2011 Golden Service Awards
Those Decisive Five Seconds
Taiwanese consumers were given the chance by CommonWealth Magazine to evaluate their favorite service brands for the first time. The winners were companies giving customers a deeper level of service.
Those Decisive Five SecondsBy Yueh-lin Ma
From CommonWealth Magazine (vol. 477 )
Tokyo. On the 12th floor of the Takashimaya Department Store in the bustling Shinjuku district, two young Japanese women, Miss Fujii and Miss Yoshikawa, have been waiting to get into a crowded restaurant for more than an hour.
"The line was even longer last time!" Fujii says with a laugh, staring at the glowing red and white sign of the famous restaurant headquartered in Taiwan, Din Tai Fung, as if to say, "No matter how long the wait, it's worth it."
Shanghai. In the Ascendas Plaza on Tianyaoqiao Road in Xujiahui district, Taiwan-based convenience store operators President Chain Store Corp. and Taiwan FamilyMart Co., Ltd. have outlets facing each other, and they are making an impact. Office workers are no longer seen holding traditional clay oven sesame rolls stuffed with fried dough sticks as they head to work. Instead, they have with them a City Cafe coffee or a carton of Family Mart sesame soymilk, symbolic of the way Taiwanese-style convenience store services have changed the tastes of China's newly fashion-conscious cities.
Taipei. The Regent Taipei on Zhongshan North Road has always been known for its elegant and pleasant atmosphere, but Steven Pan, the chairman of the Regent's parent company, Formosa International Hotels Corporation (FIHC), cannot hide his anxiety.
"We need international-class talent," he says.
After Pan bought the Regent luxury hotel brand last year, the company's office at the Regent became the central nervous system for the management of 17 five-star properties around the world. In the middle of July, FIHC announced a major talent recruitment plan, declaring that it was searching for 100 successors.
From market competition to the pursuit of talent, Taiwan's service businesses stand at a pivotal crossroads the likes of which they have never seen before.
Acer Inc. founder Stan Shih, known as the "godfather of Taiwanese branding," has long observed Taiwan's economic development, and he believes that there will be "a thousand times more opportunities" for the country's service sector but also "a hundred times more challenges" to overcome.
The opportunities are expected to come primarily from an expanding market. Taiwan's market of 23 million people, which has often inhibited the development of the service sector, has suddenly shown signs of growth.
In November 2010, Taiwan for the first time welcomed its 5 millionth foreign arrival in a single year. At the end of June, Taiwan's doors were opened to independent Chinese tourists. Previously, Chinese visitors were only allowed in as part of tour groups.
The government estimates that in five years, foreign arrivals will nearly double to 10 million a year. That number is like a quiet tsunami, a potent force ready to swamp Taiwan's domestic demand market.
Reflecting New Attitudes toward Life
Already, big companies are positioning themselves for a piece of the action.
At the beginning of the year, one of the world's biggest hotel operators, Starwood Hotels & Resorts Worldwide Inc., launched two hotels in Taipei, both upscale brands – Le Meridien and W Hotel. In July, Terry Gou, the chairman of the world's largest contract electronics manufacturer Hon Hai Precision Industry Co., broke ground on Taipei's version of Tokyo's renowned Akihabara consumer electronics district.
Aside from attracting large conglomerates and investors with deep pockets in recent years, Taiwan's service sector has also drawn elite talent from many fields, injecting creativity and new business models, observes Wei-Gong Liou, an associate professor with Soochow University's Department of Sociology.
Lavender Cottage, a leisure company that operates recreation parks, boutique homestays and herb stores, has a simple mission: to sell happiness. The feeling of spaciousness found at all of its businesses represents the lifestyle the company's founders idealized. One of them, Chan Hui-chun, worked at Citibank before taking on the new project in 2001, and her professional track record and commitment to transparent financial management was enough to convince the Chinatrust Cultural Foundation to consider investing in the venture.
"Much of the innovation in the service sector conveys the lifestyle attitudes of those getting involved," says Chang Shu-hua, a director of the Corporate Synergy Development Center, an industry consultant.
Chang has seen many small, new-style service businesses full of potential enter the market in recent years. One of them, called The One, began as a restaurant and later branched out to design kitchenware and run a resort getaway in Hsinchu County.
Tenren's Cha for Tea tea bar and restaurant commissioned the late sculptor Yang Ying-feng (also known as Yang Yu-yu) to design Tai Chi-themed tea sets to convey Taiwan's "new tea culture."
This trend indicates that for Taiwan's service industry warlords, the battle for markets, capital and talent has arrived. More importantly, after having engaged in hand-to-hand combat over small pickings over the past few decades, those warlords have amassed considerable skills and capabilities.
"Singapore and Hong Kong specialize in urbanized services. But Taiwan can still offer excellent countryside experiences and community building," Acer founder Shih says. Compared with Taiwan's world-class manufacturing sector, the country's service industry still has room for an upgrade, but among ethnic-Chinese communities, it already has established a leading position in providing comprehensive services.
The service sector accounts for 70 percent of Taiwan's GDP and employs 60 percent of the workforce – roughly twice the size of the manufacturing sector. With many hoping it will unleash its full potential and drive a new period of growth, CommonWealth Magazine organized the "Golden Service Awards" to fully reflect the sector's special characteristics and competitive strengths.(For the Top Ten service enterprises, see Table.)
The survey discovered that Taiwan's service enterprises have already gone beyond the first phase of competition, centered on speed, and the second, centered on breadth, and have now entered a new phase of competition over depth.
In the past, the country's service sector gained a reputation for "convenience." From 24-hour convenience stores, to online delivery of purchases within 24 hours, convenience was the main selling point.
But as convenience stores increasingly expanded their floor space, not to add more products but to give consumers space to have a snack, drink a cup of coffee, read a magazine or log on to their personal computer, it was clear that Taiwan's service sector had evolved and arrived at a new stage of development.
"Convenience stores used to emphasize how many minutes it took to serve one customer, focusing on the rate of turnover," says Soochow University's Liou. "But now they have turned themselves into an office or a day care center, stressing the idea of keeping the customer in the store."
Liou believes the new trend is the best evidence that Taiwan has begun to take seriously the need to deepen their levels of service.
Satisfaction in Five Seconds
"The service sector represents a customer journey. Every link must be thought out with the customer in mind," says Huey-jiuan Yeh, director of the Creativity Lab at the Industrial Technology Research Institute (ITRI) and an expert on the service sector. Getting each ring in the chain linked together begins before consumers even step through the door and continues even after they leave a store or online outlet, she adds.
Yeh cites as an example the high-end business hotel Les Suites Taipei. For their European and American guests, they prepare in advance a cell phone that connects back to the hotel with a single button and allows easy Internet access. For customers who need to get to the airport early, they prepare not only a car, but also a good breakfast to eat on the way.
Much of what service personnel do – greeting, settling a bill, calling a taxi – involves no more than five seconds of actual contact with their customers, yet they can only make them feel immediately satisfied by working behind the scenes, tightly connecting countless links and providing broader and more extensive services. These efforts are what Shih referred to in talking about "a hundred times more challenges."
The list of CommonWealth Magazine's Golden Service Award winners reveals that an increasing number of service sector leaders have added depth to their services, turning it into a competitive edge.
Retail: Service that Starts before Customers Appear
For many families in Taiwan, making a weekend trip to a nearby hypermarket is a necessary but exhausting endeavor. Forced to choose from 60,000 products, they often find that buying goods can be a tiring journey.
At big-box retailer Costco, however, service starts before the first customers arrive.
Costco gets a jump on its rivals by identifying its customer base as middle and upper-middle class and developing an outline of their daily needs and desires. It then orders products matching their customer profile through the company's international purchasing system.
"We get the best brands at the best prices and select the most appropriate sizes and then let the customers choose," explains Costco President Taiwan president Richard Chang in describing the company's philosophy.
Unlike other big-box retailers that offer customers 40,000-60,000 products to choose from, Costco stocks fewer than 4,000. But the strategy has an upside: it reduces the burden that choice places on customers and enhances purchasing efficiency.
Whether U.S. beef shoulder, New Zealand cherries or Din Tai Fung dumplings, Costco prides itself on selecting the products consumers demand. "This is the brand value of our distribution channel, and it has helped Costco generate sales that are three times higher than others in the field," Chang says.
Catering: A Manual for Success
In the Golden Service Awards for the food and beverages sector, Wowprime Group, best known for its Wang Steak restaurant brand, had three restaurants in the top 10. To fully record, cultivate and replicate complex restaurant industry operating procedures and customer service norms, the company runs a training program with 206 course credits, and has 45 training manuals filled with station observation checklists (SOCs). The result is that customers patronizing any Wowprime restaurant can expect to enjoy the same level of service every time, and even have their expectations surpassed.
At any Wowprime restaurant, for example, it is not unusual to see a store manager strolling around carrying an infant. On the surface, it may seem like the staff is satisfying an urge to play with a cute baby, but, in fact, the manager's intention is to allow the child's parents to enjoy a peaceful dinner.
"When we see a pregnant woman come in, we definitely will not pour her a glass of cold water. Instead, we'll give her a glass of hot milk and a cushion to support her back," says Wowprime Group chairman Steve Day. "These little details that resonate with consumers are all recorded in detail in the training manuals. That enables people to react quickly to any situation on the spot."
Airlines: Details Make the Difference
Singapore Airlines, which took the top spot among airlines in the Golden Service Awards, has proven capable of exhibiting service depth at the most difficult times, exceeding customers' expectations.
Known to be as exacting as the city-state in which it is based, Singapore Airlines insists that the service it delivers to customers be consistently reliable. To meet the high standard, the carrier's flight attendants receive nearly five months of training, far beyond the six weeks averaged in the industry. The logo on tea trays, for example, must always be in a 12 o'clock position, and even the positioning of the salt and pepper shakers and the presentation of the butter dish have been carefully researched to ensure a sense of sophistication and pleasure.
The real test, however, comes when the unexpected occurs.
When the Eyjafjallajökull volcano in Iceland erupted in mid-April 2010 leaving European skies blanketed with volcanic ash, the flight schedules of every airline spiraled into chaos, and passengers were stranded at airports around the continent. While other airlines were handing out cookies and mineral water to passengers who had nowhere to sleep for two or three days, Singapore Airlines booked every room they could at airport hotels and offered passengers at the airport hot buffets.
"None of these contingencies can be found in related company regulations, but because the service standard we pursue is meant to surpass customers' expectations, airline employees naturally go the extra mile," says Benjamin Chan, Singapore Airlines' general manager for Taiwan. He adds that airline management not only supports the quick reactions of ground staff, it will offer them greater public praise in the future and reward employees who take the initiative when it comes to service.
Customers Are like Babies
In-depth service requires cultivating sensitivity to gaps or shortcomings in service. As President Chain Store Corp. president Hsu Chung-jen observes, customers are like small babies – they won't necessarily tell you when they're unhappy. Companies must always have their interests in mind.
"Your biggest competitor actually is your customer," Hsu says, explaining that gaining insight into changes in modern lifestyles leaves companies best positioned to take advantage of new service opportunities.
Yet because of the unpredictability of contemporary consumers' needs, companies must also be fully committed to R&D and innovation, areas of relative weakness for Taiwan's service companies that pose challenges for the future.
Chung-Ming Kuan, the chairman of the Commerce Development Research Institute, which studies and supports the country's service sector, says that according to OECD figures, the R&D expenditure of Taiwan's service companies accounts for only 6.6 percent of all corporate R&D spending, far below the 30 percent in Austria and the 60-plus percent in Israel, and even behind the 7.2 percent in South Korea.
Figures from Taiwan's Directorate-General of Budget, Accounting and Statistics even more graphically illustrate the R&D gap in services. While Taiwan's manufacturing sector invests an average 7 percent of its revenue in R&D, the service sector only devotes 0.2 percent of its revenue to the field.
"Yet because Taiwan's market is very small and the competition is intense, in the end a few outstanding services have emerged," Kuan says. He believes that with its lifestyle edge among ethnic-Chinese communities, Taiwan should develop new forms of integrated services.
"In a country with a burgeoning service industry, people can outsource all sorts of tasks, and that makes their lives light and convenient," Kuan says.
Golden Service Awards: Listening to the Voices of Customers
For most Taiwanese enterprises in the past, manufacturing was all that mattered. The service sector was seen as nothing more than an economic side show. For most people seeking jobs, the service sector was usually not their first choice. Beginning last year, however, a survey on Taiwan's 100 most attractive enterprises to the new generation conducted by Cheers magazine found those entrenched mindsets to be changing. Among the top 10 brands cited by respondents were Eslite Bookstore, Starbucks, Chunghwa Telecom and Wang Steak.
With markets, talent, capital and technology all coming together, Taiwan's service sector appears finally ready to roll.
Translated from the Chinese by Luke Sabatier