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Customer Culture – How FedEx and Other Great Companies Put the Customer First Every Day

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Excerpt from new book by Mike Basch, founding Vice President of FedEx

Customer Culture – How FedEx and Other Great Companies Put the Customer First Every Day

Chapter 15: The Paddi Lund Story

“Take your name out of the phone book, stop all advertising, lock your doors and fire 75% of your customers.”

This is the advice of Paddi Lund, who runs an eight person dental office in Brisbane, Australia. If there is an ideal business, this is it. Very profitable, zero turnover, happy employees and owner and an integrated home and business life for all employees.

More importantly, this is a story of business transformation from average to extraordinary over a period of a decade.

The story started about 12 years ago. Paddi was very unhappy, working 60 hours a week and making average dental pay.

He was stressed out and at the end of his rope. So much so, he seriously considered suicide. He investigated various ways to take his life from slashing his wrists in a bathtub of warm water to leaping off a bridge in Brisbane. He learned that wrist slashing took too long and bridge leaping might end up with one being dragged from the mud and still alive.

Then he asked a critical question – a question that we all need to ask frequently:

“If the goal of life is happiness, however one defines it, why would I spend the prime years of my life and the prime hours of those years making myself unhappy?”

He began to explore why he was so unhappy and learned that dentists commit suicide 100 times more than the average person. On the verge of taking his own life, he was open and ready to hear the answers to why his dental practice made him unhappy.

He started by asking his employees who told him honestly that his dental practice was a terrible place to work. People, first and foremost Paddi, were rude to each other. His employees couldn’t wait to leave each day and were happy only on Friday afternoon when they foresaw the state they called “POETS” (Piss Off Everything, Tomorrow’s Saturday) – the Australian version of TGIF.

After listening to his employees and deciding not to take his life, Paddi created a vision that he describes as “Dental Happiness” – an oxymoron to most people. He became obsessed with developing a happiness centered business where people (customers, employees and owners) truly enjoyed being.

Going through the success structure process…

  1. Paddi developed the vision of a happiness centered business where people loved to work and clients (new name for patients) loved to visit and do business.

  2. Values were set in the form of the Courtesy System. The team came up with rules of conduct that were generally acceptable to each other in working there. This was perhaps the most important phase because it defined the culture that set the boundaries for everything that followed.

  3. Goals were established covering Service, Happiness and Revenue. These goals balanced the needs of Customers, Employees and the Owner.

  4. Goals were made relevant with a weekly profit sharing system and by discussions about happiness and the vision that all could relate to.

  5. A daily feedback system was put in place in a 10-minute daily meeting where people would rate their happiness on a scale of 1 to 10, their service on the same scale and the actual revenues produced. One employee called the Happiness Indicator the “Stressometer” because it showed that stress and happiness were inversely proportional.

  6. Once this system was in place, the people began to meet weekly to identify the obstacles and develop actions to resolve them.

They started their action phase by defining their “Hierarchy of Horrors” (see chapter 13) and beginning to understand why they were unhappy. They quickly decided they were unhappy because they were around people most of the time who didn’t want to be there – people that didn’t want to be around them.

This phenomenon describes why dentists commit suicide more than the average person. We hunger, Paddi reasoned, for human companionship and when we’re around people who don’t want to be around us, for whatever reason, we get depressed.

So, in order to create Dental Happiness, they had to create an environment where people wanted to be. They decided that they had to start with the reasons people didn’t want to be there.

For example, people don’t like pain. They don’t like spending time and money with few perceived results and so on.

In summary, going to the dentist at best is a negative experience.

They defined 37 different horrors to start with. Things like pain, smell, waiting, value, time spent, etc.

Then they (all employees) began by taking one at a time and coming up with ideas that would resolve the issue.

They started with smell.

Smell is an interesting phenomenon. It is one of the more powerful unconscious motivators of human behavior. If you smell something that reminds you of a bad childhood experience, you will move into a negative mood and the cause will be unconscious. Also, if you smell something that reminds you of a positive experience, you will move into a positive mood.

The smell of a dental office generally moves people to a negative mood. I know in my case, I am reminded of the childhood experience before Novocain and high speed drills. I didn’t like being there. On the positive side, I spent very happy summers on a dairy farm in Vermont and cow manure has pleasant connotations.

Also on the positive side, realtors have proven that a smell of fresh baked bread in a home for sale increases the likelihood of purchase.

Paddi’s team took it on. Sounds simple. “Come up with a smell that will emit positive emotions.” They started by putting perfume in the air conditioning system. As part of their feedback, they would constantly ask if people noticed anything different. When they asked about the smell, they got feedback. “It smells like a house of ill repute,” came the answer.

Or, as my friend says, “A house of negotiable affections.”

Well, depending on the client’s experience, that didn’t elicit the experience they were trying to create.

Then they decided to make coffee. Coffee has a smell that generally reminds people of a pleasant experience. The problem is that it goes away quickly, so they decided to grind coffee throughout the day and give some of it to their clients. This helped but was still not enough to block out that strong ‘dental’ odor.

Then one of the “Care Nurses” (their name for the support staff) came up with the idea of buying an oven and baking “Dental Buns.” (We’d call them Fruit Muffins. They speak funny in Australia!) This idea hit big with the clients. Not only did they arrive to a great smell, but they received a gift of the Buns at the end of the visit.

As Paddi said later: “It was fun to see a staid accountant or the CEO of a large company skipping across the parking lot with their little basket of Buns.”

Many of their clients have asked for the recipes.

Pain was their next challenge.

Paddi explains that pain is a function of what the dentist is doing in your mouth and that 95% of what they do is not painful. After all, he will tell you, they are drilling to remove decay not nerves.

Easy for him to say. He’s not the one who’s in the chair.

This is people’s natural reaction when told that something painful doesn’t really need to be painful. After all is said and done, when it comes to the customer experience, perception is reality. And my perception, as the perception of most of Paddi’s clients, is that having a drill in your mouth is painful. I don’t care what you say to me.

Well, the success structure provided that feedback as well, so the team developed what is known as the “pain button.” A simple device that the client could hold in their hand that would tell the dental staff that the client was experiencing pain. It was hooked up to a simple buzzer that would alert the dentist. Then the dentist (Paddi and one other) would re-think their work to make sure it was not painful.

When they began the use of the pain button, Paddi described how it worked and handed the pain button to the client once comfortably settled in the chair. He said it was interesting in the beginning. He would get within 2 feet of the client’s mouth and the pain button was pushed. Talk about perception being reality.

I spoke with several patients and they all said the same thing. None of them believed him, but after 30 seconds of drilling, all to a person, relaxed and dropped the pain button although nearly all said they kept it close. They had eliminated pain from the reasons people don’t like going to a dental office.

One by one, the team took on the horrors and one by one, they eliminated them.

The perception of waiting was cured by not having waiting rooms and by never being late. In fact, if they were more than a minute late, they would give the client an $80 bottle of champagne for their trouble. Since they shared the profits, this created incredible relevance for running the practice on time.

Such relevance eventually led to the firing of the vast majority of clients. The reason most practices are late is that a patient shows up late and, to fit him/her in, the practice begins shuffling the schedule. Soon everything and everyone is late.

In this case, the team identified the types of clients they wanted to do business with. What’s more, the types of clients that would add to the dental happiness vision. Clients that were perpetually late were not clients they wanted, so they gradually weeded them out.

If someone came in late, the client’s Care Nurse would sit down with them, explain how important it was to run on time and suggest they re-schedule the time to another day or week. If that didn’t work for the client, they suggested that they refer the client to another dentist.

Over time, this type of honest treatment and adherence to the vision, goals and values led to a turnover of 75% of the clients. They used a set of guidelines to identify each client as A, B, C or D and developed a plan to move the D and C clients to other dentists and the B clients either to As or out the door.

“Different strokes for different folks,” as Paddi explains it. He tells the story of a patient that did not fit the A or B profile. He worked in a meat processing plant, smoked and clearly was not concerned about his dental health. One day, he came in with a severe toothache and, out of long term dental problems, told Paddi he wanted dentures.

Paddi wanted clients who wanted to keep their teeth, so now was a good time to refer this client to another dentist. He explained that he didn’t believe in dentures, but that he understood the client’s desires and would be quite happy to refer the client to a dentist that could better serve his needs.

Paddi remembers going to a bar and seeing the dentist to whom he referred the client. He didn’t want to face the dentist, but was finally spotted and confronted. To Paddi’s disbelief the dentist was very happy for the referral and thanked him profusely. He said that he had taken good care of the client, given him dentures and was paid promptly.

Paddi was somewhat dismayed to realize that the client wanted exactly what the other dentist had and was pleased enough to pay promptly – something he never did with Paddi’s practice.

After that experience, he realized that you can’t be all things to all people. You pick your customer base and do all you can to attract the type of people you want to serve and who want the service you offer. In doing that, you reject a good number of potential customers. “Your message,” he points out, “is best when it is very seductive to some, but turns away the majority.”

Over time, the team developed a “By Referral Only” practice by asking each A client to refer someone like themselves to the practice. Gradually they sent the Cs, Ds to other practices by either referring them out or having them leave because they were not satisfied with what the practice was becoming.

In the last few years, the practice has become “By Invitation Only” meaning that you cannot go to the practice without first being invited.

Bottom line:

Twelve years ago, Paddi was making average dental pay working 60 hours a week, had high turnover, was stressed out and depressed.

Today, Paddi makes 3.5 times the average pay, works 23 hours a week, has zero employee turnover and is the happiest human being I know.

Paddi and his team were clear about one thing. Growth meant only growing towards happiness, not growing in size. Paddi is a minimalist and doesn’t know how much money he has in the bank. He was crystal clear about his goal of happiness was at the cost of becoming big or building a multi-office practice. He wanted happiness. If money came, which it did, that was fine, but not necessary beyond a minimal amount.

My first visit to the Patrick Lund Dental practice was quite interesting. I had seen Paddi speak at a seminar in Brisbane. I had heard many business leaders get up and describe successes similar to what I heard from Paddi so I was quite skeptical, but I had my way of checking it out– interviewing customers and employees.

I went to Paddi after his talk and asked him if he would mind if I visited his practice and spoke with several of his employees and customers. He was getting ready for a six week trip to Europe and said that it was fine for me to visit as long as I gave him feedback after my interviews. I agreed. It was interesting that he could leave for six weeks and his practice wouldn’t skip a beat.

The next week I received a hand-drawn color map telling me how to get to the practice. This was necessary as there is no sign, only a golden apple indicating the practice. I drove up, parked and went to the door. The door was locked with a doorbell that I rang.

About 20 seconds later, Marilyn came to the door and said: “Hi Mike, I’m Marilyn.” Not, Hi Michael or Hi Mr. Basch, but Hi Mike. That simple greeting said so much. When my friend Paul called to make the appointment, the receptionist went through a simple list of questions, one of which was “how does he like to be called or referred to?”

“Why the doorbell and locked doors?” I asked.

“We wanted it to be like a home. When friends come to your home, they ring the bell and you greet them – sometimes with a hug, sometimes with a handshake, but always in a friendly, caring manner. We wanted to duplicate that.”

Marilyn led me to a door that said “Welcome Mike Basch.” We went in and sat down. The room wasn’t large and Marilyn left the door open a crack and I noticed.

“Why leave the door open?” I asked.

“This is your room, but it is small. We’ve found, over the years, that to close the door is claustrophobic and to leave it open violates your privacy, so we leave it open a crack.”

We sat down and began the interview. Pretty soon, there was a knock at the door. “Hi Mike, I’m Joanne. Paul said you enjoy blueberry muffins with decaffeinated cappuccino. Is that correct?” As I said yes, she came in with a silver tray with Royal Dalton china on it

This was blowing me away. Every other place, if you got coffee, it was in a plastic cup and you served yourself. And again the use of my name and finding out what kinds of things I enjoyed eating and drinking.

These are just a few examples of hundreds of details that demonstrate both caring and quality. Earlier I mentioned UPS’ obsession with clean trucks and their reasoning that it conveys a sense of quality.

The same is true for a dental office. For the most part, people have no sense of quality dental work as long as it feels right when the work is done so quality must be communicated in other ways – quality tea service, clean restrooms, quality environment, etc.

As Joanne served us, Marilyn mentioned that they celebrate tea service in British fashion meaning that we are silent during the service process in honor of the server.

I was beginning to experience an interesting phenomena. People will generally adapt to their environment very quickly. If you have clear and certain rules, the people entering the practice will follow those rules.

An example is on-time service delivery. If the practice is always on time and you never have to wait and, if you are late, they will not slot you in, you will begin to show up on time.

After some discussion and my realization of the reality of what I was experiencing, I wanted to find out if this could be duplicated so I asked:

“Marilyn, if your husband was transferred to Sydney and you went with him and went to work for a dentist there, could you create the same atmosphere and success you have here?”

She looked at me strangely. “You mean I leave here and go to Sydney with my husband? I’d divorce him first before I left this practice.”

Obviously this was tongue-in-cheek, but she made her point.

She went on to explain some of the milestones in the transition from average to extraordinary.

The time when the Care Nurses would congregate around the receptionist counter. He didn’t like the counter because it presented a “barrier to human relationship.” He would ask us not to congregate. We would agree, but as soon as he was out of sight, we’d congregate. “One Saturday, he enrolled my husband and his chain saw, came in together and cut the counter up in several pieces and left them on the floor for us to congregate around on Monday.”

Clearly, this made a statement about Paddi’s commitment to Dental Happiness.

She talked about the “Stressometer” and how they would meet each day to review the day and discuss their relative happiness. “It occurred in stages. At first, we all were a 2 or 3 ale (1 to 10 with 10 very happy). Then we began to discuss what happiness really meant and to open up about what made us unhappy. It was stress. So we developed the Courtesy System to reduce stress. We would rate our own happiness and then talk about what would make it a 10.”

Later, I spoke with Joanne and asked her about her goals. Joanne was 19 years old and had worked in the practice for about 5 months. She replied: “I want to get married and have children. I want to study to become a dental hygienist. Most importantly, I want to be here in 5 years.”

In the dental industry, employee turnover is over 60% so this was a very unusual goal. I asked why. She replied that she was loved here. And, she went on, “I grew up in a very loving family, but here it’s even better.” I asked her to tell me whether there was any specific example she could give me.

“Yes, she replied with a tear coming to her eye. One day during our afternoon meeting, Pat said to me that she was unhappy that day because I had said something to her that made her upset. I really wanted to fit here so I asked her what it was. She replied that she couldn’t remember.”

“I went home that night and didn’t sleep well. I kept trying to remember what I had done. The next day I came in and went to my work station to find a large bouquet of flowers with a note from Pat basically apologizing for bringing it up when she couldn’t provide the detail. I cried and went in and hugged Pat.

“I’ll never forget that living of our Courtesy System Value ‘when someone is upset by your actions, apologize and make restitution.’ At that point, I really got the Courtesy system. So I’ll be here the rest of my life if it is possible.”

During the visit, I spoke to several clients. One had traveled from Sydney at an expense of over $800 to come to the practice. He had written a note about it being treated with more dignity, respect and caring than 5 star resorts.

Summarizing the experience, I left feeling relaxed and focused. I had just visited what I still consider today, 10 years later, probably the most ideal business environment on the planet. It is financially successful and brings happiness to all who touch it.

What has this all got to do with a major corporation and why present the example here?

Paddi has helped thousands of small businesses from accounting businesses to medical practitioners who have applied his principles and Courtesy System with great success. I have worked with many large companies applying the principles as well. They are simple and they work.

They also underline the power “success structure” systems.

Will all of this work everywhere? Of course not, but much of it will work when applied with passion and commitment.

Published by Prentice Hall available from of

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