UNCOMMON TAKEAWAYS

• To achieve service excellence, you must underperform in strategic ways. This means delivering on the service dimensions your customers value most, and then making it possible — profitable and sustainable —by performing poorly on the dimensions they value least. In other words, you must be bad in the service of good.

• The primary obstacle to service excellence is not the ambition to be great, but the stomach to be bad. This is an emotional obstacle.

• It's difficult to compete without understanding your customers' needs and how well your competitors are meeting those needs. Fortunately, customers are typically very willing to give you that information. And it's cheap and easy to ask them for it.

• There is an important distinction between marketing and operating segments. Marketing segments tell us how to identify and communicate with different kinds of customers. Operating segments tell us how to serve customers differently.There is rarely a one-to-one mapping between these segments.

• There are two key ways to improve service: (1) meet your customers' existing needs more effectively, or (2) convince your customers that they need something you already do well.

• There is a difference between financial models and service models. Service companies need to be "bi-lingual" to excel.

Innovating without empathy rarely delivers the same kinds of results, particularly when it comes to customer-operators. Technology makes it possible to dramatically expand the customers operating role, but that doesn't necessarily translate into better numbers. Many banks learned this the hard way in the 1990s. As retail banks increased the number of low-cost channels for customers to use to serve themselves —voice-recognition systems, ATMs, online banking — the institutions inadvertently undermined their margins. That's because customers didn't necessarily migrate to the lower-cost solutions. Instead, many simply increased their numbers of transactions overall, still coming to the teller window to deposit their weekly paychecks while also hitting the ATM and checking their balance online. In some cases, these high-tech tools enabled customers to engage their finances at a deeper level, which then increased their demand for traditional, high-cost banking services. Here's the irony: these banks were trying to save money with online tools, but instead, they designed a more costly model. Customers became much more expensive to serve, which wasn't sustainable. When your goal is service excellence, we suggest taking the opposite approach. Customer job design, especially self-service design, works best when you first work to increase the quality of the service experience, to make the service more convenient or customized (or whatever drives value in your business).

The good news (figure 1-9) here is that you have an advantage, but you're getting no return on it. We call it a waste wedge. You're investing in service features that your customers don't truly value, and it's not translating into profitability or market share. Your decision point: shift resources to attributes your customers value more, or get customers to care more about the things in which you excel. For example, our tap water was fine until bottled water made us want to drink from an obscure Swiss spring.

UNCOMMON TAKEAWAYS

• To achieve service excellence, you must underperform in strategic ways. This means delivering on the service dimensions your customers value most, and then making it possible — profitable and sustainable —by performing poorly on the dimensions they value least. In other words, you must be bad in the service of good.

• The primary obstacle to service excellence is not the ambition to be great, but the stomach to be bad. This is an emotional obstacle.

• It's difficult to compete without understanding your customers' needs and how well your competitors are meeting those needs. Fortunately, customers are typically very willing to give you that information. And it's cheap and easy to ask them for it.

• There is an important distinction between marketing and operating segments. Marketing segments tell us how to identify and communicate with different kinds of customers. Operating segments tell us how to serve customers differently.There is rarely a one-to-one mapping between these segments.

• There are two key ways to improve service: (1) meet your customers' existing needs more effectively, or (2) convince your customers that they need something you already do well.

• There is a difference between financial models and service models. Service companies need to be "bi-lingual" to excel.

Innovating without empathy rarely delivers the same kinds of results, particularly when it comes to customer-operators. Technology makes it possible to dramatically expand the customers operating role, but that doesn't necessarily translate into better numbers. Many banks learned this the hard way in the 1990s. As retail banks increased the number of low-cost channels for customers to use to serve themselves —voice-recognition systems, ATMs, online banking — the institutions inadvertently undermined their margins. That's because customers didn't necessarily migrate to the lower-cost solutions. Instead, many simply increased their numbers of transactions overall, still coming to the teller window to deposit their weekly paychecks while also hitting the ATM and checking their balance online. In some cases, these high-tech tools enabled customers to engage their finances at a deeper level, which then increased their demand for traditional, high-cost banking services. Here's the irony: these banks were trying to save money with online tools, but instead, they designed a more costly model. Customers became much more expensive to serve, which wasn't sustainable. When your goal is service excellence, we suggest taking the opposite approach. Customer job design, especially self-service design, works best when you first work to increase the quality of the service experience, to make the service more convenient or customized (or whatever drives value in your business).