What’s the difference between a taxi and an Uber?

On a lot of levels, they’re the same. A car. A driver. A passenger wanting to go somewhere. Yet riding in each one is an entirely different experience. Why is that?

It boils down to a key fact: Uber drivers are held accountable for the experiences they provide to customers. And Uber is able to do this by building customer feedback into how it manages its drivers and ensures quality.

Contrast this with a traditional taxi company, which instead holds drivers accountable for the customer experience by giving them a rulebook to follow. Any regular taxi customer can tell you how effective that strategy is.

And while most companies don’t realize it, they’re a lot more like a traditional taxi company than Uber.

The Risks of the Rulebook

In an effort to help employees be more effective, most companies segment their operations into discrete pieces and sub-teams. With this segmentation comes prescriptive workflows, well-defined rules, tight controls, and greater QA investments, all of which aim to increase efficiency and prevent costly mistakes.

These policies, processes, and procedures come with good intentions. But it’s not possible to foresee everything that will happen out in the field. And when the unexpected happens, employees who only have a rule book and a narrow area of expertise to fall back on face a difficult choice. Go off-script — or, more likely, follow an ineffective policy in order to avoid punishment. The more the latter happens, the customer experience suffers, all because of the rules designed to improve it in the first place.

But it’s not just the customer experience that this dynamic risks. It’s employees as well.

An engaged workforce offers many benefits. A study published in the Journal of Applied Psychology found that higher employee engagement leads not only to higher customer satisfaction, customer loyalty, revenues, and profitability — but also to lower employee turnover. A separate study found that companies with high employee engagement could also hire more easily and at lower cost — a significant operating advantage.

Unfortunately, the rulebooks, rigid processes and customer service scripts often put a big dent in employee engagement. No employee likes being forced to follow rules they know don’t work. No employee benefits from being judged solely on adherence to routine, rather than on how well they’re serving the customer.

For many companies, this situation leads to a downward spiral. Disengaged employees — who feel no ownership of their work, and who aren’t held accountable for the quality of the experiences they deliver — breed unhappy customers, who breed even more disengaged employees, and so on. After long enough, this cycle gets very hard to break.

Building Accountability

Of course, no company wants to operate like this. How can they reverse the cycle and use a more Uber-like, customer-driven model that creates competitive advantage?

It starts with clear accountability. In many companies, employees are accountable to customers only through the abstractions of performance reviews or corporate revenue numbers. Creating true accountability means making employees a real part of the customer relationships they are developing for the company — by providing them with customer feedback and holding them accountable for results. Here’s what that entails at a high level:

  • Relevancy — Employees need to see specific customer feedback for the customers they serve and the teams they manage (e.g., quantitative and qualitative feedback).
  • Timeliness — Employees better understand the impact, both positive and negative, of their work when they get feedback in real time, and learn through their actions and the natural variabilities of their day.
  • Context — When customer feedback is combined with other business performance metrics, employees gain the know-how to make necessary trade-off decisions (e.g., a happy customer vs. lower revenue credit).

Creating Empowerment

The above factors go a long way toward building employee accountability. But they’re not the whole story. Once you’ve given employees a view into what customers are saying and feeling, you also have to empower (i.e. trust ) them to do something about it. It’s the difference between Nordstrom sales associates —- who are encouraged to use their best judgement when handling customer issues — and call center agents who are managed solely through a rulebook.

To move toward the Nordstrom end of the spectrum — no matter your industry or business — allow employees to be more entrepreneurial in solving problems, closing the loop with customers, and raising their voice when pattern recognition indicates a flaw that’s hurting the customer experience. Doing so puts them in a better position to act quickly, resolve issues, and enable the company to stay ahead in an age where Uber and others are rapidly changing customer and employee expectations about empowerment and good service.

Or, you can be a taxi company.

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