How to Save Money By Observing Employees and Customers

In 2014, activist investor Starboard Value identified a cost savings opportunity of $216 million at Darden Restaurants. The restaurant operator owns such iconic brands as The Capital Grille, Yard House, and Olive Garden. Starboard's management felt Darden was underperforming. 

One of the more interesting conclusions in Starboard's analysis was that Olive Garden wasted $5 million annually on breadsticks.

Olive Garden is famous for giving customers free, unlimited breadsticks. It had a procedure to keep the breadsticks fresh, since they taste best within the first seven minutes of being served. Servers were supposed to bring one breadstick per customer, plus one additional breadstick per table. Customers could always request more.

What Starboard discovered was servers did not follow the procedure 57 percent of the time. They would instead give guests a large basket of breadsticks.

This resulted in a few problems. Breadsticks were wasted. Guests became full on breadsticks, so they bought less food. And servers had less guest contact since they needed to refill breadsticks less often.

All of this came from simple observation. Here's how you can save money and improve service by observing your employees and customers.

 Image courtesy of Olive Garden

Image courtesy of Olive Garden

Observing Employees

One of the best ways to fix a problem is to first verify existing procedures are followed. 

Starboard's solution to the $5 million breadstick problem at Olive Garden was to get employees to follow the current procedure more consistently.

A contact center leader I know reduced calls directed to a more expensive outsourcer by 50 percent. He did this by spending time with his employees and observing that many were not using the phone system properly. Agents would inadvertently mark themselves as unavailable to take calls, which caused calls the agent otherwise could have handled to get routed to the outsourcer.

Sometimes, employees are following the existing procedure, but that procedure is not sufficient to solve the problem. Observing your employees can still reveal solutions.

I once worked with a contact center that responded to customer questions about the company's products and tried to convert those inquiries into sales orders. A short time spent observing employees revealed that many would rush through calls when there was a large queue of customers waiting on hold.

The problem was the contact center's schedule didn't match call volume. When the schedule was re-aligned to better match demand (without adding staff), the team improved its sales closing rate by 36 percent.

If you want to save money and improve service, invest some time in observing your employees.

Observing Customers

You can often improve customer service and reduce waste by observing your customers.

I first learned this lesson when I worked in a retail clothing store in high school. My manager explained that paying attention to every customer yielded two benefits. The first was customers were likely to buy more if I was there to help them. The second benefit was being observant reduced theft.

One day, a coworker wandered away from her department and left it unstaffed. Within just a few minutes, a team of shoplifters stole approximately $5,000 worth of clothing.

Restaurants like Olive Garden can save money by observing what customers eat, and don't eat.

My wife, Sally, and I recently saw an example while dining out. Sally ordered a taco plate that came with two heaping scoops of guacamole. She ate about 25 percent of the guacamole, meaning the rest of it went to waste. A quick look around the restaurant revealed Sally wasn't the only one who left a mountain of guacamole behind on their plate.

An observant restaurant manager would notice the large number of plates coming back to the kitchen with a mound of guacamole still left. Guacamole is expensive, so the restaurant could easily save money by serving less and bringing more to the occasional customer who requests it.

Here's another simple example.

The next time you visit Starbucks or another coffee shop or fast food location at a busy time, observe how customers react when they enter and see the line. People entering the store will turn around and walk out when the line gets to a certain length, costing the company revenue.

Take Action

There are aspects of the customer and employee experience you probably won't capture in a survey. That's why it's important to observe and listen.

Here's a summary of what to look for:

  • Verify employees are following procedures. 

  • If employees are not following procedures, find out why.

  • Look for obvious obstacles that get in the way of service.

  • Watch customers to see how they naturally behave.

  • Investigate when you see signs of waste.

Which should come first, leadership or technical skills?

Note: This post originally appeared on LinkedIn.

This question came up during a recent conversation with senior training leaders. If you are developing a leader, should you first focus on growing their leadership or their technical skills? 

It's also a challenge that I often hear from Customer Service Tip of the Week subscribers, many of whom are customer service leaders, both experienced and aspiring.

The answer is crystal clear, and it's not even close.

 Group of professionals attending a leadership development workshop.

But first, let me share a little about my background and how I've come to see firsthand what works and what doesn't. 

I was the Director of Training and Development for a mid-sized company with 4,200 employees prior to starting my own business. The biggest part of my role was preparing supervisors and managers for promotion, and helping to guide them once they got there. 

Working with hundreds of leaders helped me see what enabled people to be successful in leadership positions.

Today, I'm obsessed with service cultures. The leaders I interviewed and researched for my book, The Service Culture Handbook, came from many industries and backgrounds, but they also had a lot in common in terms of their skillsets.

So back to the question. Should you focus on leadership or technical skills first?

The hands-down answer is technical skills. The answer may surprise you, but I've learned there's good reason why technical skills must come first when developing a leader.

Think of technical skills such as how to run payroll, write a schedule, or evaluate performance as the machine that runs the business. Leadership skills such as building trust, inspiring employees, and giving feedback are the oil that lubricates the machine and helps it run smoothly. There's no question that the machine will run much better with oil (i.e. good leadership), but without a machine you have no business.

Here are some practical examples.

If I had to choose between teaching a manager to run payroll or build trust, I'd first focus on payroll. Employees come to work to get paid (at least in part), and nothing erodes trust faster than a paycheck that's missing or short. 

Things do occasionally go wrong or questions arise when it comes to payroll, which is when building trust is critical for leaders. Knowing technical procedures to resolve those issues provides important context for leaders to develop their trust-building skills.

Vision is another example. There's the technical component, which is actually writing a customer service vision. There's also a leadership component, which is communicating the vision and inspiring employees to follow it. 

There's nothing to inspire people if you don't have the technical know-how to write a good vision in the first place.

The vision writing process I use with my clients includes seeking input and buy-in from employees, which naturally combines both technical and leadership elements. It's the vision creation process itself that provides critical context for leaders to develop and exercise their leadership skills.

Learning of any kind happens best when there's context. When you give leaders technical skills, they establish a very important context to develop their abilities as leaders.

Without those skills, there's no context for leaders to apply any leadership skills they try to learn.


Why Enthusiasm is Worthless and Commitment is Everything

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Okay, excuse the clickbait title.

I imagine some readers are indignant. Enthusiastically indignant, if you will. "What do you mean enthusiasm is worthless?!"

By itself, without commitment, enthusiasm often is.

Here's a story. A training professional, let's call her Susan, attended a conference where Keith Ferazzi was the keynote speaker. His message was that our success in life comes from the people we know, so we should work to build our networks.

Susan was so motivated by Ferazzi's message that she bought his book, Never Eat Alone. She eagerly started reading it while eating in the airport restaurant on her way home from the conference. Alone.

 A woman sits in a restaurant, eating alone while reading a book called “Never Eat Alone.”

The Distinction Between Enthusiasm and Commitment

Susan was clearly enthusiastic about the message, but she wasn't committed.

What you can't see in the picture is there were several other people in the restaurant who had clearly just come from the same conference. They each had the same conference tote bag at their feet that Susan had.

You can probably imagine what commitment looks like in this situation. Susan would boldly find at least one other dining companion and strike up a conversation about the conference, Ferazzi's message, or the book itself. 

Enthusiasm is the feeling you project. Commitment is what you actually do. We applaud enthusiasm with more enthusiasm, but commitment is harder.

Why Culture Needs Commitment

I wrote The Service Culture Handbook to help customer service leaders get their employees obsessed with service. An entire chapter is devoted to commitment.

One of the unique features in the book is I included my phone number and email address. I invite readers to call, text, or email with their questions and I've had many terrific conversations.

Commitment is by far the biggest challenge I hear.

One service leader, we'll call him Eric, called me to ask for help. There had been some complaints about his company’s service quality and now Eric's boss, the company's CEO, demanded swift action. Eric wanted to know how soon I could fly out and train his team.

We talked a bit, and I asked him if his company had a customer service vision. This is a shared definition of outstanding service that gets everyone on the same page. I explained that Eric should have one in place before doing any training.

Eric had been responding to complaints by telling employees what not to do, but in my opinion they needed a vision to follow so they all understood what they should be doing instead. That way, any training would be based on the vision rather than a generic set of tips and tricks that wouldn’t fully address the root causes of poor service.

I even offered to help Eric create the vision for his company and then develop training around it.

Eric told me he'd think about everything, re-read my book a bit, and share our conversation with his CEO. A week later, he called again. “Can you come out and train my employees?”

I asked Eric about the vision, but he was impatient. He wanted to put the vision on the back burner and have me do some initial training. What Eric was really doing was trying to pass responsibility on to me for “fixing his people.” I gently reminded him about the importance of giving employees clear direction, and basing the training on that vision.

He seemed to understand and told me he would think about it some more.

Two months passed and I hadn't heard anything, so I sent Eric a follow-up email. He replied and wrote that nothing had been done anything yet, but he would soon start working on a customer service vision for the company.

Think about Eric as a leader. Two months ago, poor service quality was an emergency, but that was enthusiasm talking. When it came time to do the real heavy lifting, a lack of commitment stalled any progress.

What a Commitment to Service Culture Looks Like

Contrast Eric's story with this one from Tim Chan.

He emailed to tell me he worked for a grocery delivery company in Malaysia, called HappyFresh. Tim told me he was following the steps in The Service Culture Handbook and had just worked with his team to create a customer service vision.

Now Tim wanted some advice on helping employees stay focused so they could continuously improve service. In other words, Tim was eager to remain committed. (You can read more about Tim's story here.)

The process Tim followed can be broken down into three major steps.

  1. Create a customer service vision. Here's my step-by-step guide.

  2. Engage all employees with the vision, using this simple plan.

  3. Align everything around the vision, including training.

The steps are actually very simple concepts. The real challenge is remaining committed to the culture journey over the long haul. Creating a service culture isn't a short-term project. It's a way of doing business.


Lessons from The Overlook: Why You Should Be a Good Guest

Note: Lessons from The Overlook is a monthly update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

 The couch has three decorative pillows. They often get moved around to different parts of the house. On a recent inspection, one was in the living room, one was on the patio couch, and one was over the side railing.

The couch has three decorative pillows. They often get moved around to different parts of the house. On a recent inspection, one was in the living room, one was on the patio couch, and one was over the side railing.

One of the chores Sally and I do on our regular maintenance visits to The Overlook is count the dishes and glasses. We make two discoveries nearly every time:

  1. At least one glass is missing.

  2. Some dishes and glasses are dirty.

It's a minor inconvenience for us. We immediately replace any missing or broken dishes or glassware, and we clean any that need cleaning.

I understand that guests won't always clean dishes, report minor damage, or even put things back where they found them. My true worry is how this impacts the next guest.

What some people don't understand when they rent a vacation home is it is genuinely a home, not a hotel. 

Our property manager, Idyllwild Vacation Cabins, does a terrific job maintaining the cabin and keeping it clean and tidy. Yet it's simply not feasible for the cleaning crew to inspect every dish like we do, or to memorize the location of every piece of furniture, blanket, kitchen tool, and knick-knack in the house.

So a dirty dish that's hidden on the bottom of the stack in the cupboard will gross out the next guest who finds it. A broken glass that's unreported will mean the next guest will have to make do with one fewer. The puzzle pieces dumped in a drawer will create extra work for the next guest who wants to work a puzzle.

And the blankets moved to different rooms might stay there, meaning someone else's grandma is going to be cold on a winter night. You don't want grandma to freeze, do you?

If you rent a vacation home, my advice is to treat it like you were staying in a friend's home. Chances are, you'd earnestly want to be a good houseguest.

Here are a few tips that can help you avoid inconveniencing the next guests:

  • Report damage, no matter how small, so it can be fixed for the next guest. 

  • Put everything back where you found it, or as near as you can remember.

  • Clean and dry dishes before you put them away.

  • Take out trash and avoid littering.

  • Follow the check-out instructions precisely. 

We try not to ask too much of our guests. If you break a glass, you won't be charged for the replacement. When you check out, you can even leave the sheets on the bed and the towels in the bathroom. (Many vacation rentals ask you to start a load of laundry.)

The goal is to ensure you have a great time, and our next guests have a great time, too. Here's a positive example from one of our last guests. 

The guests reported that the upstairs toilet would occasionally continue running after it was flushed. This not only wastes water, it creates a hassle for guests who have to jiggle the handle or even take the lid off the tank to get it to stop.

They reported the issue to our property manager, and the toilet was fixed by the time the next guests checked in.


The New Definition of Employee Empowerment

Advertising disclosure: We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.

 An empowered employee flexing his muscles.

The classic definition of employee empowerment never seemed right.

Most customer service leaders I talk to think of it as giving employees a certain degree of autonomy. A quick Google search brings up this very typical definition from Study.com:

Employee empowerment is giving employees a certain degree of autonomy and responsibility for decision-making regarding their specific organizational tasks.

Here's a quick story that illustrates the challenge with this definition:

A technical support rep, let's call him Scott, was empowered to take as long as necessary to help a customer solve an issue. One particular challenge routinely took Scott about 30 minutes to fix, which was much longer than the 5 minute average for a typical call.

Scott was empowered in the classical sense—he had the authority to spend an unusually long time on the phone to help his customer.

Where the definition falls short is one of Scott's colleagues, let's call her Janet, figured out how to solve the same issue in just five minutes. Yet there wasn't a good way for Janet to document this best practice or share her innovation with Scott. So giving Scott authority to spend extra time on the call still didn't add up to great service.

Here's another example from a small online retailer:

Contact center agents had the authority to upgrade a customer’s shipping to compensate for a delayed order. Unfortunately, orders were often delayed by a poor inventory management system that showed items were in stock when they really were not. Upgrading shipping is meaningless if the product isn’t physically available to ship.

When researching customer-focused companies for The Service Culture Handbook, I discovered that authority is just one part of empowerment. Here's the full definition:

Employee Empowerment is a process of enabling employees to deliver outstanding service to their customers.

I learned that customer-centric companies combine three elements to empower their employees:

  1. Resources

  2. Procedures

  3. Authority

Resources refer to the materials, tools, and equipment necessary to serve customers. For Scott, the technical support rep, this meant creating a knowledge base where he could quickly access solutions to common challenges. At the online retailer, this meant ensuring products were actually in stock.

Procedures refer to the best-known way to get things done. It's incredibly inefficient for Scott to take 30 minutes to solve a problem that Janet knows how to solve in 5; Scott would be more empowered if he was able to follow Janet's solution. For the online retailer, this meant installing a better inventory tracking process.

Authority is still that classic definition of autonomy. There are times when the standard procedure just doesn't make sense, and employees need a bit of leeway to do what's right. So Scott could still spend 30 minutes on the phone with a customer, if that was necessary for a new or tricky issue.

You can put this definition to the test by looking at a list of top customer complaints for your company. Identify any that your customer service team is unable to resolve quickly and effectively, and you’ll likely see an opportunity to improve empowerment.