Kent Svenson:
Welcome to the trusted leader show. I’m Kent Svenson producer of the trusted leader show. And for this week’s episode, we thought we’d take a look back at a previous episode where David sat down with Horst Schulze, founding member, and former president and COO of the Ritz Carlton hotel company, founder of the Capella hotel group expert in residence at arch + tower and author to discuss how to deal with a customer complaint. So sit back, relax and enjoy the show.

David Horsager:
You know, you talk about three universals. Tell us about those.

Horst Schulze:
Well, the, the, the expectation of the customer, I guess that’s what we talk about. Yeah, well, yes, it’s in universe, the market, you can look at your market over there. What is a market or potential market and you, there are two or three things for sure they want, so you better have processes and systems on measurements if you deliver it. And that’s a subconscious expectation like that. What you have anybody has, you want the product to be defect free. You know, I always use an example of bottle of water. If you buy a bottle of water, you don’t want anything to swim in there. You expect subconsciously that is defect free. Number two, very important by the way, and you have to underline it 10 times is timeliness. Everything. Today is very important that your timely responses that you, you, you want that bottle of water when you want it.

Horst Schulze:
And you want an immediate answer to your email, et cetera said timeliness. So not that time minutes. So no defect timeness and number three, what you want? The one, the people that give it to you, the bottle of water or whatever it is to be nice to you to care for you. Now, here’s the, here’s the crazy thing I, and I, and why businesses don’t get that. The creative driver over venture subscriber of eventual satisfaction, eventu loyalty is the caring piece, which means you have to, you have to process and make sure that there’s excellence and relationship between your employees, between you and those that buy from you. The product is not creating loyalty. Loyalty is nothing but trust. They trust you the three times of customer, very fast as the one that distrust you, who are, who are, who are terrorists against your company. Now they go on social media, whatever destroy you. Then the loyal done, the satisfied one. They got night next door. If they, they think there’s a better deal. And then is the one that are loyal to you. Why are the loyal they’re trusting you? And trust is not creative with a product it’s created with the relationship moment.

David Horsager:
Only the relationship. You say this in the book, page 77. I highlighted it. Every relationship in life starts out with distrust.

Horst Schulze:
That’s correct it the moment when I meet you, I, I, I don’t know who you, I don’t, I, I’m not gonna trust you with anything. I mean, and, and of course it moves right away to neutral. It depends on the subconscious decision that I make about you. That, and that depends on how we say alone and, and, and how my thinking is how we look and so on. We can’t help that. Now society tells you other BS and Delta, you should be, look this ridiculous. The fact is we’re human being does how we react. We react distrust. It moves to neutral and, and in business, or in relationship, you try to move it as POS as fast as possible to trust. And that depends on your behavior and how you think that it’s that simple. No, if you don’t mind for a moment, please, that’s part of human excellence. Human excellence is, is from, from is number one. If you do your very best in your functions that you fulfill in life, number two, do your very best in relationship. And of course, number three, do your very best morally if I put those things together. But it’s the relationship piece, that piece, which creates opinion and others about you or your organization.

David Horsager:
Number three, you talk about morally, and it seems like we have some challenges in our world today. And I think it’s interesting, even in the book, you talked about the benedicting model that you went by of tr you know, treating everyone as if they were Christ welcoming them this way. Tell me about that.

Horst Schulze:
Yeah, well at Benedict and you, you understand Benedict from the monasteries in Europe and the MOS were used as shelters when you travel through the land. And he wrote to his Arab in 500 as one, the first teaching that I learned, I could find on teaching hospitality. He said, if a, if a traveler arrives, treat him as if it was Jesus himself. In fact, if you’re the, a, you should wash his feet and end in fact, if you’re the, and the, the trouble is by himself and you are on a fast break, the fast and have dinner with them. So he’s not by himself now. And if that is hospitality, how close can I come to that today? so I have to question myself that if that

David Horsager:
yeah. How does that play out in a Ritz Carlton or your work today?

Horst Schulze:
Well, my, my work today, by the way, after it’s called, I formed a group called Capella, which has sold a little bit over a year ago, which Capella would tell, and, and body was just bought the best hotel in the world. So the philosophy works everywhere, and it worked in five continents in, in Ritz car, five continents, everywhere we were, when I was running the company, we were the leader absolute. And how does it, how does it work out the same way you, you come as close as possible, make sure that you, you creating is exceptional because it is, it is in that initial contact where the customer makes a decision about you subconsciously. Now he, or she may change that decision going forward, but there’s a pretty deep decision being made in the initial conduct. So we taught, for example, no matter what you are doing, if a, if a customer comes within nine feet, three meters, you look up, you do stand up, you look him an eye and say, good afternoon, welcome or more, whatever.

Horst Schulze:
So you establish this positive in their mind immediately, which makes them feel respected and looks. They make them feel about that. You are a professional in what you’re doing in your service world. So it, it very important moments and always say, and again, and instead of saying, okay, when the guest wants something, say, I’m happy to do that. It’s my pleasure. It etcetera. So we had about 20 points, which we taught, which were non-negotiable that had to happen any customer interaction and had to happen superior to anybody else who, who is in the business. That’s we taught, we keep on teaching that, reminding them every day of it.

David Horsager:
I love that because you know, one of the pillars of trust is consistency. If you’re late all the time, I’ll trust you to be late. If you speak, you know, it’s the only way to build a reputation or brand is consistency. And I know you teach those every single day, but what about, I’ve got a complainer and I’ve got someone whining and you have a whole process for how you deal with a complaint. How do you do it?

Horst Schulze:
Yeah, well, we, we call that problem resolution. In fact, every employee was certified in problem resolution, because again, the three types of customer, remember that the, the, the, the terrorist they satisfied and the ambassador, you are ambassador customer. And I want ’em to all the ambassadors. Now, if the, if the customer has a problem, there is a potential terrorist. So in that moment, we taught our employees. If the guest has a complaint to first of all, to follow five steps, if you will, number one, listen, very careful. Listen, attentive. Number two, empathize, number three, apologize. Number four, make corrections when necessary. Number four, delight with that. We, if you have a complaint about something and to the bus point in the morning, hypothetically that the bus point afterwards said, I feel so bad about it. I buy your breakfast. Now the key element in the apology is, forgive me, not forgive them, because we know that over 96% of customers that have a concern and complain, they don’t want anything.

Horst Schulze:
They just want to get rid of their frustration. So we have to show that we take it empathize. Forgive me. I’m I’m so sorry. I make sure it will be corrected. Yes. And, but not say, well, they do it all done and them, I don’t have, I don’t. I have nothing to do with the TV in your room. I’m a bus boy. No. And, and, and why wouldn’t your, all your employees be taught that way because you don’t want customer running in the situation where, when we said, while I tell them happens all the time and you be, and you make a terrorist. Instead, if the passport says, please forgive me here. He moves our immediately being an ambassador. He’s amazed.

David Horsager:
And, and you give leeway to, for everybody it’s trained every day. By the way, every single day, these 24 principles are trained. So people hear them every day and people, and, and one, one noteworthy piece was when you, when you said you, you give everybody a, up to $2,000 to decide themselves how they can take care of somebody. And, and all of a sudden you’ve got the whole team buying metal detectors and finding a wedding wedding ring, right?

Horst Schulze:
That’s right. Well, I, I have to laugh every time this subject comes up because you have to understand David. That sounds like a story today at the time. And I said, every employee has to write up to $2,000. It was a nuclear bump, went off. the investors everybody’s declared me insane. They want to put me in asylum. I mean, you want fast boys to give $2,000 away. Everybody, the dormant, no. I want them to keep the customer. I want, I want to tell them, I want to tell each employee, I trust you with that decision.

David Horsager:
So this goes, this gets well to your your four Supreme objectives. And this changed the way I thought about business, because number one, isn’t get customers. Number one is what you talked about right there. And that is customer customers. Tell me about the four. Tell our, our audience about these four Supreme objectives. Just

Horst Schulze:
Think about if you’re on an organization, what are the four principle things that you have to work processes behind and organize and, and measure and so on. For me, absolute number one, and it cannot be on by two, three and four, absolute number one, keep the customers that they have. And that of of course, was one decision that we made. Okay. We make sure we keep them and, and particular today. You, you business people, you must understand that today, a dissatisfied customer can go out and destroy you on the internet and in social media. So number one, keep the customer and every employee should be aligned to that. That’s called alignment. Number two, what you do find new ones, of course, but much to dissatisfied ones that you have to the loyal ones that you have. Number three, what you do get as much money as you can from the customer.

Horst Schulze:
Oh, oh, oh. Without, without losing them with other words, you’re giving value. And it has to be very clear charge as much as you can. My goodness, we have some hotels now with Capella a thousand dollars a night and so on. And, and when, and we are busy than anybody else, because we are given value for it. So number one, keeping number two, new ones, number two, make sure you get money. Number four, efficiency, efficiency, you, you don’t do it blowing money. You do it efficiently. Well, not cost cutting because that’s what everybody is an expert in, particularly in my business that comes to order from, from, from corporate office, somewhere in the world, to a hotel, somewhere in the world and saying, we need a more efficiency. And what do they do? Take the flowers away from the customer. Taking something away from the customer is not efficiency. It’s cost cutting, looking at your own processes and make sure without changing the outcome, you save money. That is a efficiency that you do that by limiting your own mistakes, et cetera, et cetera.

David Horsager:
I like the, you know, these four and, and, and there’s so many people that talk about getting new customers. How do you get clients? How do you get clients? And it’s so much easier, better, and more fun to keep customers. And I, I just, I love where you start with this because it made our thinking, are, are we really taking care of those that we have well, and that, you know, changed our business and they tell others,

Horst Schulze:
They tell, well, think about, think, think you have a hardware store. I don’t care. And it should be. Everybody’s objective in that store that works for you and yourself. That as soon as somebody walks in there, you convince them by you caring that they will come back. Even if they don’t buy anything this time that you are there for them, that you respect them. And that they, you have to look at that and, and then process this. And you, you hope is not a process. Hope is not a strategy. You have to then make sure processes are created by selecting the right employee by teaching them right, by reminding them by role playing for them, everything.

David Horsager:
I like what you said also in the book about we don’t hire, we select, in fact, you want to, you select, at least you gotta have 10 people to select one, but how do you get it? Right. So many people, I was just reading a study recently that said, people get hiring executives, right? Whether they do assessments or not about 51% of the time.

Horst Schulze:
That’s correct. That’s okay. Smart. Let’s think about that. What if I can move it to 55%, I’m winning have a better team. And that was my, and I, I was really struggling on that for years and have tried all kind of things to run into an organization that helped me to assess what talent is needed in each job that I have. And then assess, be able to ask question and says, if that talent exists in the person that applies for the chart. And, and, and, and it turned out when they said don’t hire, they were 90%, right? If they say higher, they were 70%. Right. But it’s better than 50 50. So I spend the money. I want to have people that I want to have the team that I know is a better team than they have my competition had. And so we, we use this exclusively, very careful from dishwasher to vice president. Mm-Hmm everybody, but, but what’s the result. Let, give you one result the all, if there’s hotels on the restaurant, people listening, you know, that our industry has over a hundred percent turn over a year. So with other words of knowledge books right out door again, we pro our, our turn over down and rich count to under 20% while the industry stood over hundred percent. So my, the knowledge was staying inside.

David Horsager:
Absolutely.

Horst Schulze:
And of course the saving with money of that and long term, of course, in the beginning, it costs money, but long term, keep you keep more customers who save money. You have knowledge

David Horsager:
And keeping the employees. I mean, if, if you even figure, I don’t know for sure the hotel industry, but I meant in many industries, even frontline, the, the cost of turn or retention of something you want to keep is at least two and a half times hiring costs. So of course, you’re, you’re saving millions right there.

Horst Schulze:
Oh, it goes without saying, that’s the right thing.

David Horsager:
So, you know, you’re an expert in customer service and in people and relationships, but there are some difficult people out there. You talked about something in the book that I was fascinated by, because this is what I liked about the book. It wasn’t this Pollyanna, just this, or just that it was a balanced, big view. But you know, there are jerks that just wanna take something away from you and you call it the jerk factor.

Horst Schulze:
That’s right. That’s right. Well, it exists, you know? I mean, we, we, particularly in our industry, we like to say, say every guest is right. And I will tell all, everybody in our, my organization, every guest is right all the time, but I also know that’s not true. , it’s just simply, it’s not, except I, I look, everybody knows that I delegated, I mean, I delegated everybody up to $2,000, et cetera, et cetera, decision making. But I didn’t delegate that. You could say a customer is a jerk because otherwise, pretty soon, if you have a problem with a customer, you meet it, wasn’t you, it was the customer. And that’s not a decision I could delegate. So I said the only one in, in the organization on the, in the hotels, around the world, I’m the only one that can make a decision. If a customer is a jerk or not.

Horst Schulze:
And I understand that sure, we called it a jerk factor and it happened very seldom. And I, I tell the story and there, when the guest called and, and when when my manager called and said, this guest horse, if you like it, or I know we cannot draw guest out hotel, but this guest is impossible. Here’s everything that happened, including he pinched some ladies and the club lounge. I said, okay, that’s a joke. Now. Here’s what he do. You throw him out, but you do it to its garden way. You double lock his room. You have a limousine ready for him. You have a reservation ready in another hotel. And you tell him, look, we are here to make sure every guest is happy. You are obviously not happy because he was complaining every day. Now we have tried everything. We don’t know what else.

Horst Schulze:
The last thing we can try now is this. We got another hotel for you. And the beautiful li in, we have people stand by to help you packing and carrying everything down. And, and, and they will. They made sure that they have a beautiful room for you. So you are, you’re gone. and of course I knew he would find me. I that’s clear. They find you. And, and when, when I answered telephone, there was somebody screaming. I will own you and Sue you. I know that was Mr. Jones. and I say, Mr. Jones, when you Sue me, I will be in the courtroom with the ladies that you pinched, right? So you go right ahead. He didn’t Sue. He showed up again in another hotel of powers, fascinating. And the same thing happened, same thing.

David Horsager:
And you got another hotel ride, another limo ride out of it.

Horst Schulze:
another limo.

David Horsager:
well, I, here’s something interesting. You know, we talk all the time about how do you build trust in crisis? How do you build trust in the midst of change? And one really important thing, even before, you know, these social, the, you know, certain social UN risks, certain, certain pandemic, and all these things we’ve talked about. It’s how you do it. Many people complain about change. Change is gonna happen, but how we deal with people, how we deal with it matters. I watch a big company. You would know, we would all know that basically the way they laid off a thousand people ruined their trust for a decade. And I watched another CEO friend of mine here. You would also know that brand. And in the midst of the pandemic, laid off 2000 people and kept trust with them and the brand and his leadership because of the way he did it. So I think the big, big takeaways here is how we do it matters in how we keep or build trust in the midst of change. Change is gonna keep happening

Horst Schulze:
Well in, in, in difficult circumstances, what is strange to understand people, all of a sudden change their vision and their values. If you, that means they ne never really existed. I mean, the one thing that cannot change no matter what the situation is, if in, in the case of Capella, we, we said we will be the FiNet service organization in the world. In the case of Wisconsin, we said our vision was, we will be the finest brand and finest hotel company in the world. Well, just because it is a crisis, I don’t change that objective. And we said, here’s our values. We respect everybody, et cetera, et cetera, that change doesn’t change either. So if I respect everybody, all, all investors, guest, and employees, I have to do what I do with total respect, SI, total caring, or I had no values to start with

David Horsager:
You, have you, you talk about, this is interesting because it jumps to something that you call the most important speech. And your, your way of onboarding is very significant. As far as getting people bought in, in fact you said something I want to see if I have it, human beings cannot relate to orders and direction. They relate and respond enthusiastically to motives and objectives. And that kinda leads into your most important speech. Tell us about it.

Horst Schulze:
People. What, what, what you want from your employees, no matter what organization, part of what you want for them is the right behavior, the right attitude, the right behavior. But behavior cannot be taught after 16 years old, unless there is a significant emotional when in alive, in the first day of work is a significant emotion event. And what do we do? They arrive. We let them fill out some papers. And then the manager makes this pathetic speech of being a team. We are a team here. Well, wait a minute. Without giving an objective or

David Horsager:
A family.

Horst Schulze:
yeah. All family. Yeah. All we family. Yeah. And what is a team? A team is a group of people who have a common objective and help each other too, without objective, but we don’t give them their objective. After all, they’re only here to fulfill a function. That was the first mistake. We should hire them to become part of us and not just fulfill the function. So the, the, the employee come in and we done. And then after making our, our speech, we say the new way bill work with Joe over here, he knows the ropes, the rope speech. I mean, the it’s so pathetic, everything. I mean, you’re not in a role business. So instead of telling them the first day who you are showing me in what we do join me in the dreams. And here is the dream that we have. I’m giving them purpose because even, even Aris startle said people to, to do well in life, need purpose and belonging.

Horst Schulze:
So why wouldn’t I give it the first day, given the purpose, tell ’em why? Tell ’em how our desire, our purpose, our dream of becoming known as the finest will benefit. Everybody. In fact will define you in you, the individual employee and, and why not explain it all and, and explain the first day, align them to the thinking of our customer, connected to the thinking and the being of the organization. Now they’re part of something rather than just fulfilling the function. I always said, David, the chair in which you’re sitting is fulfilling a function, but we are dealing with human beings. We have to recognize that

Kent Svenson:
That’s it for this week’s episode, be sure to check out trusted leader, show.com for all the show notes and links and information from anything mentioned in today’s episode. And if you haven’t already, we would greatly appreciate a review on apple podcast or wherever you get your podcast, as this is a great way to help support the show and help others to discover it. And don’t forget to subscribe, to find out when we release a new episode, but in the meantime, that’s it for this week’s episode. Thank you so much for listening. And until next time stay trusted.