface of the bank was the smiling teller behind the cage, and that person did all the touching and computer generating, all the work with the bank systems.
So design thinking is a way of approaching problems. Industrial design is a way, of course, of making beautiful and functional designs. And service design takes design thinking and some of the sort of aesthetic industrial design and says, “How do we use that to apply to this train journey, this ATM experience? What are we trying to convey with the look and feel of what’s happening in our interaction in the store, in the office or whatever it might be?”
O’Connell: Something we include in service design is also service delivery, because design without the ability to execute on it is meaningless.
Stewart: That’s part of that handshake.
Knowledge@Wharton: In the course of researching and writing the book, which are some of the companies that you encountered that are really good at this? Could you offer some examples? And what can others learn from the way they went about this exercise?
O’Connell: One of the classic examples we use to explain service design really quickly is Starbucks versus Dunkin’ Donuts — who’s a Starbucks person, who’s a Dunkin’ Donuts person? People usually have a very strong preference. Ostensibly they’re both selling the same thing. They’re selling coffee. But that’s not [all] they’re selling. They’re selling two very different experiences. Dunkin’ is a grab and go. There’s a reason the slogan is ‘America runs on Dunkin.’ The logo is very hot. Hot pink, hot green.
“Focus on delight, and delight is meeting expectations every time.” –Thomas A. Stewart
Starbucks is much more about being relaxed and leisurely. It’s not for the person who wants to get up and go. And there were new companies like [personal stylist] Stitch Fix, which have evolved. At the time that we were doing the book, it only did women’s clothing. It now includes men. Edmunds, the car buying service, has evolved so much. They’re a great example of a company that has just kept on evolving. They started as almost a [Kelley] blue book [listing of used car values.]
Stewart: We also looked at an airline, Surf Air, which is a subscription, all-you-can-fly air service on the West Coast in California. We looked at a hospital system, ThedaCare, in Northern Wisconsin. These are some of the trickiest; we all know how bad the design of medical care services is and these guys are applying the Toyota production system to redesigning hospital services. So we looked across a whole spectrum.
But the Starbucks/Dunkin’ example is wonderful. We were talking to an audience in Seattle once and asked for a show of hands, who’s a Dunkin’ person, who’s a Starbucks person? If you think about it, it’s really interesting. At Starbucks, the seating is laid back, and at Dunkin’ there are little stools if there’s anything at all. So these are examples of how you’re selling coffee. You’re selling better than average coffee. But what you’re doing is creating two very different experiences, and people are in one camp or the other. There are not very many people who say, “Whichever’s closest.” They have a preference. And that preference is because the experience is different, and it’s designed that way very consciously on both sides.
O’Connell: I think one of the fun things that we also discovered — intuitively we believed this, but our research bore it out — was that the principles of service design hold across industries.
Knowledge@Wharton: There are [five] common principles that these companies seem to follow, which makes them good at designing effective service experiences. … The first is that the customer is always right, but to make sure the customer is right for you. Could you explain?
O’Connell: One of the first clichés anyone hears who has ever worked in service of any kind is that the customer is always right. That is not really true. If I go to McDonald’s, I have no business asking for a hamburger medium rare. That’s not what they are designed to do. I am the wrong customer, maybe just at that moment. There are times I’m perfectly happy to go to McDonald’s and get what’s on the menu. But if I want something very specific and custom-made, that’s not the place for me to go.
If I want a luxury shopping experience, I should not go to TJ Maxx, just as if I’m looking for a bargain, I shouldn’t go to Barneys. So, in those circumstances, I am not the right customer. It is incumbent upon both the customer and the company to ensure, and that’s part of that co-creation we were talking about, that companies do two things. They have to decide who the right customer is, and be diligent about serving those customers well. And they also have to be good about communicating who they are. That’s with everything from their branding to the way they look, to the experience that you have when you go on their website, or whether you go into their store, the people you encounter.
You know there’s a very different feel when you walk into a Hyatt Regency versus an Andaz, which is another Hyatt brand. Andaz is their hip, sleeker brand where everyone’s sort of dressed in black and someone’s going to check you in with an iPad. Go into the Hyatt Regency, and there’s going to be a big, ornate desk and people in old-fashioned uniforms. And those are two different experiences. If I’m looking for the sleek, hip — I want to feel cool — I shouldn’t be at the Hyatt Regency. I’ll get a very different kind of experience. It will be a luxury experience, but it will be very different. So customers then also have to understand what they are buying. They need to recognize whether or not they’re the right customer in a given situation.
Knowledge@Wharton: What you just said reminds me of some very interesting research that has been going on at Wharton in the marketing department, led by professor Peter Fader on customer centricity.
O’Connell: Who we interviewed for the book.
Stewart: He actually does make that point, that customer centricity partly depends on your own center of gravity, too. That you want to find the right thing. We did a mini-survey of some professional services firms. And one of the things they said is a big problem is that they are lured from their sweet spot by clients who ask them to do things, because they want to be customer centric, but the customer’s sort of putting them on the wrong foot. And it’s hard to say no.
Our second principle is: don’t surprise and delight. Just delight. It expands or is another turn of the crank around that idea. One of the things we realized is that people say, “Surprise and delight, surprise and delight.” Our point is, focus on delight, and delight is meeting expectations every time. Now if you want to put a maraschino cherry on top of the sundae, fine, but get the sundae right. The problem with the surprise and delight thing is it starts putting the monkey on the individual employees’ back. And it doesn’t focus on reliably, robustly delivering on those promises that you make and that your customer expects. I think it was Frances Frei at [Uber] who said that if you’re doing this, you’re almost institutionalizing the inability to do what your customers expect constantly. And so that’s our second principle.
“Great service should not require heroics, either on the part of the employee or the customer. … It’s about consistency.” –Patricia O’Connell
O’Connell: The third principle is that great service should not require heroics, either on the part of the employee or the customer. So this is an extension of what you were just talking about. It’s about consistency. When I’m delivering a service — so now I’m in the company’s seat — I need to know what I’m doing, and I should be able to do it reliably, repeatably, scalably and profitably. When you start requiring heroics, it means that something is going wrong with the design.
I’m not talking about emergency situations. Of course, you deal with emergency situations. But if you find yourself constantly running around like a fire alarm has just gone off, something is wrong. You are either not designing your services properly, you’re not communicating the expectations appropriately to the customers or you are being lured away from your sweet spot, and that’s a strategy problem. So heroics are an indication to you that something’s wrong. From the customer’s perspective, it should not be impossible for me to get what you promised me. [When you live up to promises] we call those “ahhh” moments. That “ahhh” moment is when a customer knows he’s in good hands.
Knowledge@Wharton: In contrast to those “ow” moments?
O’Connell: So the “ow” moments are the things that companies need to look at. Those are the things that customers complain about. That is a signal that something is wrong, either for some reason you are attracting the wrong customers or you don’t have your services designed in such a way that it’s easy for customers to get what they want, need and have a right to expect from you.
Stewart: Are you easy to do business with? I mean, it’s a simple question and most companies don’t actually systematically ask it.
Knowledge@Wharton: And what is an “aha” moment?
Stewart: An “aha” moment is when I get it. I, as the seller, say, “Aha, I know how this works. I see the pain point. I see the ‘ah’ moment. I know how to fix the pain point. I know how to create the ‘aha’ moment. I understand what we’re trying to do here and how to design it.” This is getting complicated in a world of omni-channel.
This is the fourth principle: You’ve got to be able to deliver to your clients or customers at every point on the journey, and on every channel. So whether I’m on the web, on the phone, in their store, it should feel like I’m in your hands. This — what people are now sometimes trying to call a post-channel world — is critical, and we see all kinds of companies screwing up. In some cases, it’s because they’re still dealing with old computer stacks. Sometimes it’s simply a technical issue. Sometimes it’s an issue of silos and failure to make handoffs.
“You’ve got to be able to deliver to your clients or customers at every point on the journey, and on every channel.” –Thomas A. Stewart
Classically, for a long time, it’s been an issue of the analog guys and the web guys, who just don’t connect. That’s complicated even more, because it’s not just the stuff under my control as a seller. But in service environments, I’m usually working in an ecosystem. It’s bad enough what the airlines can do to me. Then add the TSA (Transportation Security Administration), the airports and the traffic in the transportation system to the airport. There’s a whole ecosystem built around these things. So one of the biggest challenges in service design is to work with ecosystem partners where you may not have authority, but to try to sort of collectively work together to create an experience that you all want to create for the customers you want to serve.
O’Connell: The fifth principle is you’re never done.
That’s really important, because it’s not a static thing. People’s expectations will change, products will change, markets will change, your strategy will change, and you’ve got to adapt to those things. There’s a fine line between you’re never done, and, as we were saying, distorting yourself outside your sweet spot so that you’re no longer recognizable as to who you are. That’s why it really does come down to service design needs to be part of the strategic fabric of the company. All these decisions about service are too often lumped in with the customer service department, where people think of it only as a function of marketing. And marketing is certainly a department that has responsibility for helping to create the notion of what that brand promise is. But strategy is about deciding what that brand promise is going to be.
Knowledge@Wharton: How can doing service design well help you develop a really strong competitive strategy that can take you forward?
Stewart: We created in the book a set of nine archetypes. They’re basically expressions of value propositions. One of the archetypes is the Trendsetter. You know, we are the Apple of whatever industry it is. Another is the Bargain. We’re the Wal-Mart of whatever industry it is. Another is The Classic. We’re the best. You know, we’re the Mercedes of whatever it is. There are nine of them, and you can find almost all of them in every industry. But if you think about these archetypes as expressions of a value proposition, that means they are actually a strategy.
Our strategy is to be the safe choice. Our strategy is to be the best, whatever it is. … Value proposition and strategy are pretty closely related. These help you envision how we’re going to take that value proposition and manifest it in the experience customers have, and also in the tangible evidence of that experience, the look and feel, the things that customers can look at and say, “Yes, that’s what this is going to be.”
When you’re there, that’s really a strategic conversation, and having one of those archetypes in mind, helps. I mean, strategy is partly the art of saying no, right? What you’re not doing and the customers you are not serving. And having those archetypes in mind helps you think, no, this isn’t us. But this is us. We can do this. And this is what it means for the organization as a whole and for the customers we seek.
Knowledge@Wharton: What are the biggest mistakes you find companies make in coming up with service design?
O’Connell: One of the things we did is focus a lot on the companies who are doing it right, which isn’t to say that there are only happy stories out there. There are a lot of companies that aren’t doing it right. But I think a few of the things that we all see just from our own experiences is people don’t walk in the customers’ shoes, literally. You know, try to be your own customer. That’s part of how you find out if you’re easy to do business with. People just don’t think it through. Crazy things that you’ll see that just make no sense. Why do I have to walk from here to there to get something done?
“You’re never done.” –Patricia O’Connell
One of the fundamental things we’ve tried to do with the book is help companies feel empowered. In an age of social media, it’s too easy for customers to just go online and tweet, “I’ve had a really bad experience with X and such,” and then somebody in customer service goes, “We better reach out to this person because … what if this goes viral?” Companies need to feel empowered to be able to make these strategic decisions.
Stewart: One of the biggest mistakes companies make is they confuse customer service with customer experience. Customer service is at the end, and it’s important to make a good last impression. But failing to see the whole customer journey and then failing to make that as coherent as possible are two of the biggest mistakes that we see companies make.
We’ve mentioned five principles. It’s the violation of those five principles: Saying yes to everything every customer asks you to do. Not being coherent. Not being innovative. Requiring heroic efforts or making your customers work too hard. The flip side of those principles is what we see too many companies doing all the time.
O’Connell: That and focus on surprise instead of delight. Why should good service be a surprise?
Knowledge@Wharton: Now, if companies want to become better at service design, what advice would you give them?
O’Connell: They need to be willing to be honest with themselves. It is a gut check, and it’s not always pretty. And I think they need to make sure that it is going into the decision-level making of the organization.
“One of the biggest mistakes companies make is they confuse customer service with customer experience.” –Thomas A. Stewart
Stewart: We’ve created a little equation in Woo, Wow, Win: Customer delight is the product of the customer’s experience and technical excellence. Experience times excellence. And we put five points under each one of those things. Empathy and engineering and the economics of it. And created a quiz you can take. I mean, a report card.
Being honest with yourself sometimes requires “let’s sit down and audit.” And that report card is a way to audit. You can sit down and you can take [the test] within your management team or a diagonal slice of the organization. Also, ask some of your customers or clients to rate you and then you can get a report card. From there, you can begin to see what’s wrong. Another idea is charting the customer journey. Have we looked at that journey? … What is my customer experiencing at each point? What do we want the whole journey to be like?
O’Connell: When you’re mapping, you have to map both onstage and offstage. What the customer sees, what the customer experiences and what’s happening offstage to make it possible.