Would Your Customers Tip You?

Super Bowl Sunday is known as one of the busiest days for pizza parlors nationwide. Pizza orders increase by 50 to 100% during the Super Bowl compared to a regular Sunday. Some of the large pizza parlors around the country even hold pep rallies to get their delivery people excited. The delivery people will be run ragged all over town, but hope to end the night with a lot of tip money in hand. In fact, while a typical tip for a pizza delivery is roughly $2, it has been reported that on Super Bowl Sunday, tips can rise to $20 per pizza delivery! Consider 3 possible scenarios at your party:

1. your pizza is delivered right on time, hot and exactly as you ordered it from a smiling and friendly delivery person;
2. your pizza is delivered on time, a little cold, as you ordered it, but from a grumpy person who tells you how much you owe and hands you your pizza; and
3. your pizza is delivered thirty minutes late, cold, and ends up being the wrong order.

Consider how much the delivery person in each scenario would be tipped. Delivery person #1 would probably receive a good tip. Delivery person #2 would probably receive a tip, but not as big as delivery person #1. And delivery person #3 wouldn't get a tip at all in many situations.

In our society, this all seems fair. Customers tip based on the service they receive taking into account timeliness, quality, and even the appearance of the person delivering the service. And if the quality of service is bad and the customer doesn't tip at all, this is a good indication that they will not be returning customers. Tips allow service people to immediately gauge how their performance is viewed by their customers. A smart delivery person that received a bad tip will revise their performance until they receive better tips.

Obviously, tips are not used in the entire service industry. We tip the wait staff at restaurants and pizza delivery people, but we don't tip the person that comes out to hook up our cable TV service or the one that answers all of our questions about the new, fancy phone we just bought. How do these service people know how they performed? How will you know if your customers were satisfied with the service they received?

Marcia Hughes and James Bradford Terrell, authors of The Emotionally Intelligent Team, say individuals who know their role and how important it is to the "big picture" feel more satisfied, think more creatively, act more productively, and enjoy working as part of a team. Individuals with these behaviors are more committed to the quality of their work. Joe Murtagh recently wrote an article on teams recognizing that communication is a team's lifeblood and necessary to be able to measure their success. He adds that communication is what establishes a worthwhile purpose and lets people know what they need to do to achieve it. People want to know how they are doing. Therefore, it seems appropriate to conclude that it is important to give people feedback in some form so they can gage their performance.

Not only is it important for your employees to know how they are doing, it is important for you to know if your customers are satisfied with your services.

Now consider your company...Do your teams know how they are performing? Are your customers satisfied with your services? Would your people be tipped based on the service they provide to your customers? I am not suggesting we implement tipping into the entire business world, but it would be nice if there was a way to gage your performance and know the satisfaction level of your customers before it is too late and they have switched to the competition. Fortunately there actually is a way! Customer surveys provide businesses with a wealth of information on how their customers feel about the services rendered. Let's look at an example to see what information can be gained from a customer survey.

Recently, a promotional services company asked the National Business Research Institute (NBRI) to conduct satisfaction surveys with their existing customers so they could assess how they were doing. Using a research instrument that has been used by thousands of companies and millions of people, the results were benchmarked against over 250,000 individual opinions per survey question. Survey items were analyzed using a SWOT analysis to determine the Strengths, Weaknesses, Opportunities, and Threats. One of the most interesting findings was that the company had one topic, "Client Delivery Team" in the Strength category scoring 77%. Further analysis revealed that clients felt that the delivery team listened to client concerns (88%), was responsive to client needs (77%), and communicated/interacted effectively (77%). The analysis further showed that clients believed this company employed high quality individuals (78%) and is committed to the business relationship (76%).

We can all agree that in the service industry, the purpose of business is to get and keep customers. A major part of that is how the service is delivered to the customer. In the case study mentioned above, the delivery team was rated as a Strength. However, as with our pizza delivery, there is more to being satisfied with a service than who delivered it to us. After all, just because a pizza delivery person is nice and on time doesn't guarantee them a good tip. Customers look for quality, value, consistency, and accuracy. Therefore, NBRI asked this company's customers to rank the importance of seven items. 54% of the survey respondents ranked Overall Quality of Service as the most important. However, Client Delivery Team ranked second with only 16% of the respondents identifying it as most important. Reporting (9%), Commitment to Partnership (8%), People (7%) and Provides Value (4%) all ranked lower in importance.

This data is a strong reinforcement that a high Overall Quality of Service must be present to ensure that you are satisfying your customers. If your pizza is cold or isn't what you ordered, even if it is delivered on time, chances are you will be shopping around for a new pizza parlor to order from. Do your employees understand their role and the impact they have on Overall Quality of Service and overall customer satisfaction?

Mark Stevens, author of "Extreme Management: What They Teach You at Harvard Business School's Advanced Management Program", states that there are four main benefits to customer satisfaction:

1. customers stay with the company longer;
2. customers deepen their relationship with the company;
3. customers demonstrate less price sensitivity; and
4. customers recommend the company's products or services to others.

Stevens also includes other interesting statistics on why customer satisfaction is so important. He reports that:

• it costs between five and six times more to attract a new customer than to keep an existing one;
• companies can boost profits anywhere from 25 to 125% by retaining merely 5% more of their existing customers;
• only one out of 25 dissatisfied customers will express dissatisfaction;
• happy customers tell 4 to 5 others of their positive experience while dissatisfied customers tell 9 to 12 how bad it was; and
• two-thirds of dissatisfied customers do not feel valued by those serving them.

These eye-opening statistics solidify how essential it is to the survival of your business to know how customers feel about the services they are receiving. Identify issues your customers have with your company early in the relationship or they may be telling others about these issues (ultimately costing you new customers) and worse, they could be lured away by the competition. You may have heard of "positioning". Positioning refers to the way your customers think and talk about your company when you are not around. The position that you hold in your customer's mind determines their reactions and interactions with your business. Your position determines whether or not your customer buys, whether they buy again, and whether they refer others to you.

Customer Surveys can be used to evaluate the entire customer facing interface for satisfaction levels. You will know exactly what your employees are doing right and where they need to improve to make the customer experience better. You will be able to determine your current "position" with your customers. And most importantly, customer surveys can identify any issues your customers have with your services before it is too late and they have switched to your competition.

If you would like to learn more about how NBRI can help your company develop the necessary knowledge base to answer the question "Would your customers tip you?" contact us now at 1-800-756-6168.

By Jamye Henry, M.A.
Research Associate
National Business Research Institute, Inc.