How to Apply Disney’s Top-Notch Customer Service Strategy to Your Business

Last week, I was blessed to take my family on a Disney cruise. In addition to sun and sea, this gave me seven days to observe one of the best-run companies in the world, a company that puts customer experience at the top of every employee’s priority list.

So what makes Disney so strong, with huge customer satisfaction and low churn? Why do waiters on a Disney cruise ship work so hard to make customers happy? Among the lessons I learned while watching cartoons: sustainable businesses prioritize customer retention over customer acquisition. That’s what Disney does so well. 

1. Measure what matters.

Well-known management consultant Peter Drucker gave us the quote “what gets measured, gets managed,” which is often interpreted to mean “measure what matters.”  And what matters to Disney is exceeding customer expectations.

According to Be Our Guest: Perfecting the Art of Customer Servicethe cornerstone of the Disney approach is “exceeding expectations rather than simply satisfying them.” At the Disney Institute (yes, that is a real thing), staff are indoctrinated with a philosophy that empowers them. It reads: “Excellent service does not simply come from a friendly transaction or helpful technology–it is the result of truly understanding your customer’s expectations and putting the right guidelines and service standards in place to exceed them.” 

This approach — measuring customer satisfaction and responding accordingly — results in more than 70 percent of first-time Disney visitors becoming return customers. But how does one take that top-line foundational principle and get more than 60,000 employees to adopt and deploy it daily? Walt Disney, like many influential entrepreneurs, implemented SMART goals.

2. Smart companies need SMART goals.

To follow the SMARTmethod of goal setting, make sure your goals are:

1. Specific: Each goal must be clearly defined.
2. Measurable: Identify milestones and track your progress so you will know when you’ve succeeded. Measure your success in an objective way.
3. Attainable: Your goal has to be realistic and achievable; otherwise you’ll be discouraged from the start.
4. Relevant: Your goal must fit with your business model.
5. Time-based: You need a defined and specific period of time to achieve your goal.

A good SMART goal might be, “By January 1 of the new year, I will have $1 million in the bank.” A poor version of this goal would be, “I want to be rich.” Step one is to align each employee’s micro goals with the firm’s macro principles (to exceed customer expectations). 

3. Plug the holes, then fill the bucket.

Now that you are measuring what matters using SMART goals, the next step is to make sure you have a seamless customer life cycle (attracting, selling, onboarding, retaining, etc.). Many firms get this wrong by focusing on acquisition instead of retention. 

Frank Sonnenberg is an award-winning author who is quoted as saying, “Plug the holes before filling the bucket.” In this metaphor, the bucket is the customer life cycle or sales funnel. The holes represent areas where customers slip through and churn. You will get this wrong if you invest huge dollars in attracting new customers, but then spend little to support and retain them. 

Here are three ways that you can follow Disney’s example to improve customer support:

1. Truly listen. Disney staff maintain eye contact with customers requesting support. They never interrupt. Only once the customer is done speaking do they respond — first by acknowledging the issue and how it makes the customer feel, then by making suggestions.

2. Be responsive. Disney staff drop what they are doing and focus on solving the customers’ problems. If that takes time, they check in with the customers, updating them regularly on the progress of the solution.

3. Empower staff. Disney appears to give their team a lot of discretion and latitude in solving customer problems. When my 4-year-old son, Edison, couldn’t find a item on the dinner menu he wanted, our waiter went next door and got him a cheeseburger…from a different restaurant.

Disney gets customer service right, which is why lots of people on my ship were booking their next cruise before they even left the ship. Others in the same industry (and many other industries) don’t. So what can Disney teach all entrepreneurs? Mostly that the way to increase profit is to maximize retention rates; the way to retain customers is through customer service that exceeds expectations; and to exceed expectations, your company needs SMART goals that reinforce its foundational principles. 

So what are your firm’s SMART goals?  Are you spending as much on customer retention as you are on customer acquisition? If not, you need to be more like the Mouse House.

3 Lessons You Should Learn From L.L. Bean’s Change of Its Famous Return Policy

L.L. Bean has long had a legendary return policy: Return any product, any time, for any reason, no questions asked.

The policy gave the company an almost mythical reputation for quality. When L.L. Bean comes up in conversation, people swap stories. Just a few weeks ago, I heard about a guy who wore his 30-year-old L.L. Bean boots into the store. The boots, well-worn but still functional, had been passed down from his father. The sales clerk offered to give him new boots for free — but he said no.

Alas, such stories are now consigned to history. While the policy drove fanatic customer loyalty, it was also abused. Some people even bought old Bean boots at yard sales and returned them for refunds. Last week, L.L. Bean Executive Chairman Shawn Gorman announced that the company will now accept returns within one year, with proof of purchase. After one year, if a product is defective, it will work with the customer “to reach a fair solution.”

This change won’t just impact L.L. Bean’s brand. It’s also a massive operational challenge. “No questions asked” is an easy policy for every employee to follow. Now, the company is empowering its store staff and customer service agents to exercise their own judgment. What one person sees as wear and tear, another might see as a manufacturers’ defect. L.L. Bean has to give them good guidance — or risk offering wildly different levels of service to different customers.

What can other brands learn from this? My company recently undertook a top-to-bottom return policy review with one of our clients, Public Rec, the men’s apparel brand. They were kind enough to let me share the data from that review here.

This is important for any company considering a significant change to the way it interacts with its customers — even if you don’t sell a physical product. If you sell products, you have return and exchange policies. If you sell services, you have payment terms, cancellation fees, and contract length.

Changing any of these policies can have a significant impact on your customers, your reputation, and your bottom line. Here are the three lessons I learned:

1. Research the competition.

We researched nine competitors. We looked at the length of their return window; exceptions they made for damaged goods; whether they charged for return shipping or restocking; and how much leeway they gave agents to make exceptions.

We learned that Public Rec’s 60-day return policy was more generous than many competitors. While some offered 60, 90, or 365-day return policies, many offered 30 days or even less.

As a result, we decided we could shrink our window to 45 days. If you can save money — critical for a small, growing brand — while still offering customers a significant amount of time to make up their minds, you should.

2. Empower your employees.

We also learned that many competitors gave customer service agents significant discretion to offer refunds for damaged products. By contrast, our agents were only empowered to enforce the 60-day return window.

Any exceptions were escalated to Zach Goldstein, Public Rec’s founder and CEO. That took up a lot of Goldstein’s time, and also made it harder for the agents to do their jobs.

In our revised policy, we empowered agents to offer refunds or replacements if a product is damaged for a reason that is clearly Public Rec’s fault. If damage is the customer’s fault, we outlined specific guidelines on how best to respond.

Enable your agents to use discretion — but give them enough guidance to make consistent decisions.

3. Assess the impact to your bottom line.

Return policies impact your bottom line — but it’s not always clear how. On one hand, every return costs money. On the other hand, a 2016 study in the Journal of Retailing shows that lenient return policies actually increase sales.

We realized we just didn’t have enough data to understand the impact of our decisions on Public Rec’s profits. As a result, we started tracking and regularly assessing returns. This has already yielded results, and we’ve made additional tweaks to our policies based on the data we’ve collected and assessed.

Review your return policy regularly to make sure it’s in line with the market — and your customers’ expectations. Of course, now is also a good time to maintain your existing policy. After all, with L.L. Bean’s move, other policies all look a little more generous than they did last week.

Hey, your policy just got better without doing anything! Bask in the additional shine — your policy is now more marketable, and more of a differentiator.

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