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Companies undergoing change



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Danhostel 

Most of the Danhostel group of 95 hostels work to strengthen their customer loyalty. This has given great results in a strongly competitive hotel and overnight accommodation market. Up to 25 percent of customers return to stay with Danhostel.

How does Danhostel achieve these results? And how can their story inspire you to improve customer loyalty in your own company?

Danhostel conducts regular evaluations of what guests think about their stay. The main purpose of the evaluations is to improve the guests’ experiences.

Danhostel obtains the ratings upon the guest’s departure from the hostel – this is customary in the accommodation industry. Guests are given an evaluation survey to fill in. The employees in the individual hostels can then see for themselves what the guests have said and how they have rated their stay at the hostel.

In some hostels, evaluations are used extensively. Guest evaluations, for example, are reviewed every week during staff meetings. At this point, the management are able to say, for example, “We can see that guest satisfaction with cleanliness could be improved.” This enables the hostel to set goals for guest satisfaction in terms of cleanliness. The guest evaluations give staff the opportunity to see how they themselves can make an impact on improving the hostel’s rating. This approach has been a great success in several of the group’s hostels in Copenhagen.

Danhostel completes a guest evaluation once a week. These periodic assessments are undoubtedly the reason that they have managed to strengthen their corporate culture.

In a large national organisation like Danhostel, it can be a challenge to get everyone to work with guest evaluations. Danhostel therefore assembles all of the group’s nationwide staff once a year to discuss best practices. During the meeting, select members present their approaches to using the guest evaluations. Additional, Danhostel uses the quality assurance programme HighQ from the group’s international organisation. Many of the group’s hostels are in the process of implementing this programme.

Every year, Danhostel employees nominate the year’s best hosts. The criteria for being chosen as the year’s best host is that the hosts and their employees have shown great innovation and resolve to help other hostels. Danhostel is currently considering allowing customers to choose the year’s best host. Throughout the whole organisation, work is ongoing to present stories about the hostels that have done particularly well during the year.

In the future, guest evaluations will play a major part in Danhostel’s efforts to improve customer loyalty. Their ambition is that there should always be a balance between price and quality.

In previous years, guest evaluations were stored in an internal system, but today the evaluations have a central position on Danhostel’s homepage where they are visible to the entire Internet.

The individual hostels can respond to negative evaluations – this was one of the conditions Danhostel set when choosing the system. This means that a hostel can only be evaluated by a person who has actually stayed at the hostel. It also enables the hostel to contact the customer who had a bad experience, which is consistent with the group’s concept.

Individual hostels can compile all the reports from the system that they might need. Each hostel can see their own position relative to similar hostels, and how satisfied the guests are according to the various evaluation criteria. Consequently, Danhostel avoids the need for customer satisfaction efforts to be top-down-managed. At the same time, employees feel that the system makes a positive difference in their day-to-day work, which is crucial to ensuring that follow-up is carried out on negative evaluations. In addition, the fact that hostels can benchmark themselves against one another increases employee motivation.

Danhostel’s experience demonstrates how effective such an approach is at the national level when representatives for the various hostels promote the systems implemented.

If this does not happen, then employees will inevitably feel that management has too many requirements and wants to implement too many systems.

The evaluation system puts ratings centre-stage, whereas the star classification system was previously the main focus. Positive ratings can result in guests who previously would not have considered accommodation in a three- star hostel changing their minds.

The group still fights against a public image of being a little old fashioned, an image they maintain is no longer valid. It is therefore hoped that the rating system will make potential customers more willing and confident to stay in a hostel.

It is necessary for Danhostel to differentiate themselves in the overnight accommodation market. Today there are many competitors fighting for the same customer segment that Danhostel caters to. The group cannot compete on pricing because of its competitors’ greater financial clout – and the price for overnight accommodation in a hostel is already at rock bottom.

So it is it crucial for Danhostel to create a great experience – budget pricing alone is not good enough. Sure, customers are price conscious, but if they do not have a good experience during their stay, then they will not return.

For Danhostel, it is important that a guest’s stay at a hostel is experienced as flexible, informal and comfortable.

Customer service means a lot – but not in a traditional sense. Within the hostels themselves, there is no room service. Good service is, however, synonymous with friendly hosts, a welcoming atmosphere, staff that know the local area and opportunities for the children to play.

Even though they cannot offer guests a multitude of facilities, the guests are happy with this more personalised form of service.

Danhostel’s management naturally have a good grasp of which values the group needs to promote. But ultimately it’s the customers who determine whether or not the brand lives up to its own values.

Customer loyalty at eye level

It is a common belief that only large corporations, with employees known by prestigious titles such as “customer ambassador” or “manager for customer loyalty”, can work seriously with customer loyalty.

So let me give you an example of a company with only a few employees – without the fancy titles: Danhostel Copenhagen.

A couple of weeks ago, I visited the hostel and spoke with Lasse Uldahl Borch, who is manager at the hostel. I can say with confidence that many customer managers – including those of large corporations – would envy this hostel. Lasse and his team really have hands-on experience with customer loyalty on a daily basis.

All guests staying at the hostel are offered the chance to participate in an online satisfaction survey. The results of the evaluations are positioned prominently on a large board in an area frequently passed through by staff.

This is truly “customer loyalty at eye level”, because staff really cannot avoid being kept up-to-date. In addition, the results of the customer satisfaction surveys are discussed at regular team meetings to ensure that the guests’ experiences of the hostel constantly continue to improve.

These efforts have paid off: only 144 hostels in the world have achieved a Hi-Q-certification as this hostel has done.

Where there’s a will there’s a way, and all companies that aspire to improve their customer loyalty have the potential to make it.

NIRAS 

NIRAS is Denmark’s third largest engineering consultancy company. 1400 specialists and project managers work on projects as diverse as construction and infrastructure, water supply, environment and nature, energy, geodata and development aid. The projects are implemented and completed from more than 20 countries.

NIRAS’ project manager, Bjørn Eliasen, relates his experiences of implementing a real-time customer feedback system:

”The challenge was to implement a customer feedback system that gets all our customers to respond to how satisfied they are in our services. We want to be measured on our performance so that we can use the customer feedback as a management tool. Before this, we were only asking a select number of customers about their experiences of being a NIRAS customer. We wanted to do better.

“We had no desire to develop our own survey system. We chose a system that was easy to integrate. That meant that implementing the new system was just a small job for me.

“Our new survey solution gives us the opportunity to compare customer feedback from various business units; however, the aim of comparing customer feedback was not to expose any of our employees as particularly good or bad. On the contrary, we use the customer feedback proactively in our partnership with them.

Customer feedback can be a great opportunity to speak to them about what they like about us and how we can improve.

“We ask our customers how satisfied they are with the process and how satisfied they are with the delivery. The survey questions are available in four different languages. And customers have the opportunity to explain their answers with comments in the open text boxes. We only ask two questions because we’re looking to achieve the highest possible response rate.”

It’s great to work with customer satisfaction

“At NIRAS, we believe that it is great to work consistently with customer satisfaction. It is our expectation that, by making customers happy, they will reward us with more orders, while customer feedback helps us improve. NIRAS has always been a customer orientated company. We have defined business values that we try to achieve: We listen, we learn, we deliver. When we take on a project, then we do so very much on the customer’s terms, so we have a corporate culture that revolves around creating customer satisfaction. But we want to do even better.”

Cad & The Dandy – suits with extra service

Cad & The Dandy is a retail chain in London that measures, benchmarks and improves performance among staff through real-time customer feedback. They want customers to be not only satisfied, but so pleased that they become promoters who are willing to recommend Cad & The Dandy to others.

Cad & The Dandy are tailors and shirt-makers based in London and New York. The company has succeeded in expanding rapidly during its first five years. The business model is to make fantastic bespoke suits at fantastic prices. Customer satisfaction plays a big role. Everyone one wants a suit that is tailored in a unique way – it is not a standard product. That is why Cad & The Dandy focuses on their customers as unique individuals.

“Our customers love to look smart – but maybe they don’t always shout loud enough about their wishes.”

That is why the feedback system is a big asset to the company. Customers can respond to the product and the service they received; for example, “I thought the service was fantastic, but next time I’d appreciate a wider selection to choose from.”

This ensures that the top quality of the company’s products and services reflect Cad & The Dandy’s corporate values.

The company is very conscious of the fact that the retail sector is under pressure at the moment, and that luxury products are typically hit the hardest when people tighten their wallets during a recession.

That is why it is necessary for the company to ensure that business is kept on an even keel – despite achieving an increase in revenue of 65% last year.

Cad & The Dandy’s business success is based on products and services. The company does not advertise, but instead relies on word of mouth and customer recommendations.

Fundamentally, you need to ensure that the customers are happy and that your company is offering a perfect service; therefore, when customers evaluate the company, they should never be asked only if they are satisfied – they need to be asked if they would recommend the company to others.

Recommendations are ultimately the reason for Cad & The Dandy’s survival and success, the company claims.

Virgin Media

Virgin Media has done extremely well in its work to maximise customer loyalty, and they have seen a 35-point increase in their frontline NPS® over the past 18 months.

Here is what they did:

Virgin Media taught themselves to really embody the programme. For example, calling dissatisfied customers and closing the loop. They really integrated the whole process into the entire organisation to improve their NPS®.

“Okay, over the past three months, how many loops have we closed, and what has been the result of that?”

Everyone in the organisation had a sincere motivation and had his/her own clear goals.

The CEO had a dashboard he would frequently check to monitor the level of customer loyalty – really having his finger on the pulse; for example, the procedure for closing the loop to the customer. Using real-time transactions with NPS®, they were able to cover all the critical touchpoints in a typical customer lifecycle. They had the perspective of the customer journey and the motivation to create a great case story – there is nothing like a good case story to motivate people and get them excited. A metric like NPS® can be a little sterile, so it was important to get some great messages communicated to the rest of the organisation so that staff felt they were making a difference.

They improved their NPS® and their touchpoints significantly as a direct result of being committed to the programme and having everyone engaged in it. It was a big motivator in making a difference in transforming their corporate culture.

During the first eighteen months, they increased the revenue of the organisation and significantly reduced the number of customers who were jumping ship (from 1.8% to 1.1%). This is a significant improvement in churn rate. When they started out, they had among the worst churn rate ever, which created many challenges, and they simply had to find a solution.

They actually discovered that those customers who were slamming them with a zero on the 0-10 scale were seventeen times more likely to abandon them than a detractor who had given a different score. Of course they could not prevent everyone from leaving, but segmenting the scale and implementing a strategy of prevention was a key point of their analysis.

And that is what we call a customer journey. They implemented NPS® surveys, through which they could track the NPS® down to the frontline team level and make them responsible for the score. They made it a part of the frontline scorecard and rewarded them for getting 10s. They had all the touchpoints in place to enable them to follow the customer’s journey and conditions.

You will need to equip the frontline with some diagnostic tools – not complicated diagnostics, but something simple that can be understood relatively quickly. That is day one. That is the day when a customer buys something from Virgin Media. You get the product installed in your home and then you receive your first bill depending on when the installation is made.

And if you are able to measure the NPS® of your customer database while you progress through the customer journey, then it will really help frontline staff to understand where the top and bottom of the scale is and where there is potentially success as well as the less good experiences.

Something else that is important is to have a clear tactical and strategic method for closing the loop to the customer, all the way from the top management to the frontline of the company. The feedback and the information that comes from NPS® can be used by everyone in the company, if they need it.

The different levels in the company have an internal strategy of how to close the loop on the customer. Team leader interviews with the front line, webinars every month, dashboards, face-to-face meetings with customers, perhaps inviting the customer into your organisation, having a customer committee within management to monitor what is happening in other areas of the organisation. These are all tactical ways of closing the loop to the customers. The strategic way is a little different and has a different process – it is more about investments, etc. Train your organisation to understand the value of NPS®.

One of the activities that Virgin Media attempted was that they actually had a website dedicated to the strategy. This was a strategic way of closing the loop on the customer because the site was available to everyone. It was not directed at a single person, but they actually said: “Look, we’ve listened to what you’ve said. We understand that there have been some problems with the bill, but now we’ve sorted it all out. We would like to get back to you to tell what it is we’ve done.”

So it is far better to honest and upfront with your customers, even when it’s not going well, than not communicating with them at all. This is an example of how you build trust with them. You respond to them. They pay to buy something from you – a product or service – so you owe it to them to respond and tell them why they have not received full value for money. You are ethically obligated to do it.

It is worth noting the strong culture at Virgin and how this creates employees who are exceptionally committed. All the employees get a little package with a motivating message. There is also a book, written by Richard Branson or another entrepreneur. There are stickers saying “Screw it – let’s do it” and messages along the lines of, “It’s okay to make mistakes, as long as you learn from them.” There is a wealth of support and motivation. Virgin really makes an effort to strengthen corporate culture and everyone in the organisation knows it. They invest a lot, not only in NPS®, but in working with the corporate culture in general.

These kinds of investments have an overt influence on the culture, which goes well with the NPS ® the programme. For NPS ® to function, there needs to be a customer-orientated corporate culture. 

At Virgin Media, they also have “NPS® heroes” – they attempt to make people who did really well into heroes. It is also okay to make mistakes, as long as you learn the lessons from them, and that is exactly what this is: “You can’t hide bad experiences – so let’s talk about them. It’s okay to mess up, but let us instead have a culture in which we talk about it rather than hush it up.”

They were very conscious of this, and they arranged annual conferences and big parties. I know that not all companies would do that, but I believe the point is that this is not simply a metric that appears in your reports.

It is not about the metric. This is a programme that creates understanding of the customer experience, and NPS® is a way of measuring it. There are other ways to measure, but this really highlights the most important aspects and makes it possible to create change in the culture, which is a central aspect.

Richard Branson talks about customer service

It is always insightful to listen to what the boss of the Virgin Group, Richard Branson, has to say – and it is always entertaining. Branson tweeted recently this entertaining story from a passenger who wrote a letter of complaint to the company LIAT Airlines:

“Dear LIAT,

May I say how considerate it is of you to enable your passengers such an in-depth and thorough tour of the Caribbean.

Most other airlines I have travelled on would simply wish to take me from point A to B in rather a hurry. I was intrigued that we were allowed to stop at not a lowly one or two but a magnificent six airports yesterday. And who wants to fly on the same airplane the entire time? We got to change and refuel every step of the way!

I particularly enjoyed sampling the security scanners at each and every airport. I find it preposterous that people imagine them all to be the same. And as for being patted down by a variety of islanders, well, I feel as if I’ve been hugged by most of the Caribbean already.

So thank you, LIAT. I now truly understand why you are The Caribbean Airline.

P.S. Keep the bag. I never liked it anyway.”

Branson, posting the story on his blog, wrote that it was wake-up call to companies to focus on what is important for customers:

“Making customer service key to your company will keep your employees motivated and your customers happy. This in turn ensures enduring loyalty, business success and a better experience for everyone.”

Summary

  • Note that common to all four companies featured above is their approach to customer loyalty: It is more about changing the culture than just measuring and calculating a score.
  • Also common to them all is the fact that the measurements are in real time. In this way, you can engage employees so that the customer loyalty strategy becomes an ingrained daily ritual.
  • Finally, their measurements are seen as a strong KPI to compare performance over time and to compare their various business units.