Create Elated Customers for Life by Delivering Surprise & Delight Customer Service

Surprise & Delight Customer Service

Surprise & Delight Customer Service

The following is what you will learn by reading this blog:

  1. The main business capabilities for a company to possess to deliver superb and legendary customer service

  2. The most critical capabilities to develop in order to enable your front-line employees to be able to deliver excellent customer service

  3. The introduction of the concept and definition of Surprise & Delight Customer Service and how the world’s top customer service companies deliver this consistently

  4. Examples of the best Surprise & Delight Customer Service that I have personally encountered and how they are linked to the critical components listed in #2 above

  5. Top customer service companies considered to be world-class in delivering Surprise & Delight Customer Service

  6. The programs you need to implement so that your company can deliver consistent Surprise & Delight Customer Service to your customers


SECTION 1: Benefits of having elated, “surprised and delighted”, customers:

The research I have conducted indicates that truly elated customers, who are consistently surprised by the level of service they receive from your company, go on to tell multiple friends, relatives, acquaintances, co-workers about your company, products/services and stories of their great experiences interacting with your company. This grass roots customer advocacy transforms your customers from just your customers into infectious and 24×7 adjunct company sales and marketing agents, convincing people they interact with to buy from your company.

Additional research also shows that this customer transformation does not come when they rate your company and service as merely “Satisfied” but rather only when a customer is elated and rates your customer service with a 7 , or “Extremely satisfied”, rating as shown here:

Sample Customer Service Ratings

Sample Customer Service Ratings


The following graph illustrates the correlation between the rating provided by a customer on their customer service and the strength of their company advocacy and likeliness to recommend a company.

Correlation between Customer Satisfaction Ratings and the Likeliness to Recommend/Advocate for a Company

Correlation between Customer Satisfaction Ratings and the Likeliness to Recommend/Advocate for a Company


SECTION 2: Capabilities required to deliver exceptional “surprise and delight” customer service:

There are more than 10 dimensions in developing and delivering customer service excellence including the following:

  1. Development of a customer-oriented vision and strategy.

  2. Development of service excellence standards that are institutionalized across the enterprise.

  3. Development and maintenance of a company culture that drives team unity and focus as well as customer service excellence and a mindset of customers first.

  4. Implementation of a customer errors, omissions and anomaly recovery processes.

  5. Implementation of a customer experience and customer service excellence measurement system.

  6. Inclusion of customers in helping define and develop the final customer management capabilities, content, methods, etc.

  7. Implementation of a customer bill of rights and non-negotiable customer standards.

  8. Development of customer emotional connection points based on customer journeys.

  9. Development of a set of hiring criteria and standards to be able to identify and source employees who have a predisposition for delivering exceptional customer service (friendly, outgoing, personable, believes in helping others, rates high on empathy, etc.)

  10. Deployment of training that ensures front-line employees are customer service excellence certified so that they can deliver world-class customer first service.

  11. Delivery of surprise and delight (S&D) customer service & experience through the development of S&D customer processes.

While all of the above are important I feel that the last three are of critical importance in making customers consistently extremely satisfied.  In the next section we will cover the definition of surprise and delight customer service and share real examples of its delivery across many service-related industries.


SECTION 3 – Surprise & Delight definition, examples:

Surprise and delight customer service is consistently going well above and beyond customer expectations such that customers feel both surprised and delighted by their treatment & level of service by your company.

Surprise & Delight Customer Service

Surprise & Delight Customer Service

Here are some examples of where I have personally encountered surprise & delight customer service:


1) Hotels:

A) High Peaks Resort, Lake Placid, NY: I recently checked into the High Peaks Resort in the Adirondack Mountains during the time of my birthday.  The front desk has a champagne reception for all incoming guests. When we were offered champagne, my wife told them that we were celebrating my birthday.  The attendant responded by saying, “we will take care of it” and took the glasses away. I said to my wife, “that was confusing as they said we will take care of it” and then promptly took our glasses from us.   We got to our room shortly thereafter and heard a knock on the door. It was a service attendant with a bottle of champagne and a personalized birthday card signed by the front desk staff. Talk about surprise and delight customer service!! We were so impressed! Obviously, this resort embraces and understands the importance of S&DCS as described in #11 below.

  1. Delivery of surprise and delight (S&D) customer service & experience through the development of S&D customer processes

Here are the thoughts and emotions I recorded just after this superb treatment by the High Peaks Resort:

  1. They really care about their customers.

  2. This hotel really goes out of their way to make their customer’s stay memorable.

  3. They know how to make a customer smile.

  4. That just made my day.

Bottom line, I felt emotionally connected to the hotel and its employees following this treatment and felt like it was in business to make their customers happy vs. merely making $$$.

High Peaks Resort, Lake Placid NY

High Peaks Resort, Lake Placid NY


As a global consultant I have had my share of extended stays at Marriott hotels. Here are a couple of surprise and delight stories that I have always remembered:

B) Marriott Shelton, CT.   I stayed at the Shelton, CT Marriott for nearly 8 months, typically staying from Sunday to Friday. When the hotel wasn’t busy for the weekend, they blocked out my room for reservations and let me keep many of my belongings in my room so I didn’t have to pack & unpack each week and could feel at home upon returning.  While away, they would gather all my dirty clothes for dry cleaning and have them hanging in my room closet upon my return.  On my last evening at the hotel the hotel staff threw me a surprise farewell party! They paid for everything – dinner, drinks, etc.  Talk about taking care of the customer with true surprise and delight service! I am willing to bet this instance of the delivery of S&DCS came as a result of both 9 & 10 on our list of needed customer service excellence capabilities:

  1. Development of a set of hiring criteria and standards to be able to identify and source employees who have a predisposition for delivering exceptional customer service (friendly, outgoing, personable, believes in helping others, rates high on empathy, etc.)

  2. Deployment of training that ensures front-line employees are customer service excellence certified so that they can deliver world-class customer first service.

Here are the thoughts and emotions I recorded just after this superb treatment by the Shelton Marriott:

  1. I’d recommend this hotel to anybody.

  2. They really appreciate a customer’s business.

  3. I have never been treated so well by a hotel.

  4. What a welcoming place to stay – they made me feel at home!

C) Marriott Princeton, Princeton NJ: Another extended stay required me to stay at the Princeton, NJ Marriott for 7 months.  One evening I was entertaining clients at the bar after a day of numerous long meetings. One client was fond of Remy Martin King Louis XIII cognac which sold for about $145 per shot at the time. A tradition of Marriott was, that if you had the last shot from the bottle, they give you the bottle, made from Baccarat crystal.   My client ordered three shots over the course of several hours which emptied the bottle. The bartender, being new, said he never heard of giving such an expensive bottle away and refused to provide the bottle to my client. I complained to no avail as the bartender refused to budge. The next morning while dressing, I heard a knock at the door, and it was the hotel GM with the empty bottle of King Louis XIII as well an additional half full bottle. He asked me to accept his sincere apology for a relatively new and untrained bartender who was filling in the previous evening and promptly gave me the two bottles. Needless to say, my client was thrilled by this surprise and delight turn of customer service events!! I am willing to bet this instance of the delivery of S&DCS also came as a result of both 9 & 10 on our list of needed customer service excellence capabilities:

  1. Development of a set of hiring criteria and standards to be able to identify and source employees who have a predisposition for delivering exceptional customer service (friendly, outgoing, personable, believes in helping others, rates high on empathy, etc.)

  2. Deployment of training that ensures front-line employees are customer service excellence certified so that they can deliver world-class customer first service

Here are the thoughts and emotions I recorded just after this superb treatment by the Princeton Marriott at Forrestal Village:

  1. That general manager is a class act and knows how to run a hotel.

  2. I was shocked that my disappointment wasn’t the end of the story and it turned into a positive event I will talk about for years.

  3. It was refreshing that they admitted a mistake and then went above and beyond to make it right.

  4. Wow! Talk about doing a 360 and turning a disgruntled customer into a surprised and delighted one!

Marriott Hotel, Princeton, NJ

Marriott Hotel, Princeton, NJ


C) Marriott Philadelphia West, Conshohocken, PA (Philadelphia suburb): I was a senior executive at a consulting company in Conshohocken and traveled into the area frequently. The first several times in the area I stayed in several different hotels trying to find one that I liked. Since I was previously a Marriott top tier rewards member, I decided to give the Marriott Philadelphia West in Conshohocken, PA a try. The first time I stayed, I didn’t use the concierge lounge.  On my second visit, I did use the lounge in the evening and I fell in love with the place because of one incredible (a 1 in 1,000,000 person) great human being and Marriott employee.

The person’s name is Luigi and he not only manages the concierge lounge, he IS the concierge lounge and is the epitome of what a customer should experience at every concierge lounge across the globe. Luigi has been the manager of the lounge for many years and when possible, I go out of my way to stay at this hotel due because of his level of exceptional service.  Luigi always remembers my name, my wife’s name (even though he never met her), my favorite drink, food likes, dislikes, etc. I could be away from the hotel for many months and yet he always provides a warm friendly welcome” “Hello Mr. Jeffes – so nice to see you again!!” as he gives me a hug. He will tell you about all the appetizers and desserts being served that evening and then suggests some favorites. He entertains his guests by playing movies during movie night in the lounge. When he first introduced movie nights, he used his own money to provide the DVDs. Luigi clearly goes above and beyond and I can recall many surprise and delight moments where Luigi delivered superb customer service to me and many other guests. When you’re a road warrior like I was at the time, it’s the little things that make all the difference.  Seeing Luigi who makes a Marriott feel like your home and provides a relaxing haven when traveling, always puts a smile on my face. Luigi has surprise and delight customer service ingrained in his DNA and I have lost count of the number of times I have encountered this from him. One occasion stands out more than others in that I had an unusually dreadful day with many things not going as planned. I started early this day and worked unusually longer into the evening. I hadn’t slept much the night before and I was tired, hungry and feeling the pressure of the awful day I just had. When I went into Luigi’s concierge lounge, Luigi immediately picked up on my unusually sour mood as I must not have greeted him in the usual upbeat manner. He immediately sprung into gear, taking the following actions:

  1. Unsolicited, inquired of the front desk if there were any upgrades to a suite for me that evening.

  2. Asked if he could order my dinner to have it sent right to the lounge or my room.

  3. Handed me my favorite drink without asking.

  4. Since the lounge was very empty that night, asked me what I wanted on the television so I could unwind.

  5. Got me a hot towel to wipe my face and relax.

As a result, I started to immediately forget about the crappy day I had just had and started to feel myself relax. After about 30-45 minutes I was back to my old happy self with the experience of a bad day a distant memory.

What would happen to your service-oriented business if you had a Luigi? Your business volume and customer following would explode! Your customer loyalty would increase and customer service would become a distinct and immeasurable competitive advantage.


Luigi is a natural at delivering exceptional customer service and this 1 in 1,000,000 person and service comes as a result of Marriott getting lucky enough to hire someone so exceptional. How do I know? I have stayed at Marriott properties and other hotels across the US and have not met anyone that even comes close to delivering the level of service that Luigi does.

By implementing #9 on our customer service excellence capability list, you will have much better odds of hiring someone comparable to Luigi:

  1. Development of a set of hiring criteria and standards to be able to identify and source employees who have a predisposition for delivering exceptional customer service (friendly, outgoing, personable, believes in helping others, rates high on empathy, etc.)

Here are the thoughts and emotions I recorded when it comes to Luigi and his level of service:

  1. I’d drive a long distance out of my way to spend a relaxing evening with Luigi.

  2. Luigi is a 1 in a 1,000,000 in terms of delivering exceptional customer service.

  3. Marriott is so lucky to have Luigi working for them.

  4. If Luigi were to become the head of training for all Marriott service employees, Marriott would blow away their competition in terms of delivering exceptional S&D customer service.

I won’t list the thoughts and emotions for the remainder of my S&D examples, but the point is that delivering exceptional customer service delivers a lasting and positive emotional connection between the brand, product/service and with the customer.

Luigi, Concierge Manager at the Marriott Philadelphia West Hotel

Luigi, Concierge Manager at the Marriott Philadelphia West Hotel


  1. Ritz-Carlton, Battery Park, NYC. Ritz-Carlton is one of the top models for superior customer service world-wide and was a client in the past. Ritz-Carlton trains all of its employees to spot a customer opportunity in that they are trained to listen to and record each customer’s individual needs, issues, preferences, wants, wishes, etc. Employees are then empowered to deliver the type of service the customer wants without having to ask.


A great example is upon arriving at the Ritz-Carlton Battery Park, NYC a number of years ago, I remember casually saying to the bellman, among other topics, that I loved the view of lower Manhattan and that I didn’t eat on the plane.  I had just flown in from San Francisco. Upon checking in, the woman at the front desk smiled and called me by name before I mentioned it, told me that she arranged a high room with a beautiful view of lower Manhattan and the Statue of Liberty and said she arranged for a snack to be waiting for me free of charge when I arrived at my room.  She said, “I heard that you didn’t have a chance to eat on your way here”. All of this was noted by the bellman and passed onto the front desk without my knowledge to deliver Surprise and Delight Customer Service upon check-in, something Ritz-Carlton is legendary at providing. I would consider Ritz-Carlton the platinum standard for delivering S&DCS as they possess and effectively deploy all 11 of the customer service excellence capabilities listed above. Their excellent service is not by luck or chance; it is ingrained in their culture and at the center of Ritz-Carton’s core values, policies and processes.


2) Restaurants:

A) Water’ s Edge Lighthouse, Schenectady, NY:

Water’s Edge Light House on the Mohawk River, Schenectady NY

Water’s Edge Light House on the Mohawk River, Schenectady NY

There are two local restaurants that my wife and I have frequented that have world-class professionals working at them. The first is the Water’s Edge Lighthouse in Schenectady, NY who employs a gentleman named Greg.  We had originally met Greg at another restaurant that sadly closed. Greg is the type of individual that remembers your name when you arrive, makes you feel at home when he is serving you, makes conversation about you and your family and takes every chance to ensure you are having a great experience. He gets to know his all of his many 100’s of customers by name and goes out of his way to anticipate and suggest my next need as I am in the process of thinking about it. My wife and I now call this level of customer service “the Greg standard”.  One time, we arrived on a Saturday night, having made a reservation earlier in the week.  Somehow the reservation had been misplaced and the restaurant was full.  When Greg learned of the situation, he said to me, “don’t worry we have you covered” and then made room for us in very short order when the place was absolutely packed. Talk about surprise and delight customer service. There was zero questioning of me about whether I had forgotten to make a reservation, which I hadn’t since I recorded the name of the person who confirmed and the time of day when I called).  Greg and the team just made it right.

Like Luigi, you would be lucky to hire someone like Greg, but you’ll need a lot of luck as he too, is one in a million.  By implementing #9 on our customer service excellence capability list, you will have much better odds of hiring someone comparable to Greg:

  1. Development of a set of hiring criteria and standards to be able to identify and source employees who have a predisposition for delivering exceptional customer service (friendly, outgoing, personable, believes in helping others, rates high on empathy, etc.)

Greg with the Manager of Waters Edge Lighthouse, Joey

Greg (left) with the Manager of Waters Edge Lighthouse, Joey


B) Mario’s New Lebanon, NY:

Mario’s Restaurant, New Lebanon, NY

Mario’s Restaurant, New Lebanon, NY

Sarah from Mario’s in New Lebanon, NY is another person who stands out as meeting “the Greg Standard” with her warmth, professionalism and exceptional service.  Sarah gets to know each of her customer’s names, likes, food and drink preferences.  She remembers the new wine that you tasted the last time you were in and makes everyone feel special.  We sometimes don’t even have to look at the menu as she will recommend a special that she thinks we will like or asks if we are ordering one of our known favorites.  At peak hours, Sarah handles customer requests with a sense of calm and professionalism. When she is serving numerous drinks, dinners and taking orders in person and via phone, she always finds time to smile and accommodate requests, chat, ask questions, etc.

My surprise and delight example from Sarah came when I atypically came in without a reservation due to a change in schedule.  Sarah looked at me and said they were full and then said, if you can wait a minute, I’ll see what I can do. Sarah did her magic and creatively asked the customers if they could move down to accommodate another guest which they all surprisingly and enthusiastically did.  Sarah has a “following” that enjoy dining at the bar when she is working.  Due to her pleasant demeanor and professionalism, I was able to get a spot for dinner, and even though the bar had squeezed in one more person, Sarah handled everything without a hitch and made me feel welcome.  Over the years, customers have shared with me that one of the main reasons they go to Mario’s is because of Sarah and the great food. Just like Luigi does for the Marriott Philadelphia West and Greg does for the Water’s Edge Lighthouse, Sarah’s presence adds to the overall experience of enjoying a delicious meal in a great atmosphere at Mario’s. Luigi, Greg and Sarah are all 1 in a 1,000,000 service professionals who are naturals at surprise and delight customer service and you’d be extremely lucky to hire someone like them.

Sarah from Mario’s Restaurant

Sarah from Mario’s Restaurant


3) Retail:

 A) Amazon:


There is a now famous story brought to light by the New York Times titled “Put Buyers First? What a Concept”. It details how a customer, by no fault of their own, didn’t receive a shipment of a PlayStation for his son just before the holidays. Here is an excerpt from this article and a potentially disastrous situation was turned into a surprise and delight customer service moment: “It was early in the morning, and I had awoken with the sudden, sinking realization that a present I had bought for one of my sons hadn’t yet arrived. It wasn’t just any present either; it was a PlayStation 3, a $500 item, and a gift, I happened to know from my sources, that he was hoping for. Like most things I buy online, the PlayStation had come from So I went to the site and tracked the package– something, thankfully, that is a snap to do on Amazon. What I saw made my heart sink: the package had not only been shipped, it had been delivered to my apartment building days earlier and signed for by one of my neighbors. I knocked on my neighbor’s door, and asked if she still had the PlayStation. No, she said; after signing for it, she had put it downstairs in the hallway.

Nonetheless, I got on the phone with an Amazon customer service representative, and explained what had happened: the PlayStation had been shipped, delivered and signed for. It just didn’t wind up in my hands. Would Amazon send me a replacement? In my heart of hearts, I knew I didn’t have a leg to stand on. I was pleading for mercy.

I shudder to think how this entreaty would have gone over at, say, Apple, where customer service is an oxymoron. But the Amazon customer service guy didn’t blink. After assuring himself that I had never actually touched or seen the PlayStation, he had a replacement on the way before the day was out. It arrived on Christmas Eve. Amazon didn’t even charge me for the shipping. My son was very happy. So, of course, was I.”  Source:


B) Zappos:




Right in-line with this blog article, Zappos is an e-commerce company whose #1 core value is to “Deliver WOW Through Service”.  In addition, in keeping with a customer first mantra, CEO Tomy Hsich states that Zappos is “a service company that just happens to sell shoes.” Here is a story I read while researching this article that definitely applies to Surprise and Delight Customer Service.  “Recently, a newly-married couple were packing up their belongings in preparation for moving. The husband packed his wife’s jewelry inside one of her purses, and packed the purse inside what he thought was a spare Zappos box. The wife, it turns out, was intending to return that purse to Zappos using that very box. Which she then does, having no idea that inside the purse now were several thousand dollars of her jewelry!

When the couple arrives at their new home and starts to unpack, bedlam breaks out as the wife figures out what has happened and why her jewelry is missing. The rep she reaches at Zappos decides to reroute the box directly to his desk, but once it arrives, the rep fears for the safety of the valuables if he were to ship them, and purchases a plane ticket to hand-deliver the package himself.  When he arrives, the incredibly grateful couple invite him in for dinner. Now they’re customers for life, as you can imagine.” Source:


Section 4: Top Surprise & Delight Delivery Companies:


Here is a list of several larger companies I consider to be at the top of their game and world-class in delivering surprise and delight customer service:

  1. Ritz-Carlton (consulting client)

  2. Marriott (consulting client)

  3. Zappos

  4. Amazon

  5. Southwest Airlines (consulting client)

  6. American Express (consulting client, 4 different projects)

  7. Costco

  8. Chic-Fil-A

  9. Wegmans Food Markets

  10. Publix

  11. Apple (consulting client)

  12. USAA Insurance


Section 5: How to implement Surprise & Delight Customer Service for your company or organization


How do companies like Amazon Ritz-Carlton and Zappos consistently deliver exceptional or legendary levels of customer service?  Do they rely on being lucky enough to hire the 1 in 1,000,000’s like Luigi from Marriott Philadelphia West or Greg from the Waters Edge Lighthouse or Sarah from Mario’s above, or do they possess something else, like a secret sauce to deliver this type of amazing customer service? Having consulted for Ritz-Carlton in the past, I know that many follow a similar 5 step process detailed below.

Step 1:  Map your customer journeys:


Leveraging an integrated team of process experts, customer service and front line employees, map the various ways customers journey through an experience with your company. Examples include:

  1. Customer prospect, exploring your potential services and/or products

  2. First time website visitor, buyer.

  3. Repeat or renewal website visits.

  4. Existing customer, new product and/or service purchase.

  5. Customer returns, complaints or warranty claims.

  6. Service termination or account closure.

Here is a chart that illustrates examples of these various types of journeys:


Customer Experience Journey Sample, Example

Customer Experience Journey Sample, with Measurements


Step 2:  LISTEN TO AND CULTIVATE meaningful and valuable customer needs, preferences, etc.:


In parallel with mapping you customer experience journeys, develop a program that continually gathers customer insights into what is most important and meaningful for each individual customer. A gift card could be given to any customer, but to know that customer A likes Starbucks, and customer B would love a Amazon Kindle gift card and customer C would value an ITunes gift card goes a long way to demonstrate that you are paying attention.  It also demonstrates that you are in tune with customer interests and care about them as individuals.  These 1-to-1, personalized surprise & delight moments build loyalty and  make a customer feel valued.


Step 3:  Map customer S&D opportunities along your customer journeys:

Once you have determined and documented the majority of your important customer journeys and determined what is meaningful and valuable to each of your customer’s preferences, start overlaying customer surprise & delight opportunities along these journeys. Here is a real example of how a client mapped a surprise a delight moment for high value customer issues. The key is to develop business rules that need to be satisfied in order for that surprise and delight moment to be fulfilled. In this case, a high value customer whose order was misplaced and later corrected once error was discovered, receives a gift as an apology for the error.

Customer Experience Journey with S&D Opportunity Process Example

Customer Experience Journey with S&D Opportunity Process Example


Example: Value of item lost $500. High value customer A would receive a $100 Starbucks gift card, customer B would receive a $100 Amazon gift card and customer C would receive a $100 ITunes gift card.


Step 4:  Develop & deploy customer S&D policies & procedures:


The next step is to distill all of the surprise & delight opportunities mapped along customer journeys into a set of front-line employee policies and procedures. Here are a couple of examples of each:


  • We will compensate high value (high value is client specific) customers for errors and anomalies that are of no fault of their own.

  • Front-line employees shall be responsible and rewarded for turning satisfied customers into delighted, loyal customers by empowering them to easily and quickly deliver surprise & delight moments.

  • Each front-line employee shall undergo front-line customer service certification training to ensure they are prepared and equipped to delivery legendary customer service via surprise and delight moments, customer needs cultivation, etc.

  • Cultivate and reward the best employee surprise & delight customer stories from each quarter and showcase and provide rewards for ‘the best of the best’ at the end of the year.


  • If a high value customer is calling to complain about a missing shipment of high value that was lost of no fault of their own, we will compensate with an item of meaningful value to that customer worth 20-25% of the missing item.

  • Prior to checking into the hotel, we will check the customer preference and need profile on record to ensure all needs are met during the upcoming stay.

  • Employees are to document all cultivated customer preference insights during their current visit in the global customer preference database in order better serve the customer’s individual likes, preferences, needs, etc. Details on how to do this are documented in the global customer preference database procedures manual and trained on during front-line employee customer service certification.

Step 5:  Develop a set of S&D hiring standards & train on S&D policies, procedures, etc.

The last step is to ensure you are hiring the best employees that they have the highest Exceptional Customer Service Aptitude (ECSA). In addition, you need to continually train and certify your employees on customer service policies, procedures, processes and how to consistently deliver exceptional, surprise & delight customer service.

1) Screen for the Best:

To hire those with the highest ECSA, you need to develop a customer service screening questionnaire as I have done for many clients to be able to consistently hire those who are predisposed at delivering great customer service and screen out those who are not. By doing this, you are screening employee candidates to find and hire only those who posses the characteristics that are most like Luigi, Greg and Sarah who are naturals at delivering exceptional S&D service.


2) Train to be the Best, Continually Improve:

The next sub-step is to develop a set of high quality customer service training materials and processes to certify your front-line employees on exceptional customer service delivery policies and procedures. All new employees should be certified via the training and all existing employees should have to re-certify to ensure adherence to the latest exceptional customer service policies and procedures. Ongoing training for all employees will help ensure a high level of customer service is being consistently delivered.



You can either hope for good luck in the hiring of natural and exceptional customer service employees that are 1 in 1,000,000 or you can develop a holistic Customer Service Excellence program with multiple dimensions and capabilities such that all employees perform to the level of a Sarah, Greg and Luigi. By hiring, training and enabling your front-line employees to consistently deliver surprise and delight moments for your customers, your company will develop a cult-like customer following similar to Zappos, Amazon and Ritz-Carlton.  Your customers will remain fiercely loyal and will actively advocate to increase your revenue, margins and brand reputation. With all this being true, there is no excuse to not actively work on creating the best surprise & delight customer program possible?!

If your organization is seeking experienced assistance in deploying legendary levels of “surprise and delight” customer service, then give me a call or e-mail me at 518-339-5857 or

Lastly, this is just one article of over 50 articles I have written on Customer strategy, customer experience, CRM, marketing, product management, competitive intelligence, corporate innovation, change management – all of which I have significant experience in delivering for Fortune 500 companies.  In fact, my blog is now followed by nearly 121,000 world-wide and was just named one of the top 100 CRM blogs on the planet by Feedspot, alongside, Infor, Microsoft, SAS, etc. – Reference this informative site here:

The 80/20 Customer Profitability Rule

Develop intelligent customer service & customer management programs based on customer value insights…

Has your business ever performed an analysis of your customer base to determine any of the following:

1)      Which customers are frequent visitors and have the greatest repeat business?

2)      Which ones rarely do business with your company?

3)      Which ones are the most valuable and profitable to your company?

If you haven’t then you really don’t have the insights necessary to really develop an effective customer service, customer management and/or loyalty program.  In performing analytics and customer analysis for nearly 10% of the Fortune 500 companies in the United States, I have found a very revealing and astonishing pattern (rule) in this customer analysis that holds true company after company.  The pattern is as follows:

80% of all company profits are derived from ~20% of your customers

Take the chart below (Chart 1) from one of the top US banks that shows 20% of their customers are responsible for 82% of their profitability and that a full 47% of customers are actually unprofitable and not worth having as customer as each transaction costs the bank more than it is worth (each customer interaction/transaction actually drives the bank further away from profitability) {Click on Chart for a larger/clearer image}:

80% of all company profits are derived from ~20% of your customers

80% of all company profits are derived from ~20% of your customers

When I presented this customer profitability analysis to the bank, the bank executives were amazed at the results and of the customer profitability distribution. (Note – The deciles were developed using a SAS generated RFM analytics model whereby Recency (How recent customer have visited/purchased), Frequency (How frequently customers have visited/purchased and when they visited/purchased) and Monetary spend (How much they spend and on what types of products/services they spent their $$ on). The RFM model was then used as input into a profitability model, using actual profit data for each product/service/customer using a unique customer id to match the profit data to the RFM score.)Why are these insights and analytics so important and what might the bank or any other business do to manage customer relationships more effectively?  These insights are key in developing a customer relationship management (CRM) and loyalty program that is tailored and specific to each customer group. 

Note: The 80/20 rule applies to companies that have higher transaction volumes, a diverse set of product & services and a heterogeneous customer base.

Ask yourself the following questions:

  1. Should your company treat your best and most profitable customers differently than other, less profitable customers?
  2. Should your company develop special customer programs so that the 20% most profitable customers are not lured away by competitors?
  3. Do you think your company’s most profitable and valuable customers want to be shown appreciation for their repeat and profitable business in a way that makes them feel welcome and special?
  4. Is it in your company’s best interest to want to develop strategies and programs that turn unprofitable customers into profitable or at least revenue neutral customers?

The answer to all four questions should be a resounding YES!

Armed with the above insights and analysis a company can start to architect customer intimacy and loyalty programs such as the following:

  1. Offer most profitable customer special discounts or accelerated loyalty rewards earning rates
  2. Conduct special top customer, by invite only, appreciation events
  3. Deliver occasional special top customer gifts or recognition when they interact with you in-person or on-line
  4. Invite your top 1-5% of customers to participate in an invite only customer advisory board or insights group event every year at an exciting destination where most or all expenses are paid for by your company
  5. Develop unprofitable customer management programs such that these customers become more profitable, cost less per company transaction and/or they are effectively ‘encouraged’ to migrate to competitors.

Take the same chart above and now overlay customer treatment programs to each customer decile and sub-segment (Chart 2) {Click on Chart for a larger/clearer image}

Effective Customer Management Programs Based on Profitability Insights

Effective Customer Management Programs Based on Profitability Insights

Even though decile #1 (10% of all customers) has been identified as the most valuable customer segment generating 65% of all company profits, the decile can then be further sub-segmented based on further profitability analysis/decomposition.  In this particular case:

  1. The top 5% of the top profitability decile customers generated 42% of all profits
  2. The remaining 5% of the top profitability decile customers generated 23% of profits

As shown in the ‘golden’ box (#1) above and below, these top tier customers should be given special access and special attention and made to feel totally appreciated and a partner of the company. The golden box also demonstrates the types of special programs you might want to provide to this top profitability group. It is of your utmost importance to do everything in your company’s power not to lose these most valuable/profitable customers. These suggested treatments are just a sample, but ones I have developed for many clients in the past, including top tier banks, retailers, life sciences companies, telecommunications providers, etc. {Click on Chart for a larger/clearer image}:

Top 5% of Customers Receive Platinum Plus Customer Programs

Top 5% of Customers Receive Platinum Plus Customer Programs

The next (Green) group of profitable customers highlighted in box #2 (below) can receive special treatment as well, but not quite the golden treatment as the most profitable 5%. These next valuable set of customers would still receive top customer treatment, but not quite the platinum access that the most valuable 5% would receive. You wouldn’t want to lose these valuable customers either, so their treatment would still be special, memorable and differentiated vs. your competitors. {Click on Chart for a larger/clearer image}:

Next Top Set of Customers Receive Top Treatment, but not Special Access, Handling Like the top 5% (Platinum) Group

Next Top Set of Customers Receive Top Treatment, but not Special Access, Handling Like the top 5% (Platinum) Group

The blue box (#3) in the chart below speaks to customer migration programs that incentivize customers to spend more, visit your company (physical or online) more, purchase higher value items, buy in bundles, etc. {Click on Chart for a larger/clearer image}:

Effective Customer Management Programs Effectively Transition Customers into More Valuable Customers Over Time

Effective Customer Management Programs Effectively Transition Customers into More Valuable Customers Over Time

One very effective way to do this is to develop what I call modeled incentives. In that, if a loyalty program is to be effective there should be an incentive for the customer to model the behavior to achieve the next loyalty reward level and the following must be present:

1)      Every customer group must know what they need to do to achieve the next loyalty rewards level

2)      Customers need to feel the next loyalty rewards level is significantly more valuable than their existing level

3)      There should be prestige and/or notoriety associated with achievement of the next loyalty rewards level so that customers feel privileged, special and differentiated from regular customers.

Lastly, the red box (#4) below speaks to customer management programs that need to either turn these unprofitable customers into profitable customers or find ways to reduce the cost to serve these unprofitable segments. Some strategies including limiting these customers to self-service, providing incentives to transact during off hours, incentivizing them to seek lower cost providers, etc. {Click on Chart for a larger/clearer image}:

Effective Customer Management Program Also Address Unprofitable Customers

Effective Customer Management Program Also Address Unprofitable Customers

The bottom line is that, through customer insights and analytics, you will find that not all customers are the same in terms of profitability (the 80/20 rule), therefore it makes no sense whatsoever to treat all customers the same. Through a robust customer insights program you will then be able to leverage these insights and develop a sophisticated and custom loyalty and retention program in order to accomplish the following:

  1. Develop break-away tier 1 (Platinum) loyalty programs that stand alone in the industry such that your top 1-5% most valuable customers would not even consider defecting to another provider
  2. Develop programs to retain your most profitable customers and make them want to remain a loyal customer
  3. Develop a loyalty migration path for customers to want to achieve the next loyalty rewards level (Silver, Gold, and Platinum) so that they simultaneously feel more recognized/special/connected to the company while providing your company great value/profits/monetary return.
  4. Develop programs to mitigate expenses when dealing with your least profitable customers (more self-service, helping them ‘discover’ lower cost competitors, offering more limited services, etc.) (the other 80%)
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