Thomas J. McFeeley Communications

From  Sales and Service Excellence magazine October 2011 (subscription)

The Customer Always Has the Right of Way.

By John Swinburn

Executive Director of the Mystery Shopping Providers Association

The phrase is all too familiar; even calling it a cliché might even qualify as a cliché itself. The Customer is Always Right. The point is the customer’s voice – particularly the collective customer voice — cannot, and should not, be ignored. In fact, most organizations tailor their customer-facing policies and training programs largely on what they believe the customer expects, or would respond to, in the sales and service processes. In addition, companies make a brand promise to customers. If you don’t know what your brand promise is, you have a lot of work to do. Once you’ve clearly articulated that brand promise, your organization must get to work to measure how effectively that promise is being met.

But all too often organizations do not measure the actual customer experience.  By truly understanding what customers face while interacting with your sales people or other representatives, only then can you make critical adjustments (or complete overhauls) to the customer service delivery process. If you shift your thinking from “The customer is always right” to “The customer always has the right of way,” then you’ll have a complete roadmap to keeping truly satisfied and loyal customers. As importantly, your bottom line will be the beneficiary of measuring customer experience analytics.

Mystery shopping is the clearest and cleanest way to get a true measure of what’s happening on the transactional level of your organization. Mystery shopping is a management tool that verifies whether a company’s operational policies are carried out in practice.  Put another way, it measures the extent to which the company’s brand identity is reinforced at the customer level.  Mystery shopping can uncover misalignments in corporate policies that actually degrade customer service.

While you might think mystery shopping is as simple as identifying whether an associate is wearing a name tag or whether a sales person asked about buying the extended warranty, it can dig incredibly deeply into the customer experience and reveal significant improvements not considered when putting a mystery shopping program together. If customer experience management is a continual priority in your organization rather than simply providing occasional snapshots in time, you will logically follow the customer to an improved process. In other words, the customer always has the right  of way; if you follow for a little while, the customer will follow for a much longer period of time later.

Your company likely devotes considerable costs to surveys, market research and the like. Having that data is an invaluable first step in the customer experience management process. Think of mystery shopping as the central lynchpin that backs up that investment. When evaluating the customer experience management process in your organizations consider this sequence:

1. Learn about customer needs, desires, and expectations –Data mining, surveys, focus groups, etc.
2. Develop and implement or adjust processes and policies to meet or exceed their expectations–Brand promise
3. Measure whether you are adhering to your brand promise–Mystery shopping
4. Adjust policies and processes to correct deficiencies, as identified by the transparent mystery shopping process
5. Measure whether you are satisfying customers–Customer satisfaction measures, such as phone surveys, comment cards, web surveys, IVR, phone surveys, mail-out surveys, etc.
6. Repeat, starting at step 1

While surveys, comment cards and other means of asking specific questions of consumers generate valuable data, they do not provide the complete and accurate picture of the customer experience – especially taking into account issues and policies that are important to you, your company and that important brand promise. The collective data of mystery shopping often reveals revenue generating opportunities for your organization.

Consider this example from one of our member companies, LRA Worldwide. One of LRA’s areas of expertise is measuring the customer experience in hotels – an industry in which a company’s success rises and falls with customer satisfaction. LRA entered a contract with a Top 10 hotel brand that had worked hard to restructure its front-desk protocol for its loyalty program members. LRA was tasked with mystery shopping each location, specifically to ensure staff at the front desk was adhering to the new protocol and policies of the company. Hotels are almost literally built around brand promises and this chain realized that measuring that promise by evaluating loyalty program customer experiences at each location would be important in order to make these important visitors truly loyal.

The first results were extremely poor. As frequently can be the case with new processes, the employees were not performing at an optimal level. Because the mystery shopping program revealed the need for additional training, more extensive training processes were implemented by the hotel chain. With each new round of mystery shops, the service level at the front-desk improved. But even when they were performing at high-levels, the mystery shopping revealed a critical oversight.

Despite the high scores based on the training regimen, the mystery shops revealed that associates, while providing excellent service, including free upgrades and other rewards, were not being specific that those rewards were as a result of a guest’s membership in the loyalty program. For example, an employee might say, “Mr. Smith, I hope you enjoy your stay with us this week. Because we value your business, we are upgrading you to a suite and we hope you find it to your liking.”

While creating goodwill and perhaps building loyalty, this communication failed to connect the benefits of being a loyalty club member with actual membership. A simple change in wording creates that bond: “Mr. Smith, because you are a platinum member in our guest loyalty program, I am able to offer you a free upgrade to a suite for your stay.” The latter is a small, but distinct, difference that reminds the guest that his or her membership in that loyalty program was what earned the rewards that ordinary guests, or even repeat customers, would not enjoy.

Through that simple word change the hotel’s brand promise to its loyalty members was significantly bolstered. But it required numerous rounds of evaluation and on-the-fly adjustments.

Mystery shopping allows managers to have eyes and ears beyond typical customer tools. Surveys often promise a chance to win a prize or a discount on a future purchase. Those incentives increase the likelihood that the survey taker will move rapidly through the process, not giving their full attention to providing the insight you hoped to receive. Expert mystery shoppers know what they are looking for before they begin the transaction and have customer service top of mind.

The customer is always right; especially when they relay their experience and your failure to deliver on your brand promise. Rather than focusing on those individual unhappy customers, remember “The customer always has the right of way” – follow all of them, see where they are taking you. Only then will you know what they prefer and what makes them take actioin, but you’ll know if you are delivering those important factors. Otherwise, they might take the next fork in the road – to your competitors – and because you were too busy trying to blindly lead them, you never saw them leave.

Mystery shopping can help you tailor your programs to drive true loyalty

Loyalty programs, once a very effective tool in increasing goodwill with hotel customers while boosting the bottom line, are struggling to stand apart and often are not returning the investment made to create and manage them. An infusion of innovation is necessary – even a complete retooling of these programs might be called for – but first there are achievable, tangible, and optimal opportunities for hotels to get more from their loyalty-program customers in the short term that must first be explored.

Difficult economic times, combined with increasingly competitive loyalty programs by boutique hotels, are forcing the major hotel chains to take a fresh look at their own programs. While it’s clear short-term trends will include simplifying point redemption and dropping the point levels required to earn free stays and other perks, those loyalty programs that actually grant genuine recognition to guests for their repeat business and make the guests feel that your hotel is their home away from home will be the most successful in the long term.

Utilizing customer experience analytics provided by the mystery shopping process can help put the loyalty back in your loyalty program while ensuring that, moving forward, customer preferences that drive loyalty are a top priority in every facet of interactions with guests.

Before you retool your loyalty program completely, we suggest you first grab the low-hanging fruit and simply do a better job at connecting with your customers today. Take the lesson we learned from LRA Worldwide, one of our member companies of the Mystery Shopping Providers Association (MSPA). They entered a contract with a Top 10 hotel brand that had worked hard to restructure its front-desk protocol for loyalty program members. LRA was tasked with mystery shopping each location, specifically to ensure staff at the front desk was adhering to the new protocol and policies of the company.

The first results were extremely poor. As frequently can be the case with new processes, the employees were not performing at an optimal level. Because the mystery shopping program revealed the need for additional training, more extensive training processes were implemented by the hotel chain. With each new round of mystery shops, the service level at the front-desk improved. But even when they were performing at high-levels, the mystery shopping revealed a critical oversight.

Despite the high scores based on the training regimen, the mystery shops revealed that associates, while providing excellent service, including free upgrades and other rewards, were not being specific that those rewards were as a result of a guest’s membership in the loyalty program. For example, an employee might say, “Mr. Smith, I hope you enjoy your stay with us this week. Because we value your business, we are upgrading you to a suite and we hope you find it to your liking.”

While creating goodwill and perhaps building loyalty, this communication failed to connect the benefits of being a loyalty club member with actual membership. A simple change in wording creates that bond: “Mr. Smith, because you are a platinum member in our guest loyalty program, I am able to offer you a free upgrade to a suite for your stay.” The latter is a small, but distinct, difference that reminds the guest that his or her membership in that loyalty program was what earned the rewards that ordinary guests, or even repeat customers, would not enjoy.

Those slight, but important, differences are what build those intangible feelings of actual loyalty (compared to simple point gathering in the program) and give the customer that feeling of a higher status. True customer loyalty is built outside of a loyalty program; the program is a tool to enable employees to build meaningful relationships with customers based on the individual needs of each guest. The LRA example is a good reminder that even hotel employees performing at above-average levels could be leaving opportunities on the table.

Similarly, a recent study by Coyle Hospitality, another MSPA member, revealed that 67 percent of hotel reservation agents ask the specific purpose of a potential guest’s stay. While that may be considered a fair number, it means that 33 percent of the time opportunities to offer incentives (such as Free wi-fi for a business trip or the hotel’s expert concierge service to help find a great restaurant or book a tee time at a top golf course) are being lost.  Even if the caller books a stay before being offered the incentive, the reservation agent or front-desk employee should be utilizing the information to surprise the customer at check-in, especially if they are a loyalty club member.

Of those 67 percent who are executing on the fact-finding of the reason for a guest’s stay, still only 78 percent of them are utilizing the information to provide those amenities that will make the customer more comfortable, Coyle found.  While free stays earned by accumulated points are appreciated by customers, those “extra mile” opportunities will keep your customers from courting your competitors for their next trip, or even this one. They will feel an elevated status, even if the extra mile is the hotel policy required to build brand loyalty.

Hotel chains are under increasing pressure – competitive and economic. Loyalty programs must be geared at true loyalty, rather than the likely trend of strict point collection.

Mike Bare, CEO of BAREInternational, and MSPA co-founder, playfully says loyalty programs can work, but if they don’t stand apart from others, then other factors important to the traveler will win out.  “Loyalty programs make sense as long as they make sense. What I mean by that is every frequent traveler has a wallet full of loyalty cards. If staying at Hotel-X right next to my business meeting makes sense for me, the loyalty program at the Hotel-Y better be providing something special if it’s on the other side of town.”

This divided loyalty system means the guest will wait longer for free stays, but convenience is a strong factor against which hotel loyalty programs compete. Hotels currently struggle to differentiate their own programs from other chains and new efforts to link them to rental cars and airline travel will surely be met by more of the same by competitors – resulting in more consumer confusion and inability for one loyalty program to stand apart from the others. Boutique hotels know this and are acting nimbly in a way large chains simply cannot in order to differentiate their brands and programs.

Earlier this year, Global Hotel Alliance introduced GHA Discovery. This program combines the idea of a quicker status upgrade, but provides insider experiences that often large hotel chains cannot give. For example, guests are automatically enrolled as Gold members after a single stay. Gold status grants them bottled water, free Internet and other activities, including a brewery tour in Boston at one property. Other boutique loyalty programs might offer a balloon ride or local winery tours – special activities guests may not engage in on their own, but are made available simply because of their affiliation with a hotel brand.

The GHA program also provided status upgrades at 10 nights and 30 nights, an accelerated schedule compared to most large chains’ programs.

In fact, a study conducted this spring by the Cornell University Center for Hospitality Research concluded that loyalty programs tended to provide little value to customers or much return on investment for hotel firms. Loyalty programs suffer from a lack of differentiation and true customer insight, according to the report.

“The most telling sign of these copycat programs is that the basis for most program tier structures is based on industry convention rather than a strategic analysis of a firm’s customer base and the needed differentiation in the marketplace,” the report concluded.

The study evaluated a large hotel chain’s three-tiered loyalty program and recommended the program be reworked to add as many as four additional tiers. While the basic levels were restored, the study discovered four other of categories of hotel guests, based on hidden habits of a wide segment of hotel guests who typically spanned all three tiers of the program.

One such group was the “whales” – the highest spending per-visit classification of visitor who on the average only checked into a hotel every 18 months or so. But their higher-than-average spending habits give hotels reason to dig deeper about their motivation to travel and choice of hotel brands.  The study concluded that if this hotel chain targeted this important but hidden audience with exclusive promotions rather than generic price discounts, it likely would have a positive impact on their travel frequency and their already superior per-visit spending habits.

Though it can be a difficult process for hotels, the effort spent to evaluate why different groups of travelers choose one chain over another — and their habits while on property – is well worth the investment. Loyalty programs provide a special challenge because membership is so varied and the brand promise to them differs slightly from those outside the program. A highly targeted quality assurance plan aimed at loyalty programs can accelerate an important but underperforming factor in your hotel’s success.

Typically a hotel client will approach an MSPA member company in an effort to specifically evaluate the experience of their loyalty members and whether the brand promise is being met, protocol is being followed, and if there is low-hanging fruit (the purpose of their visit and the opportunities that information provides).

Suppose your firm looks deeper into the Cornell suggestions; to get better market research beyond your current tiers in your loyalty program. There will be a significant marketing expense associated with these findings and programs to cater to the data and the traveler’s preferences.

Your mystery shopping program would then track those new factors that you have identified are critical to attracting these newly tiered guests and whether they are consistently being delivered. In addition, competitors can be shopped to compare those services, amenities and other factors that are important to your loyalty club customers. As they do for your own sites, mystery shops will give you an actual but neutral view of travelers’ experience with another brand, data that will be valuable to measuring your own service delivery.

You may think that shopping a loyalty program can be difficult. It requires actual members of the program, but mystery shopping firms have programs that effectively recruit from a chain’s loyalty program members.  Experienced mystery shoppers who are recruited from a hotel’s program membership provide a seamless and transparent view of how these critical members are being handled, while bringing a knowledge of a firm’s brand and customer promise. Surveys and other valuable market research tools can provide useful insight, but the customer experience analysis provided through mystery shopping bolsters the investment in those tools, a hotel training program, and the brand promise carefully crafted by the firm.

Because mystery shoppers of loyalty programs are aware of the brand promises and execution against those promises, we have found that even small changes outside of the program – based on natural property-to-property observations – often make a notable difference.

One shopper, noting that their favorite hotel chain typically features three flag poles in front of the hotel, said that, aside from a United States and a state flag, the third pole at many locations is often empty. The observant mystery shopper remarked that at some locations, particularly near military communities, a hotel might fly a “POW-MIA” flag to appeal to the community. Such a suggestion has helped several other locations follow a best practice and build goodwill in the community, additional stays and, without a doubt, new loyalty customers.

Loyalty programs without a doubt are headed for an adjustment period. Their points-over-status qualities inherently need to be changed. Because true loyalty is built in communications and interactions with each hotel employee, hotel chains must meet the unique needs of travelers – if they even have identified them. Without a transparent evaluation of actual delivery of the services that satisfy increasingly sophisticated travelers, hotels will continue to miss out on the low-hanging fruit as well as the fruit trees they plant tomorrow.

John Swinburn is Executive Director of the Mystery Shopping Providers Association (MSPA), a position he has held for 11 years. He was involved in the process which transformed MSPA from what had been a primarily North American association into a global organization with four distinct and largely autonomous geographic regions serving the North American, European, Asia-Pacific, and Latin American markets. Swinburn graduated from the University of Texas at Austin with a bachelor of arts degree.  He took graduate level courses at Sam Houston State University.

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