1 Provide Your Customers with Choicescatdir.loc.gov/catdir/samples/wiley031/00043589.pdf · Provide Your Customers with Choices 5 beyond convention. The core of FirstMerit’s customer

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Provide YourCustomers with Choices

How do I love thee? Let me count the ways.—Robert Browning

Most of us want choices, and plenty of them. The un-abashed consumers among us in particular relish thethought of being presented with lots of options,whether we are shopping for shoes or checking into ahotel (even a hospital). The same desire for varietyplays itself out in many forms. If you’re running a busi-ness, you want to know what your software applica-tions service provider furnishes that its competitiondoes not. The more choices you offer your customers,the more likely they will do business with you, ratherthan your competition.

At Nordstrom, one of the ways choice is secured is bystocking stores with wide and deep inventories of mer-chandise—shoes, apparel, and cosmetics from a broadcross section of manufacturers. From its origins in 1901as a modest shoe store to its present form, Nordstromhas always believed that if you offer your customerlength and breadth and depth of merchandise, the lesslikely she will walk out of the store without making apurchase—or two or three.

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2 Lessons from the Nordstrom Way

A typical Nordstrom store carries upwards of150,000 pairs of shoes, with the world’s widest selec-tion of sizes and widths—from 21⁄2 to 14, AAAAAA to Efor women, and 5 to 18, AAA to EEE for men—in a broadrange of styles and colors. Unlike much of the com-petition, the store carries many half sizes. My wife’sshoe size is 101⁄2 narrow; she can buy her shoes only atNordstrom.

Nordstrom has extended the philosophy of provid-ing a wealth of choices to its Web businesses: nord-strom.com and nordstromshoes.com. The latter offersover 20 million pairs of shoes. Nordstrom also reinforcesthe importance of offering choices in its advertisingstrategy. One recent ad shows four distinctly differentlooking men having a business meeting. One man istall, another is short; one is stocky, another thin. Theheadline reads: “Every man deserves a great looking,great f itting suit.”

The idea of choice also extends to other facilities inthe store. A typical Nordstrom store offers its customersthe option of choosing from four different kinds ofrestaurants. An espresso bar located at an entranceoutside the store offers gourmet coffee drinks, Italiansodas, and pastries and cookies to Nordstrom cus-tomers as well as people walking through the mall. Café Nordstrom serves soups, salads, sandwiches, and bev-erages in a cafeteria format, offering a lower priced al-ternative. The Garden Court offers full-service diningwith fresh, seasonal produce and seafood in an elegantatmosphere. The Pub is a clubby dining area that servescoffee and breakfast items from 9:30 to 11:30 AM andsandwiches, salads, cocktails, stouts, and ales the restof the day.

The Pub, which is strategically located adjacent tothe men’s suits department, has turned into such a

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Provide Your Customers with Choices 3

popular lunch spot that it is sometimes diff icult to geta table. In the event a customer has to wait a while be-fore being seated, Nordstrom doesn’t want that preciouscustomer heading out the door to look for an alternative;after all, in a shopping mall or the busy downtown areaof a city, the customer has many, many choices of whereto eat. To ensure that the customer stays, Nordstromgives her a beeper to continue to shop throughout thestore; she will be beeped when her table is ready. Inshort, Nordstrom wants to wrap its collective armsaround its customers and never let them go. A multi-tude of choices make those arms stretch a little bit farther.

When it comes to choices, Costco, Inc., the chain of148,000-square-foot warehouse “stores,” takes a differ-ent approach to customer service, but is met with thesame result. “We thought that a great deal of what wasgoing on in retail added up to a bad customer serviceexperience,” said Costco chairman Jeff Brotman. “Wetold the retail customer: We will not be providing sales-people or locations as convenient as you can get at Nord-strom; we won’t be providing the fixturing, delivery, thebilling, or a vast selection of mayonnaise or tissues. Butwhat we are going to do is narrow down the product as-sortment and cut down the self-select process for you.We’re going to eliminate costs, and we’re going to giveyou the benefit of the cost reduction. And then we’regoing to try to make it easy to get in and to get out.When asked to rate our customer service, customersrate it very, very high—and we have none, in the tradi-tional sense. The service to the customer that we pro-vide is the best value possible in each product. We haveonly 3,500 products. We think about every product thatwe sell. The metaphor for the value you get inside Costcois our hot dog and soda for a $1.50. The subtleties of

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what we do are not lost on the customer, but they arelost on the pundits.” This is proof that a focus on choiceis crucial, but how you approach the issue of offeringchoices should be customized to your business. Youmust ask yourself: What kind of choices do you offeryour customers? And if you think you are offering themplenty of choices, do you think that’s enough?

FirstMerit Bancorporation: Establish a Cultlike Devotion to Selling

At FirstMerit Corporation, a bank based in Akron, Ohio,providing customers with choices is an essential part ofdoing business in the highly competitive world of per-sonal f inance. The bank, which has close to $10 billionin assets, has been growing at a rapid pace for a varietyof reasons, one of which is what American Banker hascalled a “cultlike devotion to selling.”

For the individual account, FirstMerit offers the typ-ical 24/7 type of banking options: strategically locatedbranches, Internet services, and ATM machines for easyaccess and telephone services. Customers are also givenchoices of distribution channels. John Cochran, whohas been chairman and chief executive officer of First-Merit since 1995 explains:

They can do their business when, how, and wherethey want to. That means that they can use an ATM,the Internet, a branch, or a telephone to do their busi-ness. That way, they can define convenience in theirown manner. With that, we want to add the rela-tionship delivery and high quality service that arenot distinctive of larger institutions.

It is primarily in the realm of business banking thatFirstMerit offers a full range of choices that reach

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beyond convention. The core of FirstMerit’s customerbase is some 25,000 small and medium-sized busi-nesses in the very concentrated northeast Ohio market-place. FirstMerit services about 40 percent of thatmarket share in its territory through 177 branches.These customers need the same wide array of bankingoptions that much larger businesses require.

“Breadth and depth of your product line is very im-portant,” said Cochran. “We are considered a smallerinstitution, but we’re also a relationship institution sowe need to have a broad product line that can competewith the big guys. We want to make sure customers donot have to compromise when they choose to do theirbusiness with us. We don’t compromise the productline choices. They get the same kind of capability of so-phistication of product line that they get with the bigguys.” The product line for these small to medium-sized businesses consists of three different elements,which FirstMerit illustrates for customers with a sym-bolic triangle:

1. The f irst element of the triangle supports thebusiness itself through a wide variety of prod-ucts, including all types of credit, depository in-struments, cash management services, pensionand profit-sharing programs, and internationalbanking services.

2. The second element of the triangle consists ofprivate banking services for owners and man-agers. FirstMerit’s private banking centers takecare of personal banking needs such as pur-chasing a home, home equities, investing in education for the customers’ children, estateplanning, and dealing with stock options receivedfrom their company. “We have a special division

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that deals with nothing but building and fund-ing the benefits and the succession planning forthe future management of that company,” saidCochran. “If an owner wants to pass the busi-ness on to an offspring, we have a very sophis-ticated product line that deals with successionplanning. The owner will be able to pay the es-tate taxes in that transfer and to make thatownership transferable with the least amount oftax liability.”

3. The employees of the company represent the thirdpart of the triangle. FirstMerit provide them withpersonal banking products such as checking ac-counts, home mortgages, and credit cards.

“We wanted to build a product line that meets all of the constituencies of a company: The company itself,its owners and managers, and the employees. It’s the re-sponsibility of the FirstMerit banker—and his or herteam—to create the kind of a relationship with that cus-tomer account that will enable them to satisfy every oneof those elements,” said Cochran. The end result is thata strategy for offering choice is def ined by the com-pany’s important consumers and tailor-made to theirneeds.

How does FirstMerit make sure that its wide varietyof choices are offered to—and used by—consumers andthat the company’s long-term goals are accomplished?First of all, to help employees feel comfortable talkingabout those additional products, FirstMerit trains themto be well versed in everything a corporate customermight need. All of the employees involved in selling thevarious bank products are assembled as teams and aretaught each other’s business, which includes a broad

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and detailed explanation of the features and benefits ofeach product and service that a corporate customerwould need. They are taught how to identify that needand how to speak to the benefits of that product. Thebuilding up of relationships among and between theseemployees creates camaraderie and a greater desire tohelp the group.

Just as important, FirstMerit business bankers—likeany good salespeople—are trained in how to deal withcustomer resistance. First they’re told which objectionsto expect from customers and then they’re taught thebest way to respond to those objections. They shouldalso know when to smoothly and politely hand off thecustomer to the FirstMerit service provider who istrained to explain the product in greater detail. “It’s im-portant to build that proper protocol of referral,” saysCochran. “It’s equally important for the banker who re-ceives the referral to acknowledge the employee whomade it happen.”

A frontline employee’s initial contact with a small-business customer often begins with opening him or hera checking account and/or starting a line of credit.After that account is open, it’s time for multiple selling.The employee tells the customer, that now that he’s es-tablished a credit line, he will probably be requiringother group-banking services such as pension, profit-sharing, personal banking, international banking, orcash management. By introducing those products,FirstMerit hopes that these additional options will fur-ther attract the employees of the customer-company intothe FirstMerit fold. Because their boss or the owner ofthe company banks with FirstMerit, those employeesare eligible for some free services, too, a bonus added tosolidify the deal. Says Cochran:

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Our approach is similar to Nordstrom’s. When some-one walks into the clothing department at Nordstromand buys a suit he gets complete attention. Thesalesperson who sold the customer that suit thentakes the customer into another department to sellhim shirts and ties and socks. The responsibility ofthe person who opened that line of credit or checkingaccount is to introduce the customer to the additionalservices.

The most essential component of providing cus-tomers with choices is paying attention to what the cus-tomer is saying. For example, a customer once told aFirstMerit customer service representative that he hadjust been awarded a large monetary claim from an in-surance company for a personal injury. The FirstMeritcustomer service representative immediately referredthe customer to FirstMerit’s trust department, where anexpert spoke to the customer about the necessity for es-tate planning. As a result of this emphasis on multipleselling, FirstMerit employees increased their rate ofsales from less than one product a day in 1995 to nearlyseven products a day in 1998.

FirstMerit employees don’t educate themselves onevery product their bank provides just so they can bealtruistic team players. There’s further incentive—inextra pay—involved in the deal as well. For all employ-ees—from tellers to branch managers—who come in direct contact with customers, 20 percent of their com-pensation is tied directly to their ability to sell the cus-tomer on buying a product that they don’t personallysell themselves. Each employee has a goal of a certainnumber of referrals that result in sales. Another goal isbased on the total dollar value of those closed referrals.

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For example, a business banker is responsible forbuilding $10,000 worth of profitability for products soldby partners in her team. Let’s say a particular trustwas worth $1,000. If that business banker sent the cus-tomer to a trust officer and that trust officer sold thecustomer a pension plan with a first-year profitability of$1,000, that would count for $1,000 toward the $10,000goal. Once the employee reaches that goal, it activates20 percent of her compensation. Employees’ sales trans-actions are tallied every week by a sophisticated $9 mil-lion computer platform system.

None of this success comes by accident. It’s all part ofa corporate strategy. Every January, FirstMerit hosts athree-day retreat called “Camp We Can Do,” where 100executives and managers—referred to as “coaches”—work on particular strategic goals. One year, for exam-ple, that goal was to increase the number of sales fromreferrals within the bank. On that retreat, employeeswere taught all the nuances of trust services and invest-ment products by their coaches. To regularly remindcoaches of the importance of referrals, they are all re-quired to attend a one-day refresher retreat every quar-ter. If you’re going to be offering the customer lots ofchoices, you’ve got to constantly educate yourself.

W Seattle Hotel: Make Your Customer ServicePhilosophy Whatever /Whenever

Created by Starwood Hotels and Resorts Worldwide, theparent company of Westin Hotels, W is a new concept inhotels. Although W is certainly not the most famoushotel brand in the world, it is included in this book because it is an especially customer-friendly serviceprovider, with a mission of providing visitors with a

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completely satisfying consumer experience. I havestayed at the hotel many times and I still remember thefirst: The moment I stepped out of the taxi cab at theLexington Avenue and 48th Street location, I wasgreeted by a friendly young man, dressed fashionably,in black, who served as my escort first to the front desk,and then to my room. There, he went into detail aboutall of the interesting details of my room, from the per-sonal CD player to the comfortable mattress.

W Seattle was the fourth hotel built by the brand,preceded by units in New York, Atlanta, and San Fran-cisco. Coincidentally, another company featured in thisbook, Callison Architecture, designed W Seattle, whichopened in September 1999. It’s important to note thatcustomer-service-oriented companies are more likely todo business with similar minded companies.

As Tom Limberg, a veteran hotelier, who is generalmanager of W Seattle, said,

We’ve charged ourselves with the responsibility ofbeing someone’s home away from home, but with vir-tually no knowledge of what that home is all about.Consequently, we have to have the ability to providechoices and offer alternatives. Sometimes a customerwants something that we can’t provide. Maybe it’snot available. Maybe it’s something we don’t do. Ourphilosophy is to stay away from the “N” word (“No”).We hate the “N” word.

Of course, the brand would never do anything ille-gal, but there are many ways to make a customer feelthat he or she is being taken seriously. Providing alter-natives—choices—is the best way to stay away from say-ing “No” to the customer. If you can’t provide A, perhapsyou can provide B. “For example,” said Limberg, “Every

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room in our hotel comes with a Sony CD stereo playerand a videocassette player—in the event that you don’tlike the movie that our in-house service provides. If youcalled down to the desk and wanted a movie that wedidn’t have, we would most likely go out and get you oneat a local video store. That type of request is directed toW Hotel’s customer service department, which is calledWhatever/Whenever. That is our service mentality.That’s what they do,” explained Limberg.

The first week W Seattle was opened, a guest wantedto plug his laptop into the in-room high-speed Internetaccess port at the desktop. One problem: He had for-gotten to bring his Ethernet connector. “It was veryfrustrating for him,” recalled Limberg. “It was very frus-trating for us, too. Linc, who is our lead Welcome Am-bassador (the equivalent to a bell captain), is verycomputer literate. He searched around and finally foundan Ethernet connector on one of the laptops that we usein our purchasing department, and he brought it up tothe guest’s room. Not having that connector knockedpurchasing out of the water for a few hours, but thatwas okay because it happened at the waning part oftheir day. Most importantly, we rallied for the customerand provided him with what he needed.”

As happy as he was to find a solution, Limberg wasjust as pleased that an employee was comfortable goinginto the administrative offices to get some results. “Lincdidn’t feel like there was a skull and cross-bones on thefront door of the administrative off ices saying: ‘Solvethose problems up there; we’re busy with paper work,’ ”said Limberg. As a result of that episode, the hotel isnow creating “an inventory of things like that for What-ever/Whenever, so that in the future we can more eas-ily facilitate those types of requests.” A crucial lesson to

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be learned from this story is that companies need to em-power their employees, in order for them to be able toemploy superb customer service strategies. Communi-cation between employees and a shared mission arecrucial components of empowerment.

W Seattle, which is on the corner of Fourth Avenueand Seneca Street in the heart of downtown, has a totalof 426 rooms—250 of them come with king-size beds—and two f loor plans. One f loor plan consists of 80 L-shaped units called the “Cool Corner Kings” (becausethey occupy the corners of the building), which havef loor-to-ceiling windows, and dramatic entryways.These popular rooms have been in high demand sincethe hotel opened. The second f loor plan has the identi-cal view of downtown and Elliott Bay, but with a differ-ent window arrangement—instead of the f loor-to-ceilingwindows, each room has a window seat.

“Our approach to room types is to maintain our in-ventory and know where we are on that inventory,” saidLimberg. “If a customer makes a specific request and weknow that we’re not going to be able to satisfy that re-quest, the time to address that and to provide the bestalternative is when we take the reservation. I’m a big be-liever in keeping the customers in the loop. Include themin the decision. Give them the news—good, bad, or in-different—as quickly as you have it. You can’t put offthat decision. We don’t want our guests to think for amoment, a day, or a week between the reservation pro-cess and their actual arrival that they might be gettingsomething that they’re not going to get.” The importantmoral here is be honest with the customer and she can’tbe disappointed.

Limberg has found that customer complaints, suchas not getting the type of room that was requested,

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frequently end up on his desk, and he’s glad they do. He says,

I’ve always found that when you’re in a conversationwith the customer, it almost always boils down tothis: “If somebody had just let me know, I could havemade other plans.” We need to be on the same pageas our staff—we call them cast members—on howwe treat the customers, so we’re not going in differ-ent directions.

In customer-service-oriented companies, consistencyfor the consumer is always important. When a customerdoes not get what she wants, Limberg believes that it isnot necessary to fully explain why the company was notable to fulfill the request. Communication with a guestshould be on a need-to-know basis, says Limberg:

Another source of our problems is that we sometimestell customers more than they need to know. Theydon’t need to know the drama or minutia or what’sgoing on behind the scenes. There’s supposed to be alittle sizzle—a little magic—when you get here. Theydon’t need to know exactly how we do it. They justneed to be the recipient of that magic.

Like Nordstrom, the W Seattle offers several differ-ent restaurant services. The sleek lobby bar, like the barat the W New York, has quickly become a place to seeand be seen. The main restaurant, Earth and Ocean,which was created by the Myriad Restaurant Group, waswritten up in The Wall Street Journal just a few weeksafter it opened. The W Seattle is surrounded by excel-lent restaurants within easy walking distance, but thehotel wants to give customers the choice of stayingcomfortable and dry, rather than go out dining in that

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familiar Seattle rain. Extending services slightly beyondexpectations goes a long way toward keeping the cus-tomer happy.

USinternetworking: Respond Fast and Not Just to Your E-Mail!

USinternetworking (USi) is a pioneering ApplicationService Provider (ASP) founded in 1998. ASPs have aprofound impact on how companies employ their inter-nal software systems. ASPs like USinternetworking rentout access to computer software and hardware to busi-ness clients, a service that includes providing accessover the Internet.

Business-to-business client service in the technologyindustry has specific requirements.

In order to be able to explain how business-to-business client service in the technology industryworks, it’s important to understand the business moreclosely. USi procures master licenses to programs thatcorporations use to operate enterprise applications suchas accounting, e-mail, e-commerce, e-procurement, and human resources, from software vendors such asMicrosoft Corp., PeopleSoft Inc., Siebel Systems Inc.,Lawson Software, Ariba, Inc., and BroadVision Inc.Clients pay USi a fixed monthly fee to run and managethe software programs. They are run on USi servers atseveral sites around the world. The customers tap ineither through the Internet or over telephone lines thatare specifically dedicated to the software programs. Be-cause these systems are costly to acquire and diff icultto install and maintain, USi was a much needed re-source and was able to create a crucial niche service fora broad cross-section of small, medium, and large

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companies such as Hershey Foods Corp., Liberty Fi-nancial Cos., Knoll Pharmaceutical Company (BASF),stockbroker Legg Mason Inc., and Franklin Covey, theparent company for the organization of business self-help guru, Stephen Covey, author of The 7 Habits ofHighly Effective People. To attract these high caliberclients, USi offers a suite of products that are tailored tof it individual clients’ needs for managing f inances,human resources, product lines, and electronic com-merce for a variety of software platforms. Says JohnTomljanovic, USi’s Vice President of Client Care:

What the client gets depends on the need that theydefine. If a client wants a system that can handle ac-counts payable, accounts receivable, and generalledger information—then they will want one type ofproduct. We will work with them and recommend thebest solution, customizing to their requirements. Wedon’t hand them an out-of-the-box package. We workwith the client to understand what their businessprocesses are and what would make the most sense.Technically, accounting is accounting, but each com-pany does it a little differently. The difference is dic-tated by their business processes.

After the programs have been installed, USi gives itsclients the option of contacting and coordinating withUSi via e-mail, phone, fax, or dedicated Web sites. All of the applications that the company sells to clients areInternet-based, and therefore easily accessible any-where in the world. “We want our clients to feel com-fortable that they have any number of ways that theycan reach us for assistance,” emphasizes Tomljanovic.

USi’s philosophy is that regardless of the number ofcommunication choices that it gives to its clients, every

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call to USi must result in a successful resolution of a re-quest or service problem. We give our clients the optionof calling us on the phone if they prefer hearing ahuman voice,” said Tomljanovic. “But we also want themto feel comfortable sending us an e-mail and to knowthat we are going to work on their problem just as dili-gently as we would on a telephone call that comes intoour help desk.”

USi has mapped out detailed procedures for everyone of the communications options—e-mail, phone, Web,or fax—that clients can use. “When we first started tolook at how we wanted to structure things, we knew wedidn’t want to create a big help-desk pool of people thata client can call into via a single 800 number. In thatscenario, anyone who is sitting at a desk can answer thephone and try to help the client,” Tomljanovic told me.“We wanted to set it up so that on that f irst call, wecould answer 90 percent of the questions that a clientcould have for us.”

Consequently, USi took a different approach by cre-ating Client Assistance Teams—known throughout thecompany by the acronym CATs—which provide dedi-cated service to designated clients.

CATs are involved with the [implementation] processup front. At the very end of the [installation] lifecycle, after our implementation teams have had theopportunity to customize the applications to f it intothe client’s business processes, CATs are trained tofully understand what’s been done and will knowhow to service the client based on the client’s uniqueapplication.

An account manager is responsible for each CATteam, which consists of Client-Care Associates, who

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work for that account manager. Each CAT is dedicatedto satisfying the service needs of from two to six differ-ent clients, depending on the magnitude and size of the customer and the specific applications and servicesfor which they contract with USi. In the case of all busi-nesses that offer complex services, the question of howto provide adequate follow-up service must be answered.

USinternetworking aims for a much more personalexperience between client and provider than that of the usual help desk model. As Tomljanovic explains, “Wewant to get to a point where if the client calls in, theyknow the person they are talking to. They don’t have toexplain what their system does or what they are tryingto do in the big picture because the members of thatparticular CAT team are familiar with that client’s sys-tem and how it has been custom-implemented for thatparticular client along with the more general goals ofthe client.”

In all businesses there exists the danger that by thetime the right person is on the line with the client orcustomer, he or she has already been bounced aroundfrom one anonymous voice to another, and is alreadyfuming. I’m sure you, gentle reader, can relate to a sim-ilar scenario. Every customer-service-oriented businessmust have a plan to make sure that doesn’t happen.

When USi receives an e-mail from a client duringbusiness hours, it is the company policy to respond tothe client within 20 minutes, letting the client knowthat the e-mail has been received and that the companyis dealing with the nature of the correspondence. Notonly does the USinternetworking client receive personalcare, but also he receives the assurance of a timely re-sponse, no matter which method of communication theclient chose.

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St. Charles Medical Center: Educate theConsumer to Make Intelligent Choices

Within the health care industry, the most cutting edgehospitals and medical centers are realizing that theirpatients are, in fact, their customers, and that thosecustomers want the same kind of choices that they areafforded in real life. “Patients being viewed as customersis a totally foreign concept in health care management,”said James T. Lussier, chief executive off icer of St.Charles Medical Center in Bend, Oregon. Traditionally,hospitals approach patients as if they have no otherchoices. Lussier asks, “Would you go into Nordstrom ifthe first thing they did was stick you in a waiting roomand say ‘I’ll be back in an hour’?”

When he was promoted from president to CEO at St.Charles in 1989, Lussier envisioned a hospital that com-bined the operating eff iciencies of top manufacturingcompanies with the customer-service emphasis of topretailers. “Our competition is not the hospital down theroad or some doctor’s off ice,” said Lussier. “It is thestandards that are being set by the Nordstroms, Lands’Ends, and Staples of the world. Patients want to knowwhy those standards can be achieved at those com-panies, but not with us.”

Choices are essential at St. Charles. “I think multi-ple offerings are especially critical in health care pri-marily because the general public tends to perceivehealth care as including primarily doctors and hospi-tals,” said Lussier. The system has been rather exclu-sive, that is, anything that doctors don’t feel comfortablewith summarily gets excluded from consideration. Asan example, I hear patients all the time saying thingslike, “I’m going to an orthopedist, but I can’t tell my orthopedist that I’m also going to a chiropractor.”

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St. Charles has approached this situation in a wide va-riety of ways. The medical center is making majorthrusts into preventative programs and education thatempower patients to feel in control, and making surethat patients know that if there is an issue that they areinterested in, then the medical center is interested in itas well.

Part of St. Charles’ mission statement is to educatethe patient to make intelligent choices. “Empowermentis not just about consent to procedures,” explainedLussier. “It’s about knowing every possible approach toa particular illness or disease and being able to makeinformed decisions.” Coordinating the communicationbetween a patient and his or her different doctors—whomay have philosophical disagreements with each other’spractice—has been difficult. Still it’s important to makesure the patient knows what the different approachesmight be. Of course, it’s not always easy to offer thistype of service. “One of the issues that we have to faceis that it’s very diff icult for us to control the behavior ofa physician outside the confines of the hospital,” saidLussier. “We’ve got to bring those doctors into the orbitof the hospital. One way of doing that has been addingdifferent services to the hospital, such as massage ther-apy and music therapy.”

Lussier believes that the hospital has two prime cus-tomers. One is the physician, who exerts primary con-trol over what patients have access to and what thehospital can do for the patient. The other is the patientand, by extension, the general public. “We’ve actuallyutilized patient education to bring about change in thephysicians’ approaches to practices. The patient willcome into a doctor’s office in a totally different frame ofmind after being educated as to the various alternativesfor treatment,” said Lussier, who admits that, “Doctors

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have been known to get together to f ire the renegadeadministrator who is pushing the envelope too far.”

St. Charles regularly conducts educational forumsand offers a wide variety of patient services:

For example, we have an institute for health andmedicine that is very symptoms-related. It is nottreatment, per se. It’s looking at lifestyle, how peoplemanage stress, and how we can educate them as towhat the various alternatives are before they ever getinto the acute health care system. The patients whoparticipate become very knowledgeable about theirparticular practices and approach to diabetes or heartdisease. They are not so willing to jump straight intohaving a bypass surgery or angioplasty. They knowthat they might be helped by some changes in diet orthey might find a better alternative to manage stress.

Lussier admits that St. Charles is only part way to-ward its goal of dramatically changing the attitude ofphysicians regarding offering patients a wide variety ofchoices so that those patients can be participants intheir own healing. “The problem with the old healthcare system is that the physicians designed it,” saidLussier. “They are very interested in designing the newsystem, but that’s not going to happen. The consumer isgoing to design it.”

It’s not surprising that physicians generally are di-vided into two camps. Some are “really getting excitedabout the new customer-driven business model that af-fects us all,” said Lussier. “But there are others who re-sist wholeheartedly.” Lussier believes that the Internetis going to continue to have an increasingly profoundimpact on all aspects of health care, not only on hospi-tal services but also on how physicians manage their

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practices. He predicts that eventually every doctor willoffer patients a choice of consulting that doctor’s Website and the ability to communicate via e-mail.

With the surplus of healthcare-related Web sitespopping up all over the Internet, if patients can’t accessthe information they need from their physician, theywill get it somewhere else, such as through their insur-ance plans. These days, patients are no longer com-pelled to physically visit a doctor’s off ice to f ind outwhat their alternatives are. They have the choice ofdoing their own research from home and as a result areable to ask better questions as they and their doctorswork through to decisions.

St. Charles uses a variety of methods to get the wordout to patients that its many services are available. Al-though the hospital uses public service announcementsand direct advertising, the primary vehicle is personalcontact. “About 60,000 people from Bend and CentralOregon have some sort of contact with St. Charleseither via visiting the Emergency Room or being admit-ted as a patient, or having experienced out-patient ser-vices,” explained Lussier. “So, they see the valuableadditional services that we offer and experience our de-sire to inform the patients about all their options firsthand. It’s word of mouth that is the most powerful dif-ferentiator in our business, so we depend on our cus-tomers to spread the news. People in this region areaware of the choices we offer.”

Feed the Children: Make Life Easy for Your Customers

Feed the Children, may be a nonprofit charity, but thisinternational hunger relief organization must still

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function as an effective business. Management under-stands that donors respond to choices, and the morechoices they have, the more often they will donate—andperhaps in increasing amounts.

Based in Oklahoma City, Oklahoma, Feed the Chil-dren is a provider of emergency services in times of hur-ricane, f lood, earthquake, and even manmade disasterssuch as the Oklahoma City bombing. The organization’spriorities are providing food, education, and medical as-sistance. As explained by Paul Bigham, vice presidentof donor relations:

Feed the Children is a conduit through which donorscan accomplish what they want to. We match upneeds with resources. Our job is to match those whohave the resources—and who want to give—withthose who have the needs. We treat every donor likean individual. There are economic realities that wehave to deal with, but our goal is to be as close toeach individual as we possibly can; it makes eco-nomic sense to do so. Feed the Children operates pri-marily through its own valuable transportationsystem. For example, we may know that there aregoods available in San Francisco and that there arepeople who need them in Los Angeles.

The organization has more than seventy trucks thatare dispatched to pick up food, diapers, mops, brooms,and shovels or whatever needs to be picked up and de-livered to wherever the needs are. “We can arrange thepick up and delivery of those goods from Point A to PointB, whether with our own vehicles or some other means,such as drop shipping. We don’t move anything unlessit’s consumable. Once something reaches its shelf life, it has X amount of days by government standards to

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be consumed without creating a harm to the public,”Bigham told me.

The organization works with a broad network of6,300 large partner organizations, such as the Dal-las/Ft. Worth Metroplex Food Bank, which have boththe capacity to store goods and the connections to down-line the goods to an even broader network of some25,000 smaller community service providers in all f iftystates and the District of Columbia.

Bigham compared Feed the Children’s network to atypical marketing distribution system of wholesalersand retailers—from Frito-Lay to the local IGA super-market. For example, Feed the Children had a donor inOrange County, California, who wanted to sponsor atruckload of food. (A truckload can range from 25,000to 45,000 pounds of food, depending on the goods in the shipment.) Feed the Children found a lead partnerorganization—in this case, the Orange County RescueMission, which has a system of a couple of dozen smallergroups, such as soup kitchens, church pantries, and local food banks, which distribute the goods into thecommunity.

Increasingly, according to Bigham, the crucial choicefor donors is f inding an organization equipped to pickup and distribute the goods. Quite often, a manufac-turer of a food product finds itself—for a variety of rea-sons—stuck with excess product that must be disposedof to make room in their warehouses for new product.Rather than throwing these goods into the dump, man-ufacturers want to find a way to get them to the indi-viduals who need them. And they must be reassuredthat these goods won’t be sold on the black market,resold to a third party, or subject to any kind of productliability. That’s where Feed the Children comes in. Larry

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Jones, the evangelist who founded and heads the orga-nization, has committed to picking up anything that’savailable within 72 hours. Bigham explained:

For example, if a diaper manufacturer f inds itselfwith diapers on their warehouse f loor that they needto get rid of right now, we can go and pick them upand distribute them. We try to make it easy as pos-sible on our customers—who, in our case are calleddonors—by giving them as many ways to give as weare physically and structurally set up to do. Whenwe can’t do that, we try to create a way so thatdonors can give what they want to give in the waythat they want to give it. We f ind ways to do goodthings with product that normally can’t get into thestream of commerce.

Like any other freight transportation company, Feedthe Children calls on customers and receives calls fromcustomers. “We will call on manufacturers of beveragesor snack foods or canned goods or diapers or buildingmaterials and tell them that we need X product for Ypeople and we need it by Z date,” said Bigham. “If theycan do it, they will; if they can’t, they don’t. That’s thebasis we work on. If you’ve got it, that’s great. If not,we’ll try you next time. They always have the choice tohelp or not to help.” Sometimes the call is initiated bythe donor/customer. Bigham recalled one instancewhere a major beverage company discovered a typo-graphical error on labels that it had already applied toits bottles. After the company calculated that it wascheaper to dispose of the bottles than it would be to re-move the labels and put on new ones, they contactedFeed the Children, but with one primary stipulation: the

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product could not be distributed in the company’s nor-mal markets.

“We said we could send it internationally for them,”added Bigham, who noted that Feed the Children hasprovided assistance to more than 75 countries. “Theyasked where it would go. We told them. We arrangedeverything for them. The company was excited because(1) we disposed of the product for them, (2) it didn’t haveto be poured down the drain, and (3) children in thisthird-world country were able to be treated to this in-credible beverage that had just one f law—a typo on thelabel. Those kids didn’t care what the label said. It wasa gift from heaven.”

Another time, a donor needed to get rid of a boatloadof bananas because of tariff considerations, and askedwhat Feed the Children could do with it. “We said, ‘Giveus 30 minutes and we’ll figure it out,’ ” Bigham recalled.“We picked it up in a port in the South and were able togive it to service providers in the Carolinas and Georgia,who distributed the bananas to rescue missions, soupkitchens, and individuals in the country and the innercities. That was a real delicacy for the people whoneeded it. That was a very unusual situation, but wehad the capacity to move those bananas.”

Feed the Children affords individual donors thechoice of where they want their donation to be sent, do-mestic or international. They can earmark their gift tovirtually any community or organization in America aslong as it’s economically feasible. “Some organizationscan’t do that because of their structure, size, longevity ofexistence, and so on,” said Bigham. “We can’t always doit internationally because of government restrictions. Butwe are able to get more food into restrictive countries

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than most any other organizations because we have anetwork system set up to do that.”

Donors have a wide variety of options for giving. Adonor could send a check for a single gift that wouldallow Feed the Children to purchase food at the price of14 cents a pound. A donor could join an affinity groupwith other donors called the “Thousand-Pound Club,”which sponsors the purchase of a thousand (or twothousand or three thousand, etc.) pounds of food. An-other option is to buy a total sponsorship of the costs ofa truckload of food—weighing between 25,000 and45,000 pounds)—or a partial share, ranging from a six-teenth to a half. In 1999, the cost of that truckload was$5,400. For that sponsorship contribution, Feed theChildren provides the donor with tangible, physical in-volvement with its service. For example, an individualwho wants to sponsor a truckload of food can come tothat food drop and be on site and watch it be unloadedand distributed. Bigham recalled:

We had one gentleman who grew up in WilliamsonCounty, West Virginia, which is near the depth of Appalachian poverty. He grew up a barefoot coal boyliving up in the hollers [hollows]. He became very suc-cessful and today is the owner of several automobiledealerships in Central Florida. He wanted to sponsortwo truckloads of food for the impoverished countywhere he grew up. He went back with us andwatched that food being unloaded. He didn’t want tosay a word. He didn’t want to be spotlighted or in-terviewed on radio, television, or newspapers. He justwanted to put food back into that county. When hewas asked to speak, he couldn’t. He was so chokedup; he had a lump in his throat. His wife spoke for

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him. Look what this gentleman bought for $5,400.That was his choice.

Operating on founder Larry Jones’ philosophy thatthere is no wrong way to feed a hungry child, Feed theChildren’s attitude on providing choices is that, “If we can legally, morally, and economically structure agift that accomplishes what the donor wants to accom-plish, then we’ll do it; we’ll f ind a way within those pa-rameters,” said Bigham. Talking about Jones, Bighamwent on:

Larry is a pastor, a minister, an evangelist, and a hu-manitarian. He’s also very entrepreneurial and anastute businessman. Ever since he founded andstarted this organization in 1979, he knew that un-less you give good service and offer a good product,people aren’t going to buy from you. In this case, ifwe don’t have a good service, people aren’t going todonate.

One of the things that we are seeing in the gen-eral marketplace is convenience in packaging. We areseeing that as well in the philanthropic and human-itarian areas. As a result, we are constantly lookingfor ways to package humanitarian and philanthropicefforts in the most expedient manner.

One of the true essentials of fund-raising and de-velopment is watching the numbers; watching themarket. We are very market driven. We are ref lectiveof where the market is going and what the marketwants to do—if it f its within our charter. It’s almostan arrogant stance if you don’t move with the mar-ket. You’ll dry up and blow way and your service willdry up and blow away. Why not feed more childrenby following where the market has an interest? We

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don’t do massive market research, but we watch ournumbers. When we send an appeal out, we watchhow the response comes back in. When we talk aboutCountry A or State A, and people don’t support it, weget the message that that’s not an area they want tosupport. The reality is that there are certain coun-tries that don’t generate a huge interest in support. Ifwe talk about Country B or State B and people sendin their gifts, we say, this is what people want to do.People can be extremely specif ic—they’ll want fooddelivered, for example, only to Hazard County, Ten-nessee—or they might be more general: deliver it any-where east of the Mississippi River.

But even if the market does not favor a particularcountry, that doesn’t mean Feed the Children will nottry to help that country. When donors f ill out a form directing where they want their money to go, they havethe option of checking a box that says, “Where NeededMost,” which enables Feed the Children to make the de-cision where disposable, discretionary funds can bespent. Bigham said the organization does not want tobe so market driven that they end up sacrif icing whothey are.

Feed the Children offers a variety of options for in-dividuals and corporations to participate in their pro-grams. Individuals can designate a donation to bededucted from their paycheck or their checking or sav-ings accounts. They can give a straight cash gift or donate a product or both. Companies can help sponsorevents or concerts. They can arrange for their employ-ees to unload food or other products from Feed the Chil-dren trucks as a community project.

Many corporations find that a tie-in with Feed theChildren translates into goodwill in the community

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and improved sales. For example, the owner of an oil-changing service once advertised that for three weeks,he would earmark $5.00 out of every $19.95 oil changein his 27 different locations for Feed the Children. “Hereceived great exposure on television, radio, and news-papers,” said Bigham. “He got people feeling good abouthim. He expanded his public profile. He created betterbrand-awareness and loyalty. This was part of his per-sonal and spiritual and humanitarian beliefs.”

Feed the Children is associated with several high-visibility entertainers and sports people, such as record-ing stars Garth Brooks, B.B. King, and Ricky Skaggsand Dallas Cowboy football stars Troy Aikman and Em-mitt Smith. “Garth Brooks has a real heart for hungrychildren,” Bigham told me. “He’s looking for a way tohelp get food out to those who need it. When he has aconcert, he asks people to bring a can of food and giveit to Feed the Children. That’s a choice for him.”

Charitable organizations are all keenly aware thatover the next several years, trillions of dollars in wealthwill be transferred as the older generation passes on.The people planning their estates are faced with a myr-iad of choices of where that money should best go—tothe government, to their children, or to a nonprofit.

As a nonprofit, Feed the Children offers people thechoice of shielding or deferring taxes. Feed the Childrencan be designated in an estate as a trust or a charita-ble remainder trust; it can receive a bequest. If a donordoesn’t want to give cash, he has the option of donatingthrough stock transfers or appreciated assets. A donorcould also set up a perpetuating charitable legacy or get his or her name on a wall or a building or a project.It all comes back to choices.

“In 24 years of working in nonprofits, I’ve found that,above all, donors want to have confidence in a system,”

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said Bigham. “Donors have donor remorse just like buy-ers have buyer remorse. They ask themselves: Did Imake the right decision? Is this organization going todo what they said they were going to do? It’s up to us toreinforce to that donor that (1) they’ve made a goodchoice, because it is going where they want it to go; andthat (2) we have used that dollar economically and effi-ciently, so they see they have made a wise decision.

“So, we send back information to the donors—notsubstantiating every single dollar that comes through—but substantiating the programs that we have, giving a tangible, visible, aural representation of where thatdollar went and how it was used. People don’t want togive the guy or lady on the street a dollar. They want togive the dollar to the organization that has the struc-ture so they can see that the dollar goes for food.”

All businesses can benefit from attempting to pre-dict questions from their customers. The people at Feedthe Children understand that they also have to answerthe question that the donor is thinking to himself, butdoes not say out loud: What’s in it for me?

“When a donor asks that question,” says Bigham, “wehave a long list of answers. We can say, ‘Your donationwent where you wanted it to go, it was economically de-livered, it reached people that you couldn’t reach by your-self, it protected you from being in the environs whereyou don’t want to be in. The essence of truth in all we dois to try to answer that question so that the customer issatisf ied.” On a spiritual level, sometimes people givebecause they want to have certain spiritual precepts re-inforced. “At Feed the Children,” said Bigham, “we aredoing what we do from both a professional perspectiveand a spiritual perspective because we know that ‘therebut for the grace of God go I.’ ”

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Mike’s Express Carwash: Help the Customer toMake Sound Decisions

Some companies are popular because they’ve simplifiedthe buying process by making all the choices for you.One of those companies is Mike’s Express Carwash, a19-unit chain of automated carwashes based in Indi-anpolis, Indiana, which offers its customers speed, highquality, and attentive service.

Mike’s offers customers a variety of choices. There’sa package that includes a wash, Mike’s Clear Coat (aspecially formulated product that adds shine and pro-tection to a car) and Wheel Bright (a process that re-moves the brake dust to product shiny and cleanwheels), as well as another package that includes awash, Mike’s Clear Coat and an underbody wash. Thedeluxe package is called “The Works,” which comprisesa wash, and underbody wash, Mike’s Clear Coat, andWheel Bright. Machines perform all of these tasks,which are also available a la carte.

“The concept is that the customer stays in the car,and when he leaves, it’s completely cleaned, dry, andshiny,” explained Bill Dahm, whose father and unclestarted the family company in 1948, and ran it for 30years as a full-service business. “I emphasize the word‘dry.’ In many exterior carwashes, the customer has toget out with a towel and dry their own car. We have allthe technology that provides for detail-oriented qualityin a very short period of time.”

As Dahm sees it, the typical carwash has what hecalled “task interference.” The operators of that kind ofcarwash “come up with all these things that customerswant. But they don’t realize that trying to be everythingto all people, slows your operation down. “If an operation

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like ours runs too slow, people will choose not to comeoften because we live in a society where people’s time isthe currency.”

Mike’s Carwash does not offer customers the choiceof having the inside of the car cleaned because that jobis too labor-intensive and time-consuming. Instead, itdoes provide high-suction vacuum cleaners to cus-tomers who want to clean the interior themselves. Mikealso provides space on its property for people to do that.A vending machine supplies extra cleaning supplies forwindows and dashboards. Again, all of those materialsare for self-service. Offering lower grade service of non-specialty tasks is a good tactic for all businesses thathave to factor in the customer’s time. Explains Dahm:

For a dollar, you get four minutes of sweep time.Many customers don’t do that every time. They maywash it three times, and on the fourth time, do thesweeping. Mike’s is selling actual speed as well asthe perception of speed to its customers. At most car-washes, you drive by and you’ll see 20 or 30 peoplewaiting. At ours, it’s three or four. People driving bysee that they can get right in and right out. There isa psychological factor; long lines inf luence a person’sdecision of whether it’s worth taking the time to gettheir carwash.

“Most people don’t go to carwashes to just visit,”Dahm quipped. “It takes too long. I’ve never seen anycarwash company that gets its customer in and outfaster than we do. They are in and out in two minutes.Very seldom will you see a line at our carwash. That’swhy we call our concept Mike’s Express. We startedusing the word Express before it was popular, back in1978. Some companies give people all kinds of choices,

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but a simple approach to choices work for us. One of thebiggest things we’re selling is a very fast experience.”

Continental Airlines: Offer Customers Choices They Will Pay For

Gordon Bethune, the chairman and chief executive of-ficer of Continental Airlines, takes a refreshingly real-istic view toward providing his airline’s passengers withchoices:

Just asking people what they want, they’ll write youan epistle. So, we don’t ask customers what theywant. We ask them what they want that they willpay for. If they won’t pay for it, we don’t feel the needto work on it because it adds no value. Passengerswould like extra legroom, but they won’t pay for it.Passengers want somebody who is nice, who doeswhat they say they’re going to do, and who gets themto their destination on time.

Like every other airline, Continental offers the usualchoices—First Class or Coach seating; aisle or window;chicken or f ish—but it also offers choices of how cus-tomers want to buy their seats. “You’ve got differentkinds of customers, so you have to use the mode thatthey want to buy from you,” Bethune told me:

Some people are 100-percent price sensitive. Theydon’t care about Continental or any other airline. Weneed to know that. So, we and other airlines sell ourexcess, distressed inventory on Web sites such asPriceline.com, where the customer doesn’t knowwhich airline he is going to take or how many stopshe’s going to make. That customer just cares about

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the price. If that’s what he wants, we’ve got it for him.

The second category of customer is loyal to Conti-nental and wants the best fare while taking advantageof the company’s frequent f lyer program or service lev-els. Those people come to the Continental Web site,which offers lowest price Continental airfares. “Weguarantee that you will not f ind a cheaper Continentalticket than what you can buy on our Web site. Youmight f ind a match, but you won’t f ind it for less,”Bethune promises.

The customer in the third category wants to viewContinental in the context of United, Delta, American,and others. So in mid-2000, Continental and 26 othercarriers banded together for ownership of a Web sitethat is managed by a third party and will have a hy-perlink to each airline’s Web site. Unlike online travelWeb sites, where airlines pay for preferential place-ment, the new site, called Hotwire.com, will offer acustomer an objective look at prices, according toHotwire.

My favorite Continental Airlines’ choice is the op-tion to carry on a bag that is bigger than those allowedby the other major carriers. Bethune was moved tomake that decision when he was f lying out of the SanDiego airport and witnessed a confrontation betweensecurity guards and a Continental passenger over thesize of a bag that was too large, according to the bag-gage “sizer” that was installed by Delta Airlines, whichmanages the security contract for the concourse Con-tinental uses at that airport. Continental ticket agentsultimately escorted the passenger through security byexplaining that the bag conformed to Continental’s

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specif ications. If you f ly a lot and prefer to carry onyour luggage, that’s a choice you can appreciate. Inthat and many other ways, the airline ensures that thecustomer has a set of unique options if they chose to f lyContinental. This type of strategy is applicable to anybusiness.

KEY WAYS TO OFFER CHOICE

The best customer-service companies provide theirclients with a plethora of options because the moreoptions the more likely the customer will prefer to dobusiness with you rather than with your competition.The following key questions and strategies will helpyou to evaluate how your business addresses theissue of offering choice:

� Are you providing your customers with choices, orare you a one-size-f its-all business?

� Examine the choices you offer your customers.

� Evaluate whether those choices are adequate.

� Examine the choices your competition offers yourcustomers and respond to that difference.

� Use choices as a tool to greater sales and greatercustomer relationships.

� Make sure all your employees are aware of—andcan talk about—all of your choices.

� Provide your customer with alternatives—ratherthan having to say “No.”

� Provide your customers with several different—and effective—ways to contact you.

� Educate your customer to make sound choices.

� Figure out which choices the customer is willing topay for.

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1 Provide Your Customers with Choicescatdir.loc.gov/catdir/samples/wiley031/00043589.pdf · Provide Your Customers with Choices 5 beyond convention. The core of FirstMerit’s customer

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