LATTE for Credit Unions – Customer Relations Lessons from Starbucks
The Starbucks® story offers many different levels of meaning for credit unions, starting with the strategic question of how an innovator took a commodity product and was able to create a premium, differentiated brand. But a more tactical lesson comes from their approach to customer service.
I was getting caught up on my reading this weekend, and saw a reference to Starbucks in a new book about how to be successful by changing the way we do things. Called âThe Power of Habit: Why We Do What We Do in Life and Business,â by Charles Duhigg. The book relates numerous anecdotes from the world of business.  The core thesis â changing the âbusiness-as-usualâ approach (bad habits) can yield dramatic benefits.
The story that caught my eye was about Starbucks during their growth phase in the 1990s. An issue they identified as affecting the overall experience of both its baristas and employees pertained to conflict resolution. Or more specifically, how baristas reacted to customer melt-downs, which is to say, not very well. The book notes that âtears were common.â
None of us will ever admit in public to having had a meltdown, but weâve all seen it happen â whether it is in a Starbucks, at an airport check-in counter, or even in front of a teller. Not pretty, although it can provide some entertainment during a long airport delay (sympathy for the employee on the recipient end notwithstanding). The response habit (âtearsâ) that had evolved over the years at Starbucks was not leading to effective resolutions of customer issues, and was creating undue workplace stress.
Now keep in mind that during this period Starbucks was hiring about 7000 people every day, many of whom were high school graduates with limited workplace experience, and with even more limited customer relations skills. In a business where youâre selling a customer experience, customer relations skills are essential (does this sound familiar for credit unions?)
Starbucks created what they call the LATTE method to help baristas create a better habit to deal with customer problems â
- Listen
- Acknowledge the problem
- Take problem-solving action
- Thank them, and
- Explain what you've done
What Starbucks did was replace a bad habit (responding to an angry customer with tears) with a much better one (a process for resolving the issue without tears). The best part about it is that everyone feels better.
Much is said about how the personal relationship we have with our members is a core component of the credit union brand. Your front-line personnel are often the most palpable representation of that relationship. But as with Starbucks, customer relations is a skill that is essential to building and maintaining those relationships.
The vast majority of the time our interactions with members are wonderful, and that is where all those great kudos and accolades come from. But that means that the few times we have unhappy members are relatively rare, and it may well be that all of our employees have not had great experience in developing the skills needed to deal with problems as they arise.
To some people a LATTE-like approach comes naturally, but to others it must be learned. So the first question is, are you providing sufficient training to your front-line personnel to enable them to deal with situations when they arise?
But a second question is just as important.  Key to Starbuckâs success is the first T â Take Action. In a Starbucks is can be as simple as making a new beverage for someone if the first one wasnât done right. The stakes can obviously be much higher in a financial services environment, but are your employees sufficiently empowered to take action to fix a problem with a member?
The book acknowledges that habits can be hard to break, but the list of benefits is hard to ignore. If nothing else, you need to buy the book to find out how changing a habit of kebab vendors in Iraq prevented riots, and how understanding a habit created a billion-dollar business for Febreze®!
Post written by Dave Frankil, President, NAFCU Services Corp.
