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.


How to Improve Your Powers of Observation

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Have you ever encountered a customer who had that "lost" look?

There's something about their facial expression and body language that tells you they are having trouble finding their way. You probably made a difference in their experience if you seized the moment and offered them assistance.

What if I told you there were many more opportunities like this, but we don't often see them?

There are customers who need extra help, but we don't realize it. There are opportunities to go the extra mile, but we don't see them. There are even clear signals that can help us prevent service failures, but we miss them.

I recently did an interview with Investors Business Daily to share some tricks for improving your powers of observation. Here is some more details on what I shared, plus another one of my favorite exercises.

Close-up of a man looking through a magnifying glass.

Change Your Lens

It's easy to get locked into one perspective.

In her book, What Great Brands Do, brand leadership expert Denise Lee Yohn shares a story about a fast food chain with dirty stores that were a real turnoff to customers. Executives weren't aware of this issue because they didn't look through the lens of a customer when they visited various locations.

So Yohn gave the executives an assignment. Each one, including the CEO, had to visit one of their locations, go into the restroom, and sit on the toilet.

It was an eye-opening experience. The chain's executives suddenly realized exactly how dirty the stores had become. The exercise forced them to see the stores the way a customer would.

Experiencing your product or service the way a customer would is one way to change your lens. Another way is to literally move yourself to a different location.

Here's a picture I took from Badwater Basin in Death Valley, the lowest point in North America at 280 feet below sea level. 

Ground-level view of Badwater Basin in Death Valley, California.

From this perspective, there's not much to see. The landscape looks desolate, even boring, with the faint outline of some mountains off in the distance. What you can't see in the picture is it was also 113 degrees Fahrenheit.

Here's the same landscape from a different perspective. This picture was taken from a vantage point 5,000 feet above the valley.

View from Dante's View, overlooking Death Valley, California.

The sweeping view is quite beautiful. The white swirls you see are salt flats, which create quite a contrast with the red earth. It's also nearly 30 degrees cooler up here.

 

Pause and Reflect

We can sometimes get locked in to a particular assignment, which causes us to miss something else entirely. 

Here's a short video that illustrates the concept.

Most people who watch this video accomplish only one of two things. They either correctly count the number of times the team in white passes the basketball, or they observe the other thing. It's tough to do both.

This explains how servers in a busy restaurant can forget to refill our drinks, or a repair technician can forget to call us back. There's a good chance they got locked into other activities and missed something obvious.

You can learn more about selective attention from The Invisible Gorilla, by Christopher Chabris and Daniel Simons. Their research is truly amazing.

The cure to the selective attention problem is to take periodic breaks where you step back from whatever you are working on and look at the big picture.

For example, I review my calendar and project planner on a daily basis to identify my top priorities. I also do a more comprehensive review once per week where I update all of my action plans. This prevents me from missing an assignment that's about to come do or forgetting to follow-up with a client.

 

Find Something New

My wife, Sally, and I visited a well-known winery in Napa Valley last November. The tasting menu featured a grape we had never heard of, Sauvignon Black.

Our host gave us a puzzled look when we asked about it. "Do you mean Sauvignon Blanc," she asked?

No, we really were asking about Sauvignon Black. It turned out the tasting menu had a typo and it really was supposed to be Sauvignon Blanc, a popular grape used to make white wine. Our host sheepishly admitted the same menu had been in the tasting room for two months, and nobody had caught the error!

You can help avoid situations like this by playing a little game.

Take a walk through your store, office, or wherever you work. While you are walking, try to spot something you've never noticed before. You'll be surprised at what you see!

I like to do this exercise in my neighborhood. I'll take a walk around the block or down to my neighborhood park, and try to see something I've never noticed. I notice something new every time I try this exercise.

 

Additional Resources

You can learn more about improving your powers of observation from this short video on LinkedIn Learning.