29.8.07

¿Sos amigo de Olé?

Antiboca en tiempo real mostrando una vez mas como los "pseudo-periodistas" de Olé son los que inventan, difunden y agrandan la mentira. Aquí deschavamos simpatías que luego son fuente del engaño mas grande del fútbol... Olé = Grupo Clarín = Pagani = Canal 13 = pescado podrido = Voka = ¡ M I E R D A !

Observen el seguimiento minuto a minuto del partido que se hace en http://www.ole.com.ar/ y saquen sus propias conclusiones... pueden entrar al sitio y chequearlo por su cuenta.

Gol de Independiente:

Gol de Voka:

287 comentarios:

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Anónimo dijo...

MI IDOLO ES RIQUELME, EL TUYO ES ORTEGA. AHI SE VE LA CLARA DIFERENCIA

Mariana dijo...

La verdad que me da risa todo lo que escribis sobre el Mejor Equipo Del Mundo, pero es entendible, las gallinas son re amargas y nunca ganan nada por eso te tenes que dedicar a hablar de Boca.
Jajajajajaja!!!!!

Anónimo dijo...

COSAS QUE NO FALTAN EN COMENTARIOS GALLINAS:bolivianos de mierda;tristelme;el periodismo te invento bostero ;mi equipo esta en el wining eleven
COSAS QUE NO FALTAN EN COMENTARIOS BOSTEROS:campeon de america;rey de copas;hijos nuestros;japon;orgullo nacional;mejor futbolista de la historia;roman;milan nos veremos en japon;tricampeon del mundo;sere tetra.

ESTA CLARA LA DIFERENCIA ¿NO?

Milan,nos vemos en japon!

Anónimo dijo...

COSAS QUE NO FALTAN EN COMENTARIOS GALLINAS:bolivianos de mierda;tristelme;el periodismo te invento bostero ;mi equipo esta en el wining eleven
COSAS QUE NO FALTAN EN COMENTARIOS BOSTEROS:campeon de america;rey de copas;hijos nuestros;japon;orgullo nacional;mejor futbolista de la historia;roman;milan nos veremos en japon;tricampeon del mundo;sere tetra.

ESTA CLARA LA DIFERENCIA ¿NO?

Milan,nos vemos en japon!

------


y bueno, las gayinas son asi. Cuanto mas titulos ganemos, mas excusas van a inventar

Anónimo dijo...

CHE ¿PORQUE LAS GAYINAS NO POSTEAN MAS?

¿TANTO MIEDO LE TIENEN A ROMAN?

Anónimo dijo...

Vuelve el futbol, y te querés matar gayina!!! Vas a seguir sometiendote a nuestras vueltas olímpicas mientras vos no das la vuelta ni a la manzana ajajajjaja!!!!
Segui llorando

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.


UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.

UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)

HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.


UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.

UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)

HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

------------


jajajaajaj buenisimo , impecable.

Las gayinas desaparecieron, se ve que estan llorando porque vuelve roman.

cuando yo les dije que volvia ellas se cagaban de risa porque creian que iba al atletico. ajajjaajaj despues se enteraron de que viene a boca y se suicidaron

Anónimo dijo...

ME DIJIERON Q A RIQUELME
LO PUSIERON EN MERCADO LIBRE
A VER SI ALGUIEN LO COMPRA...

DAS LASTIMA HELADERA...

DESPUES HABLAS DE ORTEGA
BOSTERO CARADURA...

QUEDATE CON TU DROGON
DE IDOLO, ESE Q SE
CAGO EN NOSOTROS EN EL
MUNDIAL DEL 94

Anónimo dijo...

CLARO Y EL BORRACHO CAGON LE PEGO UN CABEZASO A VAN DER SAR Y GRACIAS A ESO NOS DEJO FUERA HOLANDA.
MANDALE UNA DAMA JUANA NOMAS

Anónimo dijo...

UY APARECIO UNA GAYINA FINALMENTE. SABEN QUE LE TIENEN MIEDO A ROMAN PERO TRATAN DE DISIMULARLO, POR ESO NO DICEN NADA

GAYINA TE QUERES MATAR!!!!!

Anónimo dijo...

seleccion mayor con gayinas
no gana nada

seleccion sub 20 sin gayinas
campeon del mundo

seleccion sub 17 con gayinas
no gana nada

eso no lo ven uds gayinas?

si son de cabotaje su propio presidente lo dice

no se puede tener una selecciob con gayinas y no queda otra
su historia lo demuestra
estan para jugar contra equipitos locales como quilmes, colon, argentinos, chicago,ferro, gimnasia, san martin de sj, godoy cruz, etc etc
los sacas de ahi y no existen

River MdQ dijo...

Vostero sos conciente de que si Riquelme juega en Voka es porque no lo quieren en ningún lado del mundo. Date cuenta que no tenes prestigio porque por mas que hallas ganado la Libertadores con dos goles de Riquelme en la final y todos los medios lo hallan endiosado no lo quieren en Europa porque saben que tanto el freezer como vos son una mierda, una mentira. Lo mismo les paso a Palermo, Battaglia, se comieron un shot en el orto que los deposito en el riachuelo sin escalas.

Anónimo dijo...

Vostero sos conciente de que si Riquelme juega en Voka es porque no lo quieren en ningún lado del mundo. Date cuenta que no tenes prestigio porque por mas que hallas ganado la Libertadores con dos goles de Riquelme en la final y todos los medios lo hallan endiosado no lo quieren en Europa porque saben que tanto el freezer como vos son una mierda, una mentira. Lo mismo les paso a Palermo, Battaglia, se comieron un shot en el orto que los deposito en el riachuelo sin escalas.
-----------------------------------

che puto_mdq pedazo de enfermo mental y la reputa madre q t pario, me chupa un huevo y la mitad del otro si a Romy no lo quiere nadie. mejor pa nostros, q se venga para la Boca y juegue en el lugar donde mas lo bancan, pase lo q pase. en este mes y pico q no se supo bien q iba a ser de su futuro, yo siempre desee q no lo compre nadie, xq era obvio q si Riquelme se quedaba en villareal era para hacerle mas quilombo al forro de roig y al chileno de mierda.

yo se q a sus idolos, como no ganan una gaver aca, los bancan por lo bien q puedan chupar pijas alla en europa.

tipos como a palermo, bataglia, roman, etc, los banco por lo q hagan en mi club. q fracasen alla no significa q ls deje d bancar. entendes mogo?

anda a pelotudear en la pagina d ole y no jodas mas, hijo.

Anónimo dijo...

En Milan piensan en Japon
Milan acaba de ganarle la Supercopa al Sevilla y de alcanzar otra vez a Boca en títulos. Quiere más: "El Mundial es una buena ocasión para demostrar que somos los más grandes", dijo Silvio Berlusconi.

Anónimo dijo...

ME CHUPA UN HUEVO COMO LE FUE A ROMAN AFUERA.

ACA EN ARGENTINA Y SUDAMERICAN SIEMPRE LA ROMPIO, SIEMPRE GANO TITULOS, SIEMPRE METIO GOLES, Y SIEMPRE TE COGIO EN LOS SUPERCLASICOS, Y VOS LE TENES MIEDO

carlitos menen dijo...

viva huracan ahora vamos a ganar!!!!

Anónimo dijo...

Miren como ponen el gol de boquita
http://img167.imageshack.us/img167/2964/golvo5.gif

Si hace un gol el globo (no creo ya termina) cuantas o ponen..

OLE SIEMPRE CON VOS BOSTERO CARARROTA

Anónimo dijo...

vamos vamos los xeneizes
vamos vamos a ganar
Que este año no paramos hasta ser campeon mundial!!!!!!

BOCA HEXACAMPEON DE AMERICA 2007!!!!

Anónimo dijo...

Gayina pelotuda, mientras seguis mirando lo que hace boca y lo que escribé olé, te aviso que tu equipo de cuarta va ANTEPENULTIMO.
Matate gayina y no cacareen mas por el amor a la dignidad.

Anónimo dijo...

Leo...ademas del orto de cacerola debo reconocer que tenes tambien mucha imaginacion. Es mas deberias presentarte con lucas para trabajar en una proxima peli
La pregunta...es de que mierda hablar cuando te hacen el orto seguido y ves como Boca sigue ganando.
Tarea dificil la tuya!! Por eso apelas a recursos boludos que se te pongan..ya no tenes que carajo poner...

En vez de perder el tiempo homosexual de mierda porque no te vas a hondear por ahi????

jo jo

PD: PARA QUE ACRO NO SEA EL ULTIMO...que se mueran todos!!

Anónimo dijo...

Vamo$$$$ gano boquita...$$$$ Grande Collado!!!!

Anónimo dijo...

Ya empiezan a llorar como siempre. Gayinas mal perdedoras paren de moquear por dios! Ganale a alguien hijo de puta!

Anónimo dijo...

Bueno gayinas, si esto no fue penal.

fue un PENALAZO. el arquero del globo casi lo quiebra a palacio

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).


UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.



UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.


UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).



UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.


UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.



ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA



HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)


HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.



UN HINCHA DE RIVER SE DISTINGUE CUANDO: VES GENTE CON CAMISETA DEL PALMEIRAS, REAL MADRID, BAYERN, MILAN, CRUZ AZUL, SANTOS, GREMIO.


UN HINCHA DE BOCA SE DISTINGUE CUANDO: VES REALMENTE A UN HINCHA QUE SIEMPRE VA A LLEVAR LOS COLORES AZUL Y ORO EN EL PECHO.



UN HINCHA DE RIVER: FESTEJA Y SE CONGREGA EN EL OBELICO ANTE UNA DERROTA DE BOCA EN ALGUNA FINAL.


UN HINCHA DE BOCA: SE RIE PORQUE SU HIJO QUEDA ULTIMO EN LA ZONA DE LA COPA LIBERTADORES.



UN HINCHA DE RIVER: VA SER FELIZ PORQUE SU EQUIPO DEJARA TODO PARA GANAR EN CUALQUIER PARTE DE LA REPUBLICA ARGENTINA.


UN HINCHA DE BOCA: VA SER FELIZ PORQUE SU EQUIPO DEJARA EL CORAZON PARA CONQUISTAR AMERICA Y PARA TENER EL MUNDO EN SUS PIES NUEVAMENTE.



UN HINCHA DE RIVER: VIAJA A VER A SU EQUIPO EN COLECTIVO DE LINEA.


UN HINCHA DE BOCA: VIAJA A VER A SU EQUIPO EN AVION A CUALQUIER PARTE DEL PLANETA.



UN HINCHA DE RIVER: ES RECONOCIDO POR SER GALLINA, POR SER LA VERGUENZA DE NUESTRO PAIS CUANDO SALE AL EXTERIOR.

UN HINCHA DE BOCA: ES RECONOCIDO POR COMPARTIR EL REINADO CON EL MILAN COMO MAXIMOS GANADORES DE TITULOS INTERNACIONALES DEL PLANETA.


UN HINCHA DE RIVER: EN JAPON....FUE DE SHOPING.

UN HINCHA DE BOCA: EN JAPON....JUEGA LA FINAL DEL MUNDO.


UN HINCHA DE RIVER: ES CAMPEON DE AMERICA POR HABERLE GANADO 2 FINALES AL AMRICA DE CALI Y UNA INTERCONTINENTAL AL ESTATUAS DE BUCAREST.

UN HINCHA DE BOCA: ES CAMPEON DE AMERICA POR HABERLE GANADO AL CRUZEIRO, DEP. CALI, PALMEIRAS, CRUZ AZUL, SANTOS, GREMIO Y ES TRI CAMPEON MUNDIAL POR HABERLE GANADO AL BORUSSIA, MILAN Y REAL MADRID.


UN HINCHA DE RIVER: ES TRISTE POR LLEVAR 3 AÑOS SIN GANAR NADA.

UN HINCHA DE BOCA: ES TRISTE POR NO HABER GANADO 3 CAMPEONATOS SEGUIDOS.


UN HINCHA DE RIVER: PASO 18 AÑOS SIN GANAR NADA.

UN HINCHA DE BOCA: GANO 16 CAMPEONATOS EN MENOS DE UNA DECADA.


UN HINCHA DE RIVER: DIRA QUE MACRI ARREGLO ALGUNOS PARTIDOS.

UN HINCHA DE BOCA: ASEGURA QUE UN PRESIDENTE DE LA NACION (CARLOS SAUL) LES COMPRO MUCHOS CAMPEONATOS.


UN HINCHA DE RIVER: RECORDARA PARA TODA LA VIDA GRANDES VICTORIAS SOBRE BOCA EN LOS CAMPEONATOS DE VERANO.

UN HINCHA DE BOCA: RECORDARA PARA TODA LA VIDA LOS PARTIDOS POR LA COPA 2000 (GOL DE MARTIN EN MULETAS) Y LA SEMI FINAL DE LA COPA 2004 (DEFINIDA EN LA HELADERA MONUMENTAL ANTE PUBLICO LOCAL UNICAMENTE).


UN HINCHA DE RIVER: PUEDE DESIR QUE EN ESTE 2007 ES CAMPEON DE LA COPA CINDOR DE VERANO.

UN HINCHA DE BOCA: PUEDE DESIR QUE ES HEXA CAMPEON DE AMERICA.


UN HINCHA DE RIVER: SE LEVANTARA TEMPRANO EN DICIEMBRE A ALENTAR AL MILAN.

UN HINCHA DE BOCA: SE LEVANTARA TEMPRANO EN DICIEMBRE PARA VERLO GANAR LA 4 COPA DEL MUNDO.

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).
UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.

UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.
UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.
UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)
HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

UN HINCHA DE RIVER SE DISTINGUE CUANDO: VES GENTE CON CAMISETA DEL PALMEIRAS, REAL MADRID, BAYERN, MILAN, CRUZ AZUL, SANTOS, GREMIO.
UN HINCHA DE BOCA SE DISTINGUE CUANDO: VES REALMENTE A UN HINCHA QUE SIEMPRE VA A LLEVAR LOS COLORES AZUL Y ORO EN EL PECHO.

UN HINCHA DE RIVER: FESTEJA Y SE CONGREGA EN EL OBELICO ANTE UNA DERROTA DE BOCA EN ALGUNA FINAL.
UN HINCHA DE BOCA: SE RIE PORQUE SU HIJO QUEDA ULTIMO EN LA ZONA DE LA COPA LIBERTADORES.

UN HINCHA DE RIVER: VA SER FELIZ PORQUE SU EQUIPO DEJARA TODO PARA GANAR EN CUALQUIER PARTE DE LA REPUBLICA ARGENTINA.
UN HINCHA DE BOCA: VA SER FELIZ PORQUE SU EQUIPO DEJARA EL CORAZON PARA CONQUISTAR AMERICA Y PARA TENER EL MUNDO EN SUS PIES NUEVAMENTE.

UN HINCHA DE RIVER: VIAJA A VER A SU EQUIPO EN COLECTIVO DE LINEA.
UN HINCHA DE BOCA: VIAJA A VER A SU EQUIPO EN AVION A CUALQUIER PARTE DEL PLANETA.

UN HINCHA DE RIVER: ES RECONOCIDO POR SER GALLINA, POR SER LA VERGUENZA DE NUESTRO PAIS CUANDO SALE AL EXTERIOR.
UN HINCHA DE BOCA: ES RECONOCIDO POR COMPARTIR EL REINADO CON EL MILAN COMO MAXIMOS GANADORES DE TITULOS INTERNACIONALES DEL PLANETA.

UN HINCHA DE RIVER: EN JAPON....FUE DE SHOPING.
UN HINCHA DE BOCA: EN JAPON....JUEGA LA FINAL DEL MUNDO.

UN HINCHA DE RIVER: ES CAMPEON DE AMERICA POR HABERLE GANADO 2 FINALES AL AMRICA DE CALI Y UNA INTERCONTINENTAL AL ESTATUAS DE BUCAREST.
UN HINCHA DE BOCA: ES CAMPEON DE AMERICA POR HABERLE GANADO AL CRUZEIRO, DEP. CALI, PALMEIRAS, CRUZ AZUL, SANTOS, GREMIO Y ES TRI CAMPEON MUNDIAL POR HABERLE GANADO AL BORUSSIA, MILAN Y REAL MADRID.

UN HINCHA DE RIVER: ES TRISTE POR LLEVAR 3 AÑOS SIN GANAR NADA.
UN HINCHA DE BOCA: ES TRISTE POR NO HABER GANADO 3 CAMPEONATOS SEGUIDOS.

UN HINCHA DE RIVER: PASO 18 AÑOS SIN GANAR NADA.
UN HINCHA DE BOCA: GANO 16 CAMPEONATOS EN MENOS DE UNA DECADA.

UN HINCHA DE RIVER: DIRA QUE MACRI ARREGLO ALGUNOS PARTIDOS.
UN HINCHA DE BOCA: ASEGURA QUE UN PRESIDENTE DE LA NACION (CARLOS SAUL) LES COMPRO MUCHOS CAMPEONATOS.

UN HINCHA DE RIVER: RECORDARA PARA TODA LA VIDA GRANDES VICTORIAS SOBRE BOCA EN LOS CAMPEONATOS DE VERANO.
UN HINCHA DE BOCA: RECORDARA PARA TODA LA VIDA LOS PARTIDOS POR LA COPA 2000 (GOL DE MARTIN EN MULETAS) Y LA SEMI FINAL DE LA COPA 2004 (DEFINIDA EN LA HELADERA MONUMENTAL ANTE PUBLICO LOCAL UNICAMENTE).

UN HINCHA DE RIVER: PUEDE DESIR QUE EN ESTE 2007 ES CAMPEON DE LA COPA CINDOR DE VERANO.
UN HINCHA DE BOCA: PUEDE DESIR QUE ES HEXA CAMPEON DE AMERICA.

UN HINCHA DE RIVER: SE LEVANTARA TEMPRANO EN DICIEMBRE A ALENTAR AL MILAN.
UN HINCHA DE BOCA: SE LEVANTARA TEMPRANO EN DICIEMBRE PARA VERLO GANAR LA 4 COPA DEL MUNDO.

Anónimo dijo...

seleccion mayor con gayinas
no gana nada

seleccion sub 20 sin gayinas
campeon del mundo

seleccion sub 17 con gayinas
no gana nada

eso no lo ven uds gayinas?

si son de cabotaje su propio presidente lo dice

no se puede tener una selecciob con gayinas y no queda otra
su historia lo demuestra
estan para jugar contra equipitos locales como quilmes, colon, argentinos, chicago,ferro, gimnasia, san martin de sj, godoy cruz, etc etc
los sacas de ahi y no existen

Anónimo dijo...

The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.

Anónimo dijo...

The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.
The Luxury Touch
by Robert Reppa and Evan Hirsh
04/03/07

Superb service is the indispensable ingredient of successful high-end brands. Follow four principles to deliver customer satisfaction year after year.

What distinguishes a stay at the Ritz-Carlton from a night at a comfortable, midlevel hotel chain? A room at the Ritz offers superior luxury and creature comforts, of course, but its most important differentiator is an unsurpassed level of service, as reflected in the company’s top rankings for guest satisfaction by J.D. Power and Associates and its two Malcolm Baldrige National Quality Awards — U.S. government–sponsored citations for rigorous attention to and delivery of quality.
The same dedication to service famously distinguishes Nordstrom from other high-end department stores. Competitors sell comparable, often identical, goods, but they cannot match Nordstrom’s top ranking in consumer surveys, including those conducted in 2006 by American Express and the National Retail Federation. Similarly, the quality of service explains why Lexus, the top-ranked brand in J.D. Power’s customer satisfaction surveys, consistently outpaces other makers of luxury cars. And at the local retail level, top-notch service helps Park Place, an elite car dealer in Houston and Dallas/Fort Worth, regularly take first place in statewide customer satisfaction surveys.
The relationship between quality of service and the luxury touch is often noticed, but its significance is rarely understood. A recent Booz Allen Hamilton study suggests that with luxury brands, the excellence of the underlying product is merely a starting point. Interviews with 40 executives at a broad spectrum of high-performing luxury brand companies confirm that what makes these luxury products truly stand apart is the superb level of service in which they are wrapped. Indeed, the services surrounding each of these brands can be viewed not only as an intrinsic part of the products themselves, but as an important differentiator of the brand.
Companies like Ritz-Carlton, Nordstrom, and Lexus can guarantee service that goes the extra mile because, in effect, they’ve programmed their organizations to foster customer-centered behavior in employees at all levels. Although there’s no single process for achieving high levels of customer satisfaction, four principles are common to nearly all top-performing luxury brand companies:
1. They create a customer-centered culture that identifies, nurtures, and reinforces service as a primary value.
2. They use a rigorous selection process to populate the organization with superior sales and support staff. The impulse to care about accommodating customers cannot be taught to people who are not predisposed to it.
3. They constantly retrain employees to perpetuate organizational values and to help them attain greater mastery of products and procedures.
4. They systematically measure and reward customer-centric behavior and excellence in sales and service to enforce high standards and reinforce expectations.
When these four principles are at work, the result is a highly integrated business model that combines a superior product line with outstanding sales and service quality, driving strong growth and profitability in the process. Over the past five years, for example, Ritz-Carlton sales have grown at a rate of 12.7 percent per annum, compared with a rate of 1.8 percent for the rest of the luxury hotel industry. Nordstrom’s U.S. sales have grown at a rate of 8.3 percent, while sales for other nondiscount department stores have declined 1.6 percent. And Lexus sales have grown by 7.8 percent, compared with just 0.9 percent for other luxury auto brands.

Values First
None of the four principles can be omitted or glossed over without jeopardizing the entire effort. When it comes to sales and service excellence, the leading luxury brands do not take shortcuts. “Great customer service is not an initiative,” says Greg Holland, manager of Nordstrom’s Michigan Avenue store in Chicago. “It is not the thing of the day. It is part of our culture.” High-performance luxury brands maintain their commitment to service in good times and bad, emphasizing long-term vision over short-term expediency.
Companies that achieve high levels of customer satisfaction display a zeal for superior service from the very top of the organization chart. This dedication constitutes the foundation of customer-centricity. Without the values and culture that leaders inspire, none of the other principles can be effective for long. Customer-centric values and culture inform the hiring process and animate the systems of training and rewards. Instilling values of this sort may be the ultimate test of leadership. Leaders of customer-centric companies clearly articulate what kind of organizational culture they want and consistently sell employees on its key principles, leaving no doubt about the significance that members of senior management attach to customer-centricity. More important than communications, however, is the leaders’ willingness to take action when the primacy of high-quality service is challenged.
No hotelier takes this principle more seriously than Ritz-Carlton, whose standards were set more than a century ago by founders Caesar Ritz and August Escoffier. Ritz employees are constantly schooled in company lore and company values, spelled out in a credo that the company calls its “Gold Standards,” printed on a card that employees carry at all times. The credo begins with the statement, “We are ladies and gentlemen serving ladies and gentlemen,” and continues with principles such as these:
• I am always responsive to the expressed and unexpressed wishes and needs of our guests.
• I continuously seek opportunities to innovate and improve the Ritz-Carlton experience.
• I immediately resolve guest problems.
• I have the opportunity to continuously learn and grow.
• I am involved in the planning of the work that affects me.
• I am proud of my professional appearance, language, and behavior.
Ritz’s values are not reserved for printed cards. They are the basis for all employee training and rewards programs, and they are discussed in daily “lineups” — 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques.
Nordstrom has been a global pioneer in giving sales staff both the training and the autonomy to deliver high-quality service. Stories of extraordinary Nordstrom service have become a staple of management literature. Here is one of many: In Portland, Ore., a man walked into Nordstrom asking for an Armani tuxedo to wear to his daughter’s wedding. The sales representative took his measurements but said she’d need time to work on his request. She called later to say that the tuxedo would be ready the next day. As it turned out, Nordstrom did not carry Armani tuxedos at the time. The sales representative had found the tux through a distributor in New York, then had it rushed to Portland and altered to fit the customer in time for the wedding.
To achieve that level of service, it is not enough to merely invest sales personnel with an unusual degree of authority. It must be backed up with extraordinary levels of support, recognition, and opportunity. Nordstrom’s hiring materials, given to anyone applying for a position, say, “The opportunities are endless. This is a place to love what you do.” That slogan, in turn, is reinforced by the organization chart, which puts customers on the top and the firm’s sales and support staff directly beneath them. At the very bottom of the company’s inverted organizational pyramid sits the board of directors. Having stated that the most important decisions at Nordstrom are those made by the sales and support staff in serving customers, and that everyone else at the company, including the board of directors, is there to support them, the retail chain must then follow through. It does so through a variety of means, which range from recognition for employee services to a commission system that allows successful Nordstrom sales associates to earn significantly more than their peers at competing stores.

Rigorous Selection
Successful luxury brands give the same attention and care to selecting employees that they put into nurturing them. Ritz-Carlton uses a process that may set the standard for methodical rigor. It evaluates each applicant using scientific, behavior-based assessment tools developed by the human resources consulting firm Talent+, tools derived from statistical analysis of top performers’ behavioral characteristics in each job category. Potential hires are tested both for cultural fit and for traits associated with customer service excellence, including what Ritz calls an innate “passion to serve.” Says John Timmerman, vice president for quality and program management: “The smile has to come naturally.”
As part of the interview process, candidates spend time with established Ritz employees performing their daily routines, a practice that gives job candidates a realistic view of Ritz’s performance standards and encourages those with misgivings to drop out. Company research has shown that its “mis-hired” employees — those who leave within a year or two because they are uncomfortable with the work environment — are expensive. On average, a mis-hired hourly worker costs the company two and a half times that worker’s annual salary; a mis-hired sales employee costs eight to 10 times his or her annual salary. Ritz’s staff turnover is one-seventh the industry average; this level of stability contributes to high profitability.
Nordstrom does not require new sales hires to have previous retail experience, but the company works hard to hire salespeople who are both service-minded and entrepreneurial, people who are likely to enjoy working in an environment with limited structure and guidance. The service mentality, says one Nordstrom executive, is difficult to fake. He sometimes takes prospective sales staff to lunch and deliberately knocks his napkin off the table to see if their impulse is to help.
Like Ritz-Carlton and Nordstrom, Lexus promises extraordinary customer satisfaction. To deliver it, the automaker needs outstanding personnel who share the company’s values and possess the disposition and the talent to deliver on them. But many of the extraordinary individuals who make this brand so successful don’t work for the automaker, which seldom interacts directly with the buying public. Instead, they work for franchised local dealerships. Thus, from the moment Toyota launched the marque in 1989, Lexus has set extremely high standards for its dealer selection process. It gave initial priority to existing Toyota dealerships, but even they were subjected to a demanding application process that required extensive customer satisfaction surveys and related data.
The application process included several face-to-face interviews between the company and each prospective dealer. In the end, only 80 existing Toyota dealers were chosen from a field of 1,500 applicants. “The process was unbelievable,” recalls one of the winners, “and the absolute prerequisite was high customer satisfaction.” Having turned down 95 percent of the Toyota dealers who wanted a Lexus franchise, the company then turned to top dealers of competing luxury brands, subjecting them to the same exhaustive process.
And the pressure doesn’t end when the dealership is selected. The Lexus Covenant, to which all Lexus dealers must agree, reflects a groundbreaking business model. It promises that Lexus will produce the finest cars ever built. In turn, Lexus dealers must promise to constitute the industry’s best dealer network, reflecting the company’s intent to make its relationship with dealers a strong partnership. Evidently, this covenant is working. In a survey of dealer attitudes published by the National Automobile Dealers Association in mid-2006, Lexus dealers were by far the most satisfied of any dealership group.
Lexus dealers go to remarkable lengths to please their customers. Lexus execs tell the story of one South Atlanta dealership, which serves a vast portion of Georgia, whose service and parts personnel fly their own planes to reach distant customers whose cars need maintenance. “This is beyond service!” exclaimed one customer after watching the Lexus team fix her car in her own driveway. In Chicago, Lexus salesman James Hebinck spotted a Lexus coupe stuck in a snowbank. Not only did Hebinck pull over and dig out the car, he invited the owner to buy a pair of snow tires at a generous discount. The customer followed up on the offer and later referred two friends to the dealership.
The mutual commitment to customer service between automaker and dealer was first tested three months after the first Lexus models were unveiled in the United States. The company decided to recall its flagship LS400 model based on two unrelated customer complaints. Lexus was adamant that all of the recalled vehicles be fixed within a period of three weeks, an unprecedented deadline. Dealers picked up cars at customers’ homes, paid for rental replacements, and then returned the cars, freshly washed and vacuumed, with full tanks of gas. As one dealer recalls, “Lexus came to us and said, ‘We are in this together.… Do whatever it takes to make the customer happy, and we can discuss it later.’”

Training and Heroics
The continuous training required of high-performing luxury brand employees includes training in new products and sales procedures as well as constant reinforcement of the company values and heritage. The average Ritz-Carlton employee receives 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. At Park Place, the Dallas/Fort Worth car dealership, the average employee receives 186 hours of training per year. This training, the equivalent of four and a half weeks, includes weekly seminars and roundtable discussions. Even experienced employees are trained in listening and sales techniques, in cross-cultural dynamics, and, of course, in new product information.
The fourth essential principle in ensuring high customer satisfaction is measuring and rewarding performance. The top-performing brands all have elaborate procedures to measure both customer and employee satisfaction, and they reward high-performing staff with extra recognition and superior compensation. Nordstrom, for example, recognizes customer service “heroes” with ad hoc cash awards, extra merchandise discounts, and favorable work-shift assignments. Individual employees and departments are also singled out for praise during morning intercom broadcasts before the doors open.
At the same time, Nordstrom closely monitors sales performance and encourages healthy competition. Sales associates’ performance records are posted for others to inspect, and all sales employees have ready access to sales figures from all departments and all stores within the chain.
Rather than measure customer satisfaction, Ritz-Carlton uses a proprietary metric it calls “customer emotion,” which reflects the concept of emotional intelligence. It also uses elaborate benchmarking procedures to ensure accountability for key priorities, including customer and employee loyalty, financial success, and continuous improvement initiatives. By setting salaries at the top of industry norms and using visible, nonfinancial recognition of employee contributions, it keeps enthusiasm high and staff turnover low. The company is also piloting a program with the Gallup Organization that closely monitors each location’s customer relations.

A Virtuous Circle
Ritz-Carlton, Nordstrom, and Lexus are all large organizations that have spent years honing their approach to creating the luxury touch through exceptional service. But their level of achievement is possible for smaller companies as well. An extraordinary level of customer satisfaction has marked Park Place dealerships since their inception in 1987. Park Place founder Ken Schnitzer, a former commercial real estate developer, wanted to change the paradigm for car dealerships, a retail category that consistently ranks low in customer satisfaction. He began by making a careful study of luxury-brand hospitality leaders, including Ritz-Carlton, copying many of their procedures for ensuring high customer satisfaction levels. For example, Park Place became the first auto dealership to establish a formal human resources department, charged with recruiting and training outstanding personnel and motivating them with superior compensation packages.
In Texas, stories about Park Place’s service excellence abound. Six years ago, a customer was unable to make it to the hospital and pulled into a Park Place dealership as his wife was giving birth to a daughter in the backseat. Park Place called for an ambulance but kept the car to give it a thorough cleaning. A year later, the dealership threw a birthday party for the little girl in its showroom. More recently, the customer of a competing dealer pulled off the road in Grapevine, Tex., with a disabled vehicle. The hapless driver had already phoned his dealer for help when a Park Place technician driving by stopped and fixed the car at no cost to the owner. Not surprisingly, the dealership has received numerous quality awards, including a Malcolm Baldrige award in 2005.
A Park Place–like attitude toward service does not have to date from a company’s first days. Companies not originally built around a customer satisfaction framework can change, building the structure and culture necessary for the kind of premium service that accompanies a successful luxury brand. The change should use the four principles to reenergize employees, establish new levels of customer loyalty, and drive superior growth and long-term profitability. Companies that set out to make tangible shifts in each of these domains find they reinforce one another in a virtuous circle that allows the company to change with increasing momentum.
The road is not an easy one, of course, and the details of implementing and overseeing these principles will vary from one company to the next. Employees who have been successful in an environment where other goals were paramount may be slow to embrace customer satisfaction initiatives. When company leaders begin emphasizing new, customer-centric values, some employees will react skeptically and need to be won over; others may resist and need to be let go, even at the cost of losing high producers.
In the end, however, the journey toward achieving high levels of customer satisfaction is clearly worth making, even with internal resistance. The necessary perseverance and focus may take time to pay off. But when employees recognize that they are valued and share in the rewards, they can commit themselves wholeheartedly to the company’s mission. That, in turn, will demonstrate to outsiders that the company not only has set strong values but also lives by them, and that these values make possible a growing reputation for premium products and service. Companies that deliver at high standards enjoy strong customer loyalty. And that customer loyalty, in turn, drives superior growth and profitability while reinforcing and perpetuating the underlying culture. You will know you have set that virtuous circle in motion when you recognize one day that customers are coming to buy your product at a premium price, expecting superior service and getting it. Before they walk in the door, they probably won’t know precisely what superior service means; but they’ll know it when they see it.

Robert Reppa (reppa_robert@bah.com) is a principal with Booz Allen Hamilton based in Chicago. He works with automotive and industrial products companies and focuses on growth strategy and sales and marketing effectiveness.
Evan Hirsh (hirsh_evan@bah.com) is a vice president with Booz Allen Hamilton based in Cleveland. He works with automotive and industrial products companies and focuses on business strategy and marketing and distribution channel strategy and management.

el riverplatense dijo...

en vez de postear pavadas lo hinchas de voka,llamense a silencio y respeten la memoria del arquero gustavo eberto que fallecio hoy a los 24 años.

es un jugador de ustedes,por lo menos respeto,no?

que en paz descanse,un buen pibe que padecio una enfermedad de mierda.

la millonaria dijo...

recien lo acabo de leer ,una pena realmente,un tipo de 24 años y que haya sufrido tanto.
muy triste.

Anónimo dijo...

Recién acabo de enterarme :(

Espero que todos puedan entender alguna vez que la muerte esta muchisimo mas allá que los colores de una camiseta

Q.E.P.D

Anónimo dijo...

SOY BOSTERO Y LES AGRADEZCO LA MANERA DE EXPRESARSE. DEJEMOS DE LADO LAS CARGADAS.
AGUANTE EBERTO Y GRACIAS A LOS HINCHAS DE RIVER QUE POSTEARON ANTERIROMENTE.

el enzo dijo...

si algun boquense que postea aca es de paso de los libres(corrientes),sepan que a gustavo eberto lo velan alli.

mi pesame.

bruno dijo...

una sorpresa la de hoy. Megusta el futbol y la verdad q duele que un joven de 24 año muera. Una gran persona e igual de profesional.Espero que Boca se acuerde de EL.

Anónimo dijo...

GRACIAS ENZO, MILLONARIA, SAVIOLA, RIVERPLATENSE Y ANONIMOS POR DEJAR DE LADO LAS CARGADAS SANAS QUE TIENE EL FUTBOL POR EL MOMENTO QUE LES TOCA VIVIR A LA FAMILIA EBERTO.
GUSTAVO TENIA 24 AÑOS Y LUCHO MUCHO TIEMPO CONTRA UN CANCER TESTICULAR QUE EL DIA DE HOY LE GANO ESA LUCHA.
GRACIAS A ESOS HIMCHAS DE RIVER QUE SIENTEN ESTE TRISTE MOMENTO QUE NOS TOCA VIVIR A LOS HINCHAS XENEISES.

Anónimo dijo...

si se hubiera comido 5 goles de gallardo estaria posteado en la en la pagina principal del foro de este idiota, pero ahora lo recuerdan, seamos hinchas del futbol...

Q.E.P.D

el albiceleste dijo...

por que se mezclan las cosas asi?
quien puede reirse o burlarse de la muerte de una persona?
si eberto se hubiese "comido" goles de jugadores de river como vos decis,al que lleva adelante este blog ni se le ocurriria postear algo de tan mal gusto ante un fallecimiento.

es mas ,si te fijas ayer nadie posteo bromas ,ni nada,los pocos que entraron fueron para dar un pesame a los hinchas de boca.

ah,y me considero muy hincha de futbol.

el granate dijo...

duranye 18 meses la apeleo este pibe contra esa enfermedad chota,a quien le puede importar quien le hizo goles?

la muerte provoca siempre los mismos sentimientos,tristeza,pena,lastima por perder a una persona tan joven.
no soy hincha ni de river ni de boca,pero los sentimientos existen igual.
ante todo es una persona y merece respeto.

Anónimo dijo...

loco haber si se ponen las pilas y sacan un informe sobre la victoria de vok frente a huracan...
con otro penal!!!
ya aburren.... todos los partidos un penal... no puede ser!!
tienen 1 gol asegurado x partido!!

chau

Anónimo dijo...

por al menos ya no sufre mas

fuerza a la familia y amigos de gustavo!!

Anónimo dijo...

Lo que no tiene palabras es la caradurez de tristelme.

AMADEO dijo...

sinonimos de voka...

TRICAGON JUNIORS

NEGRADA FUTBOL CLUB

CLUB ATLETICO SEGUNDON

Y AHORA...

DEPORTIVO PENAL

Anónimo dijo...

eurs émissaires défilent en rangs serrés à Rabat, Tanger ou Marrakech. L'immobilier et le tourisme ont leurs préférences. Pas une semaine ne passe sans qu'on apprenne le lancement d'un nouveau projet, le plus souvent mirobolant : les pays du Golfe investissent massivement au Maroc. En tête du peloton : les Emirats arabes unis, suivis par l'Arabie saoudite puis, presque à égalité, par le Qatar, le Koweït et Bahreïn. Les chiffres annoncés donnent le tournis. Ils sont parfois surévalués, mais le phénomène est réel : une pluie de pétrodollars s'abat aujourd'hui sur le royaume chérifien.



Cette manne inespérée, le Maroc la doit principalement aux conséquences du 11-Septembre 2001. Depuis les attentats contre New York et Washington, les pétromonarchies ont les plus grandes difficultés à placer leur argent dans les pays occidentaux. Or, avec la hausse continue des cours du pétrole, elles ont des sommes colossales à investir. Résultat : les pays du Golfe se tournent désormais vers des pays "frères", dont le Maroc fait partie. Le roi Mohammed VI entretient d'excellents rapports avec ses homologues princiers du Moyen-Orient.

Pour la seule année 2007, les investissements directs étrangers (IDE) au Maroc devraient s'élever à quelque 3 milliards de dollars (contre 500 millions de dollars par an au milieu des années 1990). Les deux tiers de ce montant sont originaires de l'Union européenne, le dernier tiers des pays du Golfe. Les Européens (Français et Espagnols en tête) restent donc les premiers investisseurs étrangers au Maroc, mais peut-être plus pour longtemps. "Les investissements arabes sont à la hausse de façon continue. En 2008, je prévois que l'Europe et les pays du Golfe seront à égalité", déclare Hassan Bernoussi, directeur des investissements au ministère marocain des affaires économiques et générales.

Ce sont des entreprises émiraties qui raflent, à l'heure actuelle, les plus gros projets, la plupart du temps en partenariat avec la Caisse marocaine de dépôt et de gestion (CDG). Le géant immobilier Emaar vient de donner le coup d'envoi d'une importante station touristique non loin de Tanger, baptisée Tinja. Une véritable petite ville, avec 2 500 maisons de grand luxe, des clubs de sport, des hôtels, des magasins... Au total, il y en a pour plus de 1 milliard de dollars d'investissement. C'est ce même groupe Emaar qui va s'atteler, début 2008, à réaménager la corniche de Rabat (12 milliards de dollars, sur sept ans), construire une station de ski à Oukaïmeden, dans le Haut-Atlas, et mener trois autres projets touristiques, notamment du côté de Marrakech.


HORS D'APPELS D'OFFRES


C'est une autre société émiratie, la Dubaï Holding, qui a obtenu (toujours en partenariat avec la CDG) l'exploitation et le développement de l'estuaire du Bouregreg, entre Rabat et Salé. Et c'est encore Dubaï qui va exploiter la future zone franche du nouveau port de Tanger.

La capitale régionale du Nord fait l'objet de bien des convoitises. Qatari Diar s'apprête à donner, tout près de Tanger, le premier coup de pioche d'un complexe ultraluxueux, s'étalant en front de mer, sur 2,5 kilomètres, le long de l'océan Atlantique. Pour faire mieux que Tinja, la réalisation de son rival émirati, le groupe qatari projette de construire un golf de 18 trous, un centre équestre, un centre de conférences ("le plus grand d'Afrique", annonce-t-il), et une "vraie-fausse" casbah où l'on fabriquera et présentera l'artisanat marocain. Parmi ses autres projets, l'aménagement du port d'Asilah, sur la côte atlantique, et de l'immobilier de standing à Marrakech et à Agadir. Coeur de cible : la riche bourgeoisie marocaine, autant que les retraités espagnols, français et britanniques fortunés.

Aux critiques qui font remarquer que ces fabuleux contrats sont conclus hors appels d'offres et publication - en infraction avec le code des marchés publics du royaume - les responsables marocains répondent qu'ils veulent gagner du temps et qu'ils ont retenu "des références internationales incontestables". La ruée actuelle sur le Maroc, font-ils valoir, est une "aubaine" qu'il ne faut pas laisser passer. "L'objectif du Maroc est d'atteindre les 10 millions de touristes en 2010 (contre 6 millions en 2005). Nous devons donc augmenter rapidement notre capacité d'accueil", souligne Hassan Bernoussi, avant d'ajouter : "Grâce aux investisseurs du Golfe, nous sommes en passe de réussir notre pari."
Pour les syndicats, le discours de Sarkozy sur l'éducation est "déconnecté des réalités"
LEMONDE.FR avec AFP | 04.09.07 | 17h32 • Mis à jour le 04.09.07 | 17h41







es principaux syndicats de l'éducation ont critiqué la lettre adressée aux enseignants par Nicolas Sarkozy mardi 4 septembre, estimant qu'elle était "déconnectée des réalités", tout en accumulant les contradictions.


"D'un côté, il souhaite élever le niveau des élèves, mais en même temps, il propose une sélection nouvelle à l'entrée en sixième et en seconde", a regretté Patrick Gonthier, secrétaire général de l'UNSA. "Le président s'est adressé à la fois à ceux qui veulent démocratiser l'école et à ceux qui veulent la rendre plus sélective, mais le point d'équilibre n'a pas été trouvé. La vision de l'école qu'on en retire est celle de grandes idées et de grands principes dont on a du mal à trouver les points concrets", a-t-il poursuivi.


M. Gonthier a également fustigé "une revalorisation en trompe l'œil", estimant "que des postes seront supprimés et que de surcroît, il faudra accepter le principe du mérite ou de la performance".



"ILLUSION"



Pour le président de la FSU, Gérard Aschieri, le discours du président faisait "illusion". "Mais quand on gratte, [sa] position sur la politique éducative n'est pas à la hauteur des défis réels de l''école aujourd'hui, a-t-il conclu. On note des faiblesses très fortes dans cette lettre, par exemple le poids des inégalités sociales à l'école est complètement absent."

En outre,"rien n'est dit sur la nécessité d'améliorer les pratiques des enseignants. Rien n'est évoqué non plus sur les personnels autres que les enseignants. Il n'y a pas un mot sur les formations des maîtres", a énuméré M. Aschieri.

Pour sa part, la FCPE, principale fédération des parents d'élèves, s'est dite partagée. D'un côté, elle a apprécié que M. Sarkozy rappelle son attachement "à de nombreux principes, comme la laïcité, la priorité donnée à la maternelle ou la nécessité de donner du sens aux apprentissages et de privilégier les méthodes pédagogiques actives". Toutefois, elle s'inquiète "des propos (...) sur la réforme du collège unique, la disparition de la sectorisation et sur la nécessité pour l'élève de faire ses preuves pour pouvoir entrer en sixième, puis en seconde".






ARIS (Reuters) - Six personnes, quatre mineurs et deux adultes, seront poursuivis après les heurts à proximité de la gare du Nord de dimanche dernier, a annoncé mardi le parquet de Paris.

Les deux majeurs seront jugés en comparution immédiate devant le tribunal correctionnel pour violences volontaires avec arme et les quatre mineurs seront présentés au tribunal pour enfants pour les mêmes faits.


Les armes saisies étaient des tessons de bouteille et des bâtons.

Douze autres personnes arrêtées dimanche soir ont été remises en liberté sans qu'aucune charge ne soit retenue contre elles.

Selon le parquet, l'incident, simple échauffourée entre deux groupes de jeunes du 18e arrondissement et du Val d'Oise qui sortaient d'une boîte de nuit est "sans rapport" avec deux autres incidents survenus à Pigalle et dans la gare du Nord les jours précédents.

En se rendant sur place lundi, le Premier ministre François Fillon a annoncé des moyens supplémentaires pour renforcer la sécurité de la gare du Nord.

Anónimo dijo...

Es curioso que en el diario de hoy saliesen estas dos noticias casi juntas:

TIRONEOS POR LOS FONDOS PARA ALQUILAR UN ROMPEHIELOS
Se demora la llegada del barco ruso para reemplazar al Irízar

BOCA : SIN ACUERDO ENTRE EL VILLARREAL Y LOS REPRESENTANTES DEL JUGADOR
El sueño de traer a Román no tuvo el final esperado

Los 2 puntos en común que conectan ambas noticias:
.La falta de fondos para poder contratar los servicios tanto del rompehielos como del jugador
.Los dos trabajan en el polo...

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).
UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.

UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.
UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.
UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)
HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

UN HINCHA DE RIVER SE DISTINGUE CUANDO: VES GENTE CON CAMISETA DEL PALMEIRAS, REAL MADRID, BAYERN, MILAN, CRUZ AZUL, SANTOS, GREMIO.
UN HINCHA DE BOCA SE DISTINGUE CUANDO: VES REALMENTE A UN HINCHA QUE SIEMPRE VA A LLEVAR LOS COLORES AZUL Y ORO EN EL PECHO.

UN HINCHA DE RIVER: FESTEJA Y SE CONGREGA EN EL OBELICO ANTE UNA DERROTA DE BOCA EN ALGUNA FINAL.
UN HINCHA DE BOCA: SE RIE PORQUE SU HIJO QUEDA ULTIMO EN LA ZONA DE LA COPA LIBERTADORES.

UN HINCHA DE RIVER: VA SER FELIZ PORQUE SU EQUIPO DEJARA TODO PARA GANAR EN CUALQUIER PARTE DE LA REPUBLICA ARGENTINA.
UN HINCHA DE BOCA: VA SER FELIZ PORQUE SU EQUIPO DEJARA EL CORAZON PARA CONQUISTAR AMERICA Y PARA TENER EL MUNDO EN SUS PIES NUEVAMENTE.

UN HINCHA DE RIVER: VIAJA A VER A SU EQUIPO EN COLECTIVO DE LINEA.
UN HINCHA DE BOCA: VIAJA A VER A SU EQUIPO EN AVION A CUALQUIER PARTE DEL PLANETA.

UN HINCHA DE RIVER: ES RECONOCIDO POR SER GALLINA, POR SER LA VERGUENZA DE NUESTRO PAIS CUANDO SALE AL EXTERIOR.
UN HINCHA DE BOCA: ES RECONOCIDO POR COMPARTIR EL REINADO CON EL MILAN COMO MAXIMOS GANADORES DE TITULOS INTERNACIONALES DEL PLANETA.

UN HINCHA DE RIVER: EN JAPON....FUE DE SHOPING.
UN HINCHA DE BOCA: EN JAPON....JUEGA LA FINAL DEL MUNDO.

UN HINCHA DE RIVER: ES CAMPEON DE AMERICA POR HABERLE GANADO 2 FINALES AL AMRICA DE CALI Y UNA INTERCONTINENTAL AL ESTATUAS DE BUCAREST.
UN HINCHA DE BOCA: ES CAMPEON DE AMERICA POR HABERLE GANADO AL CRUZEIRO, DEP. CALI, PALMEIRAS, CRUZ AZUL, SANTOS, GREMIO Y ES TRI CAMPEON MUNDIAL POR HABERLE GANADO AL BORUSSIA, MILAN Y REAL MADRID.

UN HINCHA DE RIVER: ES TRISTE POR LLEVAR 3 AÑOS SIN GANAR NADA.
UN HINCHA DE BOCA: ES TRISTE POR NO HABER GANADO 3 CAMPEONATOS SEGUIDOS.

UN HINCHA DE RIVER: PASO 18 AÑOS SIN GANAR NADA.
UN HINCHA DE BOCA: GANO 16 CAMPEONATOS EN MENOS DE UNA DECADA.

UN HINCHA DE RIVER: DIRA QUE MACRI ARREGLO ALGUNOS PARTIDOS.
UN HINCHA DE BOCA: ASEGURA QUE UN PRESIDENTE DE LA NACION (CARLOS SAUL) LES COMPRO MUCHOS CAMPEONATOS.

UN HINCHA DE RIVER: RECORDARA PARA TODA LA VIDA GRANDES VICTORIAS SOBRE BOCA EN LOS CAMPEONATOS DE VERANO.
UN HINCHA DE BOCA: RECORDARA PARA TODA LA VIDA LOS PARTIDOS POR LA COPA 2000 (GOL DE MARTIN EN MULETAS) Y LA SEMI FINAL DE LA COPA 2004 (DEFINIDA EN LA HELADERA MONUMENTAL ANTE PUBLICO LOCAL UNICAMENTE).

UN HINCHA DE RIVER: PUEDE DESIR QUE EN ESTE 2007 ES CAMPEON DE LA COPA CINDOR DE VERANO.
UN HINCHA DE BOCA: PUEDE DESIR QUE ES HEXA CAMPEON DE AMERICA.

UN HINCHA DE RIVER: SE LEVANTARA TEMPRANO EN DICIEMBRE A ALENTAR AL MILAN.
UN HINCHA DE BOCA: SE LEVANTARA TEMPRANO EN DICIEMBRE PARA VERLO GANAR LA 4 COPA DEL MUNDO.

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.


UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.

UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)

HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

Anónimo dijo...

Hola familia de Boca:

Me levanté tempranito, como todos los días, pero con bastante resaca de haber festejado sacarle dulcemente la punta a los amargos (rojo-velez)... y sin que jugara el tucumano krupoviesa (van a tener que conseguirse un ingenio completo los muchachos de avellaneda).

Me gustaría que destacáramos la enorme dignidad del globito de Parque Patricios.

Mientras todos los gallinas, de diversos colores, lloran, lloran, lloran y no paran de llorar... EL DIGNÍSIMO GLOBITO se bancó a mil el partido y, a la hora de declarar, nada de rezongo gallinesco. Los tipos se la bancaron a full, CON HUMILDAD, con LA FRENTE EN ALTO, y no se si sacando pecho, pero al menos, con la sensatez de los que hacen buena autocrítica y no se conforman con el empate, sino que quieren ganar, saben perder y muestran que están para pelear con orgullo...

Muy bien para el Turco Mohamed. Ojo, es un tipo inteligente y el globo va a darle dolores de cabeza a más de un plumífero.

Muy bueno lo del chipi, aunque sentí una sensación extraña de no verlo con nuestra camiseta. Pero igual, es como de la casa.

Y muy bueno lo del arquero.

Eso es dignidad. Los que saben admitir la derrota, aunque se mueran de bronca por dentro, tienen la posibilidad cierta de revertir los tropezones.

Insisto, bien por el globo, que recién volvió de la B y tiene la misma "actitud" que un equipo que nunca se fue MIENTRAS QUE LAS GALLINAS, LLORAN Y LLORAN Y LLORAN COMO SI FUERAN EQUIPOS PERMANENTEMENTE ABONADOS A LA "B"...

GALLINÁCEOS, DE DIVERSOS COLORES: APRENDAN DEL GLOBO.

Sólo pueden crecer los que reconocen los errores y hacen autocrítica con humildad.

Turco: Mi respeto.

Y bueno, ahora tengo que seguir porque el trabajo no me espera sentado... veré COMO SORTEO LA RESACA POR EL FESTEJO DE SER DEBIDAMENTE PUNTEROS

VAMOS BOQUITA, CARAJO!!!!!!

Anónimo dijo...

Che Leotragaleche..que pasa que no apareces?.....no posteas las boludeces de siempre. Mira que tenes que apelar a todo tu ingenio ahora para poder sacar la cabeza....igual....este sitio ya se ha vuelto bostero por lo que veo....un beso...
PD: Para que ACRO NO SEA EL ULTIMO.....!! QUE SE MUERAN TODOS....

Anónimo dijo...

Ya que te regodeas en el ole..miren la notita que saca el diario hoiy:
ALESSANDRO DEL PIERO
Un gran recuerdo






El crack italiano recibió el premio "Pie de Oro 2007", en Mónaco, y contó que el partido de su vida fue cuando metió el gol decisivo para Juventus ante River en la final Intercontinental, en 1996. Este mismo reconocimiento lo había obtenido Diego Maradona en la década del 90.

(Grande Alesandro...un idolo...te llevamos en el corazon de bosteros..)

Anónimo dijo...

No se porque te preocupas tanto de Boca.
Vamos a analizar a river:

a) NIVEL INTERNACIONAL: último torneo internacional ganado: Supercopa 97: viste la final??? Te cuento lo que pasó. Antes de los 10 minutos les regalaron un penal que nadie lo pidió, pero el gran Enzo lo erró. Luego, con Burgos ya amonestado, le dan la pelota al arquero, éste la agarra, tiro libre indirecto. Burgos se coloca delante de la barrera (SIC), toque y gol, pero el referí lo hace patear de nuevo porque Burgos se adelanta (SIC), piden amarilla -lógica- pero no pasa nada, a pesar que fue gol, lo hacen patear de nuevo, Burgos se vuelve a adelantar y no pasa nada.
Sigamos, último Copa, tiene que jugar el 5º partido de grupo contra Caracas (nunca les toca un brasilero en los grupos, que casualidad!!), al que en los escritorios ya habían sacado de la cancha (si tuvieras acceso a información, ello te daría verguenza), y un día antes, increíblemente, le sacan los únicos 4 jugadores que sabían que la pelota era redonda, pero pierden y quedan afuera. Luego Caracas juega en Octavos de final contra el Santos de local en su cancha y con esos 4 jugadores.
Sigo, Copa Libertadores del año pasado, tienen que jugar con los paraguas de Leoz, y juegan con Cáceres!! que no debió jugar, pero igual jugó muy mal y pierden nuevamente.
Por último, trajiste a colación el Boca-River del 2004, mirá el primer partido, sobre todo la atajada de Coudet sobre el final, te va a dar verguenza, te lo juro. Ni hablar de la actitud de la araña Gallardo, y como Lopez y Cavenaghi llegaron a la cancha tirando bengalas del micro. Ah! definieron de locales sin público, pequeña ventaja...

b) AFA: me hablás del gol de Ortega contra Quilmes, porque no decís que Rosales fue anotado exageradamente fuera de tiempo a y a Morón, una semana antes le prohibieron inscribir a Gancedo?? En serio decís que a River lo perjudican?? Porque no ves lo números de Boca y de River con Pezzotta y te darás cuenta porque todos los clásicos los dirige él (para sacar los porcentuales, no soslayes tené presente que Boca siempre lucha los torneos hasta el final, por lo cual gana más partidos que River). Hacé lo mismo con Ruscio.
Si supieras como hizo River para anotar a Belluschi sin pasar por Boca, hummmmmmm.
Ah! Porque River no jugó la primer fecha???? Por la final de la Peace Cup??? O para anotar más refuerzos y entrenarlos? Esto no es serio....

3) Ministerio del Interior: El gallinero Rafael Videla fue clausurado por 5 fechas, pero indulto de Fernández mediante, se bajó la condena a tres fechas. Si te falla la memoria, se tirotearon en el playón y se acuchillaron en los quinchos. Boca jugó 3 partidos de la Copa entre Velez y Casla por un escupitajo -vergonzoso- y un hincha que entró a la cancha y jugó en Racing por la Copa hace tres años y ganó sin llantos (por penales, como nos gusta a nosotros, jaja)

4) Poder judicial: las únicas barras bravas condenadas y juzgadas fueron las del Abuelo y la de Di Zeo. No digo que esté mal ello, sino que me parece que River no solo mató a dos de Newells con filmaciones del peaje, sino que gozan de llamativa impunidad y ahora se matan entre sí. No te olvides que a Aguilar le ofrecieron ser rival de Macri como jefe de Gobierno en el GCBA, pero mientras dice que hay más hinchas de River que de Boca, no se presentó.

Ahora me tengo que ir, más tarde sigo agregando cosas...

Un abrazo, prometo seguir anotando cosas, porque esto es interminable


BOCA TE COGE, TE COGIO Y TE COGERA SIEMPRE!!

Anónimo dijo...

Hola....bueno me llamo maxi de Neuquen, solo queria decirle al hincha de boca, que no vale la pena discutir con gente de river...sinceramente dan lastima estas gallinas...y lo de Neri...creo que un buen pijas.... que le meta russo por andar boludeando por ahi en las noches, se lo merece porque si nadie hace lo mismo dentro del plantel el tampoco tiene porque hacerlo, es como un laburo jugar al futbol, y tendria que comportarse como tal. Pero con esto no quiero decir que lo banco a muerte, porque es un jugador con mucho talento. Y para los periodistas que hablan y dicen que Datolo la gente lo putea...ese pibe esta despegando de apoco, y lo esta demostrando, siempre tuvo una carga de otro jugador y es dificil jugar y saber que alguien atras lo va a venir a remplazar... asique los bosteros no puteamos a los jugadores nuestro. Miren a las gallinas, y su figura Beluchi....o Veluchi..que se yo como se escribe, sera que ni me intereso por ellos...los hinchas millonarios...puteandolo...pobre pibe...ah aclaro algo es buen jugador..hay que bancarlo a muerte pero que se le va a ser, se le subieron los humos a la cabeza con NIEMBRO y MARIANITO...que inflan inflan y ahi lo tienen...no hace nada pero porque los mismas hinchas lo estan matando al pibe...si ese viniera a boca...ya esta vendido para el 2009 para algun equipo europeo a unos cuantos millones y con la chapa de EXELENTE JUGADOR.
Bueno mucho mas no tengo para decir...saludos a todos los hinchas del mundo...ya no podemos decir del pais...y nada...si guille lees estas boludeces que ponemos...te quiero mucho y se te extraña...seria lindo que algun dia vuelvas. Roman... pese a las cosas que hablen... demostraste con tu ultima venida que sos unico...
Gracias papa - mama...y abuelo por hacerme hincha de boca

Anónimo dijo...

Por suerte venimos en levantada, jugando cada vez mejor y ganando.

Vuelvo a destacar el hecho de que nuestros delanteros andan con los pies torcidos. Si bien es cierto que está jugando mejor, Rodrigo Palacio no tiene definición... No sabe definir.

Es para elogiar la actuación de Sebastián Battaglia. Fue él quien robó una pelota en el medio y puso el pase que terminó siendo penal a Palacio.

Creo que Russo se equivocó con el cambio de Cahais por Battaglia... Luego del penal, debería haber sacado a Palacio y haberlo puesto a Boselli.

Gracias a todos Boca y muchas gracias a BATTAGLIA.

Anónimo dijo...

Hola a todos! Es sabido por todos que Boca es el equipo que pone a prueba al resto del futbol argentino y tambien de Latinoamerica... Sin embargo pensaba mucho en algo que comentaron varias personas en este blog y es sobre Juan Roman... Es uno de nuestros maximos idolos y todos tenemos ganas de que vuelva a ganar copas y meter goles con esa calidad unica que lo destaca, sin embargo no estoy para nada de acuerdo con lo que este prestamo nos va a salir. Quizas 12 millones (como se estipula) en dos años sean justos por el talento de Riquelme pero no creo para nada que debamos otorgar el 20% de Banega o Palacios. Ever es un jugador con muchisimo potencial que dentro de unos años podria irse comodamente a jugar a algun grande de Europa, y Palacios aunque no esta demostrando la contundencia que tenia hace algunos meses atras sigue siendo un delantero con muy buenas caracteristicas. Por que es necesario entregar parte de estos jugadores para repatriar a un idolo desde un club que no lo quiere para nada? Siento que el Villarreal se esta mas que aprovechando de nosotros en esta situacion... Cuando se fue JR, el Cata, Clemente el equipo se desarmo y lo pudimos observar durante los primeros partidos de este campeonato, Al ver a Riquelme ganar la Libertadores casi solo, obviamente todos lo pedimos de vuelta pero nunca dimos tiempo a que el equipo se volviera a armar. Esa desesperacion nos puede llevar a cerrar un trato un tanto injusto el dia de hoy. Es tanta esa ansiedad por ver a Boca campeon que nos cegamos en otros aspectos? Yo creo que tambien es porque nos acostumbramos a ganar y es por eso tambien que nos dolio TANTO perder el tri frente a Estudiantes, aun con un tecnico nuevo durante gran parte del campeonato Boca hizo un muy buen torneo y llegamos a una nueva final, pero la costumbre ganadora a veces no nos deja ver eso...

Un abrazo a todos y sigamos alentando a Boca en las buenas y en las malas porque eso hacen los buenos hinchas.

Anónimo dijo...

El 3 de septiembre de 1997, por la Supercopa, Martín debutó con la camiseta xeneize. El equipo dirigido por Veira superó 1-0 a Cruzeiro, muy bravo Cruzeiro en competencias internacionales, y el rubio delantero fue sustituido en el ST por Pablo Islas. Convengamos que hoy son mejores las perspectivas: para reemplazar al Titán está Mauro Boselli.

Palermo --un sobreviviente de golpes durísimos-- es capaz todavía de imponerse en las dos áreas y de ganar esas pelotas que el arquero o los centrales, en situación de apremio, mandan a campo rival (¿cuántas veces vimos que se la baja de cabeza a Palacio?).

Obviamente que el 9 no es la persona más indicada para asociarse en un contraataque con Gracián, Dátolo, Cardozo o cualquiera de los ligeritos del plantel, pero ¿no te conmueve cuando persigue a un defensor? ¿No te emociona su arenga a los compañeros cuando está por empezar el juego? ¿No recordás todos los goles que te hizo gritar?

Anónimo dijo...

Saludoss a todos los hinchas de boca.. Primero, hay que dejar en claro que martin es un grande de boca, y hay que estarle eternamente agradecido de todo lo que le dio a Boca, pero me parece que el equipo no se forma en base al apellido, y en este momento me parece que martin no la emboca,y tenemos a un monstruo como Boselli en el banco, que si no le damos minutos en cancha, se nos va a terminar llendo, no nos olvidemos que casi se nos va hace poquito.. Por eso, no confundamos, Martin es un idolo, y emblema de boca, y eso es indiscutible, pero esta lejos de ser ese gran goleador que fue hace unos años atras, y como dije antes, el equipo se forma en base al rendimiento, y no al apellido..
Martin sos una bestia igual hermano, gracias por todas las alegriass, peroo me parece a mi aunque sea, que le llego el turno a maurito
un abrazo a todos loco, y espero que no se enojen

Anónimo dijo...

Nadie puede negar que Martín es un mounstro, quien puede discutir sobre Martín es un grande, vino a Boca a hacer goles y lo hizo y lo sigue haciendo,cuantas alegria me a dado y se lo agradezco de corazón y mas cuando los galos eran a river (yo pongo al Enzo), quien no se acuerda de ese gol, sos lo mas, me despido desde Jujuy para todos los hinchas de Boca

Anónimo dijo...

Yo al "loco" le voy a estar eternamente agredecido por todo lo que nos dio, le tengo un cariño enorme y si sigue jugando lo voy a bancar como siempre, porque se que Martin deja todo y hace lo que mejor puede en la cancha... pero primero esta BOCA y algunos parecen ser hinchas de Palermo antes de que de BOCA. Lamentablemente Palermo esta en muy bajo nivel y hace rato..., no es ni la mitad del jugador de lo que era antes , hay que ser ciego para no darse cuenta.. esta muy impresiso ( aveces no puede ni parar una pelota o dar un simple pase ) y lento... no le gana en un pique corto ni al defensor mas lento del futbol argentino, pero no esta solamente muy lento para correr, sino hasta para acomodarse y patear ( que seguro le sale mordido) o definir, tarda una eternidad... ya se que nunca se caracterizo por ser rapido o tecnico, pero esta por demas..., ademas tampoco ya gana mucho de arriba , que era el fuerte de el.
Si tiene que ser titular por el pasado, entonces traigan al guille, pongan de 5 al chicho con Cagna al lado, etc. A mi me gustaria que Russo le de mas oportunidad a Boselli ( me parece que cuando tenga continuidad y si la suerte lo acompaña, se va a cansar de hacer goles) y NO que lo ponga faltando 10 o 5 minutos y el partido complicado...
Con todo lo que dije paresco anti-palermo, pero nada que ver.. es simplemnte lo que yo veo en la cancha... y como dije antes si sigue jugando los 90 minutos lo voy a apoyar y aplaudir su esfuerzo como siempre!

Anónimo dijo...

Gracias Martín por los goles, gracias por amargar tantas veces a River, Gracias por la mañana contra el Real Madrid, gracias por haber elegido a Boca y no como el Chileno fracasado traidor que despues de ponerse la gloriosa , se fue al gallinero y hoy da pena en un futbol chico como el chilote y nosotros con MArtín vamos a Tokio, y ellos la conocen por Discovery Chanel y el National Geographic.Un abrazo a Eberto a la distancia da pena que se vayan los pibes jóvenes habiendo tanta m....viva

Anónimo dijo...

MARTIN SOY UN GROSO, EL QUE TE DISCUTE COMO JUGADOR NO SABE NADA DE FUTBOL. SOS JUGADOR EN LAS DOS AREAS, CONTAGIA A SUS COMPAÑEROS POR PERSONALIDAD Y SACRIFICIO. LOS GOLES YA VAN A LLEGAR Y EL LO SABE. UN ABRAZO A MARTIN POR TODO LOS QUE NOS VA A DAR ( NO SOLAMENTE POR LO QUE DIO )
UN ABRAZO A LA FAMILIA DE EBERTO POR ESTE MAL MOMENTO QUE ESTAN VIVIENDO.

AMADEO dijo...

sinonimos de voka...

TRICAGON JUNIORS

NEGRADA FUTBOL CLUB

CLUB ATLETICO SEGUNDON

Y AHORA...

DEPORTIVO PENAL

Anónimo dijo...

todo muy lindo,boludeces aparte de los bosteros,pero la tapa que le dedico bastaole a tristonio es mortal.
lo trato de pesetero??,no!!!!!!!!!!!!!!!

y otra cosa que deberia llamarme la atencion pero en realidad no,fue la ausencia de gente de voka en el sepelio de gustavo eberto,donde estaba el plantel?? y los dirigentes??
estaban los de los clubes de corrientes donde este chico jugo.
los demas nombrados ni aparecieron parece.


son de terror realmente.por algo en el futbol son mala palabra.
sigan alabandose entre ustedes porque de los demas no esperen nada.

el bicho de la paternal dijo...

es cierto,de la ausencia llamativa de dirigentes y plantel en el velatorio de eberto nadie dijo nada,ahora en los noticieros para festejar que hace 10 años que ese fracasado de palermogo hace que esta en la bosta,casi que lo dan por cadena nacional.

que noticia mas pelotuda,a quien le puede interesar salvo a los bostas?

Anónimo dijo...

lo que se olvidaron de agregar (a proposito) en el bostaole con respecto a las estupidas declaraciones del tano fanfarron de del piero es que esa final de la intercontinental la ganaron dopados todo el plantel,lo confeso el medico que los atendia en el club en ese momento,se hizo la denuncia ante la fifa y el tema esta en la justicia italiana.


asi gana cualquiera,si lo sabras vos bostero,no?

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.


UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.

UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)

HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

Anónimo dijo...

Que raro un bostero imbolucrado en asuntos turbios....

http://www.26noticias.com.ar/piden-prision-por-estafa-a-ex-volante-de-boca-48585.html

Se ve que les enseñan bien en bosta juniors!!!

www.realriverguenza.blogspot.com dijo...

Nuevo video que demuestra lo puto cagon que es Spampi!!! Gordo puto...Das asco!!!!

www.realriverguenza.blogspot.com

Anónimo dijo...

Que raro un bostero imbolucrado en asuntos turbios....

http://www.26noticias.com.ar/piden-prision-por-estafa-a-ex-volante-de-boca-48585.html

Se ve que les enseñan bien en bosta juniors!!!
--------------------


ORTEGA Y LA DAMAJUANA?? PASAPORTE TRUCHO DE CARRIZO?? AMELI Y TUZZIO?? AGUILARRRRRRRRRRRRRRRRRRRRRR?? LOS BARRAS??

AHHHH EL PROBLEMA DE ORTEMAN ES CON OLIMPIA GALLINA TRISTE (2004-2007).

Anónimo dijo...

NI ELLOS SON CONCIENTES CUANDO NOS CARGAN....

UN HICHA DE RIVER: CAGASTE BOCA EL MILAN TE ALCANZO Y AHORA SON LOS DOS MAXIMOS GANADORES DEL MUNDO EN TITULOS INTERNACIONALES(ademas milan jugo la supercopa europea, nosotros jugamos la recopa recien el año que viene).

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE CON SAN MARTIN DE SJ.


UN HICHA DE RIVER: CAGASTE BOSTERO EL BEYER TE GANO LA FINAL DEL MUNDO.

UN HINCHA DE BOCA: CAGASTE RIVER PERDISTE UN CAMPEONATO DE CABOTAJE CON HURACAN (SOTO).

UN HINCHA DE RIVER: BOSTERO EN DICIEMBRE EL MILAN TE LIQUIDA.

UN HINCHA DE BOCA: RIVER EN ESA MISMA FECHA BANFIEL TE GOLEA.

ROMAN JUEGA POR LA GLORIA
ORTEGA JUEGA POR LA DAMAJUANA

HINCHAS DE RIVER EN LA CANCHA: CHILEEEENOOOO CHILEEEENOOOO (ESO QUE ODIAMOS A LOS INGLESES TANTO CON A LOS CHILENOS)

HINCHAS DE BOCA EN LA CANCHA: OLE OLE OLE OLE DIEGO DIEGO.

Enzo dijo...

Che, Bosteros, cómo les rompió el orto Estudiantes!!!! Jajaja!!! Encima ellos sí son tricampeones (y de América). Tienen una Libertadores auténtica, por haberla ganado tres años seguidos. Lo mismo Independiente. En cambio ustedes, bosteros, solo tienen réplicas, JUAAAAA!!!!

Anónimo dijo...

AHHHH EL PROBLEMA DE ORTEMAN ES CON OLIMPIA

Jugador que paso por tu institución de mierda bostero culo roto!!! Tipico de la bosta que esta rodeado de movimientos turbios.Mira si no a tu maximo idolo que transo por guita con un narcotraficante y encima lo garcó!!! No podes ni hablar de orteguita pelotudo!!! Claro enfermito,Carrizo volvio a River por seis meses hasta que se arregle el tramite de la nacionalidad porque es parte de un negocio turbio no??? Si no sabes que poner no pongas nada infeliz!!!

Anónimo dijo...

Che, Bosteros, cómo les rompió el orto Estudiantes!!!! Jajaja!!! Encima ellos sí son tricampeones (y de América). Tienen una Libertadores auténtica, por haberla ganado tres años seguidos. Lo mismo Independiente. En cambio ustedes, bosteros, solo tienen réplicas, JUAAAAA!!!!

--------------------


REPLICAS?? JUAAAAAAAAAAAAAJUAAAAAAA

NO MERECE COMEBTARIAO ALGUNO

GRACIAS BOCA POR SER HEXA CAMPEONES DE AMERICA Y DE LA MANERA QUE VALE, JUGANDO 14 PARTIDOS, NO COMO ESTUDIANTES E INDEPENDIENTE QUE LA GANABAN EMPEZANDO DESDE SEMI FINALES.
AHHHHHHHH ME OLVIDABA, TAMBIEN SOY TRI CAMPEON MUNDIAL (BORUSSIA, MILAN, REAL MADRID) Y NO VENAGAS CON ESO DE NO HABERLAS GANADO DE MANERA CONSECUTIVA PORQUE ES UN INVENTO TUYO PORQUE YA NO TE QUEDAN MAS COSAS QUE DESIR, ¿O ME VAS A DESIR AHORA QUE BRASIL NO ES PENTA CAMPEON DEL MUNDO POR NO HABERLOS GANADO DE MANERA CONSECUTIVA? SE TE VAN A CAGAR DE RISA GALLINA TRISTE (2004-2007).
ESTUDIANTES???? FOOOOO QUE TRISTEZA HAY POR NUÑEZ HOY EN DIA, YA PASO ESO PREOCUPATE POR TU CLUB QUE LLEVA MAS DE 3 AÑOS SIN GANAR NADA, NO TE QUEDES EN LA HISTORIA (AJENA), BOCA YA ES CAMPEON DE AMERICA 2007 Y EN DICIEMBRE VUELVE A JAPON (NO VAMOS DE SHOPING COMO VAN USTEDES, VAMOS A JUGAR LA COPA DEL MUNDO).

ARIGATO=GRACIAS(EN LENGUAJE BOSTERO)

GOOOOOOL DE RIVER DIJO ÓLE....¿Y AHORA? dijo...

MIREN ÓLE Y EL TEMA DE LAS OOOO QUE TANTO LE PREOCUPABA A RIVER ULTIMAMENTE (EN EL GOL DEL PENAL DE DAMAJUANA ORTEGA).

Anónimo dijo...

QUE VAS A DECIR AHORA?? MIRA LO QUE SALIO EN OLE

20' GOOOOL DE RIVER. Ortega le pega cruzado y abre el maracdor
19' Tiro libre para River, Collado advierte que se estaban tomando y marca penal..

CUANDO NO UN PENALCITO.

Anónimo dijo...

Che, Bosteros, cómo les rompió el orto Estudiantes!!!! Jajaja!!! Encima ellos sí son tricampeones (y de América). Tienen una Libertadores auténtica, por haberla ganado tres años seguidos. Lo mismo Independiente. En cambio ustedes, bosteros, solo tienen réplicas, JUAAAAA!!!!

--------------------


REPLICAS?? JUAAAAAAAAAAAAAJUAAAAAAA

NO MERECE COMEBTARIAO ALGUNO

GRACIAS BOCA POR SER HEXA CAMPEONES DE AMERICA Y DE LA MANERA QUE VALE, JUGANDO 14 PARTIDOS, NO COMO ESTUDIANTES E INDEPENDIENTE QUE LA GANABAN EMPEZANDO DESDE SEMI FINALES.
AHHHHHHHH ME OLVIDABA, TAMBIEN SOY TRI CAMPEON MUNDIAL (BORUSSIA, MILAN, REAL MADRID) Y NO VENAGAS CON ESO DE NO HABERLAS GANADO DE MANERA CONSECUTIVA PORQUE ES UN INVENTO TUYO PORQUE YA NO TE QUEDAN MAS COSAS QUE DESIR, ¿O ME VAS A DESIR AHORA QUE BRASIL NO ES PENTA CAMPEON DEL MUNDO POR NO HABERLOS GANADO DE MANERA CONSECUTIVA? SE TE VAN A CAGAR DE RISA GALLINA TRISTE (2004-2007).
ESTUDIANTES???? FOOOOO QUE TRISTEZA HAY POR NUÑEZ HOY EN DIA, YA PASO ESO PREOCUPATE POR TU CLUB QUE LLEVA MAS DE 3 AÑOS SIN GANAR NADA, NO TE QUEDES EN LA HISTORIA (AJENA), BOCA YA ES CAMPEON DE AMERICA 2007 Y EN DICIEMBRE VUELVE A JAPON (NO VAMOS DE SHOPING COMO VAN USTEDES, VAMOS A JUGAR LA COPA DEL MUNDO).

ARIGATO=GRACIAS(EN LENGUAJE BOSTERO)

Anónimo dijo...

che, gallina inmunda, que decís ahora de collado, del penal que te regaló contra Newell's? no te escucho quejarte del arbitraje, mojona de mierda.

el riverplatense dijo...

el penal de river obviamente no fue penal.
collado devuelve gentilezas o le quedo culpa del domingo pasado.

el arbitraje argentino es tan mediocre como este campeonato.

pero,ustedes necesitaron del penal porque fue el unico gol que hicieron,nosotros por suertew hicimos 2 mas sin necesidad de otra ayudita de collado.

Anónimo dijo...

LO QUE PASA ES QUE ESTE PENAL INVENTADO DE COLLADO NO CAMBIO EN ABSOLUTO EL RESULTADO DEL PARTIDO,DADO QUE TERMINO 3 A 1.

LO DE LA BOSTA FUE DIFERENTE PORQUE ESE UNICO GOL Y DE PENAL DADO POR EL ARBITRO,SI CAMBIO EL RESULTADO DEL PARTIDO.
SE LLEVARON 3 PUNTOS EN VEZ DE 1.

Anónimo dijo...

Hola familia bostera..quisiera recordar a uno de los responsables de que Boca sea el referente nacional, de america e internacional y que ayudo tambien a este presente negro gallinaceo. Con ustedes.....Jorge PATRON Bermudez....un extracto de un articulo a proposito de un partido que jugo en el gallinero (y gano como siempre) con la camiseta de Newells: leamos:

Me puso muy bien mantener en Newell’s esa sana costumbre que tengo que es ganarle a River. Lo disfruté desde que entré al estadio”. Es que desde que ingresó a la cancha, como Jorge Bermúdez cuenta, cayó en Núñez una catarata de insultos recordándole un pasado en Boca más que exitoso. El “Patrón” sonrió, arengó a sus compañeros de Newell’s, y se convirtió en el bastión de la victoria de La Lepra por 2 a 0... Bermúdez es una pesadilla para el hincha de River. Lo sufrió con Boca, y ahora volvió a sufrirlo con Newell’s. Cada balón que tocaba el colombiano era coronado con silbidos: "Cuando empezaron a insultarme me agrandé, porque quiere decir que lo que uno hizo en el fútbol fue importante", dijo Bermúdez.

Luego descargó: "Extrañaba estas puteadas, me reconfortan, porque así se demuestra que estoy vigente"."Podrían cantar más fuerte, ¿no?". Bermúdez tiró la ironía para unos 100 hinchas de River que lo insultaban a la salida del Monumental: "Pobres, siempre me sufren... Es lógico que me puteen. Si siempre que vine a esta cancha, gané...", disparó el Patrón. Antes de subirse al micro en su vuelta a Rosario, saludó con su mano a los hinchas de River que estaban en llamas.

"Hasta la vista niños" comentó el futbolista, campeón de la Copa Libertadores y la Intercontinental con Boca.

Anónimo dijo...

LO QUE PASA ES QUE ESTE PENAL INVENTADO DE COLLADO NO CAMBIO EN ABSOLUTO EL RESULTADO DEL PARTIDO,DADO QUE TERMINO 3 A 1.

LO DE LA BOSTA FUE DIFERENTE PORQUE ESE UNICO GOL Y DE PENAL DADO POR EL ARBITRO,SI CAMBIO EL RESULTADO DEL PARTIDO.
SE LLEVARON 3 PUNTOS EN VEZ DE 1.

--------------------

Y CLARO PELOTUDO, EL PARTIDO ERA UN EMPATE CLAVADO, LOS DOS EQUIPOS RE MEDIOCRES PERO QUE TE COBREN UN PENAL ASI TE CAMBIA TODO, LA HISTORIA HUBIESE SIDO OTRA.
EN CAMBIO BOCA MERECIO GANARLE AL GLOBO POR 4 O 5 GOLES Y LLEGO POR UN PENALAZO Y SE GANO BIEN.

DICEN QUE A ORTEGA LE DAN DE PREMIO UNA DAMAJUANA POR CADA GOL QUE HACE....POR ESO ENSEGUIDA PIDIO EL CAMBIO, PARA EMPINARSELA EN EL VESTUARIO....
GRANDE IDOLO RIVERPLATENSE, LEVANTE ESAS COPAS, NO LIBERTADORES NI INTERCONTINENTALES SINO ESAS QUE LLENAS CON VINO.

Nunca triunfarán dijo...

muy buena pagina chicos, espero que se pasen por la nuestra SI SE QUIEREN CAGAR DE LA RISA
www.nuncatriunfaran.blogspot.com

SIMPATICAS GALLINITAS dijo...

Que lindo que las gallinas nos tengan allá arriba! Hay un tipo que dedica mucho tiempo de su vida a hacer este blog!!! Qué complejo de inferioridad ¿no? y es entendible. Vas a la cancha que tienen y en esas escaleras que parecen un estacionamiento de playmobil dice 2 libertadores, 1 intercontinental... cómo no acomplejarse así... La verdad es que deseo que avancen en la sudamericana, así el faloperín de Dani se queda como DT y sigue dándonos alegrías. Después me queda otra pregunta. ¿puedo ser ídolo de las gallinas? Digo, porque traen un chileno y a los 2 partidos lo ovacionan (por 2 goles) ahora no sé bien cómo estan con el fracasado de Belluschi. Hace un mes lo chiflaban de los 4 costados cuando la tocaban, hasta que hizo un gol de afuera del área y fue ídolo de nuevo. Ahora que se los cogió Tigre (de Dieguito Cagna, si no recuerdan) y le robaron el partido a Central ¿en qué situación estará el rastaman?

Anónimo dijo...

PERO SE COMEN EL VIAJE GALLINAS
BOCA ES LO MAS
Y SI HACEN UNA PAGINA ANTIBOCA ES PORQE NO QUIEREN ABRIR LOS OJOS Y VER LA MIERDA QE SON EN LA CANCHA



BOCA SOS MI PASION




PAAAAU

Anónimo dijo...

AIRE LIMPIIO
AGUA LIMPIA
NO A LAS PAPELERAS

Anónimo dijo...

AIRE LIMPIIO
AGUA LIMPIA
NO A LAS PAPELERAS

Anónimo dijo...

AIRE LIMPIO

























AGUA LIMPIA




















NO A LAS PAPELERAS
NO A LAS PAPELERAS

Anónimo dijo...

ups sorry delete plz [url=http://duhum.com].[/url]

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