In a Nutshell: A “wow” customer service experience meets clients needs, engages customers on terms that gel with their lifestyle, and creates genuine human connection. Hitting those check marks is what separates Ritz-Carlton, Starbucks, Zappos, and the best financial advisory firms from the rest of the pack.

Guest: Joseph Michelli, a bestselling author, an international speaker, an organizational consultant, and one of the world’s leading authorities on how to develop joyful and productive workplaces with a focus on the customer experience.

My Key Takeaway: To give your clients a “Ritz-Carlton” advisory experience they’ll be sure to tell their friends about:

1. Don’t strive for excellent customer service. Seek perfection. The companies that try to deliver better service tomorrow than they did today are the ones that build the priceless brand loyalty that sets them apart from their competition.

2. Focus your client experience around addressing “peaks and pains.” Find small ways to celebrate big wins with clients that your planning helped them achieve. Use your financial expertise and your human empathy to mitigate painful moments — like, say, a sudden market downturn after a global virus outbreak.

3. Make the most out of every face-to-face interaction you have with a client. Your most effective marketing doesn’t happen in Facebook ads or on a billboard. It happens when a client is in your office getting five-star treatment from the moment they walk in the door. You won’t have to ask your clients for referrals — you’ll be earning them.

Also Learn:

1. Why you wouldn’t take a first date to McDonald’s and what that says about good service vs. great hospitality.

2. How to integrate your tech stack with your advisory team to create elevated customer experiences on a consistent basis.

3. What Joseph Michelli learned about world-class customer service and team leadership from Howard Schultz, Airbnb, and Mercedes-Benz.

Complementary Episode: Pair this with my conversation with Julie Littlechild, in which she discusses how she and her clients “co-create” a unique, personalized client experience. Listen/read here.

Resources Featured In This Episode

The Michelli Experience Visit Joseph Michelli’s website.

Values Clarification Toolkit Click here to download this FREE tool and start living your values.

Full Transcript

Steve Sanduski: Joseph, welcome to the show.

Joseph Michelli: It’s great to be here, Steve. Thanks.

Steve Sanduski: Well, this is a real treat because as we were talking here just before we went live, I first caught wind of you back in probably about 2008 or so when one of your books on Starbucks came out. I found that fascinating. Now here I am, you and I were talking here live at the Barron’s conference.

Joseph Michelli: You’re rich with credibility, so I believe you. Not everyone who says that, I actually believe. They’re just being nice, but thanks for being part of it for the journey.

Steve Sanduski: Well, I’m transparent. I’m not pulling your leg here. Because I’m a big fan of Starbucks. I’m a huge fan of Howard Schultz and I’m sure we’re going to be talking about some of the things that he has done at Starbucks. I’m sure we’ll get there. Let’s start with this whole idea of customer experience, client experience. You’re obviously an expert, a world authority in this area. You’ve talked to some of the leaders of the most prominent companies in the world who do a fantastic job at this. How do you see customer experience and service? How has it changed over, let’s say, the last 10 years? Let’s go back to maybe 2010 to today. What are some of the big sweeping changes that you see happening in that area?

Joseph Michelli: Yeah, I’m so deep into this that I was there before we called it customer experience. We just called everything customer service. Then we had Gilmore and Pine come out. The experience economy and everybody started thinking about the economics of going beyond just fulfilling service needs. What if you looked at this whole thing as a theater and a stage and you thought about the impact, the emotional impact of what you do on your audience and realize that’s going to be the value chain. In the world in which we live today where we’re globally connected, where people share their stories of service experiences readily and worse yet people actually make decisions about whether to engage you as an advisor or to purchase a product strictly based on something they read from an absolute stranger.

Joseph Michelli: This has become currency now. The story of your customer is your currency. I think brands are starting to understand that it’s not good enough to just get it right, make it right. You have to envelop this customer in a branded experience and know what you want them to say about you long before they ever show up at your website or your doorstep.

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Steve Sanduski: When you say the story of the customer, what do you mean by that?

Joseph Michelli: People are lifecasting into social networks all the time. While you might not think that the person who just walked up to you has an audience, they probably do. Maybe only their grandmother or their mom, but everyone has an audience today. I think what we’re trying to do is get marketing through the experience. I was just talking with a colleague of mine from Godiva, I’m going to be doing a book about them next year. He said, in the old days, he would go and he’d say, where’s my marketing budget, at any company he worked for. They would say things like, well, you want to buy a sign across the street? We have a sign above the building.

Joseph Michelli: Your marketing budget is what happens inside of that building. You’ve already got your sign. Do something there. That’s a 5-minute commercial, a 20-minute commercial while the customer is engaged with you. They can then have a 140-character, 280-character tweet about the experience that will influence others to walk up to that sign.

Steve Sanduski: Then how do you think about, let’s say, the wow experience. We talk about the onboarding process. Whether you’re onboarding a new employee, whether you’re onboarding a new client, how do you think about that? What are some of the things that you see some of the best companies doing? Many of the people listening to this are going to be financial advisors. These are smaller firms, don’t have the resources of some of these larger firms. How do we bring that back to a level where smaller service professionals can actually implement?

Joseph Michelli: Here’s more of your value proposition. I’ll talk about some of this from the stage today at the Barron’s conference, but you’re going to make sure that people get it who can’t even be here. For me, wow is defined, and I like to anchor most everything I do in terms of trying to help brands move forward to data. Forrester has done lots of studies on growth of organizations. When it comes to experience, they identify three triggers that if you can hit all three of them, you will outperform laggards in the space. These leading three drivers are meet their needs.

Joseph Michelli: People come to financial advisors to generate someone who’s going to help them achieve their financial objectives. Sometimes that’s grow their assets, sometimes it’s protect their assets, whatever it might be. They come with a meet my needs level. Fortunately, I think most people are able to perform within a bandwidth in that. Differentiation in that space is a little hard. If you’re underperforming there, forget everything else. Don’t worry about the experience. If you’re not competent at the core of meeting customer needs, you’re done. Frankly, customers will tell you if you’re competent by just simply asking how satisfied they are.

Joseph Michelli: Satisfaction is this intellectual calculation of your competence on need meeting. Beyond that, then make it easy for me. The next step up is figure out ways where I can engage you on my terms based on my lifestyle, that at times that’s going to mean technology and self-serve. Other times it’s going to mean please rescue me from all this technology with some human insights beyond the calculations in the AI and the algorithms. Give me a person. Then finally, what they’re looking for is some layered sense of care. I don’t mean care for you because I met your needs, but care about you.

Joseph Michelli: Where I fundamentally felt like as a unique human being, you brought your own unique humanity to the table and connected with me for but a moment and then you’ve got me. If I hit those three drivers according to Forrester, meet needs, make it easy, and then sprinkle on some kind of personalized emotional engagement. I’m outperforming the laggards, the people who are not hitting all three of those substantially in five-year growth models. When we look at this from a very pragmatic perspective, it’s like, okay, how are we doing on the basics? Then where can we meet the customer where they are from a convenience perspective? Then finally, what is our personal connection?

Steve Sanduski: Yeah. I think those are three good frames to be thinking about here. Then this idea of make it easy, I think technology, of course, in many ways has made things easier whether we have an appearance or …

Joseph Michelli: Until it doesn’t work.

Steve Sanduski: Until it doesn’t work.

Joseph Michelli: Up into that point, it’s fabulous, right?

Steve Sanduski: Like in the Iowa caucuses.

Joseph Michelli: Yeah, exactly. I’m not sure that it’s been easier as a result.

Steve Sanduski: Not there for sure.

Joseph Michelli: That’s right.

Steve Sanduski: I remember one gentleman telling me, he said, what we try to do is we try to make it easy for a client to take the first step to do business with us. I was just having this conversation yesterday where two different advisors, one advisor said when we have the first meeting with a potential new client, we ask them to bring their statements in, we ask them to bring their last year’s tax return. Then another advisor said just the opposite, we just want them to come in, we want to have a conversation, we want to get their story, we want to learn about them. Two different approaches to the very same first meeting with a potential new client. I’m not saying one is right and one is wrong. They’re different circumstances. It’s not like one’s right or one wrong, but I think it’s interesting. It’s like how do we make it easy for them to take that first step?

Joseph Michelli: I think the beauty is being able to do both. These are not and ors. If you’re somebody who wants to really maximize your time and you want us to get right at it, then we have an opportunity for you to bring in these materials. If you’re someone who would really like for us to get to know you a little bit, we can get that stuff on the backend. I think a lot of times we build our businesses for one singular client experience. When in truth, we have three or four customer segments that we’re trying to attract. I think the art is to figure out what are those three or four client segments that you serve and how can you create differentiated journeys for them that get their needs met, make it easy on their terms and still make that emotional connection. I think that’s the challenge, is not getting into the chicken egg phenomena.

Steve Sanduski: This idea of caring, caring for you and caring about you is another huge theme that’s come up in some recent conversations as far as we think about what’s happening with technology in the financial industry and technology is making investment management a commodity and some folks are saying, well, as technology keeps going up the food chain and it’s going to replace more and more of what an advisor does. The one thing it will never replace is a caring advisor, someone who is empathetic to their clients, someone who really understands not just what to do with your money, but help you understand what is my money for, how can I use my money in ways that’s going to help me live my best life possible.

Steve Sanduski: I think a lot of your work is also about the front line people have to care about their clients and their customers. I know in the Ritz-Carlton book you talk about Ritz-Carlton says, we don’t hire people, we select people. How do you find these people that care not in a, oh, I’m supposed to care, but that’s just the kind of person I am.

Joseph Michelli: Well, first off, I think that they’re all over the place. We always act as though there’s just this limited supply of people who really care for one another. I’ve actually created a movement called Surprisingly Kind. I’m constantly sharing stories now about people who are being surprisingly kind. What it’s done for me is it’s been a real antidote to the evening news, which gives me a sense that no one is surprisingly kind. I think when you see someone in the world around you who was behaving in that way, whether it’s a server or somebody who’s working for another financial firm, those are people that you need to reach out to somewhere along your journey and say, I’m really impressed by that element of who you are.

Joseph Michelli: It’s the kind of people that I am attracted to and that I bring into my business. It doesn’t have to be a solicitation of their services in that moment in time, but putting a stake in the ground and saying, your behavior right now is in keeping with what I like to select for. I think if something goes untoward in that place, you’ve put a stake in the ground where they might reach out to you at a later point in time. It’s not easy. Selecting talent is really hard and there is a war for talent. Nobody’s going to argue that. Whenever I’m in the quick service restaurant sector, I run across these quick service restaurants that say, why is Chick-fil-A have all these great people and we’re struggling to find them?

Joseph Michelli: Well, this is the same people that you’re trying to create. What has happened is they’ve created a culture. They’ve created a legacy and a lore about it all. When I’m deciding between Chick-fil-A or some other place, I’m thinking maybe that’s going to be a little more family like and maybe they’re going to care a little bit more about me so that I can bring what I am, a caring person to bear for their clients or customers. It’s not an easy answer, but we have had really good success. Ritz-Carlton does it. Many of the brands that I work with really good success at selecting talent and then developing it.

Steve Sanduski: You brought up this idea of culture. If you take the same person and they could go work for McDonald’s or they could go work for Chick-fil-A, are they going to perform a lot better at Chick-fil-A because of the culture, the culture just makes them better? Is that what I hear you saying?

Joseph Michelli: Absolutely. I would encourage your listeners to go in the internet and look that every life has a story. There’s a video that’s used in training at Chick-fil-A. It’s basically the kind of training you get if you go to Chick-fil-A. It’s going to grow the skillset that you have. Essentially, it’s just a bunch of people walking up to the counter with thought bubbles behind them. You don’t really know their story, but they’re telling all these poignant stories. That person who’s coming up to the counter frustrated could have had the death of a spouse yesterday. It’s causing people to think about what’s going on behind this person, their backstory. You don’t get that kind of training at every single quick service restaurant. Because of that, if you have natural talent and it’s being groomed and developed too, so you can maximize it.

Steve Sanduski: Yeah, I think that’s such a great point, this idea of, as a person, you think about a day in the life of my customer. When someone calls me and they’re being ornery or nasty, oftentimes I catch myself and I’ll say, I don’t know what just happened before they called me, maybe something really negative happen, who knows? I try to have a little more empathy, like why are they being this way? I’m not going to take it personally. It’s probably not something I necessarily did. I think it’s an attitude that you bring to it. It sounds like Chick-fil-A, maybe other companies train that idea too.

Joseph Michelli: Right. I think it is assuming positive intent. Some people will prove you wrong and you have to manage those exceptions. The customer isn’t always right. The client isn’t always right. There are times when you have to help them find someone else that they’re right for. It’s not you. Most of the time, people perform to the level that they’re treated. Sometimes we have to treat them a little extra gently because how they got jostled around. Ultimately, they come around.

Steve Sanduski: Mm-hmm (affirmative). This whole idea of service, it’s hard. Here we are at the Bellagio. This morning or yesterday, I take a shower, I use the shampoo. This morning, I get into the shower and there’s three things there. There’s a little tube of body wash, there’s a tube of conditioner, and there’s another tube of body wash. I’m not criticizing Bellagio.

Joseph Michelli: Your hair looks fine, by the way.

Steve Sanduski: It does fine. It’s just conditioner.

Joseph Michelli: People can’t see it on the podcast. It’s super conditioned.

Steve Sanduski: Yeah. Thank you, Joseph. It’s like even at a place like this, which is super upscale, somehow instead of replacing the shampoo, they put another of the body wash in there. Then even little things. I know you’re really big on customer preferences, how do we know what the customer wants? Again, using the example here, is there’s a big bar of soap in the shower and there’s a big bar of soap at the sink. Both of them came wrapped in a little piece of paper. Are you staying here at the …

Joseph Michelli: I am, I am.

Steve Sanduski: Yes, so you know what I’m talking about. I use both yesterday and then when I get back to the hotel last night, of course, they tidy up everything. They give me two brand new bars of soap wrapped in paper. I’m thinking, what did they do with my hardly used soap? I think of myself as a green guy. It’s like, how would they know what my preferences are? It’s like, hey, if I’m here for a week, I’ll use the same bar of soap. You don’t have to give me a new soap every week.

Joseph Michelli: Right. I think the option is to leave one of those pieces. Again, it’s a lot about options and reading what happens. If you leave that one piece of soap and you have the other one still wrapped, so the one unwrapped used gone and you put another wrapped one there. If the person continues to use the one from the day before, then you don’t need to keep replacing new soap. This person is amenable to it. Luxury hotels are always in this quandary. Because they want to be eco-conscious for their own economics and because a whole trending millennial generation particularly cares about that.

Joseph Michelli: Then there’s these other folks who say, “Wait, I’m paying for this soap. Don’t go get and skimpy on me.” I’ve been through this with the Ritz-Carlton for a long time. In 2008, I was sitting with the CEO of the Ritz-Carlton, Simon Cooper in Chevy Chase, Maryland. I remember very vividly and we had this discussion. Could the Ritz-Carlton ever served beer just in a bottle? Must it always be poured into a glass and then handed with reverence like a chalice to the consumer? It was a huge debate in 2008. Now, let’s fast forward, in 2008 at the same time, we were struggling on those kinds of what’s relevant for the customer today.

Joseph Michelli: The folks over at Airbnb, we’re trying to make a rent on an apartment in San Francisco and literally serving Pop-Tarts to guests who were staying on air mattresses. I share that with you to say I think we have to read customers. Every customer has an invisible sign according to Danny Meyer, the great restaurateur out of New York City. It’s our job to read that sign. We’re just inferring it. It is invisible. It’s not like they tell you exactly how they want to be treated. As you treat them one way and you read and engage what their reaction is, then you change your course. You pivot. In work with a financial services client, we talked about this as emotional dynamics.

Joseph Michelli: Everybody has a love language according to Gary Chapman. In the context of business, they have a commerce language. Do you want me to make a big deal of your arrival or are you a little more low key about that? You really want me to not have my phone out and reading text messages while you’re here. It’s different, but I need to try one and see if that works. Making a big deal with the sign says welcome to our firm, in neon lights, doesn’t seem to be something you seem to be comfortable with and I might tone it down.

Steve Sanduski: Yeah. Every one’s different. I think we can use technology to try and understand individual preferences. Going back to the soap example. I took out a piece of paper and I wrote on it this morning and I said, I’ll reuse my soap, please do not replace. I’m curious when I get back to my room this afternoon if they’re going to not replace my soap or what’s going to happen there.

Joseph Michelli: No, they’ll replace all your stationary since you used a piece.

Steve Sanduski: Actually, I used a napkin, wrote it on a napkin.

Joseph Michelli: It is the art. People aren’t easy to read. The more you develop that social intelligence to understand preferences, to try to put yourself in their place, what might they be thinking? It’s one of my favorite questions for customer service. What might your core customer segment be thinking and feeling at each of the major touch points along their journey? Through that, what are the peak moments that you could really amp up? What are some of the pain moments that you could mitigate? What are some of the end moments that you can send them off with some energy?

Joseph Michelli: Because we know from behavioral economics, those peaks, those pains, and those ends are the ones that form memory. For your entire stay here and my stay here, however long we’re here, there are only going to be a few key moments that frame whether or not we think the Bellagio is competent and delivering an extraordinary experience or not. We’re going to decide based on a few key moments whether this conference rocked or not. There’s a lot of in between that we ignore or forget, fades into the gray of our memory.

Steve Sanduski: As you think about a financial advisor, can you imagine what some of those peak moments might be where, hey, this is the moment of interaction that we’ve got to really get right?

Joseph Michelli: I think when you’re putting together a plan that when you see in the eyes of the person that plan really resonates as you’ve got me, like you figured out how it is I think, my risk tolerances, my goals and objectives, and you’re able to share that and say, wow, it sounds like we have forged together in a really meaningful partnership to move you in the direction of your life goals. I’m so excited for you. That moment is pretty cool. The moment of feeling known and that someone has dialed it up right, if that client gives you that confirmation that you’ve got it right, just blow that out of the water. Not in a look at me, aren’t I brilliant?

Joseph Michelli: Look here, you’re going to never found this at the guy across the hall. More at the wow. Two humans came together, or a human and an entire family, or whatever your client looks like. We came together. We evaluated your need state. We looked at the optimal state. We collaborated, co-created a solution set based on expertise that you entrusted me to demonstrate. We’re here looking to the future in accord with your hopes and dreams.

Steve Sanduski: There you go. I think it was … Was it Chip and Dan Heath wrote a book about these peak moments in how do you recognize them? They talk about this idea of when there is one of those moments, make it a big deal. I don’t remember an example off the top of …

Joseph Michelli: The book is called The Power of Moments. Chip and Dan, they’re amazing. They put out so many incredible books. I know Dan. What they do is much like some of these like Daniel Pink, they do the same thing. They go out and they get great research, and then they simplify it so people can understand it. This research has been done for a long time by people with names like Tversky and Kahneman. Those folks have really shown us where to look. One of my favorite examples from the early research, it comes from colonoscopies. I’m sorry. That’s really probably not what … Hopefully no one’s eating right now.

Steve Sanduski: This is a family show.

Joseph Michelli: Yeah, exactly. The whole point of this study is that whatever your consistent level of pain is throughout the procedure does not matter. What matters is if you have any breakthrough peak moments. If you have a sudden surge of pain, then you remember it negatively. Or if your pain is not fully resolved by the time you leave, then you remember it negatively. Anything else short of that, doesn’t matter how high the pain is, as long as it never burst through and as long as it is resolved by the time you leave, all as well. If we know that, then anytime I have a breakdown in service, for example, with a client, I need to make sure before they leave, they leave resolved.

Joseph Michelli: Resolution after a breakdown is critical. If I can get a breakdown early, then I have more time to resolve it before that is over. We also know that you have to fix the pain points, but you don’t get a lot of credit for it. It’s assumed that I’m not going to have pain. Why must I endure pain to deal with you?

Steve Sanduski: We have a drug for that.

Joseph Michelli: Yeah, exactly. Why should I have to? When you fix it, you get a little bump from the days when it was broken, but it doesn’t really change the loyalty to you. What changes a loyalty is elevating the peaks. Anytime you have this moment where it’s a victory celebration moment, you need to celebrate it. Sometimes it’s not about just what’s happening in your relationship with them. Sometimes it’s what’s happening in their life. When they’re going to play that golf course, they’ve always dreamed to go and play, you need to be sending them a sleeve of golf balls that is there waiting for them on the first tee. It’s that kind of crazy over the top I am here with you celebrating a peak moment in your life that is probably related to good financial planning, but isn’t directly related to you sitting across from me in the office.

Steve Sanduski: How do people do those types of elevated experiences on a consistent basis? I’m going to imagine we’re going to have to use technology to do that. We’re going to need a CRM system. We’re going to need to have conversation with our clients to understand what are their preferences, what are their likes, what are their dislikes, what are their hobbies, where’d they go to school, all those kinds of things. We put it into the system and then somehow we’ve got to trigger that, so that when we’re talking to someone like, “Oh, I’m going to go play at Pebble Beach,” then there’s a trigger that’s like, okay, what can I do special for them on their trip to Pebble Beach?

Joseph Michelli: Boy, and that’s exactly, again, what I’m talking to at Barron’s conference right now and what I’ve worked with a lot in the sector. Because you have to dedicate a couple of different types of resources. One is the CRM. That’s where you can put your information. Hey, you got to teach people to track this kind of information. You don’t auto-populate these fields like you might with performance numbers. Somebody’s got to go out and listen …

Steve Sanduski: It’s manual.

Joseph Michelli: … and then manually insert them into your CRM. That’s number one. Number two, somebody has got to be responsible for your … I always segment this by book of business. High net worth investors, I’m going to talk about real personalized things like the gulf sleeve when you’re on the first tee at Pebble Beach. Then the mid book of business, I’m talking about more generalized solution. For all of your accountants who are your clients, you’re going to send out a tax day relief kit on April 15th or whatever it is. It’s a whole segmented strategy for your mid book of business.

Joseph Michelli: Then at your bottom book of business, you can be generic, thinking about you anticipating needs that are ubiquitous to human beings. That one should be fairly automatic. There should be quarterly drops that they get that are about you thinking of anticipating needs. In the mid, can be triggered by segments and timelines. Again, automated. The high end needs a team, needs a team of concierge folks who are responsible for assuring you don’t lose anyone from that group. They are responsible for certain clients and they are responsible for knowing those clients in ways that they can leverage and elevate peak moments in the lives of those clients.

Steve Sanduski: In banking, in some industries, they talk about a chief relationship officer. It sounds like we’re talking more of a chief concierge, a chief hospitality officer, as Danny Meyer talks a lot about. This whole idea of how do we really elevate the experience, it’s got to be an intentional strategy …

Joseph Michelli: It’s intentional, yeah.

Steve Sanduski: … delivered by the right people, empathetic, caring.

Joseph Michelli: It’s not always the advisor. The advisor should be the technical expert, should have obviously strong interpersonal skills. I’m not thinking that you should just be a robot yourself, because they can select that as an alternative, unfortunately, these days. It has to be the people who enjoy tracking and elevating the lives of folks, who feel excited to be held accountable to delivering and constantly tweaking. We go back to that emotional dynamics thing from earlier, hey, we try this, it did not seem to land. We got to try something else. We got a quarterly plan for you as a client that says we’re going to try the gift and then we’re going to try the donating to your charity, we’re going to try the spending extra time with you, inviting you to the football game, whatever it might be.

Joseph Michelli: We are going to consistently try to infer your preferences, your invisible sign. We are going to constantly be present with you in relationships, celebrating your peak moments and creating the financial platform that allows you to continue to enjoy them in whatever way you seek to do. For me, that’s magic. Lots of people don’t do it. They get so into like, let’s just do the mechanics of the thing and let’s run this as efficiently as possible. Then when people turn surprisingly right there going, what happened? We performed so well for them. Our performance was so good. Well, you didn’t really show them anything other than returns. They believed because they got a coupon or a flyer from somebody else who claimed the same kind of performance that they could get that, plus somebody who really cared.

Steve Sanduski: Yeah. I was talking to an advisor yesterday, this whole idea of caring and she said, “I really care about I really like my clients.” She said, “I take them to plays, I take them to baseball games, we go out, we do things together because I really like being around them.” Then I said, “Well, what happens if someone gets referred to you and you may not click with them?” Then her assistant, her associate was there with her, and she said, “Well, we have a pretty strong screening process and we know what she likes.” That person would never get to her to begin with because it’s screened out. There may be someone else in the office that would be a better fit. This idea in a personal service business like being a financial advisor, there’s got to be a human to human fit there. We each got to like each other, and respect each other, and value what each of us bring to the table.

Joseph Michelli: When there isn’t a fit, we have to be willing to let go of that. At some level, I want everyone to love me. Everyone’s a perfect fit for me, of course, right?

Steve Sanduski: Of course.

Joseph Michelli: In truth, every time I force that and I work with somebody that doesn’t fit with me and I try to act like it’s a fit, it’s bad. It starts bad, it gets worse. That’s a lesson I’ve learned long ago. If it starts bad, it probably is going to get worse. What happens is as it worsens, the disillusion of me seeming like I was what they needed me to be when I wasn’t, that disillusion really magnifies itself into social media. It starts to talk about me as disingenuous and not engaged. Hopefully there’s none of that out there. My point is there nonetheless, that we have to stay within our integrity and believe that there is a sufficient number of people for us. If there isn’t, we need to develop better skills.

Steve Sanduski: Yeah. I have started to say no more often here, particularly in the past year or so. It’s like I can’t do everything. I just have to pick and choose the spots. I forgot the gentleman who said it, but it’s like if it’s not a hell yes, it’s no.

Joseph Michelli: Yeah, I love that.

Steve Sanduski: Derek Sivers I think is his name.

Joseph Michelli: For me, I can honestly say that early in my career, I was more inclined to say yes to opportunities that were wrong. Then as you see them turn wrong, you have to ask yourself. Then the more I think you get focused on what is right, the more success I’ve had in my career, at least.

Steve Sanduski: I’m sure you see a strong correlation between the level of service and engagement that a company or an individual has and say referrals. Is it just when I am doing all the things that you talk about here, again, let’s say we’re talking to a financial advisor, I’m elevating these peak moments, I really care about my clients, we provide tremendous service. When I do all those things, do referrals just happen or is there still an additional push, let’s just say, that the advisor needs to trigger to let the client know, hey, I’d like referrals. What happens there?

Joseph Michelli: Right. The great Joe Duran who I worked with when I was in United Capital, he used to say, how often do you think an oncologist goes to his patients and says, I know, I treated your cancer really well. I’d like for you to go out and talk to everybody else about me in case they ever get cancer.

Steve Sanduski: That’s right.

Joseph Michelli: It’s something creepy morbid about asking for referrals at that level of intensity. Yet oftentimes we put an order out to our clients like, please go and find me five more bodies or something.

Steve Sanduski: Just like you.

Joseph Michelli: Yeah, just like you. I think there is a fine line between this. First off, I think every business should set a goal for how many referrals they get. They should track that goal. They should ask people how they come in the door, what was the source that brought them in the door. Was it marketing, advertising, whatever? For example, I have one client right now, 25% of his business is the goal for referrals. Now once you do that, then you have to figure out, well, how are we going to get that? How are we getting it organically? Then what can we do to nurture it? There are certainly times and ways to nurture. I think you’re always talking about wanting to earn referrals.

Joseph Michelli: You’re always talking about that. I am in the business of referrals. I am in a business where relationships are what produce clients and I want to earn that. Now there are certain times you want to activate it and you want to suggest, if you’re happy with this, I’d be really honored for you to think about it. If there’s anything I can do to help you know how to talk about it, I’m glad to do it. Because wanting to refer, which is what the net promoter score is all about, like how likely are you to recommend, and actually referring are two different things.

Joseph Michelli: The statistics behind that very, very cool scientific metric that Bain put together and Fred Reichheld is champions, is that it’s a really good proximity for loyalty, not such a good proximity for referrals. Likely to recommend just means that I’m in a good place to recommend, but you got to activate me to get me to recommend. You can almost say because you’re such a loyal customer and because you’ve experienced what we try to offer here. I really would ask you on my behalf to think about how you could share that with other people. I do think it’s important. Particularly if somebody is dissatisfied, I see people try to activate referrals from people who are just barely there.

Joseph Michelli: I’d like to know the NPS score of the client before I ever, ever try to activate a referral. Because trying to activate a referral with somebody who doesn’t like you is just sending them out there to go tell people how much they hate you. It works against you.

Steve Sanduski: Your recent book here, The Airbnb Way, you talk about five leadership lessons, which are belonging, trust, hospitality, empowerment, and community. I’d love to go through …

Joseph Michelli: Have nothing to do with financial planning.

Steve Sanduski: Well, they do actually. They do actually.

Joseph Michelli: Trust, huh? Let’s see.

Steve Sanduski: Well, trust for sure. I’m a champion of some of these ideas that you have here as they relate to a financial advisor. Let’s just briefly talk about belonging. What does that mean as it relates to Airbnb? Let me see if I can connect how that may fit in with what financial advisors do.

Joseph Michelli: Yeah. I guess this all boils together. There is a great tweet that has been archived for Brian Chesky, who’s one of the cofounders of Airbnb. He’s got it posted up on his wall. He talks about all the people who wouldn’t invest in Airbnb in the early days and what they’re likely to lose out on when this goes IPO or whatever their public offering turns out to be. I think a lot of people felt that this could not happen is how could people accept strangers into their home and that’d be a good value proposition. There’s all kinds of risks involved. One of the things that they realized is that people needed to have more than in a Maslovian sense, just safety, and security, and accommodations.

Joseph Michelli: They needed a higher level emotional engagement if this was ever going to be successful. They found that in their own early experiences just renting out that apartment in San Francisco, as I alluded to earlier, that people left feeling emotionally connected with their host, that hosting had this potential for you to feel like, wow, this is a special moment. Belonging is at their core. They had to take some time to really evolve. They use Chip Conley, the great Chip Conley to help them get there. Chip essentially helped them determine that the real value proposition is to create a world where anyone can belong anywhere. As a traveler, part of the world where I’m exceedingly vulnerable, if you can make me feel like I belong here and I’m safe here, you’ve got me. Airbnb becomes a trusted platform then.

Steve Sanduski: How does that differ from community?

Joseph Michelli: Community I think is, in their world, they’ve got all these hosts that are delivering their experience. They’ve got 4,000 people, I don’t know how many employees they have, but that group is what’s holding together millions of nights of bookings around the world. The people who are really doing the bookings are not employed. They’re being influenced by Airbnb to try to deliver an experience. Yoking those people together as shared resources, helping them do good in their own communities, lifts their sense of purpose beyond just renting a room and believing truly that they can create a world where anyone belongs anywhere, including a world where their communities are benefited from Airbnb.

Steve Sanduski: This idea of community, this is something I’ve been talking about to financial advisors for years, and that advisors have 100 clients, or 500, or 7,000 clients. I’m saying, how can you create a community among the clients, either one big community or subcommunities, maybe around certain interests, and you can be a bit of a nexus bringing your clients together. A lot of clients might like drinking wine. Maybe you start the Joe and Mary Smith advisory firm wine club, for example.

Joseph Michelli: Yeah, I think a member of my family would just join them as an advisor just so they could have that access pointer. That’s so brilliant. Really, I think this is the kind of stuff that you bring to people to think beyond just the numbers and just the mechanics of a business and think broader about the impact your business can have and how you can do some great things. Hey, it helps them feel closer to you because you are that conduit. You are the facilitation of that. Beyond that, it enables them to feel not like they’re alone. In this world that we have today, the screen that we look at all day long, while we seem like we’re connected, we’re often not.

Joseph Michelli: Now some people do connect through that. Airbnb will do online communities, they’ll do offline communities, they’ll support communities that are organically grown. I was up in Portland, Oregon at the launch of my book for HostFast, which was sponsored by a group of HomeHost, not just associated with Airbnb, but with HomeAway and others. This host to host community was supported by Airbnb. They’re helping people who are experiencing homeless in the Portland area. They’re also fighting for homeowners rights and protecting the right to short-term lease your property. It’s a win-win for everybody. It’s activating them to feel purposeful. Boy, when you’re associated with that, you’re pretty valuable.

Steve Sanduski: Yeah. You touched on this, but encouraging advisors to think beyond just the money. I know many of them do. Because money is just a tool. Ultimately, it’s like, well, what’s my money going to help me do? Advisors are, I think, in an ideal position to help their clients have a better relationship with their money and help them think about, well, what’s the best way I can use my money to help me live the kind of life I want. Whether I have philanthropic ideas or whether how much I want to leave to the kids. They do some of those things. Then if you can bring people in a community that have similarities and it ties into this idea of belonging, I feel like I belong here.

Steve Sanduski: I’ve got my tribe, so to speak. I think there’s a lot of opportunities there. Another one, trust. This is an obvious one in the financial business that we’re dealing with people’s money. We have to trust them. I’ve got a really great story here about Howard Schultz that I’m sure you’re very familiar with as it relates to trust. I heard this on a podcast, maybe even had this in your book. This goes back to about 2008 when Starbucks was on the rope with the economic crisis. I think Howard had just come back into the company after having been gone for a while. He said, “We lost our soul. We stop learning how to make good coffee.”

Steve Sanduski: Then he said, “I need to talk to all of our store managers.” There’s 10,000 of them. His board said, “What are you thinking? This is nuts.” He said, “No.” He said, “I got to go talk to these people.” They had a big leadership conference in New Orleans.

Joseph Michelli: New Orleans, yeah.

Steve Sanduski: Yeah, I think toward the end of 2008. Howard was backstage. He was finalizing his notes. One of his colleagues turned to him and said, “Howard, what are you going to say to these people? What are you going to tell them?” He says, “The truth, the real truth. Because if they know what I know, then they’re going to help me turn this thing around, they’re going to care about our people, and we’re going to get back to what Starbucks used to be.” As Howard was telling that on this podcast, I’m like, oh my gosh. It was just so powerful from a leadership moment, from a trust moment, from a transparency moment. I’m not sure if you have any comment on that or …

Joseph Michelli: Absolutely. First off, I would take a hill for Howard Schultz. Forget about politics, forget about whether or not they lost the basketball team in Seattle. For me, having been in the room with the man and watched the way he leads, I am completely convinced that what he just said there is exactly the way he had been at Starbucks. I wrote two books about it. The first one you alluded to, and I wrote a book called Leading the Starbucks Way, it was right after Howard released Onward, which was his story of the transformation, and we took it forward. I was there when Jim Donald was the CEO and Howard went to be the chief global strategist.

Joseph Michelli: He didn’t actually leave the brand, but he was more on global strategy and wasn’t running day to day operations. Just watching how that didn’t work and then Howard’s famous memo that talked about how we’re compromising the experience, how we’ve got more baristas, those stuffed animals in there than we have things which show we’re a coffee authority, all of that. I can tell you, I think at the end of the day, the honest truth does work a lot better. Because as much as we don’t always like to stand behind the truth, the moment that we don’t tell it, the moment people begin to doubt us, that spiral of doubt is crazy.

Joseph Michelli: If I mislead you about some small thing, it starts to cause you to think, well, what are the bigger things you’re misleading me about? Once that happens, you’re doomed. I always say, get ahold of clients before they have to reach out to you. Because once they start wondering, why haven’t they contacted me yet, and oh, by the way, why haven’t they, and I wonder if, and then, oh my gosh, maybe they’re … You’re doomed. Getting ahead of these things is really particularly important. It’s so hard to do in human nature. We want to avoid, wait it out, maybe it’ll get better, maybe they don’t know, no one’s done, it’s all good. Integrity comes from the Latin word integer, which means to be whole as in a whole number. We need to whole in our words and action.

Steve Sanduski: Yeah. Yesterday, at one of the sessions, one of the advisors was talking about how he works with some very, very high net worth families. The patriarch, matriarch of the family, the man in the family was starting to decline. They were thinking about we got to get the money transferred to the second generation. Well, the second generation, a couple of kids, they made money, they lost money, they made money, they lost money. The advisor says, I’ve got to have this tough conversation with these kids and say, look guys, you’ve not been good stewards. We’ve got to figure something out here. We need to start letting you know what your parents have here, because they didn’t really know the full scope of what their parents were actually worth. He had to be truthful to them at the risk of maybe …

Joseph Michelli: Them firing him, yeah.

Steve Sanduski: Exactly, yeah, yeah, and so …

Joseph Michelli: A lot of that intergenerational wealth stuff is about that like, how do I tell the honest lullaby? Because it’ll work out as long as. If you don’t, it won’t. If you fire me and you don’t change who you are, it’s not going to work out. That’s bold.

Steve Sanduski: It is, yeah.

Joseph Michelli: It’s easier to placate.

Steve Sanduski: It is, yeah, yeah. I know. He did a really nice job telling that story and I think it’s still unfolding at this point. I think he’s in the middle of that story right now.

Joseph Michelli: Yeah. It’s a lot of sleepless nights I’m sure standing behind your integrity.

Steve Sanduski: That’s right, yeah, yup. Another one of these ideas here are lessons from Airbnb is hospitality. Now I think you mentioned Danny Meyer earlier, a moment ago. He wrote a great book called Setting the Table. I’m not sure if he came up with this idea, but he talks about service versus hospitality. This is something I’ve been sharing with advisors as well, is the difference. How do you view the difference between service and hospitality and then how do we apply that to what financial advisors do?

Joseph Michelli: Yeah. Well, I think hospitality can be really off putting. It’s okay for Danny Meyers to talk about it, because he owns restaurants all over the place and was largely behind Shake Shack, for example. For us, we’re professional service providers. We’re not in the hospitality sector. Well, and therein I think is the opportunity because if … The way I define it and maybe a little different than Danny, Danny often talks about enlightened hospitality I think. I talk about it probably more in accord with the ways that Chip Conley might, which is its service with heart. Service is easy to figure out. It’s like get it right and make it right, do it fast, be knowledgeable, all of that. That’s operational elements of service.

Steve Sanduski: It’s mechanical.

Joseph Michelli: Yeah, you should be able to put it on a checklist and you should be able to determine how …

Steve Sanduski: It can be done without emotion.

Joseph Michelli: Absolutely. McDonald’s is a pretty dang good example. No offense to all of you who have investments in McDonald’s. What makes them great is their service model, the consistency, the turnkey, the operational excellence. It is rock solid. I don’t go there to have an emotional experience. I would not bring a first date to a McDonald’s so that they can feel a love connection potential. I could do that at Starbucks. Really, Starbucks has to have the same operational platform, but there’s a little bit more of a soul, a little bit more of a romance, a little bit of more of affordable luxury, the third place of the community. There’s a vibe that’s been created there that could allow us to build a relationship going forward from that first cup of coffee. I think that’s the difference. I’d say Starbucks is hospitality and McDonald’s is service.

Steve Sanduski: Okay. I know we’re starting to bump up on time here. You’ve met a lot of these amazing service people. I’m just going to go down the line here with two or three and ask you to tell me one or two big things you learn with them. We mentioned Howard Schultz. What’s something you’ve learned from Howard Schultz?

Joseph Michelli: Yeah. Sitting with Howard, I used to say, “You’re doing a great job in the coffee business.” Howard goes, “You don’t understand.” I said, “Really?” He goes, “No, we’re not in the coffee business.” I sat there like an idiot going, “You’re Howard Schultz, right? Let me just be clear here.” He said, “No, we’re in the people business serving coffee. Until you get that, you’ll never understand how we’re going to be successful going forward.”

Steve Sanduski: I think there’s a corollary there for financial advisors who would say, “I’m not in the financial advice business. I’m in the X business. We need to figure out, well, what is that X business?”

Joseph Michelli: The relationship business, I think, yeah.

Steve Sanduski: The relationship business, yeah.

Joseph Michelli: That enables people to have success.

Steve Sanduski: Ritz-Carlton, you may have met Horst Schulze.

Joseph Michelli: Horst is a mentor of mine. I was fortunate to actually help him get moving in his book, which is just brilliant, Excellence Wins. Horst Schulze, perfection. I used to argue with Horst about, “I want to be excellent, Horst. I want to deliver excellent customer experience. It’s not just satisfactory.” He goes, “Well, if you settle for excellence, you’ll be mediocre. It’s not until you seek perfection that you will reach excellence.” Then he said, “Let me give you the number on this. Perfection is 100%. Excellence is what, Joseph?” I said, “90%.” He goes, “Good. Let’s assume 10% is your mom, your dad, your cousin. Now tell me you’re satisfied with delivering excellence. Seek perfection, be better tomorrow than you work today.”

Steve Sanduski: How about the guys that started Airbnb?

Joseph Michelli: These guys are super smart, but they’re extremely humble and probably better than most leaders at learning from others, the humility of learning from others. They have been on this ride for 11 years, the same three founders, 11 years. That just doesn’t happen in startups. It’s because they trusted each other and each of them, we’re here in Las Vegas, one of them spent a lot of time with another guy that should be mentioned, which is Tony Hsieh from Zappos. He spent a lot of time learning from Tony Hsieh about culture, and then would go and turn to a Chip Conley to learn about hospitality. They were brilliant at going to people who were great, listening to podcasts, expanding their mind, being lifelong learners.

Steve Sanduski: Okay, Tony Hsieh.

Joseph Michelli: Tony Hsieh, just introvert, extremely introverted guy, brilliant Harvard-trained guy, serial entrepreneur, never met an opportunity he couldn’t see a path to, but built a culture as an introvert, an extremely extroverted culture.

Steve Sanduski: Then how about Mercedes-Benz?

Joseph Michelli: Steve Cannon was my main go-to over there. He’s now in charge of the Arthur Blank Foundation, and in charge of Mercedes-Benz Stadium, and the Atlanta Falcons, and all of that. Steve cannon, he was a military academy graduate. I think he holds the record for pushups at one of the academies. He uses challenge coins to build this culture, very military mindset. The coolest part for him is that he was willing to declare what he wanted to have happen, create a visual depiction of what that would look like in addition to a word picture. He constantly made promises that he delivered against, was not afraid to say, we will do these things, and he saw it to its completion.

Steve Sanduski: Then thinking about our audience here, financial advisors, what would you want them to take away in terms of here’s what you can do to really deliver experience caring? What’s the key takeaway for you?

Joseph Michelli: Yeah. I think you got to say to yourself, what do I want every client to experience every single time when they associate with our firm? How do I communicate that clearly so it’s true north for us? How do we ask our clients whether or not we delivered it? If we want to deliver delight, when you do your questionnaire, don’t say how satisfied are you with performance. You can ask that, but also ask, how much did we delight you on a scale from 0 to 10?

Steve Sanduski: Excellent. All right. Well, as we wrap up here, is there anything else that you want to share that we haven’t talked about yet?

Joseph Michelli: No, just people got to keep listening to you. You have great values. Thank you so much.

Steve Sanduski: I appreciate that, Joseph. Well, I appreciate you being on the show.

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