The consumers determine ultimately not only the prices of the consumers’ goods, but no less the prices of all factors of production. They determine the income of every member of the market economy. The consumers, not the entrepreneurs, pay ultimately the wages earned by every worker, the glamorous movie star as well as the charwoman. With every penny spent the consumers determine the direction of all production processes and the details of the organization of all business activities.

~ Ludwig von Mises, Human Action

Businessmen often forget this. As specialists in production, they become fixated on their products, their plans for the business, and their goals for all the money they will earn. But consumers determine the outcome of the businessman’s concerns. They must be placated in the marketing of everything offered for sale. As Mac Ross, the master direct-response marketer has said, “If you build a better mousetrap and ignore marketing, you will die broke with a garage full of mousetraps.”

Businessmen who sell to the general public should go out of their way to train their employees to “do things with a smile.” A person who takes our order had better be more than an order-taker. We don’t need to shop there. There are many competing firms who will take our money. Money is the most marketable commodity. We consumers, in our economic capacity as consumers, hold the hammer.

When you find a salesperson committed to customer service, you have found a rare jewel. If you have a similar experience with that person a second time, and if you own a business, and if this person could by any stretch of the imagination fit anywhere in your business, offer to hire the person. Such an employee will generate repeat business.

If you find a company that appears to employ several of these people on staff, investigate. This may be a company to invest in. The ability of a firm to identify or train salespeople who know how to keep customers happy is probably more important to the success of the business than the actual product line.

When we encounter these people, it comes as a surprise. As customers, we find satisfactory service in most businesses that offer face-to-face sales. The more selling that employees must do, the more likely that the salesperson is at least pleasant. Otherwise, the person would have been fired or quit because of low commission income. Surly people are comparatively rare in face-to-face selling — far more so, I find, than up in America’s telephone trees.

But really outgoing, cheerful salespeople are extremely rare. How often do you get the impression that this person really does have your best interests at heart, and wants to make your experience a memorable one?

If our high schools were to impart only one skill, it should be cheerfulness in front of a consumer. The cash registers do the math. Hand-held calculators do the higher math. Most people never remember what they learned in algebra class. One of my favorite scenes in Peggy Sue Got Married, a movie about a woman in her late-thirties who finds herself back in her senior year in high school, is where she tells her algebra teacher, “I will never use this. Really, I won’t.”

The social experiment known as the compulsory-attendance public high school is now a century old. With respect to this system’s production of graduates who are ready to meet the consumer with a smile, it is way behind the output of fast-food restaurants.

If I were to teach McDonalds one phrase to teach its trainees, it is this: “Will you have smiles with that?”

HOW IT’S SUPPOSED TO BE

When we as consumers go to buy something, or even more important to us, after we have already purchased it, a good experience in the transaction makes us want to do this again. Nothing is more important for long-term business profitability than repeat transactions.

Recently, Jude Wanniski posted one of his “Memo on the Margin” reports on his website. He writes a great deal for his clients, but “Memo on the Margin” is for the general public. Here is his report for March 6, 2005.

An Appreciation of Ivana Maine

Memo To: Larry Kellner, CEO, Continental AirlinesFrom:Jude WanniskiRe:An Inspiration in the Air

You may not have heard of her, but Ivana Maine is a flight attendant on your Lisbon/Newark route. I was on the flight this morning after two days at a NATO workshop, to which I’d been invited to make a talk on the global economy. Some important things happened to me in Lisbon and I was feeling pretty good as I boarded Flight 65 departing Lisbon at 10:15 a.m., but I was not prepared for Ivana. In 48 years of flying, since I was 20 years old and flew from La Guardia to Burbank on the way to the fall 1956 semester at U.C.L.A., I’d never encountered a flight attendant like Ivana. She was an inspiration, and I decided to write to you about her in this “memo on the margin.” By “margin” I mean the place where all change takes place, something new, no matter how small. In my “memos” on this website, I try to offer comments on events that represent change, in one direction or another in the U.S. or world economy, and Ivana fit the bill perfectly.

My vantage point was from the first row of business/first class and I was the first aboard, so I was in a position to watch the plane fill up with a few hundred passengers. The woman who greeted me cheerfully as I stepped into the plane said “Good morning, good morning, welcome!” which I was not used to hearing and thought it was very nice, but probably due to my first-class status. What followed absolutely blew me away. This little woman, not more than five feet two inches, bubbled and bustled for the next 20 minutes as the plane filled up, greeting everyone who came aboard just as she had greeted me, her “Good mornings” and “Welcomes!!” filling the cabin like music. At first I thought she would tire of the exclamations as she moved up and down the aisle, or that they would begin to sound perfunctory, but from first to last she was greeting each passenger with as much enthusiasm and spontaneity as she had greeted me.

I’d never seen anything like it, and I could see the passengers filing into coach respond with smiles and nods. It was unlike anything I’d experienced on the thousand flights over my 48 years. This was far beyond “exceptional service,” the far end of the bell curve as ratings go of the very best workers in the service industries. I’d watched her during the flight and was amazed at the joyousness she showed in attending to the passengers in the smallest detail. When I saw she had a moment I caught her eye and she came over with a smile to see what I wanted, and I simply asked her how it was she was so happy. “But this is my home,” she laughed, holding her hands out to the cabin, “and you are my guests. I am happy to come here, I really look forward to coming here when I wake up in the morning, to be a part of this.” And she clearly felt it and meant it. If it were the custom to give flight attendants gratuities, I thought, it would make sense that Ivana would put on a show to increase her income.

But that wasn’t it, and the experience of watching her reminded me of the pure joy everyday, ordinary people can feel by throwing themselves into their work, getting out of it far more than a paycheck at the end of the week. I recalled reading Erich Fromm’s “The Art of Loving” sometime in the 1950s, in which he wrote of the deep satisfaction, a love of a kind, that men feel for each other in working on a common endeavor, like building a bridge or a skyscraper. To earn the appreciation of your fellows by doing your work well is priceless, and Ivana clearly was drawing on an even deeper pool of satisfaction, asking nothing in return for her hospitality, a clean expression of virtue being its own reward. At the end of the 7-hour flight, I told her I was going to write to you with this commendation, but I knew I would have to do more than simply fill out a card noting her exceptional service, because this was more a song of humanity. She is Portuguese, I gather, telling me she had worked for many years for Varig, the Brazilian airline, and has been with Continental for the last eight. How wonderful, I thought, it everyone could be so enthusiastic about “work” after so many years at it, and it occurred to me that many more than we imagine feel that way, but they don’t express it as Ivana does. . . .

In 48 years of flying, this was a wholly new experience.

Why aren’t a majority of employees who deal with the general public just like her? Why don’t training programs impart these skills? What Dale Carnegie taught two generations ago in How To Win Friends and Influence People, should be basic in training in-house programs.

Some people acquire these skills at an early age. For them, life is a lot easier. But most of these skills can be taught to people who are motivated to learn them.

The problem seems to be a lack of motivation. The old adage about necessity being the mother of invention applies here. The absence of necessity has reduced the supply of invention. Americans are fat and sassy. Capital investment has increased our output as producers. There is high demand for entry-level labor. So, employers take what they can get, and what they can get went through the public school system.

WHAT OUR MOTHERS TAUGHT US

As children, we are taught properly to say please, say thank you, and treat adults with courtesy. Anyway, my generation was. The kind of training required to make employees highly productive in dealing with customers is little more than a refresher course in what we learned from our mothers at age three. Why is this training seemingly absent all the way up the educational system, from pre-school to graduation day?

A business that requires continual courses of its employees is going to get a high payoff if this training includes customer relations. The trainees must be taught to love the customer, to want to do right by him. The problem is, employers need this training first.

Part of the problem may be that well-trained employees get better job offers and quit. But fast-food restaurants know these kids are going to quit, probably when they go off to college. Newlyweds don’t work at McDonalds, either.

Wal-Mart does teach these skills. Floor people are supposed to be friendly. If they are closer than so many feet to a customer, they are supposed to offer to help or at least say hello. Wal-Mart has a limited supply of floor people, as warehousing retailers do. So, it concentrates on customer relations in an almost Japanese-like way. Wal-Mart sales now account for something like 2% of America’s gross domestic product. It did this in less than one generation.

This is now basic to survival in retail sales. Price competition from the Web is eating into the margins of local retail sellers. These companies must learn to sell based on service and positive customer experiences. Price competition will drive out of business all but service industries and warehouses stores that offer the customer immediate purchases.

Service with a smile is no longer a luxury. It must become basic to face-to-face retailing. The Web is relentless.

If you are employed by a company that deals directly with the public, and management isn’t putting up money for training along these lines, you had better be working on an exit strategy. That company’s days are numbered.

March 9, 2005

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