Creating and Administering a True Five-Star Concierge Service

IMN's 2nd Annual Destination Club & Private Residence Club Industry

Symposium, May 29-30, 2008, Miami, FL

Biographical Information: Ed Powers• SVP Operations for Ultimate Escapes

• Co-Founder of Private Escapes, LLC

• 21 years of experience in sales, marketing, quality management, operations management, and consulting

• Formerly with Hewlett-Packard, Sorcia, Center Partners

• BSEE 1987 Illinois Institute of Technology

• Six Sigma Black Belt, Baldrige Examiner, HP Quality Maturity System Reviewer, American Society for Quality Certified Quality Manager

• Spoken at Rocky Mountain Quality Conference, American Society for Quality, Colorado State University, and University of Chicago

• Published in AMA Marketing News, Call Center Solutions magazines

Who are you?

• Industry?

• Functional area?

• Current situation?

Topics

• General Models for Service Quality

• Developing a Quality Strategy

• Lessons from Ritz-Carlton

• Variables in the Destination Club Industry

• Ultimate Escapes Deployment

• Q&A

Service Quality—What is it?

A customer attitude formed by a long-term, overall evaluation of performance.

Source: Hoffman and Bateson., Essentials of Services Marketing, Second Edition, Harcourt College Publishers, 2002

Service Quality—Why is it Important?

• Average customer retention is 80-85%

• Reducing defections by 5% can boost profits 25% to 85%

• It is 3 to 5 times less expensive to keep a customer than to recruit a new one

• It creates referral income

Source: Wayland and Cole, “Turn Customer Service into Customer Profitability,” Management Review (July 1994)Source: Adapted from Frederick F. Reichheld and W. Earl Sasser, Jr., “Zero Defections: Quality Comes to Services,” Harvard Business Review, September-October 1990, pp. 106-107.

Service Quality—How do you Deliver it?

PeopleProcess

Technology

Quality Assurance Process:•Standards•Training•Scorecards•Mystery Shopping•Software

Service Quality—How do you Deliver it?

PhilosophyStrategyStructure

PeopleProcess

TechnologyManagement Process:•Leadership•Planning•Execution•Learning

Developing a Quality Strategy

Quality of theManagement System

“Big Q”

Managementof the

Quality System“little q”

Actual Service Delivered

Customer Expectations

Source: Adapted from A. Parasuraman, Valerie Zeithaml, and Leonard Berry, “A Conceptual Model of Service Quality and Its Implications for Service Quality Research,” Journal of Marketing 49 (Fall 1985), pp.41-50.

Customer Perception of Service Received

Knowledge Gap

Standards Gap

Management Perceptions of

Customer Expectations

Delivery Gap

Standards Specifying Service to be Delivered

Communication Gap

Communication about Services

Conceptual Model of a Service ExperienceService G

ap

The Management System

Fourth Generation Management

1st Generation

Do it Yourself

Source: Brian Joiner, Fourth Generation Management

2nd Generation

Supervise Others

3rd Generation

Management by Objective

4th Generation

Management of the System

Baldrige National Quality Award

• Purpose: To enhance the competitiveness, quality and productivity of U.S. organizations for the benefit of all residents.

• Established in 1987• Awarded by the President and Secretary of

Commerce• Categories: Manufacturing, Service,

Education, Health Care, Small Business, Non-Profit

Source: National Institute for Standards and Technology (NIST)

Baldrige Principles

• Visionary leadership• Customer-driven

excellence• Organizational and

personal learning• Valuing workforce

members and partners• Agility

• Focus on the future• Managing for

innovation• Management by fact• Social responsibility• Focus on results and

creating value• Systems perspective

Source: 2008 Criteria for Performance, Malcolm Baldrige National Quality Award, NIST

Baldrige Criteria for Performance Excellence

1.0 Leadership

2.0 Strategic Planning

3.0 Customer and Market Focus

4.0 Measurement, Analysis and Knowledge Management

5.0 Workforce Focus

7.0 Business Results

6.0 Process Management

Organizational Profile: Environment, Relationships, and Challenges

Source: 2008 Criteria for Performance, Malcolm Baldrige National Quality Award, NIST

Ritz-Carlton Business Excellence Roadmap

Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf

Ritz-Carlton Leadership Example

Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf

Ritz-Carlton HR Focus Example

The Gold Standards

Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf

Ritz-Carlton HR Focus Example

The Gold Standards

Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf

Ritz-Carlton Lessons for DC&PRC Industries

• Aligned and integrated management system based on criteria for high performance

• Process management and Plan-Do-Check-Act practice

• The Gold Standards

• CLASS database

• Benchmarking

Source: Ritz-Carlton Hotel Company LLC 1999 Application Summary, http://www.baldrige.nist.gov/PDF_files/RCHC_Application_Summary.pdf

Advantages in the Destination Club Industry

Variable Advantage

New industry Innovation

•Long-term, highly desirable customers

•Low staff turnover

•Personalization

•Engagement

Challenges in the Destination Club Industry

Variable Challenge

Member expectations of a new industry

Setting expectations

Properties Consistency in outfitting

•Global footprint

•Distributed, contracted workforce

•3rd party providers

Consistency of service

Business model Limited money and resources

Ultimate Escapes Deployment: Leadership

• PurposeWe create and deliver personalized vacation experiences.

• VisionOur service defines the destination club industry where excellence is the standard.

• Values– Fun

– Teamwork

– Communication

– Trust

– Integrity

– Recognition

– Caring

– Dependability

Customer and Market Focus

• Board of Advisors– 3 from each Club– 2 year terms– Review and debate details, then recommend changes to

BOM• Board of Managers

– 1 from each Club– 2 year terms– Quarterly meetings– Rules and Regulations and pricing changes– Minutes taken

Process Management

1.0 Planning and Review1.0 Planning and Review

2.0 Property Acquisition

2.0 Property Acquisition

3.0 Member Acquisition

3.0 Member Acquisition

4.0 Member Services

4.0 Member Services

Escapes

Real Estate Plan

Marketing Strategy

New Member-

ships

Furnished Properties

IT HRProperty

OpsFinance

Key Support Processes

AccountingInstallation & Design

Key Business Processes

Japanese Control and Improvement Methods

Pro

cess

Per

form

ance

Mea

sure

Time

hoshin kanri“policy control”

hoshin kanri“policy control”

kaizen“change for the better”

P

D

C

A

nichijo kanri“daily control”

“little q” in Operations

• Single point of contact• Hiring, training, and performance management• Enterprise technology strategy• Knowledge management• Quality measurement with 100% follow-up• Checklists

– 24-hour Planning– Local Host– Inventory

2007 Private Escapes Results

• Over 2,500 trips• 99.4% Satisfaction with Escape Planner

service• 94.7% Satisfaction with Local Host service• 97.7% Overall Satisfaction • +1% improvement in Overall Satisfaction• < 2% Service Recovery rate• 1.9% redemption rate, none attributed to

service quality

Getting Started on “Big Q” with MBNQA

• http://baldrige.nist.gov/

• Self-Assessment Materials– Getting Started– Issue Sheets– Are We Making Progress?– Are We Making Progress as Leaders?– Criteria for Performance Excellence