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BizBooks: We will begin taking questions in less than hour.

Joseph Michelli: Looking forward to answering your questions.

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BizBooks: Briefly, can you help our readers of BizBox understand what is "The New Gold Standard"?

Joseph Michelli: Thank you for having me. The New Gold Standard is not only the title of my book about service at The Ritz-Carlton Hotel Company but a way to think about a needed paradigm shift in leadership and customer service.

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BizBooks: In your opinion, is the customer always right? Should the buyer beware? And how does someone running a business reconcile those two seemingly contradictory axioms?

Joseph Michelli: Interestingly enough, Cesar Ritz the visionary hotelier whose inspiration led to the modern day Ritz-Carlton Hotel company is credited with saying "the customer is always right." While I think Cesar was wrong, the customer is .....always the customer. The New Gold Standard of customer service is to not say "no" to customers but help them get their needs, wants and desires addressed to the decree the business can. Buyers hold the power in a world of brand clutter. I can go online and have an endless see of choices. New Gold Standard businesses find a way to customize service to customer needs such that brand loyatly trumps the breadth of options given to buyers.

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BizBooks: What is the best way to deal with unhappy customers? Can you give us some examples.

Joseph Michelli: The simple answer is "LISTEN TO THEM." Most unhappy customers want to be heard not to have their product or service given to them for free. When I go to a restaurant and a food item isn't right, I want it fixed. I want someone to care that it was wrong. I had the money to buy the item or I would not have ordered it. I am not looking for a free meal. I think it is never good to exchange money for conversation. The philospher Paul Tillich notes that "the first act of love is to listen." Great servants, be they political leaders, managers, or front line staff begin service and service recovery by open listening. Listening to solve problems. Once a problem is solve, extraordinary service means taking an additional step to honor the customer and let them know that their business is important and not taken for granted.

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BizBooks: How do you feel about programs that reward frequent patronage (for example, buy 7 burritos, your eighth is free cards)? Do you personally use any? Do they work?

Joseph Michelli: While they work, they are not a panacea for customer loyalty. Let's say two burrito fast food restaurants have products of equal quality and price. One offers a buy 7 get's the 8th free card. The other can then choose to offer the same incentive for frequent purchase, thus removing the competitive advantage. Better yet the second shop can offer a buy 6 get the 7th free promotion. In that case, customer loyalty has been commoditized. Who is willing to spend more to buy loyalty? While I do not discourage discounting or free promotions, I seek to help companies learn from businesses like the Ritz-Carlton where no customer loyalty card discount exists but brand loyalty is extremely high. Namely, rather than discounting your way to repeat business (business that is vulnerable if someone else offers a deeper discount) I think it is optimal to add value by personalizing service. If your staff remembers the names of your frequent customers and can begin preparing their favorite burrito when they walk in the door, a discount card from a competitor is less likely to lure them away.

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BizBooks: What advantages (if any) does a small business have over a big business in terms of customer service? How can the person in charge of the small business work to exploit that advantage?

Joseph Michelli: That's such a great question and I have been pondering it as I've been thinking about next book options. Small businesses have several advantages namely they should be able to develop closer personal relationships with their customers. I believe all business is personal. I think of service not as "customer service" but "personal service." As such, small businesses should be able to more personally serve their staff and thus demonstrate how their staff can personally serve the end user. The other advantage of smaller business is fluidity and flexibility. In essence, these companies can me more nimble in response to change. Whereas a large corporation may need to hire a compnay like Gallup to do customer engagement surveys, a small business owner can personally inquire of his/her customers to determine how to refine the service offerings in accord with the needs of the customer base. Small businesses can then immediately transfer that information into action, without involving large scale corporate initiatives.

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BizBooks: What is your opinion of Starbucks's efforts a few months ago to improve customer service by closing their stores to retrain their employees and investing in lower espresso machines?

Joseph Michelli: Leadership at Starbucks has changed over that last six months. Howard Schultz has returned to the helm. He led Starbucks to its meteoric success by emphasizing the "uplifing" service experience staged in the "living room of the community." Clearly Starbucks lost sight of that success driver. They became overly concerned about ROI and reducing cost. The mandatory lock down training and the change in espresso machines (which return barista's to handcrafting drinks in a way that customer's can see)are all part of bringing back The Starbucks Exprience. Clearly, change in customer's discretionary income is hurting Starbucks but a return to the Starbucks Experience will likely return the luster to the brand.

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BizBooks: How do you feel about the current system in some industries--including dining/drinking establishments and hotels--under which tipping for certain services is considered to be, essentially, required?

Should owners of such businesses look to change that for their own companies?

Joseph Michelli: WOW! No one has ever asked me that before. But here is my off the top answer. As I understand tipping it emerged as a way to incentivize good service and occured before a service was offered - some have suggested it is an acronym for "to insure promptness." The idea was to offer money to assure service would follow. Now it has become a calculation based on quality of service already received. I believe that all of us should be measured on the quality of the service we give to one another. I believe that leadership has the primary responsibility to fairly compensate great servants. I have no problem with consumer's being an additional source of that measurement but they shouldn't replace the responsbile treatment of servants by business owners.

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Washington, D.C.: Is it easier to provide high levels of customer service when that is what your customer is paying for? i.e. luxury, high-end brands like Nordstrom, the Ritz Carlton etc.

Joseph Michelli: I think it is far more the expectation to receive great service as the price point escalates. Who expects great service at a quick "service" restaurant? But that is where the competitive advantage can take place. If great service doesn't cost more to deliver (assuming you learn how to select for service professionalism and effectively train it) then you can offer luxury service in a mid-range business. That's why I wrote the book The New Gold Standard - to offer insghts on how to bring luxury and legendary service to life in any business.

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Anonymous: Your upbeat, optimistic philosophy permeates your presentations, books, podcasts, articles, interviews, etc. To what do you attribute your pervasive 'glass half-full' approach to life and how might others adopt it as well? Your positive approach is inspirational and greatly appreciated. Thank you.

Joseph Michelli: In the words of Eeyore, "thanks for noticin." I am honored to serve people. My batteries are charged when I have opportunities through books, presentations, podcasts or even this conversation on BizBox to encourage people to move toward their greatness. I believe that business leaders can help people change the way they relate to one another both at work and at home. To modify a phrase from John F Kennedy, great leaders inspre their staff to "ask not what this job can do for me but what can I do through this job to serve others."

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Dallas, Texas: I am buying into an existing small business - how do I endear myself to the current employees, but still make sure I maintain authority?

Joseph Michelli: Communicate your values, communicate more, and communicate even more. Inspire them with what they can do from their perch in the business. Communicate the outcomes you want them to derive through your business. Train them in the operational issues, source them well... then get out of their way. Observe them, recognize their achievements, and coach them through breakdowns. To use a musical metaphor, great service leadership means teaching people how to read the music, letting them know what it should sound like, and helping them not only play it note-for- note but improvise through their unique talents and skills,

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Alexandria, Va.: How do you find -and keep- good employees?

Joseph Michelli: Look for people who are serving you well in your day-to day life. If they are only satisfied with their job but not truly engaged, they will be vulnerable to your passive efforts to recruit them. Take your time to select not hire them (I have a section in The New Gold Standard just about this distinction and scientific selection techniques), use structured interviews, role playing, and formal assessment of talent. Keeping them is less about compensation and instead involves helping them grow, connecting them to something larger then themselves, giving them authority and respect.

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Anonymous: Given the current economy, what words of wisdom can you offer to leaders who are confronted with making unpopular decisions that might adversely affect employee morale?

Joseph Michelli: Business owners have to take the "risk of excellence." Often that means making unpopular decisions needed to move the company forward. Generally, people object more to the way they are treated in difficult times than the change decisions themselves. Most employees understand that not every business decision will favor them but there is no excuse for treating people poorly in the process.

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BizBooks: Looks like that's all the time we have for today. Thank you Joseph for taking the time to answer our questions. And thanks to everyone for joining us.

Joseph Michelli: The time went by so quickly and there were so many more questions yet to answer. The good news is that most if not all of those questions have answers in my latest book The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience courtesy of The Ritz-Carlton Hotel Company. I hope you will buy The New Gold Standard and that we can have another opportunity to discuss these issues further. Bizbox thank you for this opportunity and a special thank you for all who have taken the time to participate in this event. May each of you create The New Gold Standard in your industry.

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