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 in search of other options. And that’s when I remembered Room Mate Hotels.

Room Mate Hotels is a small chain with locations in New York, Miami, Latin America and Spain. 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 €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.

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.
 

Gymboree's Red Flag percentage has dropped 3 years in a row.  And it started out in very fair territory.  Wow.  That's focus and commitment by a franchise system who is serious about using customer feedback to be the best in their business.

This week we bring you a terrific "Best" gleaned from Gymboree Play & Music in honor of next week's annual franchisee meeting in Chicago.  

And speaking of bests, Annual Meeting at Gymboree brings the best & brightest in early childhood development from all over the world (there are actually more international Gymborees than there are domestic!), as well as a cast of heavy hitters from Gymboree's well-respected apparel side of the business.

Customer Comment:  My daughter Emma is in the Play & Learn 4 class at the Galleria Mall. I can't thank you enough for the program you provide and the wonderful teachers you have on staff. Gymboree expands his world so much in such a safe environment...Love it! 3rd child of mine that I get to take to Gymboree class.

Hats off to Gymboree and their amazing franchisees!

PS.  We make a big deal about the Complaint Line Effect.  We think the REVERSE is also true...a business can gain a sense of powerful momentum as things move in the right direction.  As anyone who has set foot in one of their locations recently can tell, Gymboree is well positioned to do exactly that.

Next time on Best & Worst, we'll share a scathing negative!  (Don't worry...no names.)   If you've got one you'd like to share, feel free to submit it to bestandworst@customerville.com.  If we use it we'll send you a $25 coffee card.

Do you think your average surgeon is smarter than your average retail employee or restaurant staff member? We think so. Which is why it’s such a mystery that managers expect hourly employees to automatically treat customers in ways which so many doctors cannot.

You’re sitting in the doctor’s office and you’re scared to death. Maybe you’re the patient or maybe it’s a loved one, but your anxiety level is high. You meet with the physician, who gathers information, presents a diagnosis and then talks about your treatment options.

Doctors are human, and sometimes their diagnoses and treatments of patients (who are their customers) don’t go as hoped. What’s interesting – and important for any of us who deal with customers of our own – is that the likelihood that a patient decides to sue his or her physician when this occurs has nothing to do with the quality of medical care provided.

A surprising predictor. One of my most interesting take-aways from Malcom Gladwell’s book, blink, was his review of a study involving how doctors interact with their patients and – in particular – how those interactions predict lawsuits.

Instead of clinician quality, the likelihood of a patient suing his doctor has a lot more to do with the types of conversations and relationships between doctor and physician leading up to the point where something goes wrong. In blink, Gladwell writes that they found:

• No correlation between quality of care provided and likelihood of a malpractice suit.
• A strong correlation with a patient’s impression of how he or she was treated – on a personal level –by the doctor.
• That those surgeons who had never been sued spent more than 3 minutes longer with each patient than those who had been sued at least twice. (18.3 minutes vs. 15 minutes.)

Even more surprising, one study which Gladwell references involves participants who listened to recordings of conversations between doctors and their patients. The study participants quickly learned to differentiate between doctors whose tone and manner distanced themselves from their patients, or which might have even seemed imperious or condescending, and those who took even a small amount of time to establish a personal connection with their patients in the process of discussing diagnosis and treatment.

The latter group made orienting statements such as “I’ll take a few minutes to examine you, and we can discuss options”. They explained ahead of time that there would be plenty of time for questions; they diffused tension with humor; they made appropriate small talk along the way to put their patient at ease. Whereas the first group of doctors sounded cool and detached, the latter seemed relatively warm and approachable.

Guess which group of doctors was far more likely to have been sued during their careers for malpractice? That’s right – the doctors who failed to make those personal connections. In short, patients have a lot more patience with doctors whom they have been given reasons to like.

What’s even more remarkable is that the study participants could eventually predict with an extremely high degree of accuracy whether or not a doctor had been sued at least once within his or her career simply by listening to a few random moments of recorded interaction with patients. The difference was that pronounced.

How can someone so smart be so dumb? For a doctor, getting sued for malpractice can be devastating. Personally and professionally it can be a serious setback and very difficult to endure.

So, if failure was this predictable, why don’t more doctors protect themselves? Why don’t they make the adjustments in their bedside manners necessary to lower their risk for malpractice suit?

The answer is: because they’re blind to the risk. They lack the context to evaluate their own interactions and the data to understand the consequences of them. Seeing objectively how your  actions impact customer satisfaction is incredibly difficult, even for someone as highly educated as a physician.

Good Medicine. Losing a customer in your own organization might seem like a far cry from being sued for malpractice, but the cumulative effects of a steady drain of customer defections can be equally punishing on any company.  

There are two lessons that we think you can apply from Gladwell’s chapter on malpractice. First, be sure that you’ve invested the time into talking with customer-facing employees about the importance of their not mistaking a professional tone for a detached one.  

Study participants were able to divine whether or not a doctor was at risk for being sued just by listening to a few random moments of recorded patient conversations.  We'll bet you know just as quickly when your employees are putting you at risk with their approach to talking to customers. Getting this right sets the stage for more and better future discussions. And, as Gladwell points out, it does a great deal to build you a base of goodwill when things go wrong.

Second, be sure that you do everything you can to show employees objectively how customers perceive their interactions with employees.  A good start on this is to implement a policy of complete transparency when a customer complaint arises. If your employees can’t see firsthand how customers felt at how they were treated, you can’t expect them to make changes.

Note: Along these lines, you might also find our post on Name Badges of use.

The other day we read the New York Times interview with Yelp CEO Jeremy Stoppelman.   In the interview, Stoppleman answers questions about class action lawsuits brought against Yelp by a variety of busienss groups.  He blithely brushes aside why Yelp is unfair to retailers and restaurants -- especially among small businesses. 

The Big Risk to Your Sales.  The big risk we see for your business -- which isn't really mentioned in the article -- is that customers searching for your business or your type of business on Google might very well see a random negative yelp review placed directly in the search results...on top of your own company website!

Imagine if you operate a bike store in Houston with 20 great reviews and one bad one.  Because of Yelp's traffic on the web, customers searching for "bike store in Houston" are very likely to see the Yelp review (including a caption of that lousey review) before your own website in the search results.  Before they see your website or even Yelp's own page about you, their first impression is a nasty complaint -- even if it's nowhere near a fair representation of the truth. 

Ask youself how likely it is that this customer's next thought would be "I'm going to get in my car and drive to THAT store!"

This week, B&W features a “worst”.  We won't tell you whose customer this is, but we will point out that this breaks about as many rules of customer service as is possible. 

Customer Comment: “I found a sharp 3/4 inch chunk of chicken bone in my lunch and still have it…I nearly choked!  On going up to the counter I got zero apologies.  To the contrary....the manager said 1) “It’s not my fault; 2) "Well, the meat comes from Cisco and we do nothing to it other than heat it up."   Oh, and he also mentioned that 3) you’ve had *never* had a complaint before...I was a shocked.  What an attitude.”

• Front-line employees need to be empowered to resolve low-level complains like this one on the spot. This is a $5 problem that probably just cost this company the lifetime value of this customer....not to mention many people whom this angry customer knows.
   
• Somehow, this employee made it to the front line of this company without anybody ever having explained how to handle a customer complaint.  Listen & empathize...don't try to win a pointless argument!
   
• Telling a customer to take their complaint and register it on your feedback loop is not exactly what we have in mind.

We get asked all the time for examples of great ways to ask your customers for feedback.  We've shared some success stories about customer feedback on our website, but sometimes a picture is worth a thousand words.

Big O Tire franchisee and entrepreneur Brandon Elder send us this picture of a great window hanger in use right now -- a product if his design focus.  What we love about this is that it's exciting, designed to go right where it'll be seen, has a clear call to action and mentions a nice give-away to the customer.

Awesome work, Brandon!

 Yelp isn't fair to retailers or restaurant operators.  Which is a problem, because Yelp's reach means that a customer searching for your business or one of your locations on Google is pretty likely to see a Yelp review before they see you.

 This week we share a brief PowerPoint deck with some new thoughts on using your existing customer feedback loop to tell your own story on Yelp.

• Keep it focused by concentrating only on those vital cues that drive results.  (For more ideas on this, read Choose One Thing.)
   
• Find a system for streamlining the results so your employees don’t have information overload.  There are a variety of ways – including our software – to do this.
   
• Make it repetitive.  As for feedback and share it with your employee-facing customers regularly.

Here's some awesome video footage recently taken at a Pallino in Seattle -- part of Customerville's upcoming video series.  If you're in the restaurant business, you'll love this!

Pallino is an excellent NW restaurant chain and long-time Customerville client.  Thanks, guys, for letting us capture a few moments in your day!

The franchisor-franchisee relationship is unlike any other in business.  Franchisees are a unique hybrid of the franchisor’s customer and stakeholder, and yet they themselves have responsibility to the franchisor.  Customer feedback provides an important piece of objectivity in troubleshooting that relationship.

I have an interesting view of the franchisor-franchisee relationship by virtue of the fact that Customerville works with franchise organizations all over the world.  We see this remarkable relationship from both sides, both when things are really working well and when the relationship is under stress.  Over the years we’ve seen several franchise organizations use customer feedback not only to drive sales, but also as an important tool for maintaining a healthy franchisor-franchisee relationship.

The Nature of the Relationship.  Franchise relationships are based on the franchisor’s ability to package up an exciting offering in ways that enterprising franchisees can execute in local markets.  This is a real two-way street.  For every aspect of the business that the franchisor must communicate, the franchisee must execute every day when those doors open.

Franchisees can struggle for a variety of reasons, and it’s usually a combination of them.  Some of these are operational reasons that can be fixed, but dealing with operational issues can get tense when the franchisee is also fighting against a broader trend such as the economy. 

A drop in sales usually goes right to the bottom line.  As any franchisee will tell you, he or she is usually the only person in the deal getting paid on spec.  Everyone else – from franchisor to landlord to the tax man – is guaranteed to get paid.

And that can create tension, which we often see in erosion of goodwill between the franchisor and the one group of guys in the world who can help him when things are tough – his franchisor. 

Customer feedback gives clarity.  When we’ve seen franchisors and franchisees get their relationships and the businesses back on track, it usually seems to start with one or both parties taking a deep breath and looking around for objective information.  This isn’t always easy because, frankly, a lot of franchisees don’t come into the deal with a ton of business experience.  All too often, they start to feel like they’ve been sort of taken for a ride, which saps energy from fixing problems.

Looking back over, say, the past year’s customer grades – and how those grades benchmark against other franchisees in the region – can be a good starting place for dealing with that anxiety and moving the discussion in a productive direction.  This is especially true if the franchise community had real buy-in on the questions which are used to gauge the customer experience.  If the franchisee feels that the questions are actionable and realistic, he or she will look at them a lot more clearly.  And an actionable list of things to fix can be a welcome antidote to stressful ambiguity.

You can teach a bear to dance.  I once heard Gary Heil, a business advisor to retailers, say that you can teach a bear to dance, “but you’d better be ready to dance when the bear wants to.”  This is true in this case, too.  Not all elements of customer feedback point to shortcomings on the franchisee side.  Franchisors in this discussion need to be ready to accept responsibility and take action when your customers express frustration about things only home office can fix.

Customer feedback can be a valuable tool for maintaining a healthy franchisor-franchisee relationship, and for putting that relationship back on track when things get stressed.