SDP-012. Stop Giving Coupons When You Failed

Guy: 12 stop giving coupons when you failed.

Guy: Welcome to Service Design Principles. I'm Guy Martin joined by the author of the ServiceGuy Martin joined by the author of the Service

design Principles series of books. Founder of the Swiss Innovation Academy and Service Designthe Swiss Innovation Academy and Service Design

Practitioner, The Enriching. Daniele Catalanotto.

Daniele: Hi Guy, it's such a pleasure.

Guy: Great to have you here again. So every episode we look at one of the principles fromepisode we look at one of the principles from

your book Service Design Principles. Today it's number 12. Stop giving coupons when you failed.number 12. Stop giving coupons when you failed.

Now people usually like getting a discount Daniele, so why do I feel cheated when I've hadDaniele, so why do I feel cheated when I've had

a bad experience from a company and to compensate, they give me a coupon on dealingcompensate, they give me a coupon on dealing

with them again?

Daniele: Yes. So there are multiple elements here that I think the first one is, is thehere that I think the first one is, is the

element of always, you know, which is important to me. It's if every time you do something whereto me. It's if every time you do something where

you suck, the only response that you have is here a gift here, a gift here, a gift. You know,here a gift here, a gift here, a gift. You know,

it starts to lose its power. You know, 2 to 2 stories to build on that If you know, I'm comingstories to build on that If you know, I'm coming

late at home and I know I've been way too late and so I'm going to buy some flowers to sayand so I'm going to buy some flowers to say

sorry if I do that once, you know, my wife sees me arrive with flowers and she says, Hi, it'sme arrive with flowers and she says, Hi, it's

okay. You know, you're sweet. But if if I do that every time when she sees me arrive, arrivethat every time when she sees me arrive, arrive

with flowers, you know, she's already ready to scream and shoutscream and shout

Guy: What did you do this time?

Daniele: Yeah, exactly. You know, you did something, you know, And so basically it's aboutsomething, you know, And so basically it's about

this thing, or we can take it to another. And another level is you know, it's like swearing,another level is you know, it's like swearing,

you know, if when you swear, sometimes you if you swear every time, you know, it loses itsyou swear every time, you know, it loses its

power.

Guy: Mm.

Daniele: But if, if your dad never swore but one day he said one of the bad words, it will justday he said one of the bad words, it will just

stop everything

Guy: Right.

Daniele: And that's basically the same thing with coupons. It's it's meaning that therewith coupons. It's it's meaning that there

should they should be surprises. They should be moments where people say, oh, okay, this is nice.moments where people say, oh, okay, this is nice.

This is something I really receive something which is a gift. And it's not just it's just notwhich is a gift. And it's not just it's just not

just an automatism. And I think that's that that's a very important thing when it comes tothat's a very important thing when it comes to

coupons is is learning that they shouldn't be the response to everything. And then when itthe response to everything. And then when it

comes to errors, sometimes, you know, just say, yes, we messed upyes, we messed up

Guy: That's enough.

Daniele: is already way better than say we messed up, please get five bucks. And then it'smessed up, please get five bucks. And then it's

like, no, your mistake is worth much more than the five bucks you could give me, you know? Andthe five bucks you could give me, you know? And

if you stop that, I'm terribly sorry. This is on us. It's very different than. Oh, sorry. Here.us. It's very different than. Oh, sorry. Here.

Five bucks. Yeah. I just missed my grandmother's funeral. Your five bucks don't change anything.funeral. Your five bucks don't change anything.

Guy: It's an insult. Yeah.

Daniele: Yeah.

Guy: Yeah.

Guy: There's a story that's told in Freakonomics by Stephen Levitt and Stephen Dubner, It talksby Stephen Levitt and Stephen Dubner, It talks

about unintended consequences and about the kindergarten that was having trouble withkindergarten that was having trouble with

parents picking their kids up on

Daniele: And

Guy: time. And so they said that they will get fined. And and if you don't pick your child upfined. And and if you don't pick your child up

by 4:00 or whatever, then you'll be fined for, you know, $5 or whatever for every 5 minutes oryou know, $5 or whatever for every 5 minutes or

something like this. I can't remember the details. The problem was, is that this then gavedetails. The problem was, is that this then gave

permission. It was like now it becomes a transaction and it says, okay, I can pick up mytransaction and it says, okay, I can pick up my

kid late because I can afford to pick up my kid, you know, 30 minutes late or something like this.you know, 30 minutes late or something like this.

And so it became not something to reduce the number of like pick ups, but it actuallynumber of like pick ups, but it actually

increased the late pick ups because now it was a transaction. And sometimes these thingstransaction. And sometimes these things

shouldn't be transactional.

Daniele: Yeah, I think that that that that's definitely the point is that it's, again oftendefinitely the point is that it's, again often

the science of our work in services that is knowing when to use which tool you know isknowing when to use which tool you know is

knowing when when to make it transactional, when to make it emotional and, and that's notto make it emotional and, and that's not

something that you can say every time we will do it like that, you know. And that's where I thinkit like that, you know. And that's where I think

I think that the power goes back to the frontline workers, you know, giving them thefrontline workers, you know, giving them the

tools of saying, okay, here, when you feel it's it's necessary, you can give coupons up to thatit's necessary, you can give coupons up to that

point. And when you don't feel it's necessary, don't do it. You know, and a good example ofdon't do it. You know, and a good example of

that is the Swiss railway. They are they have this thing where the way the the the ticket guy,this thing where the way the the the ticket guy,

the guy will comes to check the your ticket

handles mistakes is up to him. So it's not like if we are 10 minutes late you can get the refundif we are 10 minutes late you can get the refund

Guy: Right.

Daniele: then it's that doesn't exist

Guy: There's discretion

Daniele: Exactly. But what happens is that basically then they can do it in a very good waybasically then they can do it in a very good way

and they can and they can then choose what is the best moment to do itthe best moment to do it

Guy: Right. it. Going back to hotels. It's trains or hotels with us.trains or hotels with us.

Daniele: Trains and hotels. I think that we we should not do a podcast about service design butshould not do a podcast about service design but

about trains

Guy: Trains

Daniele: and hotels

Guy: in hotels

Daniele: or trains in hotels. That's just like the best one.the best one.

Guy: or hotel trains. The.

Daniele: Ooh, now you got me

Guy: Okay. I will put that aside for now and you'll hear the Train hotel podcast coming fromyou'll hear the Train hotel podcast coming from

us soon.

Guy: So, yeah, in in hotels often points are given for for failures in service or somethinggiven for for failures in service or something

like this. But again, this unintended consequence is that people try and game theconsequence is that people try and game the

system and they say, okay, well, I'm going to complain about something because I want to getcomplain about something because I want to get

some more points. Right.

Daniele: Indeed.

Guy: And the complaints go up because there's an expectation. Then it's not a surprise anymore.expectation. Then it's not a surprise anymore.

Right. It's an expectation that they'll get some points back out of it, you know. Oh, I'll getpoints back out of it, you know. Oh, I'll get

2000 points if I complain that my room wasn't serviced or something. And I'm like, if I shoutserviced or something. And I'm like, if I shout

and then I make a big scene, they'll give me 10,000 points to go away. So again, it's like,10,000 points to go away. So again, it's like,

you know, the appropriate time to give it and not making itnot making it

normal, not normalizing these coupons. I think the other thing that that that annoys me when Ithe other thing that that that annoys me when I

get a coupon, for example, especially if it's a discount,discount,

Daniele: Mm,

Guy: it's I had a bad experience with you and now you're saying, well, to compensate you fornow you're saying, well, to compensate you for

that, please have another experience with us, but at a lower cost. So when when my feeling is,but at a lower cost. So when when my feeling is,

well, I don't want to ever want to have an experience with you again, good or bad, right? Iexperience with you again, good or bad, right? I

kind of want to punish you for making me hurt. Now, that might not be the right frame of mindNow, that might not be the right frame of mind

from my perspective, but you give me a coupon to that that I can only get value out of if I comethat that I can only get value out of if I come

back to you again and spend more money with you in future. That doesn't work for me.in future. That doesn't work for me.

Daniele: yeah. And that really shows that that the toolbox of handling errors and handling, youthe toolbox of handling errors and handling, you

know, reactions should be wider than just coupons. Having coupons, refunds. Sorry. Wouldcoupons. Having coupons, refunds. Sorry. Would

you like to talk with the manager, you know, having a bit of all of that? Uh, being able tohaving a bit of all of that? Uh, being able to

take the shame, you know, and say, yes, this is on us, I'm sorry. You know, all of that. Andon us, I'm sorry. You know, all of that. And

having kind of this toolbox where people just what frontline workers can then pick and choosewhat frontline workers can then pick and choose

based on the context, on what they feel is culturally appropriate with the person, feelculturally appropriate with the person, feel

based on what the emotion is. You know, And that's very different and that's very different.that's very different and that's very different.

And, you know, there's this element of of gaming. The system, I thinkThe system, I think

is very true. Do you have ever seen this thing where you go on a website and the moment youwhere you go on a website and the moment you

start to leave, there comes a pop up that says, you know, which is the thing that is called exityou know, which is the thing that is called exit

intent pop ups. So it's a technical thing. And so now every time I go, I go on a website whereso now every time I go, I go on a website where

I want to buy something, the first thing I do is like, try to fake me going out just to say maybelike, try to fake me going out just to say maybe

there is a coupon waiting for me.

Guy: Right

Daniele: So let me just check it, you know, which is so absurd, you know, And because theywhich is so absurd, you know, And because they

trained us to in that way, like living means coupon. So you're okay, I'm going to try tocoupon. So you're okay, I'm going to try to

leave, which is so absurd

Guy: And then if the coupon doesn't appear, you've already left. So the momentum has goneyou've already left. So the momentum has gone

right.

Daniele: exactly.

Guy: If they presented that coupon at the start and said Welcome as a new customer, you can getand said Welcome as a new customer, you can get

blah, blah, blah. 5% or something like this, he's a coupon that that might be more effective.he's a coupon that that might be more effective.

Daniele: And, and so in some way we could summarize this by saying if we want to go firstsummarize this by saying if we want to go first

and then just stop with the coupons, it's basically thinking whenever you automatebasically thinking whenever you automate

something, also think about the unintended consequence ofconsequence of

Guy: Yes.

Daniele: the habit that you're creating. You know,know,

Guy: Yeah.

Daniele: what is the habit that you're creating with your automation?with your automation?

Guy: Yeah, for sure. No. Let's leave it there. Thank you, Daniele.Thank you, Daniele.

Daniele: Thanks to you