in Professional, Startup

What Hooters and Apple Genius Bars can teach us about Customer Service

Once upon a time I wanted to get in to MICA. After receiving an interview call, I decided to look up some alumni. Out of the many I sent friend requests to, only Siddharth Soni replied. We’ve been friends ever since.

Siddharth recently wrote a blog post asking “How much should customer service guys be paid?“. In the post, Sid says that marketing and sales professionals attract customers to a business but it is the customer service people who actually “fulfill the promise” and therefore, they deserve to be paid equally well. Here, he’s not talking of Customer Service as the guys at the call centre, but anyone engaged in the “delivery of the promise”. This could mean the lady at the front desk, the Relationship Manager at the bank or even the aircraft pilot.

My answer to “How much should a customer service person be paid?” is, “it depends“. What does it depend on? How integral is the Customer Service to the Customer Value Proposition.

Let me explain. You go to a small family owned restaurant close to your place for a quick meal. It’s a slow Tuesday afternoon and the owner says that no waiters are available, so it’s “self service”. Will you be disappointed and expect to pay less? I don’t think so. It’s more like “Fine, I’ll get my own grub from the counter, no issues”.


Now, let’s say you walk in to a Hooters and management informs you that there are no Girls available and it’s self-service. Would you expect to pay less?

Hooters Girls

These women aren't available to wait on you. Please serve yourself.

I would, because the Hooters Girls are an integral part of the experience at Hooters restaurant. In fact, for them, I’m ready to pay a premium price on the food. Why is this so? Because the value being promised by Hooters as stated in their Mission Statement is

We are committed to providing an environment of employee growth and development so that we can provide every guest a unique, entertaining dining experience in a fun and casual atmosphere delivered by attractive, vivacious Hooters Girls while making positive contributions to the communities in which we live.

As you can see, no Hooters Girls = “No complete value” as promised by them. My point is this, if the Customer Service (CS) being provided is an integral or a large part of the promised value, then the CS professionals will be paid relatively well. For example – in Management Consulting, the greatest amount of value is provided by consultants so they’re very highly paid. Take banks, where the highest paid professionals are the investment bankers that give awesome returns to investors.

Let’s get back to Siddharth.

Siddharth runs Mississippi Earrings, an online/offline store dedicated to earrings. As you’ll notice, earrings are products while all my previous examples have been of service based businesses. How much value then, can CS offer when customers are walking in for a product?

Apple Genius Bar - Image Courtesy http://www.flickr.com/photos/waynedixon/

To answer this, I would like to draw your attention, dear reader, to Apple’s Genius Bars. A Genius Bar is essentially a tech support centre inside every Apple Retail store where highly trained “Geniuses” help customers with any problems they might have. Quoting this Wall Street Journal article, stores have sales associates that are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems.

“Your job is to understand all of your customers’ needs—some of which they may not even realize they have,” one training manual says

And the result: Customer Growth Partners says that Best Buy makes about 1% profit margin (before taxes and excluding online sales), while Needham & Co. reports that Apple makes 26.9% profit margin from its stores.

Can Siddharth do the same with Customer Service at Mississippi Earrings? I think he can. In my opinion, the two most important steps are

  1. Train his staff extensively on the products available, the latest fashions, the different segments of customers who walk in and make sure they’re super helpful when it comes to giving advice about selecting earrings based on event, dress, personality, budget, use, etc.
  2. Communicate the availability of this extra value to the customers.
Now, the CS guys will be providing increased value to the customer,  consequently, driving up customer satisfaction (sometimes even delight), repeat walk-ins, retention and lifetime value of each patron to Mississippi Earrings. In this case, I agree, Customer Service professionals should be paid as much as or even more than marketing or sales people.

At the end of it all, it isn’t about Customer Service, Marketing or Sales or whatever. It’s about who’s making the paying customer walk-in. Marketing and Sales guys do that since it’s their Job Description. A just-another-CS person doesn’t do that. An exceptional CS person becomes a reason for customers to walk back in, just to hear his opinion or tap upon his knowledge.

Dear reader, if you feel this isn’t correct or have examples that go against what’s written in this post, please do put that down in the comments. I’d love to have a conversation with you on the same.

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  1. Well, firstly Its better to use the term consumer specially in services industry(anything but IT) where your customer is more often your direct consumer. And services is the only industry that mostly focuses on what you call customer satisfaction as its the most important factor which makes the consumer love you for your service.

    Nowadays, sales people indeed are the one responsible for customer satisfaction (here i am speaking of FMCG, IT, etc.). They get you the customer and make sure they receive services as expected and promised by the sales man.

    Without getting much into it, i would say its all about your job description. If a sales guy’s job is to bring in a customer, that is his job. A CS guy if at all he is there his job is to make sure the customer is satisfied. CS guy’s performance is little difficult to measure on a daily basis but the sales figure would be an outcome of combined efforts of the sales guy and the CS guy.

    Now because it isn’t very easy to measure CS’s performance, most companies now a days have merged this responsibility into sales guys’ JD at work.


    • Praveen, I feel that the organisation as a whole must be able to clearly define and demarcate the jobs but also introduce “Systems Thinking”, that is, how different components come together to produce the whole.

      Marketing/Sales should understand that false promises don’t work, while CS should ensure that a customer has the best possible experience.
      Deswal recently posted..How much should Customer Service be paid?My Profile

  2. Who exactly are the customer service people that you are talking about? An investment banker is a part of customer service. In fact, and this is more true for the service industry, everyone is the part of customer service. “sales and marketing people……”, if sales people are not a part of customer service, then who is?

    Secondly, the compensation of the customer service people is not at all dependent on how important they are to the customer value proposition. How else would you explain a call center guy being paid more than a pizza delivery boy? Let us not get away from the basics because that is where most of the answers lie. A simple answer to your question, without going into hooters and apples would be,”how much one should be paid is simply a function of supply and demand of human resources with the desired skill set.” Easy to understand is that the skill set being talked about here can range from common sense, language skills, specially acquired skills, looks and size of your boobs (since you cannot stop taking about hooters).

    BestBuy and apple is probably apples and oranges. You just cannot compare the profit margins of two organizations that are poles apart in their business. BestBuy is a broker, Apple sells its own products. The higher profit margins of Apple are due to factors you know very well. That it still has very high margins (compared to a 5% of dell) is owing to factors other than customer service. According to me, the geniuses play a small part in that (the same products are bought on online stores, without the geniuses, at even higher margins for apple).