The Ritz-Carlton’s customer service is legendary, but how do they achieve it? One way is by empowering and training their employees to solve customer issues in real time. It is a customer service model that few hotels follow.
However, if you’re one of their customers, it’s good news, because the Ritz-Carlton will spend $2,000 to make you happy.
Known as one of the gold standards in hospitality, the Ritz Carlton’s customer service has been rightly studied and dissected over the years in an attempt to find the “secret” Ritz sauce. Entire books have been written just on the Ritz’s customer service.
One aspect of the Ritz’s service that has received a lot of coverage is the fact that the Ritz empowers its employees to spend up to $2,000 to solve customer problems without asking for a manager. Yes, you read that right, Ritz-Carlton employees can spend up to $2,000 per incident, not per year, to rescue a guest experience.
What is interesting about this famous number is that the majority of authors who mention it leave out an equally vital statistic. You see, the $2,000 is always mentioned in the context of how important employee empowerment is to great customer service—as if empowering employees to excess is the key to a profitable and successful business.
What the authors often leave out is this: the average Ritz-Carlton customer will spend $250,000 with the Ritz over their lifetime.
Like any smart, profitable organization, the Ritz did not pull the $2,000 figure out of thin air. The Ritz has studied its customer base and understands the value of the relationship with their customers and what they are willing to do to maintain those relationships.
When you take into account that the customer lifetime value of a Ritz-Carlton customer is a quarter million dollars, the $2,000 does not seem so hard to conceive.
The Ritz-Carlton values relationships over transactions, and for anyone who has ever stayed at one of their properties, that is no secret.
Knowing that your business probably doesn’t have a $2,000 per-incident budget for service recovery, it’s important to focus on how your business can use the same principle to your advantage.
It begins first by embracing the idea of a relational approach over a transactional approach.
When organizations approach their customers relationally, they do not attempt to extract every possible advantage from each transaction. They empower their teams to make things right in the moment, even it it results in an unprofitable interaction at the time.
Customer service training is crucial to the Ritz-Carlton’s process. Empowering employees with a large budget is not enough. Employees must be trained on how to communicate with customers and how to use that empowerment to create powerful customer service moments.
In the end, like the Ritz-Carlton, organizations who are dedicated to customer service know that in the long run they will be rewarded with loyalty when they prioritize customer relations over individual transactions
For more on the $2,000 rule, check out this follow-up video:
To learn more about employee empowerment, make sure to check out our Ultimate Starter Guide to Employee Empowerment.
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