Creating and Administering a True Five-Star Concierge Service

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This presentation at the IMN DC/PRC Seminar in 2008 described the approach to create a high-performing service organization using "little q" and "Big Q" principles. Ritz-Carlton and Private Escapes examples illustrate key concepts.

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  • As opposed to customer satisfaction, which is a short-term, transaction-specific measure
  • Loyalty! Generally it’s good for business. Retention is even more important in the destination club industry given the economics and cash flow tied up in redeeming deposits. Referral sales take 1/3 as long and cost a fraction of acquiring a new Member.
  • Most people focus on the explicit mechanics, the tactics. Its as much about implicit strategy at the top as it is about the front line. Understanding the organizational context is important before applying operational tactics. If the senior managers don’t see value in high service quality and are instead focused on short-term financial objectives, quality effectiveness is limited. Deming: “Quality begins in the boardroom.” The service quality strategy should be appropriate to the organization context. More on this in a minute.
  • Most people focus on the explicit mechanics, the tactics. Its as much about implicit strategy at the top as it is about the front line. Understanding the organizational context is important before applying operational tactics. If the senior managers don’t see value in high service quality and are instead focused on short-term financial objectives, quality effectiveness is limited. Deming: “Quality begins in the boardroom.” The service quality strategy should be appropriate to the organization context. More on this in a minute.
  • Most people focus on the explicit mechanics, the tactics. Its as much about implicit strategy at the top as it is about the front line. Understanding the organizational context is important before applying operational tactics. If the senior managers don’t see value in high service quality and are instead focused on short-term financial objectives, quality effectiveness is limited. Deming: “Quality begins in the boardroom.” The service quality strategy should be appropriate to the organization context. More on this in a minute.
  • Gaps are problematic—overpromise/underdeliver vs. underpromise/overdeliver. How services and delivered needs to be designed and managed in such as way as to minimize these gaps. System is also dynamic—expectations are constantly changing! Variables in delivery are constantly changing! The service experience is affected by all functional areas: operations, sales, marketing, general management
  • Since service quality depends on all aspects of the business, how does the business operate?
  • Mandatory 2-day training, daily reinforcement
  • Creating and Administering a True Five-Star Concierge Service

    1. 1. Creating and Administering a True Five-Star Concierge Service IMN's 2nd Annual Destination Club & Private Residence Club Industry Symposium, May 29-30, 2008, Miami, FL
    2. 2. Biographical Information: Ed Powers • SVP Operations for Ultimate Escapes • Co-Founder of Private Escapes, LLC • 21 years of experience in sales, marketing, quality management, operations management, and consulting • Formerly with Hewlett-Packard, Sorcia, Center Partners • BSEE 1987 Illinois Institute of Technology • Six Sigma Black Belt, Baldrige Examiner, HP Quality Maturity System Reviewer, American Society for Quality Certified Quality Manager • Spoken at Rocky Mountain Quality Conference, American Society for Quality, Colorado State University, and University of Chicago • Published in AMA Marketing News, Call Center Solutions magazines
    3. 3. Who are you? • Industry? • Functional area? • Current situation?
    4. 4. Topics • General Models for Service Quality • Developing a Quality Strategy • Lessons from Ritz-Carlton • Variables in the Destination Club Industry • Ultimate Escapes Deployment • Q&A
    5. 5. Service Quality—What is it? A customer attitude formed by a long- term, overall evaluation of performance. Source: Hoffman and Bateson., Essentials of Services Marketing, Second Edition, Harcourt College Publishers, 2002
    6. 6. Service Quality—Why is it Important? • Average customer retention is 80-85% • Reducing defections by 5% can boost profits 25% to 85% • It is 3 to 5 times less expensive to keep a customer than to recruit a new one • It creates referral income Source: Wayland and Cole, “Turn Customer Service into Customer Profitability,” Management Review (July 1994) Source: Adapted from Frederick F. Reichheld and W. Earl Sasser, Jr., “Zero Defections: Quality Comes to Services,” Harvard Business Review, September-October 1990, pp. 106-107.
    7. 7. Service Quality—How do you Deliver it? People Process Technology Quality Assurance Process: •Standards •Training •Scorecards •Mystery Shopping •Software
    8. 8. Service Quality—How do you Deliver it? Philosophy Strategy Structure People Process Technology Management Process: •Leadership •Planning •Execution •Learning
    9. 9. Developing a Quality Strategy Quality of the Management System “Big Q” Management of the Quality System “little q”
    10. 10. Actual Service Delivered Customer Expectations Source: Adapted from A. Parasuraman, Valerie Zeithaml, and Leonard Berry, “A Conceptual Model of Service Quality and Its Implications for Service Quality Research,” Journal of Marketing 49 (Fall 1985), pp.41-50. Customer Perception of Service Received Knowledge Gap Standards Gap Management Perceptions of Customer Expectations Delivery Gap Standards Specifying Service to be Delivered Communication Gap Communication about Services Conceptual Model of a Service Experience ServiceGap
    11. 11. The Management System Fourth Generation Management 1st Generation Do it Yourself Source: Brian Joiner, Fourth Generation Management 2nd Generation Supervise Others 3rd Generation Management by Objective 4th Generation Management of the System
    12. 12. Baldrige National Quality Award • Purpose: To enhance the competitiveness, quality and productivity of U.S. organizations for the benefit of all residents. • Established in 1987 • Awarded by the President and Secretary of Commerce • Categories: Manufacturing, Service, Education, Health Care, Small Business, Non-Profit Source: National Institute for Standards and Technology (NIST)
    13. 13. Baldrige Principles • Visionary leadership • Customer-driven excellence • Organizational and personal learning • Valuing workforce members and partners • Agility • Focus on the future • Managing for innovation • Management by fact • Social responsibility • Focus on results and creating value • Systems perspective Source: 2008 Criteria for Performance, Malcolm Baldrige National Quality Award, NIST
    14. 14. Baldrige Criteria for Performance Excellence 1.0 Leadership 2.0 Strategic Planning 3.0 Customer and Market Focus 4.0 Measurement, Analysis and Knowledge Management 5.0 Workforce Focus 7.0 Business Results 6.0 Process Management Organizational Profile: Environment, Relationships, and Challenges Source: 2008 Criteria for Performance, Malcolm Baldrige National Quality Award, NIST
    15. 15. Ritz-Carlton Business Excellence Roadmap Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf
    16. 16. Ritz-Carlton Leadership Example Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf
    17. 17. Ritz-Carlton HR Focus Example The Gold Standards Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf
    18. 18. Ritz-Carlton HR Focus Example The Gold Standards Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf
    19. 19. Ritz-Carlton Lessons for DC&PRC Industries • Aligned and integrated management system based on criteria for high performance • Process management and Plan-Do-Check-Act practice • The Gold Standards • CLASS database • Benchmarking Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf
    20. 20. Advantages in the Destination Club Industry Variable Advantage New industry Innovation •Long-term, highly desirable customers •Low staff turnover •Personalization •Engagement
    21. 21. Challenges in the Destination Club Industry Variable Challenge Member expectations of a new industry Setting expectations Properties Consistency in outfitting •Global footprint •Distributed, contracted workforce •3rd party providers Consistency of service Business model Limited money and resources
    22. 22. Ultimate Escapes Deployment: Leadership • Purpose We create and deliver personalized vacation experiences. • Vision Our service defines the destination club industry where excellence is the standard. • Values – Fun – Teamwork – Communication – Trust – Integrity – Recognition – Caring – Dependability
    23. 23. Customer and Market Focus • Board of Advisors – 3 from each Club – 2 year terms – Review and debate details, then recommend changes to BOM • Board of Managers – 1 from each Club – 2 year terms – Quarterly meetings – Rules and Regulations and pricing changes – Minutes taken
    24. 24. Process Management 1.0 Planning and Review1.0 Planning and Review 2.0 Property Acquisition 2.0 Property Acquisition 3.0 Member Acquisition 3.0 Member Acquisition 4.0 Member Services 4.0 Member Services Escapes Real Estate Plan Marketing Strategy New Member- ships Furnished Properties IT HR Property Ops Finance Key Support Processes Accounting Installation & Design Key Business Processes
    25. 25. Japanese Control and Improvement Methods ProcessPerformanceMeasure Time hoshin kanri “policy control” hoshin kanri “policy control” kaizen “change for the better” P D C A nichijo kanri “daily control”
    26. 26. “little q” in Operations • Single point of contact • Hiring, training, and performance management • Enterprise technology strategy • Knowledge management • Quality measurement with 100% follow-up • Checklists – 24-hour Planning – Local Host – Inventory
    27. 27. 2007 Private Escapes Results • Over 2,500 trips • 99.4% Satisfaction with Escape Planner service • 94.7% Satisfaction with Local Host service • 97.7% Overall Satisfaction • +1% improvement in Overall Satisfaction • < 2% Service Recovery rate • 1.9% redemption rate, none attributed to service quality
    28. 28. Getting Started on “Big Q” with MBNQA • http://baldrige.nist.gov/ • Self-Assessment Materials – Getting Started – Issue Sheets – Are We Making Progress? – Are We Making Progress as Leaders? – Criteria for Performance Excellence

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