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The Failure of the Last Mile

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There was a girl I knew in college (let’s call her Michelle). She spent most of early 2005 planning a fundraising event for a group she founded. She spent months organizing the catering, the entertainment, and the venue. She got RSVP confirmations MONTHS in advance. All told, she spent countless hours planning the event. So why was the turnout only 10% of what she expected?

As you read this, see if you can figure it out.

Why do events fail? Why do we have such a visceral dislike for some companies? How do we surprise and impress people around us? I’ve been thinking about this for a while, and I came up with an idea. I call it The Failure of the Last Mile, and it happens when you neglect the last–and most important–contact with somebody.

In the telecom world, the “last mile” refers to the “final leg of delivering connectivity from a communications provider [like Earthlink] to a customer” (full definition here). In other words, the last mile is the last point of contact to a customer.

You can find last miles everywhere in business and personal life: A restaurant will have a beautiful dining room and expensive cutlery, but if the server is rude, the whole experience is ruined. There’s been a failure of the last mile.

I think understanding this is pretty important, so let me give you a few examples of last-mile failures in business and personal life. See if you can spot anybody you know.

Failures of the last mile in business
A few months ago, one of my friends asked me why I have a category called stories about customer service on this blog. It’s a good question because the other major categories are Saving, Investing, and Personal Entrepreneurship, which all seem pretty different. But I don’t think they are. I think that we can learn a lot from companies’ successes and failures as we’re trying to be more successful ourselves. For example, Amazon’s customer service is almost universally loved because they just treat you right; if your product doesn’t work, they’ll refund you immediately, no questions asked. They understand that no matter how relevant their recommendations are, no matter how optimized their Web site is, the last mile of customer interaction is paramount.

Many other companies don’t get this, so let’s talk about them. They spend a lot of time devising new management practices but, stupidly, they forget about the last mile. In the past, they could get away with this: There was limited competition and, besides, customers didn’t talk to each other.

Things are different today. No matter how complex your infrastructure is or how fast your site is, if you neglect the last mile, you’ll pay for it.

For example, take the DoubleTree Hotel. They’re cool and I like their chocolates on the pillow. Imagine how much money their management team spent improving their hotel over the last few years, with those fancy new beds and furniture (and marketing all the changes, too). But because one clerk failed, they’re regretting it. Yours is a Very Bad Hotel, a Powerpoint presentation documenting their horrendous stay. One of my professors at Stanford showed this to a class full of students. God only knows where else it’s been shown.

Or maybe it’s Best Buy, which heralds its new “customer-centric” strategy. Let’s take a look at some of its recent press:

“Best Buys success is owed to their well-known and highly praised initiative called “customer centricity” which enables it to engage more deeply with customers by empowering employees to deliver products, solutions and services through multiple channels. Best Buy’s “customer centricity” provides the company with an entirely new lens through which the company sees opportunities to increase market share with both existing and new customer segments…” [More]

“If we could build an organization that instead of looking at every human being like they were the same, looked at them as though they were completely individual, we would be in harmony with reality…” [More]

“Customer centricity is an extraordinarily complex capability that will allow us to provide our customers with superior experiences, now and in the future. It requires that we take full advantage of the talent and creativity of every Best Buy employee working in our stores across the country.” [More]

I’m not making this stuff up. But while it’s fun to mock old white guys for using incomprehensible language like this, Best Buy forget the last mile. And not just once or twice, either.

bestbuysux.gif

Enough to start an entire site called BestBuySux.com. Enough to have thousands of customers who write in rants about Best Buy’s service, starting over six years ago. Enough that if you Google “Best Buy,” you get BestBuySux.com in the top results.

When people talk about customer evangelism, this probably isn’t what they had in mind.

And it’s not just Best Buy. Customers rant about Enterprise Rent-a-Car in a site called Enterprise Rent a Car is a Failing Enterprise (also a top 5 Google result). There’s also Delta and many, many others. In fact, there are extremely popular sites like Consumerist.com that are dedicated to simply cataloguing our horrible last-mile experiences with companies. Tagline: “Shoppers bite back.”

Now, every company makes mistakes. Every company hires people who can’t be watched all day long (nor should they be). But I’m arguing that the last mile has a disproportionate impact on customers’ impressions of a company. So it makes sense to spend accordingly to make it right.

Here’s an example of a company that did (from Signals vs. Noise):

typepad-customerservice.gif

Another company that gets it right: Staples.

So, a few days later I called the customer service included with the warranty card, and told them my woes.

The CSR asked for the model number, my name and address.

Okay sir, well be sending you a new seat cushion. Youll receive it in about 7 to 10 business days.

Uh, okay. Thanks!

That was easy.

No proof of order, silly red tape, or transferring of calls. Im pleasantly surprised and confused.

And here’s an example of a company that doesn’t.

[He] told the person behind the register that he had bought coffee yesterday, but had forgotten to bring the card. Could he please have 2 stamps on his card?

Well, you would think the counterman was being asked to part with his car. He argued (quite strenuously, I might add) with the gentleman, informing him that he should have brought his card and that rules were rules. Mr. Buns, after a brief exchange, paid for his pastries and left, stamp-less.

[…]

Lets assume that a cup of coffee is $3 and that each card requires 6 stamps. So, the manager saved $1or did he? Lets review the math

Lets assume that Mr. Sticky Buns buys gas once a month at this particular station, and spends $25 each time. Now, what happens if, because of being denied the benefit of the doubt, he chooses to go across to the station across the street (which, by the way, is quite a bit cheaper)? $1 saved is now costing the gas station $300 in lost business per year.

But, it gets better. Each dissatisfied customer, on average, tells 7 to 10 other people. Lets assume just one of the others Mr. Buns told stops buying gas at this station and had the same spending pattern. $1 saved has now cost $600.

And, now the coup de grace there were three other people who heard this exchange, including myself. Do any of them still patronize the place? I dont and I probably spend about $700 per year in gas, not to mention the occasional bottle of soda. Were now up to at least $1300 all for assuming Mr. Buns was trying to steal 1/3 of a cup of coffee.

Failing the last mile can cost you a lot. Ok, enough about businesses. Let’s talk about Failures of the Last Mile when it comes to regular people like you and me.

The Failure of The Last Mile in regular people (and why Michelle failed)
It’s not just businesses. Regular people have last-mile failures all the time. We forget to follow up. We’re in a bad mood one day, so we meet someone and they think we’re moody forevermore. I see this in a few prime examples.

First, I see it in event planning, whether it’s just dinner out on Friday or a huge conference. Remember Michelle, the girl from the beginning of this? She spent months planning her event (the venue, food, entertainment, etc). She even sent invitations out months in advance and got the RSVPs. But Michelle forgot one thing: She forgot to send a reminder email the day before the event. All that work, only to fail at the last mile. It matters.

I bet you see this in some of your friends. These are the ones with hella drama who think they are always being “misunderstood.” What often happens is that they construct a bunch of stuff in their heads and don’t communicate it at all, and then they’re surprised when people get mad. For example, let’s say you invite your dramatic friend out for whatever. She might think to herself, “Well, I’m not going to go because I don’t think she really likes me, and plus it’s really late at night and I have to get up early.” Unfortunately, she’s a horrible communicator so she never actually tells people this is what she’s thinking. She just doesn’t show up.

You get pissed, of course, because you didn’t see all these internal machinations. You just see your friend standing you up again. Your dramatic friend didn’t explain herself, failing the last mile.

The last mile is what we remember. We know about Dan Rather’s brilliant career, yes, but we remember his resigning in disgrace. And there are tons more examples.

How to eliminate failures of the last mile
Michelle, the event planner, had her priorities all wrong. The most important part of her event was not the flowers or food or whatever–it was the people. And Best Buy’s surly managers spawned a Web site that I’m sure is doing irreparable damage to them.

The point is that, yes, the back-end stuff is really important. Without the food, Michelle’s event probably would have made people grumble. And without logistics, Best Buy wouldn’t have products to sell in the first place.

But we remember the last mile. In fact, look at the definition for the peak-end rule: “…we judge our past experiences almost entirely on how they were at their peak (pleasant or unpleasant) and how they ended. Virtually all other information appears to be discarded, including net pleasantness or unpleasantness and how long the experience lasted.” Combine this with the availability heuristic and you start to see why the last mile is so critical.

Think carefully about what’s important. Is it the food, or is it the people? Probably both, but you need the people to have an event. How do you communicate all the stuff in your head (or in your business)? Think hard, and then do it: Send the extra email the night before, or teach your employees how to be nice, or tell your friends what you’re thinking. It really matters, because we don’t see anything behind the scenes. All we see is what we get.

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33 Comments

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  1. Awesome!

  2. So what’s the last mile for bloggers?

  3. Ramit, I couldn’t agree more.

    I think that the single most important conclusion here is what you write about communicating our own loose thoughts, assumptions, goals and reasons in whatever we do (at home – with family, at work – with clients and colleagues, and with friends when planning spending time together).

    The more I speak about what I think about certain event or thing that’s udnergoing the “planning” phase with other people, the more surprised I get how often we understand even single, simple words complet in a completely different way! It results in frustration and inefficiency (best case, at work, no hurt feelings) or huge stress and irreversible damage to relations (clients, family, friends – hard, often permanent emotional effects).

  4. Yes, I agree on the last mile bit.

    In addition, it’s been my personal experience that if folks don’t have money on the line or some other attachment to the event, the odds of them showing up is quite low.

    In other words, their decision wasn’t really made even with the RSVP because they felt they could (and did) back out with no penalty.

    This doesn’t have to be a financial penalty. The attachment could be as little as saying that she mentioned Mr. RSVP was attending to So-and-So and So-and-So was excited to meet Mr. RSVP.

    It is like a wedding couple calling their guests up after the RSVP and saying that they were delighted they’d be coming. Cuts down the no show rate substantually.

    It’s not the reminder. It’s about binding the guest to the event in some way.

  5. I can explain Best Buy’s serious problems with customer service. They encourage it for certain value-oriented shoppers. I wrote an article about Best Buy’s policies on “Angel & Devil Customers” on my own blog last week.

    My favorite quote from Gary McWilliams (The Wall Street Journal) was: “Best Buy estimates that as many as 100 million of its 500 million customer visits each year are undesirable. And the 54-year-old chief executive wants to be rid of these customers.

    Another memorably quote from the CEO: “Culturally I want to be very careful,” says Mr. Anderson. “The most dangerous image I can think of is a retailer that wants to fire customers”.

    How crazy does a company have to be to think they need to eliminate 100 million customers??!

    Mr. Anderson (CEO) needs to have a reality check in my humble opinion. There is likely a better way than simply eliminating 20% of it’s customers because they don’t make Best Buy as much money as they would like.

    The easy way out isn’t alyways the best way.

  6. Communication is the hardest problem.

  7. This is true, to a degree. FOr instance, Dell’s customer service is awful. IBM’s is very good. Yet I continue to buy Dell products because they offer me the most value for my money. It’s a question of value, and although the last mile adds (or subtracts) value at an emphasized rate, it isn’t the bottom line in terms of business. Many value-oriented companies manage to succeed without exemplary customer service.

  8. Monica Gonzalez Link to this comment

    Nice article, for anyone interested in the Service Revolution topic, I recommend “Best Face Forward” by Rayport and Jaworski

  9. The problem is, in so many cases, you’re talking about people making the rules who have such a contempt for the average person that they are completly out of touch.

    Take any of the chains trying to sell a discount card every time you go there, for example. What should be done, is you put up a sign, giving the message. Having the teller give the message each time is a failure of the last mile. Because it’s the little things that make more antsy about the big things.

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