Guy: 12 stop giving coupons when you failed.
Guy: Welcome to Service Design Principles. I'm Guy Martin joined by the author of the Service
design Principles series of books. Founder of the 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 from
your book Service Design Principles. Today it's 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 had
a bad experience from a company and to compensate, 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 the
element of always, you know, which is important to 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,
it starts to lose its power. You know, 2 to 2 stories 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 say
sorry if I do that once, you know, my wife sees me 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, arrive
with flowers, you know, she's already ready to scream and shout
Guy: What did you do this time?
Daniele: Yeah, exactly. You know, you did something, 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,
you know, if when you swear, sometimes you if you 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 just
stop everything
Guy: Right.
Daniele: And that's basically the same thing with 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.
This is something I really receive something which 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 to
coupons is is learning that they shouldn't be the response to everything. And then when it
comes to errors, sometimes, you know, just say, yes, we messed up
Guy: That's enough.
Daniele: is already way better than say we messed 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? And
if you stop that, I'm terribly sorry. This is on 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.
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 talks
about unintended consequences and about the kindergarten 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 up
by 4:00 or whatever, then you'll be fined for, you 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 gave
permission. It was like now it becomes a transaction 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.
And so it became not something to reduce the number of like pick ups, but it actually
increased the late pick ups because now it was a transaction. 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 often
the science of our work in services that is knowing when to use which tool you know is
knowing when when to make it transactional, when to 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 think
I think that the power goes back to the frontline 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 that
point. And when you don't feel it's necessary, don'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,
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 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 way
and they can and they can then choose what is the best moment to do it
Guy: Right. it. Going back to hotels. It's trains or hotels with us.
Daniele: Trains and hotels. I think that we we should 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.
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 from
us soon.
Guy: So, yeah, in in hotels often points are given for for failures in service or something
like this. But again, this unintended consequence is that people try and game the
system and they say, okay, well, I'm going to complain 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.
Right. It's an expectation that they'll get some points 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 shout
and then I make a big scene, they'll give me 10,000 points to go away. So again, it's like,
you know, the appropriate time to give it and not making it
normal, not normalizing these coupons. I think the other thing that that that annoys me when I
get a coupon, for example, especially if it's a discount,
Daniele: Mm,
Guy: it's I had a bad experience with you and now 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,
well, I don't want to ever want to have an experience 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 mind
from my perspective, but you give me a coupon to that 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.
Daniele: yeah. And that really shows that that the toolbox of handling errors and handling, you
know, reactions should be wider than just coupons. Having coupons, refunds. Sorry. Would
you like to talk with the manager, you know, having 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. And
having kind of this toolbox where people just what frontline workers can then pick and choose
based on the context, on what they feel is culturally appropriate with the person, feel
based on what the emotion is. You know, And that's very different and that's very different.
And, you know, there's this element of of gaming. The system, I think
is very true. Do you have ever seen this thing where 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 exit
intent pop ups. So it's a technical thing. And so 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 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 they
trained us to in that way, like living means coupon. 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 gone
right.
Daniele: exactly.
Guy: If they presented that coupon at the start and 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.
Daniele: And, and so in some way we could summarize this by saying if we want to go first
and then just stop with the coupons, it's basically thinking whenever you automate
something, also think about the unintended consequence of
Guy: Yes.
Daniele: the habit that you're creating. You know,
Guy: Yeah.
Daniele: what is the habit that you're creating with your automation?
Guy: Yeah, for sure. No. Let's leave it there. Thank you, Daniele.
Daniele: Thanks to you