Tuesday, May 24, 2016

Serving Two Masters: the dichotomy of customer service by Bryan & Todd Neva

Serving Two Masters: the dichotomy of customer service

by Bryan & Todd Neva

"My customer satisfaction rating is one of the highest in the nation, and my territory is one of the most profitable!  So what's the problem?" I was dumbfounded why my regional manager wasn't happy with me. He handing me a letter of reprimand for going to bat for a customer. 

A large hospital had just purchased an expensive imaging system that proved to be defective within a week of installation, and I had facilitated getting them a replacement system. I was just trying to do the right thing for the customer and save Philips from an embarrassing lawsuit under the state’s “lemon law.”

At that point, I had been a field service engineer with Philips Healthcare for nearly eighteen years. Managers had come and gone - seven by my count - and over the years I received mostly positive performance evaluations. In fact, several times I was encouraged to apply for management positions.

My customers loved me, but for some reason, this new manager didn't think I had the company's best interest at heart. He may have questioned my loyalty, or he may have viewed great customer service as a dichotomy to profitability. In that way, I understand his concern. Even Jesus said, “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other." (Matt. 6:24a)

I was telling this story to a close friend of mine, and he told me, "That sounds like my experience. I was a finance manager embedded in supply chain. My clients loved me, but the finance directors didn't think I represented their agenda, so they rated me ineligible for promotion. I provided customer service to our internal clients, but in doing so I had forgotten who signs my paycheck." 

People often find themselves trapped between opposing agendas when providing customer service. I had been assigned a territory to provide on-site engineering services to hospitals and clinics. I provided great customer service through a combination of people skills, time, and resources. And I still managed to earn a healthy profit for Philips every year.

Philips extolled their high customer service ratings when they sold their products and services, but privately they chastised us field engineers for spending too much time and money and using too many parts to fix imaging equipment. Philips wanted the revenue but not the expenses. They wanted high customer satisfaction but didn't want to pay for it. They wanted their cake and to eat it too.

On top of all this, for the previous ten years Philips had been cutting costs, and the quality and reliability of their imaging equipment had declined dramatically. Philips was penny-wise and pound-foolish. (They lived up to their Dutch stereotype.) With the declining reliability, it would naturally cost more to service the imaging equipment.

did have the company's best interest in mind, but I took a long-term approach. If we didn't keep our customers happy, then they'd stop buying our services as well as new equipment.  The customers kept us in business, and ultimately they paid our salaries.  

Doctors and administrators  were happy when their imaging equipment was up and running, and they were even willing to pay for expensive service contracts to minimize downtime. In fact, over my eighteen year career, my territory had been split several times due to growth. And customers were buying more imaging equipment along with multi-year service agreements. I could hardly keep up with the workload and thought I secured a job for life. My wife and I had even taken out a second mortgage and built an addition to our home. And my sales colleague used to joke that our biggest customer paid for his expensive home in an exclusive neighborhood. 

Unfortunately, executives at Philips, like those at so many other companies today, focus too much on short-term profitability. They seek profit-at-any-price, even the long-term survival of their business. But that's Philips' business model: they purchase businesses that are nearing maturity, drive out competition, and then aggressively slash costs when customers are left with few other alternatives. Due to industry consolidation in the medical imaging equipment industry, there are only a few companies left: GE, Siemens, Toshiba, and Philips.

Shortly after my new regional manager officially reprimanded me, I resigned from Philips effective on my 18th year with the company.  Not only did I have one of the highest customer satisfaction ratings in the nation (98%), I also had one of the highest revenue producing territories (double the national average), and the most profitable service territory in the nation (78% gross margin).

Philips won with high profits. The customers won with low equipment down time. But I lost, as it became untenable to continue to serve two masters, particularly when one of the masters was my new boss. Within a year of my resignation, every one of my service colleagues in the region also resigned.  

In the full quote by Jesus, he said, "You cannot serve both God and money." Jesus was talking about prioritization. Obviously, we should continue to use money. Jesus used money, but interestingly he gave the coin purse to the man who would betray him. That's what Jesus thought about money.

When we put God first in our lives, then we put other people ahead of ourselves. We provide the best service we can to our customers because it's the right thing to do. Even if good service reduces profits, it's still the right thing to do. 

Fortunately, good service can be a win-win-win for companies, customers, and their service providers. We just need to get corporate executives to see past the next quarterly earnings report.

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