Sometimes the Best Customer Service Innovation Means Flipping the Script

When Apple opened its first stores, the business press overwhelmingly called it a bad idea. And in some ways, they had a point. Think about the business model Apple was introducing: We’re going to get some really expensive real estate, then we’re going to build a really expensive store, we’re going to fill it with lots of expensive payroll, and we’re going to do it to sell a commodity that has an 8% to 10% margin.

The day after we opened the first stores, Businessweek published an article entitled, “Sorry Steve, here’s why Apple Stores won’t work.” In it, one marketing researcher called the stores “a very painful and expensive mistake” and predicted they would close within two years. To say that the press didn’t get what we set out to do would be an understatement.

We built beautiful stores on expensive real estate that people visited regularly instead of renting a spot in a destination-oriented strip mall. But all of that was secondary to the real focus — the store design revolved around creating an entirely new, innovative customer service experience. That’s why I was in meetings for three hours every Tuesday with Steve Jobs, working on the store design and every part of the Apple retail experience. 

We’d ask: 

• How does a customer look at this? 
• What does a customer think about that? 
• How do we want the customer to feel about this and that? 

That discussion brought us to what I believe became the heartbeat of the Apple retail store: the Genius Bar. Let’s give away free tech support. Let’s do free classes. Let’s do free services on all Apple products we sell. 

Apple’s innovative customer service experience helped build loyalty

This very different approach to our customer service delivery was a radical departure from all other computer stores at the time. Back then, if you needed tech support, you called a service center somewhere in the world and hoped someone could help you solve your problem. Unfortunately, maybe one out of 10 agents knew what they were talking about, making it frustrating for consumers. To resolve this customer satisfaction friction point, we decided to just do it in the store. This one small decision — to differentiate our stores through a commitment to excellent customer service — was the catalyst for an entirely different customer experience.

As just one example, during the early years of the stores, employees who wanted to be a Genius came out to Cupertino for four weeks and trained before working behind the counter. So, not only were the stores themselves radical in light of the business model, this focus on comprehensive training and what we could do differently for our customers were a huge departure from what everybody else was doing. 

There’s a confidence that the Genius Bar builds in the mind of an Apple customer. If I’m in Barcelona and my phone stops working, I simply go to an Apple Store in Barcelona and they take care of me. They don’t try to make a sale. They just do something to my phone that makes it work again. Customers remember things like that, and it leads to a loyalty halo around all things Apple.

Perhaps it starts with a computer, and then goes to an iPhone, an iPad or even an Apple Watch. After a period of time you become connected to the Apple platform across numerous devices. Now, step back and consider what it would be like changing to another brand for any of those items. You’re very unlikely to switch platforms when you’re being taken care of so well by a particular brand, especially after you’ve bought into multiple components from that brand.

Now go back and think about why Apple opened retail stores in the first place. It was to engage with customers in a place that was different from anyone else and to take care of them in a way that no one else could. The store experience and service model were the linchpins that made all that happen.

Tesla puts the power in the customer’s hands

Tesla’s first showrooms delivered a similarly unique customer experience. For almost 100 years, car companies all sold cars the same way. They display cars in a big showroom where you set up a test drive, endure an often lengthy and not at all transparent sales process, and eventually leave with the keys to a new car in your hand. Shopping for a new car this way was right up there with trips to the dentist and doing your taxes on the list of things people would prefer not to do.

I joined Tesla in July 2010 and was challenged with the task of figuring out how to create a retail customer experience that would build customer loyalty and drive demand for a car that was two years away from being manufactured. We didn’t have a Model S in our showrooms for two years and during that time it was impossible to do a test drive. All we could do was point to a photo of Model S on our showroom wall and tell people it was coming soon. 

People would ask, “How do I get one of those?” With a straight face, we would look them in the eye and say, “Well, give me $5,000 today and I’ll send you a car in a couple of years.” Amazingly, by the time we started delivering Model S, more than 10,000 people had given us $5,000 to reserve a car they’d never even seen.

Then, when it came time to start delivering those cars, the people with reservations had to configure them. But we didn’t ask them to come back into a showroom to try to upsell them on a bunch of extras. The groundbreaking decision we made was that all orders would be done online. That way, it doesn’t matter where you are, you can connect to the internet and order a Tesla. If you happen to be in a store, you go to the computer in the store, and you either open up an account or go to your existing account and design and order your car. If you’re not in a store, it’s done the exact same way. 

This accessible, completely transparent ordering process was genuinely radical because all other automotive companies had a dealership where their goal was to sell you what they had in inventory, whether you like the car they have or not. You could also expect them to haggle with you on your trade-in value and then negotiate with the finance team on your loan.

With Tesla, the power is all in the customer’s hands. There’s no haggling over price or trying to sell you a car someone else returned. Every car they sell is built specifically for its owner, to their exact specifications, without any human intervention in that ordering process. The first time you ever have to engage with somebody from Tesla is when you pick up your car at your local service center. 

Customer service transformation calls for new agent core competencies

Service transformation isn’t just a customer experience shift — it changes the agent’s role and core competencies too. 

For example, when we first opened the new Tesla stores, we didn’t hire experienced car salespeople. Instead, we simply focused on hiring passionate and enthusiastic people. We hired people from Nordstrom, Kenneth Cole, and Apple who were inspired to be part of something different and exciting. Some only worked 20 hours a week at Tesla, but they were there because they wanted to educate people about the potential of electric vehicles and they enjoyed the surprise of telling people that what they were looking at was actually an electric car.

There were no commissions. Everybody worked as a team. We created a cool store that enticed people to come in. And once they came in, the enthusiastic staff would talk to them about electric vehicles, saving the planet, and migrating humanity to sustainable energy. It was not an emphasis on closing a sale. It was about establishing rapport and engaging with the customer however and whenever they wanted to. It was definitely not something your traditional car salesperson would have been suited to do.

The leadership imperative to create truly new customer experiences

I was very fortunate in both of these situations that the leaders — Steve Jobs and Elon Musk — both had a bold, big vision of where they wanted to go and what they wanted to do, and it was definitely not to do what everybody else was doing.

Unfortunately for many service leaders today with a vision for a radically new customer experience, C-Level executives require a lot of information before making a decision. Before they commit to any service transformation, they need lots of data. Then they need to analyze that data, and then they generally want even more data. But if you’re setting out to do something radically different, you don’t have mounds of data that can be analyzed again and again to predict your 90-day and 12-month likely outcomes. It takes a leap of faith that what you’re doing will be good for the customer, which in turn will be good for the company and long-term results.

Leaders who want to create memorable customer experiences have to be OK with making decisions without having 100% of the data. At both Apple and Tesla, executives made their decisions with basic input, with the touchstone of “What’s the right thing to do from the customer standpoint? What’s the right thing to do?” 

For Apple, with its stores, the ultimate goal was to let people know they’re important, they’ll be taken care of, and we’re available to help. We felt if we delivered that, good things would happen from a business perspective. And they did, starting with the impact the store had on the launch of the iPod. Even with its catchy “1,000 songs in your pocket” advertising, the iPod wouldn’t have become the success it was if we had just set it on a shelf at a big box electronics reseller. The experience in the stores is what made it successful.

Move beyond incremental service improvements to deliver breakthrough experiences

I have been incredibly lucky throughout my career and have gotten a lot done by pushing people to do things that they didn’t always think were a good idea. I knew that if I pushed them really hard, I could accomplish a lot. But, eventually, I realized this approach to managing my teams was completely wrong. 

Instead, what you do is you hire the best people. You then inspire them to understand what needs to be done and why it’s important, and then step back and enable them to do their best work. It’s basically hire, inspire and get out of their way. There’s no limit to what a strong, inspired team can do.

The best leaders today know they don’t have to come up with all the great ideas. They don’t have to be the ones who create every innovation. They don’t have to focus exclusively on improving their day-to-day work. Yes, the daily work is still important, but as a leader, it’s your job to look at what could be possible. If you hire the right team, inspire them the right way, and then enable them to do their best work, you set your company up for runaway success.