Max Israel

When introducing customer feedback to your teams, start by taking an honest assessment of their sense of job security. There’s no ‘right answer’ here, but knowing where you stand will help you plan your optimal rollout.
Last week I had the pleasure of joining The Ram Restaurant & Brewery for their annual leadership conference. This year’s conference was in Maui, so it wasn’t too tough to convince me to be one of their speakers.

This is a big year for The Ram – they’re celebrating their 40th birthday. And as I watched them look at last year’s results and plot the year ahead, I was struck by one overwhelming sense: The Ram makes a big investment in their managers, and their managers work and act differently because of that.

The company only very recently started collecting live customer feedback. And – believe me – the prospect of suddenly seeing a location you’re responsible for benchmarked against your peers can create some anxiety.

Looking across a room full of managers, though, I couldn’t see a single look of concern. It isn’t that the company believes itself to be perfect. Rather, they seem to have created a culture where executive management continually reinforces the faith they have in their front-line managers. (Flying the team to Hawaii for a leadership conference, for instance.)

The Faith Factor: It was interesting to see. Not every company’s managers have that sense — and not at every point in a company’s history. This “faith factor” will allow The Ram to very quickly draw lessons and capitalize on feedback it receives from customers.

Of course, there are companies and cultures where managers might have the sense that poor customer feedback levels could immediately result in their walking papers. (And there are times when that can be justified, for sure.)

Getting Comfortable with Feedback. If that’s your company, we suggest that a key component of your rollout involve spending a little extra time getting people comfortable with the notion that feedback isn’t punitive.

One way to do this is with an internal contest for the first 30 days focused completely on getting your levels of feedback up and running by creating awareness among employees and customers alike.

Be sure to spread the word on positive stories that come through, while also consistently messaging to your teams that there will eventually be a time for everyone to focus on areas of opportunity to improve, however for now we’re just working on getting our customers to the table with their feedback. (For more on this, read our post about an employee feedback contest.)

PS. We captured a bit of video while hanging out with Team Ram in Maui. These guys were such fun to watch, we couldn’t resist putting it into a quick “Happy 40th Birthday” video for the guys. Enjoy.

Trendy hotel operator Room Mate Hotels gives us a great look at a type of lean operator who delivers value pricing while still allowing customers to feel cool about themselves.  This format will only get more potent in the coming years.

Events this week took me to Barcelona on Monday, where I also had the opportunity to meet up with an old friend who was also in town.  Comparing notes on our hotels provided a great look at a breed of retailer that we find to be particularly compelling: Companies who merge trendsetter coolness with smart value pricing.  We’ve taken to calling them Dignity of Style businesses.

First, a word about Barcelona.  Cool.  Barcelona is very cool.  And when you go there it’s important to try as hard as possible to be cool yourself.  (This is easier said than done when you design software for a living.)

Sadly, a night at the W Hotel (where my pal was staying) would cost me around €500.  I imagined myself trying to explain this credit card charge at the next budget meeting and quickly went in search of other options.  And that’s when I remembered Room Mate Hotels.

Room Mate Hotels is a small chain with locations in Spain and Latin America, as well as properties in New York and Miami.  Their formula is simple: Their hotels are close to the urban action, but the buildings seldom have great views.  The rooms themselves are usually small or medium sized.

Where Room Mate dominates – and I mean dominates – is in style.  They’re the love child of Steve Jobs and Martha Stewart.  Lots of white and everything cool, and yet you feel instantly at home.  Add to that that their service is fantastic.  The trade-off in views and room size is that a night at a Room Mate property will cost you around a third of someplace like the W.

Why Dignity Matters.  As we’ve discussed frequently this year, America and much of the world have undergone and continue to undergo massive changes in how consumers spend money. We’re all going to be a lot more conscious of where we spend our dollars and euros for a long time.

Would I have dropped €500 or €600 a night on a business trip?  Generally not, and chances are neither would you.  Could we have found a typical business hotel €150 option?  Absolutely.  Would I have felt as cool about the experience?  No way.

Dignity of Style companies like Room Mate Hotel will be increasingly effective because they allow us to balance the necessity of being shrewder than ever with our money with our need to feel like we’re cool – that economizing hasn’t stripped away our personal sense of style and excitement.  And for reasons we wrote about in January an will update again in August, that’s going to be increasingly important in order to compete for consumer dollars.

So, kudos to Room Mate Hotels and – in particular this week – their Barcelona director Pepe Fuxa Soriano who so capably made my stay productive and enjoyable.  We look forward to seeing lots more of Room Mate Hotels – and more Dignity of Style companies of all types in the future.

Have a look at this chart. It shows a continuum of companies and the relationship between their grades and their sales growth.

In the lower left corner, we see companies who get low or very low grades (less than 4.5 on a 5-point scale).  No surprise here.  Sales growth is stuck at zero – or even negative growth.

In the upper right corner of the chart we can see companies who are getting consistently excellent grades – between a 4.5 and 5.0 on a 5-point scale.  And their sales sure show the effect.  This level of grades means that customers’ expectations are being met and even pleasantly surpassed – a fantastic level of service.

Their customers are repeating their purchases – which is to say they’re generating more sales.  And, more importantly, they’re recruiting their friends and acquaintances into your business for you.

Playing Defensive Retail. Companies with mediocre grades find themselves in a dangerous position.  They use their resources and energy in order to replace those customers who simply float away to competitors.  It’s a tiring way to spend your workday – and it saps the life out of a company.

In contrast, companies who get excellent grades not only maintain their clients, but when new customers walk in the doors of their locations they build the business.  On other words, they build sales.  Everyone understands this because it’s intuitive.

Here’s what’s not intuitive. And we want to encourage you to look very carefully at it:  Look at the point where sales growth takes off.  Below an average grade of 4.5 on a 5.0 scale, you’re not really moving the needle.

Only when you get grades above that break point – at the level of excellent – do you see results.  More sales.  They have to be that good to make a real difference.  This needs to be very clear to your employees who are in front of the public.  And to do that, it’s vital that they know at each moment how those customers are grading them and where they can improve.

We’re right in the middle of an implementation for Road Runner Sports‘retail stores. I love these guys and have been a customer of theirs for many years and many triathlons! (Note: Ironman Arizona coming up on 4/13!)

This week we spent some time with Road Runner Sports’ marketing folks to answer their question: “How are we going to get our customers to grade us?” Getting this right is extremely important. Once you have a system in place for your customers to grade you, you should always be inviting them to tell you how you’re doing. There are lots of opportunities to do this, and you always want to be using a mix of at least 3 of them at any one time.
Here are some great ways to let customers know that you’re looking for feedback. Remember, at any one time we’ll only see about three of these in play.

1. Window clings on the shop doors
2. Counter clings at the cash-wrap area
3. Signage in an acrylic frame at the cash-wrap area
4. Printed message on receipt tapes
5. “Grade us!” message with website printed on bags and other consumables
6. Inexpensive printed collateral as bag-stuffer
7. A visible button on the website.Check out how Tully’s does this.
8. Monthly or quarterly blast email to internal customer list, especially if we can send specifically to customers who recently purchased

I’ll post more later about the specifics of crafting this invitation – including offering an incentive – but for now let’s look at just the impact of having a mix. When Tully’s Coffee Company first launched their Customerville platform – telltullys.com – they soft-launched using only a message printed on table tents located around their stores. In the following weeks, Tully’s rolled out a graphic link on their own website which invited customers to grade their experience and then, some weeks later, new and better signage featuring an enter-to-win drawing. Each additional step resulted in a 300-400% increase in customers taking the time to grade their experience.
Customerville’s clients typically mix up their 3-prong approach several times a year to keep things fresh. This communicates both to customers and front-line employees that listening to customers is always a priority.

Enter-to-win sweepstakes drawings are a fantastic way to get customers interested in grading your business. They’re quick, fun and easy to implement. Here are some good things to know about getting this right.
Keep the Farm. I recently saw customer feedback reward drawing for $250,000 and just about went bananas. Let me tell you, if you need to offer your customers a quarter million dollars to tell you what they think of your business, you’ve got problems even we can’t solve!
Our clients nearly always find that a gift-card drawing in the low hundreds of dollars works like a charm. What’s more, you can do the drawing as frequently as you like. Customers tune into the gift card amount, but generally don’t care how frequently you do the drawing. You marketers can almost always find a great PR opportunity around giving the award, too!
Know How To Message. When you advertise or distribute collateral in your stores or restaurants, be sure to get the message right. We usually see the best traffic when the message starts with the headline: Win $XX, and then says “We’d love you to grade us”. The website address should usually be last in line on the page.
Get the Legalese Right. You’ve got to include the rules, and they need to pass muster with your State’s sweepstakes laws. Drop me a line via my profile email link if you’d like our boilerplate version and I’ll make sure you get it.
Is It Really About The Prize? Here’s the biggest surprise: No. Customerville’s system allows our clients to use either a sweepstakes drawing or a printable gift certificate. The redemption rate of the gift certificates is a tiny fraction of the number issued. In speaking with our clients’ customers, many of them express to us the sentiment that it’s not really about the prize. They love shopping with you and just want to be included, listened to and valued!
A well planned sweepstakes drawing or printable coupon is like a warm “hello” when you meet someone new. It’s not essential to the conversation that will follow, but it sure goes a long way toward whether or not they want to talk.