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Refunding unhappy guests, renovating smoking areas and building prayer rooms: How far Colony goes for its guest experience

The Coworking Space industry is brutal. Last year there was a reported 37 coworking spaces in KL alone, this year I expect the number to be at least double of that. What makes it brutally competitive isn’t just the number of players but because of the amount of investor money pouring into the industry. In this era of cheap money, operators have the opportunity to raise a lot of money at high valuations and use that to open more outlets, spend lots of marketing and cut prices in order to gain market share.

Colony’s strategy isn’t to raise more money to outspend others or open more outlets. In fact in a world where other coworking space operators are targeting to open hundreds of outlets in two years. Our ambition is to just have 20 well run and profitable outlets in five years. Any time we’re in doubt about what to do, we go back to our mission of empowering life at work. To change the experience of work so that going to work no longer feels like going to the office but going instead to the Ritz Carlton or Four Seasons.

In order to do this, we need to be obsessed about our customer experience. If there’s one thing you’ll notice about Colony, is that other coworking spaces refer to their customers as tenants or members, we refer to them as guests just as hotels do. We’re less about creating a community and more about hospitality. We don’t sell desk or office spaces. We sell an experience. The Colony experience.

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Because of this we are obsessed about the guest experience. We send out quarterly surveys and track customer experience with metrics like Net Promoter Score. On top of that, every week at our huddles, our team is asked to present feedback that they have compiled from our guests, good and bad (though we tend to give priority to the bad because that means we need to act immediately).

We take extreme ownership when it comes to anything that affects a guest experience from when the time they walk into Colony to the time they leave. Apart from the great hospitality that my team puts together in terms of anticipating guest needs and always being around for them, here is an example of the things we’ve done.

  1. We killed the industry-old practice of auto-renewing client contracts

A common practice in the coworking space/serviced office industry is an “auto-renewal” term. If you rent a space for 3 months, when it comes closer to the end of your contract, the operator will send you an email reminder that unless you formally terminate the agreement, they will auto-renew your term for another 3 months, That’s great for the operators but it pisses off the customer if they forget to formally terminate because they feel cheated into going on for another 3 months. Nevertheless many just accept it because it’s all in the contract they signed.

The problem I had with that practice though is that even if we do win over the customer for another 3 months or 6 months or even 2 years, it ruins the customer (guest in our case) experience. Is an additional 3 months rental worth forever losing that customer? Since I’m trying to build a long term sustainable business though, that answer is NO. So with Colony we specifically took that term out. If your contract ends, it ends unless you tell us you want to continue. We don’t lock you in anymore beyond that.

2. We have fully refunded customers if they didn’t have a good experience

In fact at Colony we go even further. We had one guest that signed a contract to rent our space for one month. He spent two weeks working at Colony though in his second week we had a number of events going on in the space. So it was a lot noisier and crowded than he would’ve liked. He came to our front desk and vented his frustration as our team listened empathetically. The team offered as many alternatives they could think of to solve his problem but they weren’t good enough so he left angrily saying “I’ve had enough of this place”.

We take these kind of things very seriously so our team had an emergency meeting to discuss how to proceed with this. After listening to everything that happened I suggested that we should fully refund him.

I watched as eyebrows arched upwards around the room. After a few seconds, one of my colleague asked “How much?”. I said “Everything”.

“But he’s already used two weeks worth. Should we just refund him the remaining two weeks?”.

I thought about that for a moment then replied “No. Refund everything, even the first two weeks that he used the space for.”

I then went on to explain that we have to build a company with guests who are happy with what they pay for. Sure this mindset opens us up for abuse by guests who do these things just to get a freebie out of us, so we have to evaluate this case by case to see if the guest has a genuine problem or they’re just trying to take advantage of us. In this case I believed him. He had a genuine problem.

There’s an ending to this wonderful story. A few months later, this same guest came back and rented out an office for a year. He is now one of our strongest advocates for the space. What we did turned an angry customer that we would have lost forever, to a loyal one. Now the Colony team makes decisions like this on their own if they think it will create a great experience for the guest. We do a lot of things like that at the expense of short term profit sometimes.

3) We built a prayer room

In one of our guest feedback recently we were asked if we could have prayer rooms in Colony itself. Coworking spaces and serviced offices are about fully monetising every square footage of space. We worked out converting two existing offices into Suraus would cost us RM57,600 a year (not including the cost to convert one) in foregone rental but we decided to go for it anyway. Why? Because it was an important part of the guest experience.

4) We spent our own money renovating the building’s fire escape because people often hung out there to smoke.

Another thing we did? We noticed that because Colony @ KLCC doesn’t have a smoking area, a lot of our guests resorted to just going to a fire escape to smoke. The fire escape looked really bad with black walls and no light there so it was really dark.

While the fire escape isn’t part of our property, we knew that where our guests hang out (to smoke or otherwise) is part of the Colony experience. So we asked the building management if we could do up the place at our own costs and they agreed. Here is a before and after photo of the space.

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When our guests found out about our plan to renovate the fire escape so they had a nicer place to smoke, one of them said to me “The extent to which you guys go is amazing”.

If we could, I’d put a fan and some seating there but it is a fire escape after all so we can’t put anything there to block it.

Our new Colony @ Eco City though has a kickass outdoor smoking area. Here’s how it looks.

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All these things cost money, so what’s the upside? Did it help us make more money in the long run?

Well Colony @ KLCC is surrounded by other coworking spaces that are cheaper to rent. So far we haven’t lost an existing guest to another coworking space yet even though our average prices have gone up by 25% in the past 12 months. Sure we’re bound to lose some eventually but I believe that if we keep improving on our guest experience, we’ll have a strong retention rate and be able to deliver consistent earnings.

We have a long way to go though, hospitality and service is about consistency and we still have lapses in our service levels every now and then.


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