"Are there any barriers to entry in your market?"

Founders of tech-enabled startups, particularly those that are disrupting industries with high-touch customer service requirements, are used to this challenging line of questioning (whether it is during an investor meeting or when they are pitching a panel of investors at a startup event). I recently coached a founder to respond with "we will have challengers in our vertical, but unless those same competitors invest in their customer service at the high level we have, it is unlikely they will succeed" the next time she faced that gnarly question.

Investors typically shy away from tech-enabled service ventures. There are issues of scale and high customer acquisition costs on top of the fear of the ease of entry of competitors into the sector. I see it differently: products are being built cheaper and faster, but failing at customer service means your startup is failing fast. Technology still needs humanity and that means a high-touch. Technology facilitates the discovery of new products but a well-crafted five-star customer review doesn't replace talking to a "real" customer service representative. Apple understands this: the representatives on the phone display the same warmth, enthusiasm and desire to solve a problem as the staff behind the counter at the genius bar. Quality customer service makes your product or platform sticky. Take Zappos as a case in point. I'm afraid to think of how many companies a Google search would produce if I typed in "shoes". Yet, Zappos thrives. The online shoe and clothing giant dazzles with its WOW customer service philosophy. Investing in customer happiness pays off for Zappos: its customers are raving fans of the company--and raving fans are less likely to be lured away by a coupon-waving competitor.

So why isn't disrupting a market with a fanatical focus on delivering the best quality customer service considered a barrier to entry? Can customer service become an investable competitive advantage?

Alexander Shashou believes service is a competitive advantage and that startups should take a page from the hospitality industry. He should know. Alex is Co-Founder and President of ALICE, a cloud operating system for the hospitality industry (ALICE's mobile/web request management platform empowers hotels to receive, manage, and execute all guest and internal requests for every department). Alex also grew up in hotels (his father's company managed 90 hotels in the UK) giving him the guests' perspective on everything from the laundry to the concierge. With ALICE, Alex works with some of the top hotels (from a service perspective) in the country and has learned a great deal in the process.

Hotels go through a significant amount of turnover and have to take extra measures to ensure they consistently deliver the best service they can. Startups are making things up as they go, trying to learn as much from the mistakes and successes made by their community before them. - Alexander Shashou

While building a platform to address the inefficiencies in the hotel industry, Alex and his team have also learnt a lot about delivering great and consistent service, lessons which have improved not only the product, but also the operations and culture of ALICE. Alex believes these are lessons every startup should get to learn, no matter who they work with--and he believes these lessons may just give your startup a Zappos'esque competitive advantage:

Never Say "No".

Hotel staff never say no. It is a banned word in the hotel environment. The job of hotel staff is to solve a problem, whatever the problem is and "no" is a failure in executing the job. Instead of saying "no", offer something else, give alternatives if you can't give what the guest (client or customer) wants. There is always a way to leave someone happy, no matter if you can or cannot address an initial request or need.

Great leaders are on the frontline.

Leaders are not scared of guests or issues that come with the reality of everyday business. At our hotel clients, we have seen first hand how the best managers will go into battle with their staff. In fact, the role of a manager in the hotel is to address the issues that arise, especially with guests.

Great leaders pick up the trash.

There is no job too big or too small, just things that need to be done. Hotel managers know this. You will never see a true hospitality professional pass by garbage on the floor. Whatever your company's garbage is, physical or literal, a good leader will never ignore it.

Loyalty over price.

For hotels and start-ups alike, loyalty is everything. For guests and consumers always have a choice of where to take their business and most often it is wherever they feel more comfortable. Price is only one factor in the decision-making funnel. Quality customer service, how you make the customer feel, what they experience when using your product - these factors trump price. If the customer or client enjoys working with you, they will continue to do so--and will be happy to pay for it.

Consistent customer service needs SOP not culture.

What is an SOP? SOP (Standard Operating Procedure) is a set of written instructions that document a routine or repetitive activity followed by a hotel. SOP helps in maintaining quality and consistency of service and standards. Why don't startups have them? Startups focus on culture, but culture does not always provide the best guide on how every member of the team should respond or act. Take startup attire. At ALICE, we dress casually in the office, yet our clients (hotel staff) wear suits. Without a SOP, an employee doesn't know what's required when they meet with clients (t-shirt or tie). We have created SOPs for how we behave and act in certain scenarios--from meetings to phone calls to customer complaints. Without a SOP, a startup risks inconsistency in how well the team represents the startup's brand.

Hello! Every call is a brand conversation.

Think of the disconnect of a hotel experience if a call to the front desk was handled differently than a call to room service? Hotels know every call is a brand risk. Startups are constantly on the telephone and these calls are typically unmonitored. Whether you are leading your startup's business development efforts, talking to press or simply answering support calls, how do you want your startup to be heard? This is a lesson we learned from our hotel clients and have used it ever since. Additionally, given the average age of employees at a startup is likely significantly lower than that of its clients, acting professionally and sounding more mature can only bridge that gap.

Set Expectations.

A startup is always selling ahead of the curve but a good startup will set clear expectations so that they can build a relationship of trust and loyalty with their target customers. Setting expectations ensures those customers are there through every product release and iteration.

Apologize anyway.

You are never too big to apologize, even if you didn't do it, even if it didn't actually happen. Guest's perception is always more important - as should your clients be.

"One team. One dream."

I don't know a startup that does not buy into this, but our hotel clients embody it. Everyone exists to drive towards a vision and it will take all of your team working as a collective unit to overcome the odds and achieve it.

Published on: Nov 8, 2015