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Guy: 12 stop giving coupons when you failed.

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

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

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Practitioner, The Enriching. Daniele Catalanotto.

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

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

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

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

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

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with them again?

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

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

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

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

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

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

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

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

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Guy: What did you do this time?

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

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

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

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power.

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Guy: Mm.

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

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stop everything

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Guy: Right.

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

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

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

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

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

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

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Guy: That's enough.

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

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

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

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

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Guy: It's an insult. Yeah.

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Daniele: Yeah.

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Guy: Yeah.

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

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

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parents picking their kids up on

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Daniele: And

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

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

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

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

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

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

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

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shouldn't be transactional.

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

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

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

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

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

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

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

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

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the guy will comes to check the your ticket

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

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Guy: Right.

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Daniele: then it's that doesn't exist

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Guy: There's discretion

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

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

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

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

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about trains

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Guy: Trains

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Daniele: and hotels

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Guy: in hotels

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

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Guy: or hotel trains. The.

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Daniele: Ooh, now you got me

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

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us soon.

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

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

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

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some more points. Right.

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Daniele: Indeed.

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

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

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

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

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

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

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

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Daniele: Mm,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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there is a coupon waiting for me.

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Guy: Right

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

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

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leave, which is so absurd

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

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right.

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Daniele: exactly.

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

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

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

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

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something, also think about the unintended
consequence of

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Guy: Yes.

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

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Guy: Yeah.

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

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

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Daniele: Thanks to you