When I started out in the real estate ownership and management business, I decided there were three things I had to emphasize to my Team Members:

1. Customer service

2. Asset maintenance

3. Net operating income (NOI)

There are many more aspects to the business, but I wanted to keep a clear focus. So I decided these would be the “big three,” and I would spend one-third of my communication efforts on each. I quickly figured out that in the long run, asset maintenance and customer service are surprisingly close. A leaky roof is neither good asset maintenance nor good customer service, and neat and clean grounds are both good customer service and good asset maintenance. I dialed back a bit on the asset maintenance and decided to make my communication closer to 10% asset maintenance, 45% customer service, and 45% NOI.

But something unexpected happened: Even though I was spending almost half my time talking about customer service, I sensed that it did not have the full attention of my organization. I pondered that for a while until I had my Eureka moment: Hard drives out soft.

On the “hard” side, like most organizations, we have a budget. We call it a financial plan, but it is what most organizations call a budget. The financial plan is full of (surprise!) numbers. Numbers are definite things, and dollars are relatively easy to track and measure and the bottom line is, after all, the bottom line. No margin, no mission. We expend a lot of time and effort in the fourth quarter each year building this plan for the next year.

And, yes, we do track customer service. Every resident service request is logged and a service satisfaction letter (these days often an email inquiry) is sent from company headquarters (not from the individual property management office), with the response directed back to headquarters to ensure objectivity. “Trust but verify” and “Expect the best, and inspect for what you expect” are two of my big slogans. We also survey our residents at least twice a year, after move in and after move out, the two times when the greatest customer service challenges are likely to arise. We also post in every community office a customer comment phone number and email address.

Still, hard (the bottom line) was driving out soft (customer service) because, at least in the short run, customer service can be difficult and may involve financial sacrifice. That customer service is expensive is not necessarily true in the long run, for it is possible to start a positive ”virtuous cycle” (*see “Quality is Free” by Philip Crosby). It is also important to make sure that we and our customers agree on what constitutes quality. It is too easy to project our needs/wants/expectations onto the customer.**

What I found out is that the natural drive of our community managers and their regional managers to “make” the monthly financial plan was overwhelming their customer service inclinations. This monthly and quarterly focus was at times obscuring the long-term benefits of customer service. I may have been spending half my time talking customer service but my systems were spending most of their time talking NOI, and the systems were winning.

With my new-found awareness, I then resolved to spend 80% to 90% of my time talking about customer service, confident that NOI would do just fine on its on. I began spending more of my time looking for customer service heroes to thank and to hold up as examples to be emulated, and told more stories of legendary customer service to drive the ethic deep into our company culture.

* “Quality is Free” deals with the quality manufacturing principle that in the long term it is less expensive (but not easier) to design quality into your product from the beginning, than to try to inspect for quality (find defects and repair) at the end. In the short run, it is much easier to be reactive (fix mistakes after they happen) than to be proactive (take the time amidst all the urgencies and crises of the present moment) to think through your processes, determine ways to avoid errors and mistakes, and design systems and cultures that are always learning and self correcting.

** I once was doing due diligence on a student-oriented apartment community, one side of which faced an open air musical arena. I was concerned that the noise might be a detriment to the rental value. When I happened upon a young man sitting on a balcony facing the concert center I asked him how he felt about living next door to a place that featured live bands on the weekends. To my amazement, he thought it was cool because he got to hear some great bands for free, and when a particularly hot name was scheduled he would invite his friends over to enjoy his balcony seats. My interpretations of what the customer desired were 180 degrees off. Of course, as a manager my goal would be to make sure that every customer moving into the buildings facing the arena shared his feelings, and those who were of a more quiet bent were on the opposite side.

This is a classic from the NSCBlog archive, originally posted September 16, 2007.