Archive for the ‘German mentality’ Category

Fresh from the press: German service economy lags in international comparison

Without changing the new theme of this blog, I want to point out to a new report from the German Institute for Economic Research. According to this report on German exports (abstract in German), the German service sector is lagging in international comparison. Although Germany is still strong in the export of goods, in particular with the automobile and heavy industry, its service share of all exports of 13% in 2005 falls way behind that of other developed countries. According to the institute, this is in particular significant since the economic weight is shifting from the industrial to the service sector. 

I won’t say “I told you so”, but will point instead to this post. ;-) 

As others before, however, the institute sees innovation in R&D and in human capital as the solution to this problem. It still amazes me that these “think tanks” don’t make the connection with the poor service mindset in Germany as one of the key causes of this problem.

Is it German companies or companies in Germany?

In general, service levels offered by companies depend on the service mindset of their employees. As discussed in this post, German mentality leads to poor service mindset in the average German population. This would imply that companies with German employees offer poor service wherever they operate. However, there isn’t always such a clear cut. Service level depends also on the value that company’s management puts on customer satisfaction by providing for example appropriate training to employees or tying compensation to customer satisfaction. 

Let’s take Lufthansa as an example. The German airline employs mostly German employees and operates world wide. Since it competes with other airlines world wide, it cannot afford poor service levels. Hence, it offers now good service, even exceeding that of some US airlines. This wasn’t always the case but Lufthansa’s management must have realized that customer satisfaction is a profit driver and has significantly improved its customer service over the past ten or so years. 

Siemens Business Services (SBS), the former IT service unit of the German industry conglomerate Siemens, could be an example for German management not realizing the importance of customer satisfaction. According to Siemens, SBS has been struggling for years due to competitive and cost pressures. Could these competitive pressures come from SBS’ lower service levels in comparison with its global competitors? And are lower service levels also the reason for poor performance of other European IT service companies like T-Systems, Atos Origin, or Cap Gemini? Although the IT service market is growing, it is also becoming more global, exposing European companies to another service playing field. 

The poor service mindset among the German population impacts not only German companies, but also foreign companies operating in Germany and relying on German employees. Foreign companies establishing operations in Germany may initially pay attention to the service levels offered through their German employees. If not carefully managed, however, these service levels may morph to the typically poor service levels offered in Germany.  

Wal-Mart, the US retailer, is a good example. When the company opened its first stores in Germany, the sales clerks were providing service levels common in the US. For example, when asked where to find a product, they actually walked with the customer to the corresponding aisle, which is very typical for US retail stores. Now, years later, it’s the typical silent hand gesture “that way”.

As these examples show, the poor service mindset among the German population may lead to poor service levels offered by companies in Germany and may also impact service levels provided by German companies abroad. However, these situations can be avoided if management is serious about satisfying its customers, which naturally leads to satisfying company’s owners or shareholders.

Low service expectations

Where are the poor service levels in Germany coming from? German consumers are not accustomed to good service and they perceive the poor service levels they get from most businesses as set in stone. Not knowing better service levels, German consumers usually don’t demand improvements.  

A very telling is an experience at OBI, a home improvement chain. A customer who was engaged for one minute in a sales conversation with a store associate was interrupted by another customer and told to not ask too many questions. This wasn’t only rude but also sheds some light on the German mindset when it comes to customer service expectations. 

The German mentality with never challenging the status quo prevents better customer service levels in Germany. This mentality drives the low customer service levels demanded by consumers and the low customer service levels delivered by businesses. 

German consumers may not be aware of what they are missing by being satisfied with the service levels they get currently. It’s almost like the product availability in the former communist countries in Eastern Europe. Availability of almost any product was very poor then, but most consumers considered that for granted. They simply didn’t know, and were not allowed to know, that a market economy with its self-regulating demand and supply can provide acceptable product availability. 

It sometimes even looks like German consumers were brain washed by businesses when it comes to what is acceptable service. From some Germans you will hear that some customers demand too much service. How do you get to such a twisted view? Are these people shortsighted about what service is acceptable, are they jealous that others know what they want and demand it, or are they simply satisfied with anything they get?