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Archive for the ‘Customer Service’ Category

In the last few years the business press has been inundated with stories of business failure. In this post I want to write about a business that has continued to soar in spite of the challenging economic environment: Five Guys.

Five Guys is a fast food franchise restaurant company that focuses on hamburgers and fries. In 2012 the company’s sales are expected to exceed $1 billion and Five Guys was recognized as the fastest growing US restaurant chain by Nation’s Restaurant News. In the past year Five Guys’ sales have grown 31.84% with unit growth of 24.73%. The company now has over 1000 restaurants across the U.S. and Canada with plans to expand overseas to the UK in the upcoming year.

Here are five reasons for Five Guys’ success:

1. Word of Mouth Marketing: There are no Five Guys restaurants in my area yet, however this restaurant has gained a cult following similar to that of In & Out Burger, so it’s hard not to have heard about them. Recently on a trip back from California my husband and I stopped at the one in Roseville a few miles off the freeway, to see what the fuss was all about. Surprisingly it lived up to the hype! Five Guys are a word of mouth phenomenon, having built their brand on customer referrals and media reviews. Even the Kardashians have promoted Five Guys for free! As these tweets show: 

2. Simplicity: Five Guys have a very simple menu, but it is this simplicity that is key to their success, as Inc. columnist Jeff Haden acknowledges:

“They don’t try to be all things to all people, they sell to people who want a great burger. They’ve identified a market big enough that they can do that.”

3. Top Notch Ingredients: Five Guys are focused on offering a quality product made using the best ingredients. Even though this causes high costs and higher than average prices, the great food justifies it and keeps customers coming back. This focus on food quality differentiates Five Guys from many of their fast food competitors and has earned them numerous cuisine awards including Zagat survey appearances every year since 2001.

4. Treat Customers Right: Fast food restaurants are not necessarily known for good service.however Five Guys may be the exception. On entering the Five Guys restaurant in Roseville an employee took the initiative to approach us and ask if we’d been to a Five Guys before. On learning that we hadn’t, the employee took the time to explain how the orders worked, available topping options and portion sizing. Five Guys’ focus on their customers extends to their public acknowledgement that their success is dependent on their patrons. Check out this sign posted in many of their restaurants:

5. Treat Employees Right: Five guys CEO Jerry Murrell, advocates treating both employees and customers’ right. This approach is very reminiscent of the fast food restaurant described in Greg Blencoe’s SuperManager book which I reviewed in a past post. Employees are paid above minimum wage and many of the restaurants offer health insurance to crew members, which is outside the industry norm. Even more surprising the company does little advertising in order to give employees bonuses. 

Five Guys have soared in recent years and time will tell if their success can be sustained. But what do you think? Share your thoughts in the comments section below. And if you haven’t been to Five Guys, visit their website to find your nearest restaurant.

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After college I participated in the Walt Disney World Cultural Representative program training new cast members on Disney’s guest service. It’s rare to find companies that deliver customer service at the level of Disney, however online shoe, clothing and accessory retailer Zappos may be that exception. In 2008 Zappos hit $1 billion in annual sales, a success they attribute to their customer focus. Here are some of the features of Zappos’ customer driven business strategy:

  • Every customer contact is an opportunity: Zappos view every phone call and e-mail as an opportunity to make a lasting impression on their customers.
  • Investment in customer service: The company allocates a large amount of the money that they would have spent on advertising on customer service. If the customer service is perfect, word of mouth will make up the difference.
  • Keep core competencies in-house: At one point Zappos outsourced their warehouse and shipping. This sourcing strategy did not work as Zappos quickly learned that you couldn’t trust a third-party to care about your customers as much as you do.
  • Make customer transactions as risk free as possible: U.S. Zappos customers benefit from free shipping both ways. Customers have 365 days to send back the items that don’t fit or they don’t like. Zappos returns run high (accounting for approximately a third of gross revenues) but they have learned that the lower the transaction risk, the happier the customer and the more likely they will buy more.
  • Make contact information easy to find: Zappos list their 24 hour telephone number on every page of their website, so that customers can easily contact them if they need to.
  • Evaluate customer interactions from a branding lens: Zappos evaluate their customer service staff on their ability to go above and beyond. Zappos do not require their staff to up sell as such a practice can irritate customers. They also do not measure call center staff on average call handle time as they don’t want them to rush through calls damaging customer service experience. One member of Zappos’ Customer Loyalty Team (the name of their staff) once spent 6 hours on a phone call helping a customer find the right pair of shoes. 
  • The lifetime value of a customer can grow: In contrast to traditional marketing ROI calculations, Zappos believe that a customer’s lifetime value can grow if loyalty is developed and expectations are exceeded.
  • Surprise your customers: Surprising customers goes hand in hand with exceeding expectations. One such example at Zappos is their surprise shipping upgrades for repeat customers.

What do you think? Have you ever ordered from Zappos? Share your thoughts in the comments section below.

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