Chapter One: Truth Number 1: You Can’t Be Good at Everything

“Notice what Commerce has done. It's worst in class on some service dimensions (rates and product mix) so that it can be best in class on others (hours and attitude). Bad in the service of great. It sounds simple, but the courage to choose low deposit rates and poor cross-sell performance seemed crazy alongside the desire to grow. These choices worked because being bad was not a missed opportunity, but rather was the fuel to create an exceptional service experience.

Notice that Commerce is indeed a collection of 5's (best) and I's (worst). The bank was so successful because it had the wisdom to know the difference, to know where it should be winning and losing. Being worst in class on the things that were least important to its customers allowed it to be best in class at the things that were most important to them. That's the trick. You have to be bad in the service of great — and you have to be very smart about which is which.

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.

Notice that Commerce is indeed a collection of 5's (best) and I's (worst). The bank was so successful because it had the wisdom to know the difference, to know where it should be winning and losing. Being worst in class on the things that were least important to its customers allowed it to be best in class at the things that were most important to them. That's the trick. You have to be bad in the service of great — and you have to be very smart about which is which.

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.