The New Gold Standard

Michelli, Joseph A. The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company . New York: McGraw-Hill. 2008

Reviewed by Michael Avari.

This review appears on Dr. Michelli's Blog.

“We are Ladies and Gentlemen serving Ladies and Gentlemen”.  So stands the motto of the Ritz-Carlton Hotel Company and the explanation behind its incredible success.  Joseph Michelli follows The Starbucks Experience, with this well-done and comprehensive study of the Ritz-Carlton.

The Ritz-Carlton has an unsurpassed reputation for attentiveness and quality.  This translates directly into their operating result: between 1998 and 2007 sales have almost tripled to $3 billion.  They are planning to reach 100 properties by 2011 and they have successfully extended their brand to The Ritz-Carlton Club, a fractional ownership real estate management company.

How does the Ritz-Carlton do it? Michelli explains it is not by setting the perfunctory mission statement and hoping for the best.  They actively document their beliefs in several formats that are interconnected by five underlying principles.  These principles are put into practice beginning with the daily “line up” of the staff in each hotel, and with every employee’s contact with guests. The Credo, the Motto, the Three Steps of Service, the 20 Basics, Key Success Factors and other tools of Ritz-Carlton sound overly complex, but Michelli does a superb job of illustrating with ample and graphic examples the application of theory to practice.

The “Ladies and Gentlemen” of the Ritz-Carlton, for example, each have authority to spend up to $2000 per guest per day to satisfy guest problems.  They are imbued with the belief that “mediocrity is our threat” and that they are empowered to make each guest’s experience unique and memorable. My favorite story is about the anticipation of the staff at the St. Thomas property for the needs of a pregnant woman traveling with her husband for their anniversary.  Upon their arrival, she found a body pillow, extra blankets, and apple cider instead of champagne in the ice bucket.  No detail is ignored, even in Michelli’s examples as he brings vignettes to life and pleasantly elucidates each Ritz-Carlton principle.

The Ritz-Carlton is fastidious about measuring performance.  It hires Gallup to measure various attributes about guest experience and has developed a way to measure “customer engagement”, the interaction of employees with clients.  Quality pays at the Ritz-Carlton: for every four point increase in customer engagement, they see a $40 million increase in revenue.

In the business literature, there are many books exhorting us to concentrate on quality and customer satisfaction.  Michelli instead exposes in a detail the methods and techniques of one of the most highly regarded luxury brands whose very business model is centered on quality service.  This is much more informative and satisfying.

Replete with examples, this book is instructional as a large scale case study in quality; as the documentation of benchmarks and techniques to establish and measure superior service in one’s own business; or—perhaps unintended by the author—as an inspirational reader in how to attain customer loyalty and expand a company’s brand.

The book itself is appealing to the senses: with sturdy binding, elegant proportions, quality paper and printing, inserts and sidebars highlighted in the Ritz-Carlton’s corporate colors … McGraw-Hill has created an experience to help one become immersed in the Ritz-Carlton’s famous atmosphere as one reads. To complete the multimedia effect, one can view video recordings of Michelli’s interviews with Ritz-Carlton executives at www.yournewgoldstandard.com .  Luxury like this cannot be delivered in an eBook.