CHINA UD DAYS INN Class 1 Introduction

CHINA UD/DAYS INN

Class 1 Introduction to Strategy for Effective Quality Service Delivery l. Examples from Disney and Marriott International. l. Why quality matters. l. Setting the service table: Porter’s Model in brief and Co-alignment in brief

While innovations in hotel design and style, technology, and personal amenities will always be important, nothing comes closer than personal service to providing what Strategist Michael Porter has defined as true competitive advantage: the ability to deliver distinctive benefit for which customers will pay more, over time, because those benefits are highly valuable and difficult to imitate. • A company can outperform its rival only if it can establish a difference that it can preserve; • Competitors can quickly imitate management techniques, new technologies, and input improvements; • The most generic solutions-those that can be used in multiple settings diffuse the fastest; and • Competitive strategy is about being different…choosing to perform activities differently or to perform different activities than rivals. Michael Porter, “What is Strategy? , ”, Harvard Business Review, November. December 1996, pp. 62 -64.

COMPETITIVE STRATEGY Forces Driving Industry Competition

Three Generic Strategies STRATEGIC ADVANTAGE STRATEGIC TARGET Uniqueness Perceived by the Customer Industry-wide Particular Segment Only DIFFERENTIATION Low Cost Position OVERALL COST LEADERSHIP FOCUS

Class 2 The importance of Quality Guest Services to Your Hotel Business’s Bottom Line. l. The monetary cost of a lost customer (from Keiser, De. Micco, et al. textbook) [Future Value of a guest] l. What the customer expects l. What is quality customer service l. The importance of understanding the “service (and product) lifecycle and the cycle of service”. l. The service process and blue print-an introduction to these concepts (more in depth later in the program on TQM and CSI).

An Example: Mc. Donald’s Quality Service Cleanliness and Value

Disneyland Great Quality and Innovative Food Over-the –top Guest Service Exceptional Cleanliness Entertainment & Show

“You can dream, create, design and build the most wonderful place in the world… But it requires people to make the dream a reality. ” Walt Disney

The cost of poor service To estimate how much poor service costs your organization, calculate the following: Lost revenue 1. What an average customer spends in a year 2. The number of customers lost each year (for the average company, 25%) 3. The revenue lost form lost customers (1*2) 4. Lost revenue form people ex-customer talk to (3*10) Labor costs 5. Time redoing things not done right in the first time 6. Time spent on warranty repairs 7. Time spent apologizing to customers 8. Time spent responding to government agencies, consumer complaint bureau etc. Other costs 9. Cost of shipping express instead of regular 10. Cost of collections from angry customers who refuse to pay 11. Cost of liability insurance Your costs

Other costs (continued) 12. Legal costs 13. Telephone costs for apologizing, explaining, etc. 14. Postage costs for reshipping, apologizing, explaining, etc. TOTAL (add number 3 through 14) Cost of poor service Adopted form G. Roberts_Phelps Your costs

Remember We will be better tomorrow than we were today. Deliver the best service possible all the time. Use the guest’s name often. Practice personalized service, especially for out return guests. Humility, Humor, Humanity. “Thank you for staying with us” a great way to say “Happy you are here. ” At your service, How many I assist you, Certainly, My Pleasure. The 2. 5 inch rule. Eye contact.

Remember ! 96 percent of unhappy customers never complain. But if their problem remains unsolved—they usually tell ten other customers!

The Hotel Service Guest Process(1) Guest Pre-Arrival Occupancy. Check in Departure Guest Feedback Loop (1) Case Studies—EI Front-office Management book (De. Micco, 2009)

Keeping customers happy is good and profitable for the business. A 5 percent increase in customer retention has been shown to increase profits more tan 25 percent. It is estimated that companies lose 15 percent to 20 percent of revenues each year to ineffective, inefficient processes— —although some might suggest that it’s even higher. Six Sigma provides a goal that applies to both product and service activities and that sets attainable, short-term goals while striving for long-range business objectives.

Statistics… ØOnly 4 percent of dissatisfied customer tell us, 96 percent tell other people. ØEach unhappy customer tells an average or 10 or more people (13 percent tell 20 or more). ØResolving a problem quickly will turn 95 percent of unhappy customers into return customers. Ø 40 percent of your perceived customer service is how well you solve problems.

Customer complaints are great fun… Here’ s how to deal with any complaint and turn it around: G et the facts R esponsibilities E mpathy A gree a solution T hank the customer for complaining F U N--- Follow-Up Now! Adopted form G. Roberts_Phelps

Keeping customers Customers are for life…not just for Christmas! Lost customers… Ø 1 percent die. Ø 3 percent move away. Ø 4 percent just naturally float. Ø 5 percent change on friends’ advice. Ø 9 percent can buy cheaper elsewhere. Ø 10 percent are chronic complainers. Ø 68 percent go elsewhere because the people they deal with are indifferent to their needs. ØMake the extra-ordinary---ordinary! Every year most businesses lose between 10 percent and 30 percent of their customers— and they don’t even know who these customer are.

Turn complaints into opportunities Welcome complaints ! ØComplaints are opportunities. ØProblems are wake-up calls for creativity and commitment. ØPeople complaining are people to value---they want to stay customers and are simply telling you how to achieve it and keep their custom. ØBe pro-active, not re-active to customer service issues.

Quality, like beauty, is in the eyes of the beholder (Customer).

The Meaning of Quality QUALITY CONTROL: measurement of goods and services against established standards of excellence.

What Is Quality Service? We are now ready to address the question, what is quality customer service? So, here is my response. Quality customer service is the ability to consistently meet external and internal customer needs, wants, and expectations involving procedural and personal encounters.

The Difference Between Product Quality and Service Quality: u. Product Quality is WHAT YOU GET and is easily quantifiable. u. Service Quality is HOW YOU GET IT and is less quantifiable.

Quality service is service that consistently meets or exceeds customer expectations. Every customer comes with certain expectations about the quality of the goods, the services, and the total experiences of dealing with your business. When you exceed his expectations he perceives the quality as relatively high. When you fail to meet his expectations he experiences the quality as relatively low. In the back of every customer’s brain is a scale that compares what he gets with what he expected. The recipe for success in hospitality is the same s that for any other type of business: identify customer expectations, consistently meet or exceed those expectations, and do so at a prices that is acceptable to customers and generates profits acceptable to the company.

The factors in Dumping a Company: u Service u Quality u Price

The factors in a Purchase u Price u Quality u Service

Think of the last time you stopped doing business with a company… 70% say it was for poor SERVICE

Adopted form G. Roberts_Phelps

Class 3 Basics of High Quality Customer Service l. Identifying and retaining your loyal customers l. High quality customer service l. A systems management approach l. The “Service Profit Chain” l. Employee Satisfaction via “internal service quality” –how this impacts the quality of the service delivery by your employees. l. Tools for evaluating customer satisfaction- electronic tools, gap analysis, Importance-Performance matrix, SERVQUAL. l. Time Out for a -Group mini-case (work in teams)

U. D. HART. De. Micco 2009 • The Service-Profit Chain SUPPORTIVE PROCESS Workplace design Job design Employee selection Employee development Employee rewards and recognition Tools for serving customers Employee productivity Internal service quality Employee satisfaction Employee retention External service value Customer satisfaction Customer loyalty Revenue growth Profitability

THE SERVICE PROFIT CHAIN =VALUE, SATISFACTION, LOYALTY

Importance/Performance Matrix U. D. HART. De. Micco 2009 (B) Performance Hi (A) Importance to customer Low Hi

The Service Gap Analysis Matrix Exceed Expectations High Guest Expectations Performance GAP! “Must Have” “Necessary to have” “Nice to have” Low Performance High De. Micco, 2009

Q LH: Of all the components that make up the guest experience, from valet to front desk to housekeeping to foodservice, is there one that’s more critical to the resort’s success and the guest experience? If so, what is it? A Wynn: The total voice of the employee. Everything else is a joke by comparison. Everything else doesn’t amount to one percent. Everything is the eye contact and the tone of voice of the employee. Forget everything else. People of taste and discretion don’t want big, they want nice; they don’t want dirty, they want clean; they want pretty, not ugly; and they want to be cared for by people who care for them as human beings, not as Blackjack customers or a drink customer, or a diner, but as human beings.

Food for Thought: If 95% of Guests left satisfied; is that good enough? At the Magic Kingdom last year, 5%=745, 000 dissatisfied Guests Dissatisfied Guests tell approximately 16 to 20 people about their experience. *And if the Guest has access to Internet? Can we afford to let this many Guests leave dissatisfied?

Gap analysis To determine the difference between what you do and what your customer expect, complete the following analysis and fill in your answers on the table that follows: 1. Fill in your four most important outputs (products or service) in the space shown (A—D). 2. Visit or talk with at least three customers to determine what they expect for each of your listed product or service outputs, how important each expectation is, and how the customers rate your company in providing it. 3. Fill in what you learn about your customers and their expectations for each product or service listed. 4. Note how important each expectation is to the customer on the following scale: 1=Unimportant/unnecessary 2=Somewhat important 3=Very important 5. Show your customers rate your product or service in this area on the following scale: 1=Does not meet expectation 2=Meets expectations adequately 3=Superior (exceeds expectations) 6. List any problems you uncover of which you were unaware.

Product/Service A. Product/service: __________________ Expectation Importance Rating B. Product/service: __________________ Expectation Importance Rating C. Product/service: __________________ Expectation Importance Rating D. Product/service: __________________ Expectation Importance Rating

Examples of good and bad service----Worksheet 1. Working in a group discuss examples of good and bad customer service from information obtained when you were a customer, list at least three of each. 2. Be sure to examine each case in detail, identifying what impressed or depressed people in each case. 3. Transfer to a flip chart and select one of your group to present back. Good Bad Discuss points ØHow many of the good example are mistakes or problems by suppliers that are solved well? ØWhat are causes of dissatisfaction-small things or bad attitudes more than major problems? ØHow many of the bad examples involve the attitude of staff serving? ØWhat are the similarities between the examples? Adopted form G. Roberts_Phelps

5 Quality Service GAP Analysis There are 5 potential GAPS: 1. Failure to know Customer Expectations 2. Incorrect Service Quality Standard 3. A Service Performance GAP 4. Not delivering on the promise 5. The Service Quality GAP (e. g. expecting one level of service or product and receiving at a lower level)

TRUE 2—The Big 5 of Guest Service 1. Tangible (Landscapes, lobby, room etc) 2. Reliability (Do things work? ) 3. Responsiveness (Willingness to serve and help) 4. Understand Needs (Safety, assurances, courtesy, friendliness, e. g. female travelers—safety and security) 5. Empathy (Individual attention and caring. Anticipation of needs. ) TRUE 2 [adapted from Zeithaml. etc. Delivering Quality Service]

UD HART, De. Micco 2009 Guest Feedback Analysis (GFA) Fill in the following table to determine guests ‘ importance compared to actual performance. The greater the value C, the more satisfied the guest. Plot the data on the matrix to show the areas of strength and weakness. (1=poor, 10=excellent) Element of service/ performance or perception 1 2 3 4 5 6 7 8 9 10 A Importance to customer 1 -10 B Performance rating 1 -10 C Variance 1 -10

Importance/Performance Matrix U. D. HART. De. Micco 2009 (B) Performance Hi (A) Importance to customer Low Hi

Know what your customer are worth: Loyalty Many business spend about 75 percent of their marketing budget in a search for new customers. It can be costly: Ø It costs substantially more to win a new customer than it does to keep a current customer Ø The longer a business keeps a customer, the more profitable that customer is for the business Ø As a customer’s lifetime value grows, the more dependent they become on a company, and the less susceptible they are to other companies’ offers of lower prices Ø As customers become more loyal, they can become advocates for the business, encouraging friends and acquaintances to also buy there. You need to understand the lifetime value of your customers, and communicate this throughout the enterprise.

THREE CRUCIAL QUESTIONS 1. Optimize sale: How do I get more profit per sale? 2. Optimize customer: How do I get more sales per customer? 3. Optimize business: How do I get more customer?

Customer Value Calculation The following value formula worksheet can help you to calculate the average lifetime of each customer. 1. Working from annual accounts, take the total amount of revenue and divide it by the number of current customers. 2. Calculate the average length of a relationship. 3. Total the number of referrals that became customers for the year, and divide by your total number of customers. Add one (representing the original customer). 4. Multiply the average spent per customer per annum, and any yearly dues, by the average length of a relationship. 5. Multiply the number of referrals by the total in box four above. This total is the average value of each relationship. Adopted form G. Roberts_Phelps

Listening to Guests and Measuring Excellence in Dining Experience Web Survey at Vita Nova——A Case Study

UD/DAYS INN CHINA TRAINING HART – DEMICCO 2009 Mini Case TQM-CQI Tools for Collecting Data

Class 4 Ensuring Consistent Service Quality- Introduce Process Engineering and the Service Blueprint l. Introduce TQM and CQI. l. Zero defects (Ritz Carlton model) l. Process control- service blue printing l. Pareto’s law and how the 80/20 rule applies to service quality l. Tools to ensure quality-e. g fishbone diagrams, cause and effect tools, charting.

Tools for Continuous-Improvement Process PROCESS STEP TOOLS USED 1. Target an Opportunity for Improvement Guest Feedback 1. Identify improvement ideas Business Plan Goals Staff Feedback Brainstorming 2. Write problem statements Brainstorming 3. Develop selection criteria Selection Matrix Priority Determination Chart 4. Select an area for improvement 2. Analyze the Area Selected for Improvement 1. Establish baseline measurements Bar, Pie Charts Line Graphs Process Flow Chart 2. Analyze processes Cause-and-Effect Diagram 3. Identify potential causes Fish-bone 4. Determine the root cause(s) 3. Develop and Implement Improvements Brainstorming 1. Identify potential solutions Selection Matrix Priority Determination Chart 2. Select the best solution(s) 3. Conduct a trial test Action Plan Worksheet 4. Develop an action plan for implementation 4. Evaluate Improvements

Guest Satisfaction and Cast Excellence Guest Return Satisfaction Intention Cast attitudes do impact Guest Satisfaction, which in turn impact return intention.

Six Sigma The example of Starwood Hotels, which owns and operates such top hotel brands as Westin, Sheraton, and several luxury and resort hotels, shows how Six Sigma is being ingrained into management. At Starwood, which has launched the first Six Sigma program in the hospitality industry, managers at all levels are held accountable for a variety of measures: l. Customer satisfaction l. Key process performance l. Scorecard metrics on how the business is running l. Profit-and-loss statements l. Employee attitude These measures provide feedback on the performance of the hotels and regions. At regular meetings, managers review key measures within their hotels and select new Six Sigma projects that target those measures that have fallen off. If, say, guests complaints have risen, the hotel management will charter a Six Sigma team to find out why and to take corrective action.

The Quality Grid The Winners Disney Theme Parks Many Asian Hotels Honda, Apple Some Asian Airlines Four Seasons, Ritz Carlton Mc. Donald’s Marriott Hotels Excellent Cable TV Companies Product Quality Repair departments of many auto dealers Poor IBM Domino’s Pizza Service Quality Excellent

TQM—CQI Hotel Examples Example for a Continuous Improvement of Process 1. Stocking housekeeping carts 15/15 people stocking 15 carts Versus 1/15: 1 person stocking 15 carts 1/15 = 1 -2 hours 15/15= 5 hours (15*20 minutes for each cart) 2. Guestroom Cleaning 1/13: 1 housekeeping room attendant cleaning 13 rooms/shift 3/45: 3 room attendant cleaning 45 rooms/shift Cycle time of new process reduced by 50% (rooms ready for sale by front desk in 50 percent less time).

UD/DAYS INN China HART De. Micco Steps for TQM—CSI Identify an Opportunity for Process Improvement Identify what product or service need to be improved Steps: 1. Identify process improvement ideas. 2. Write the problem statement. 3. Developing the selection criteria. 4. Select the area for improvement that your TQM—CQI team will work on.

YOUR IDEAL CUSTOMER Vilfredo Pareto, keenly interested in the political and social implications of economics, observed that the majority of Italy’s real estate was concentrated in the hands of a minority. Specifically, 80 percent of the real estate was owned by 20 percent of the population. Over the years reflections of Professor Pareto’s observation began showing up in many different disciplines and applications, and it eventually came to be known as Pareto’s Law, or the 80/20 rule. You can the 80/20 rule operating in virtually and every realm of human activity. Look through your emails from last week. You’ll probably find that 80 percent of them went to 20 percent of the people in your address book. Look in your closet or your kitchen cupboards. You’ll find that you wear about the same 20 percent of your cookware, about 80 percent of the time.

If we focused more of our time on the 20 percent and less time on the other 80 percent? What would happen? Let’s take a look at the number s. The 20 -percenters currently generate 80 percent of our business. That means they’re generating four times as much business as the 80 -percenters. But hang on, it gets better: Not only are they generating four times as much revenue as a whole, but there also four times fewer of them. That means that each of our 20 -percenters is generating sixteen times as much revenue as an individual 80 -percenter. Now, what if all your customers were like those 20 -percenters? What if your could replace your current 80 -percenters with a whole new crop of 20 percenter-type customers? You’d have something like sixteen times your current revenues.

We can take this one step further, too, because even though your current 20 -percenters are the best customers your have right now, they may not be your ideal customers. Can you imagine how powerful it would be if you identified exactly who your ideal customer was, and then found simple, practical ways to fill your business with exactly that kind of customer?

Class 5 Conclusions & Integrating What was Learned l. Case study Ritz Carlton. l. Developing a quality audit and a blue print for the service process for a Day’s Inn department. l. How to evaluate using bench marks.

CHINA UD/DAYS INN CASE STUDY RITZ CARLTON Applying Total Quality Management TQM

Ritz-Carlton is very clear about their mission: “Ladies and Gentlemen Serving Ladies and Gentlemen. ” In a survey conducted by J. D. Powers and Associates, 96% of employees surveyed were able to identify the mission of the company successfully. Once the vision is clarified and shared, the leader can focus on serving and being responsive to the needs to the people. The greatest leaders have motivated other by energizing those around them with their vision. Popularity is not leadership: Results are what define effectively leaders. Their followers do the right thing. This is essential in the hospitality industry where customers purchase goods and services on promise. Leaders are highly visible: They set the example. Jonathan Tisch, chairman and CEO of Loew’s Hotel and Resorts, requires that he and his top management spend time each year working in all of the hourly positions in the company.

LEADERSHIP=FOCUS The “Strategic Plan” of Ritz Carlton Hotel? “Customer Focus”! (H. Schulze)

INDUSTRY INSIGHTS A Leadership Eye for Detail By Stan Bromley is Regional Vice President and General Manager, The Four Seasons Hotel Company. My job is to make sure that the food is hot. . not cold, service is friendly…not rude, rooms are clean…not dirty, the public areas are painted…not chipped, response to any request is fast…not slow. My job is to ensure that our employees and guests believe we are caring and sincere. That’s it. That’s what I do. I’ am a hotel General Manager.

STARBUCKS: Ideas to Sip On Retail is detail. For that matter, all business is detail. • Missed details produce dissatisfied customers who go elsewhere. • A small detail is sometimes the difference between success and failure. Something as simple as a 7 -cent value helped Starbucks become a publicly traded company. • Important details live in both that which is seen and that which is unseen by the customer. • There really is no way to hide poor quality. • Store environment, product quality, training, the development of a playful culture, and a social conscience all matter. • Details affect the emotional connection (the “felt sense”) that others have with you. • Ask customers what details they notice about your business.

Whiteley’s Seven Fundamental Imperatives for a Customer-Focused Company 1. Create a customer-keeping vision. A clear vision that is focused on what the customer wants and needs. Must be held from CEO through the front line service providers.