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 Buy’s 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, we’ll be sending you a new seat cushion. You’ll 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. I’m 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.

[...]

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

Let’s 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. Let’s 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 don’t – and I probably spend about $700 per year in gas, not to mention the occasional bottle of soda. We’re 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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31 Comments

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

  2. 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).

  3. 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.

  4. 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.

  5. Communication is the hardest problem.

  6. 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.

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

  8. 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.

  9. I was enjoying this entry until you said “hella drama”. I completely stopped reading after that. You goofed on the last mile as well.

  10. It’s a Norcal thing and I will say that until I die.

  11. I think a really obvious case of “The Last Mile” is outsourcing technical support to somewhere cheap but where the vast majority of people aren’t the native speakers of the language spoken by customers.

    I sum this up as follows:

    “when you go, we’re the best company evar, we’re so awesome, we’re awesome totally cheap and cool and you’ll love us… and then someone goes “gee we’ll save x / make y more profit if we give our technical support to guinea pigs trained to growl in human speech” and you flush it down the toilet.”

    I work in tech support among other things, and I can vouch for the fact that as customer base gets bigger and your product gets more complicated, support takes exponentially more time and money.

    Unfortunately, deciding to ‘throw away’ support to the lowest bidder kind of removes the point of providing support in the first place. What’s the point of being there for your customers if they could get a better experience from learning to meow at their cat and get a meow back?

    By the way, i don’t mean disrespect for anyone who lives in India, Malaysia, or wherever most stuff is outsourced/offshored to nowadays. Part of the reason I think this fails is because humans tend to be xenophobic – if you get someone who is very obviously not named “Peter Robinson” and whose accent is so thick you have to ask him something four times, your brain may possibly go “this person does not understand me because he is different!” and you are soured.

    Another part of the equation is that offshoring by nature is to remove the burden of providing support at high cost, and so to further the low cost, everything is heavily scripted. Speaking with Equifax about a dispute on my credit report (which was really just me being ignorant of how many credit lines I had), once my information was pulled up by the support rep, i was notified that it was not an error and hung up on.

    Of course, my whole gist is really about people throwing away support, but offshoring seems to be a big sore spot these days. Heck, we get constant harassment from companies wanting us to offshore/outsource everything.

  12. I handle customer service and even though a client will RSVP to the meeting weeks before. I know that I still have to call him the day before to double confirm that he will be attending. I also want to mention that a lot of people out there have some kind of fear of just saying “I’m not going to be able to make it”, instead they confirm the appointment but still decide to not show up or my favorite; I call to double confirm the appointment and they say “I was just about to call you”.

    Thanks for the great post

  13. Thank you! I hope chief of ozon.ru will read this article. I’ve waited books from this site almost two months!

  14. This is a great post and sums up the essence of what true customer service is.
    Companies do need to ask if they’re going that extra mile – it’s the difference between a successful business and a not so successful one.

    Customer service is very much related to “being rich”!

    ~Maria Palma
    CustomersAreAlways.com
    Online Business Resources

  15. FYI for those that care, I did receive the new seat cushion from Staples within 10 business days.

    whether it’ll wear out again or not is another story, but eh – props for the service regardless.

  16. Ramit -

    Great post. But, you missed the greatest example of a company that got it. When the Tylenol scare hit in the 80s, what did Johnson and Johnson do? They pulled off every bottle in the country. It was an incredibly difficult decision, but one that showed that the company got it.

  17. Very enjoyable read, I couldn’t agree with you more. To me it is simply common business sense or in one word, courtesy. Some get it, some never will. From business to just as importantly, the way we live our lives, right down to our freeway behavior or even holding the door open for a stranger carrying packages into the post office.

  18. -Well, you would think the counterman was being asked to part with his car-

    Most likely because he would have gotten in trouble with his boss. I’ve worked at coffee shops like that, and unfortunately, the person at the “last mile” may have restrictions on him that make it difficult to give the customer what she wants. This is partially because many times customers complain not because they have a legitmate grievance, but because they are trying to get free items, or pay less than what they should for items. At the minimum, it’s a little bit of an entitlement mentality where customers think customer service = completely catering to them. So then the employees are told to follow the stated policies, and not give exceptions, because otherwise, people take advantage of a situation (in a way that the boss doesn’t want to happen.) I know where I worked, we weren’t allowed to give the extra stamp, weren’t allowed to bend the rules, so sorry for the inconvenience. So it’s important for a company to set it’s parameters from the top down: how much to give without creating a free-for-all. Then you can see the people at the last stages cut a little slack — now they can do it without putting their jobs at risk.

    Also, it’s important to realize that the customer is right, except where the customer is wrong. I mean, that customer is going to argue with a guy (who is making per hour what the customer spent on one cup of coffee) to get the guy to _disobey his boss’s rules_ so the customer can get an extra stamp? I’d have said “no” too: what choice do you have? At jobs like this, you’re more likely to get canned if you break the rules than if you annoy a customer.

    I’m sorry, but being a brat about not getting your way doesn’t mean that you got customer service. It may mean that the person you’re dealing with has really run out of options to solve whatever situation you have. And really, being too big of a brat can practically ensure that you don’t get much of anything. Most people in customer service want to do a good job and make you happy with your purchases. But they often get treated like utter crap, which makes it hard to really care too much if the person leaves happy or not: they just want the person to leave.

  19. bleah. I just read the link to the coffee guy post (should have done so earlier.) I concede, the manager was being a brat. But I’ve experienced the situation at my job where a customer just gets unreasonable, which is where the earlier post came from. You don’t have to post this part or the last, if you like. :(

  20. I guess it pays to RFTA first.

  21. The last mile is as important as the first. It is so easy to forget the little things in life, yet they have such an impact.

    Thanks for your insight. (And hella drama? o_O)

  22. Starbucks when they tried to charge me 60c for the marshmallow in my sons hot chocolate.

  23. How did you manage to think of something like this? I Wonder…

  24. Wow !, What an Article !

  25. I was reading through the article….it’s interesting! Paused for a bit at the “Hella Drama” wording, but moved on. Then saw your Norcal reply to one of the readers who pointed it out.
    Sorry buddy, you couldn’t handle “the last mile” yourself.

  26. Howdy. This was a great article. First, I want to handle the whole “hella drama” thing. I suppose there are some who read this blog that are all hifalutin’ and special, and perhaps that’s why they don’t grok idiomatic language, but for me it works. On the other hand, I’m not hiflautin’ at all, being a poorly educated hick from the boonies of the back forty, and so on.

    Nevertheless, I believe “hella drama” could be looked at like shorthand between, uh, peeps. For example, take a look at these two scenarios, then YOU decide.

    Scenario 1:

    Me: What is going on at this time, in this place, up in here, that is in some way affecting you, my acquaintance?

    Ramit: Well, there is a dramatic turn of events playing itself out even as we speak, and, to be dead honest, it makes me somewhat uncomfortable, because I don’t know how I’m supposed to feel right now, which is causing a significant amount of internal tension. That is the low down on the skinny, my home skillet.

    Scenario 2:

    Me: ‘Sup?

    Ramit: Hella Drama.

    Which would YOU rather interpolate? And yes, I said interpolate on purpose and everything. By the way, I could enrich the above exchange pretty easily and still be economical with my words. Watch and learn:

    Scenario 3:

    Me: ‘Sup?

    Ramit: Hella Drama.

    Me: Say it!

    See? It’s almost like being psychic, but without per minute fees.

    Now, to the meat of the moment. Some have commented, fairly, that there are occasions when you can’t get the best customer service because the lowly, sad sack, hourly, not particularly motivated to be here, etc. and so on employee is prevented from fixing what ails you because of policies, or procedures, or @!&%head (rhymes with thick, um, bread) bosses, or whatever, and all these things are true, but they’re just symptomatic of the real, actual problem which is that you either like your customers or you don’t, and if you do, you try to make everything easy for them, you try to be helpful to them, and, whenever there’s a roadblock, of any kind, you eliminate it FOR them. It’s pretty simple. It is NOT rocket science. Hell, it’s not even First GRADE science. It’s what you learn when you’re three (unless you’re particularly resistant, as I was, then it takes longer). It’s being nice to other people, sharing your toys, saying please and thank you, and all that other crap, I mean wonderful stuff that you were taught so you could survive in the company of people without getting the stuffing knocked out of your gullet, or being ostracized.

    Sadly, we’ve gotten away from holding these companies accountable. We TAKE the abuse when we should be going back and shrieking about it. Ramit’s right about the diffusion effect, but I think it’s higher. . .maybe 12 to 15 people. And by the way, if you aren’t telling 12 or 15 people about your awful experience, YOU should be ashamed.

    Moreover, this business with Best Buy blows my mind. But, it makes a lot of sense. I don’t like Best Buy, and wouldn’t shop there if the products were free. Again, they violate the basic “you either like your customers or you don’t” rule. Best Buy claims to have a return policy, but they charge you if you return items. They call it a “restocking fee.” Why do I have to pay a restocking fee? You have stock people already. I know this, because I often see them stocking the shelves. The only reason to charge a restocking fee is to punish the person returning the item, but that’s not okay, because, if you had done your job correctly, and sold them the item they needed for the specific purpose they wanted to use it for, it wouldn’t have turned into a return in the first place, so, essentially, when you charge me a restocking fee, you’re charging me for your failure to do your job.

    Now it is true that not every single person who buys something is necessarily a good person, and there ARE people out there who’ll try to take advantage of you, but I think it’s worth the risk to just factor those “roadbumps” into the math when you’re thinking about what to charge for your product, and treat everyone like you trust them. Especially since, mathematically, the people who’ll do the right thing massively outweigh the few scumbags who won’t.

    Compare your typical Customer Service experience with my recent experience with Remington Corporation (dialog is very SLIGHTLY changed for convenience, and to maximize clarity):

    Rem: ‘Sup?

    Me: Dude, the foil on my razor fell out and now it won’t work.

    Rem: Dude, that’s teh sux. Wh’appen?

    Me: Dunno. Went to shave one day and it was popped. Went back to SuperDuperMaxiMegaMart, and they’re outty.

    Rem: Didja catch the model number?

    Me: Yeh, it’s the ISUX-1000 combo shaver and meat grinder.

    Rem: Sorry, dude. I’ma send you another one. Be there, like, four days tops.

    Me: Awesome. You da best.

    Rem: Ja! Air Bump!

    Me: Air Bump! [BOOSH!]. Laterz.

    Rem: Laterz.

    And that was it. Faster than you can fix a hitch in your giddy-up, I got a box from Rem, a nice note, and a brand new SUX-1000 to call my very own. Guess who loves, Loves, LOVES Rem? And, since then, I’ve bought prolly four or five new products from them, and told the story to dozens of people including all of you.

    Now, that could have gone a whole ‘nother way, but if it did, I certainly wouldn’t be talking about how easy it is to do business with Rem, and I wouldn’t be praising them to all of you, and so on.

    With this in mind, who do you think has a better chance of selling to existing customers, converting maybes to definites, and securing long-term profits over and above what it cost them to make good on a customer issue, Rem or Best Buy? Think hard, it’s on the test.

    I LOVE the concept of “The Last Mile.” I may even steal it (with full credit of course). But whether you call it The Last Mile, or Goodwill, or The Golden Rule, or Customer Centricity, or even just “The Customer Experience” (whatever that is), it comes back to what we were talking about just above. . .either you like customers or you don’t, and the way you treat them tells them how you feel.

    For the record, I think the boy should’ve given the extra stamp, told his boss about it, and stood his ground. Going the extra mile, or even the extra stamp, for a customer is always good business, whether the powers that be understand that or don’t.

    Warm Regards,

    James.

  27. The biggest problem with communication is the illusion that it has occurred.
    – George Bernard Shaw

  28. Ramit, this is a great article, and hits home for me! I’ve hosted financial education events for years, and relatively speaking, had great success in turnout. But it’s never as good as we hope of course.
    In recent years, we have turned to more email marketing campaigns and invitations, and in a sense, have become more “hidden” behind the computer. Results? Turnout has suffered.
    Recently we have been providing in-depth financial workshops based on the coaching curriculum on our website. I hired a marketing & event coordinator who was in charge of following up PERSONALLY by phone…and sure enough, people responded. They literally told me at the events, “I wasn’t planning on coming until Mellisa called me at work!”

    The personal connection and valued interaction will always be the tipping point for getting clients to follow you and become a Raving Fan.

    Thanks for the article!