Customer service is an important component of customer experience

I am among the numerous followers of Forrester's Bruce Temkin who recently blogged with the title: Don’t Confuse Customer Service With Customer Experience.


According to Temkin it comes down to this picture:

"Customer service is an organizational function, like marketing and sales, that manages a subset of interactions with customers. Customer experience, on the other hand, is the connection that companies make with their customers across all functions and touchpoints. Here's a definition for customer experience: "The perception that customers have of their interactions with an organization".

For most companies, customer service deals with some key “moments of truth” for customers. So that function is an important participant in most efforts to improve customer experience. But firms can’t just focus on customer service interactions or offload responsibility for customer experience to the customer service organization. That’s why the 3rd principle of Experience-Based Differentiation is: Treat customer experience as a competence, not a function.

"

The bottom line: Customer service is an important component of customer experience.

Customer satisfaction and loyalty are not the same.

According to author Shaun Smith:

"True loyalty happens when there is an emotional engagement with the organization or product.

This engagement comes from experiencing the brand or organization in unique way that creates true value for the customer."

Continues Smith:

How is loyalty different from satisfaction?
We have seen time and time again in the research that smith+co has conducted in a variety of sectors that 90% of customers who award top scores for satisfaction indicate their intention to be loyal to that organization. That figure drops to around 20% percent for customers who are still satisfied but rate one box lower. The reason is that over the past 10 years, organisations have become increasingly aware of the need for customer focus and customer satisfaction - so much so, that it is now the norm and the entry price for any organization wishing to be successful.

As a result, differentiation on the basis of basic customer service has declined, price sensitivity has increased and it now takes a unique customer experience which goes beyond satisfaction and creates a real bond with the customer in order to regain the competitive edge.

So, loyalty is not one and the same as satisfaction, neither is it the same thing as repeat purchase. Until First Direct came along in the UK and made it attractive and easy to switch banks, few customers would entertain the inconvenience of closing their account and applying for one elsewhere, yet the retail financial segment has generally low levels of satisfaction among consumers. What kept customers coming back was not loyalty, but 'stickiness' due to the hassle factor in changing accounts. Not any longer.
Loyalty is a misused term. Most organizations think that it is about customers being loyal to them when it should be the other way round - the brand should be loyal to its best customers by offering value that is not generally available to the mass market.

True loyalty happens when there is an emotional engagement with the organisation or product. This engagement comes from experiencing the brand or organization in unique way that creates true value for the customer. And this emotional engagement matters.

As the leading global advertaising agency Ogilvy found in its annual BrandZ survey: "Companies that were successful in creating both functional and emotional bonding had higher retention ratios (84% vs 30%) and cross/up sell ratios (82% vs 16%) compared with those that did not".

And of course when you get very high levels of emotional engagement with a brand than something rather wonderful begins to happen.

Beyond loyalty -> Advocacy
For those organizations wishing to increase margins by driving down sales costs while driving up revenues, advocacy is the answer. This requires you to know who your most profitable customers are and to consistently deliver a customer experience and thus create a high degree of trust in your brand. Then these loyal and highly profitable customers are prepared to recommend your organization to others.

It's therefore no accident that First Direct in the UK claims to win a new customer every eight seconds and is the UK's most trusted bank, according to Research International, or that 36% of its new customers join as a result of a personal referral. First Direct's customers have become the bank's biggest advocates, reducing its costs of sale and increasing its share of these customers' spend.

This is the way to win in a recession.

Great customer service requires 'human service'

There are many components that go into providing exceptional customer service. However, there will never be an element of customer service more important than the human element.

In these days of texting, Facebook, email, etc. the art of human contact is a fleeting one. All of the tools just listed are exceptional ones; however, many individuals and organizations hide behind these communication methods, as well as policies and procedures, to keep them from providing ‘human service’.

Customer Experience is the big buzz term in Customer Service. The definition of experience includes words such as emotion, perception, humankind, and participation. All words that would lead one to believe that in order for a Customer Experience to be exceptional, a human emotional chord must be struck.

Even if ‘touchy- feely’ is not your forte, look at supporting this type of behavior from a business standpoint. Studies show it costs a minimum of 5 times what it would cost to keep an existing customer happy than to acquire a new one.

Times are tough. No man is an island. And everyone likes to feel visible. If you see people as people, you will also see their money –even during these tough times.



This is an extract from the blog of the Customer Service Institute which I thought was very pertinent.

The cusomer service opportunity in this recession

This economy gives us an opportunity. Now, more than ever customer service to both customers and employees (internal customers) is paramount to the success of any company.

With customers tightening their spending, this is the chance for vendors to prove to their customers that they value their business in good times and bad - and that the relationship is more important than the sale.

The same goes for employees. The potential for apathy - even anger - from an employee is high, as morale potentially slips due to layoffs, wage cuts etc.

Management must create an environment that fosters loyalty, both inside and outside of the company, in spite of the tough decisions they have to make.


What is your view? My experience has been that many organizations miss this way of thinking.

No wonder customer service is not getting better....

Companies fail to measure and act on customer feedback, study finds

Despite overwhelming agreement on the importance of the customer experience and subsequent word of mouth, senior marketers admit their companies are failing to take decisive, companywide action to integrate feedback from customers and their experiences into key business and marketing processes, a new study by the Chief Marketing Officer Council says.

The study, “Giving Customer Voice More Volume,” reveals that 58% of the 480 executives in various industries surveyed say their companies do not compensate any employees or executives based on customer loyalty or satisfaction improvements.

38% say their companies have no programs in place to track or propagate positive word of mouth among customers.

And only 29% rate highly their ability to handle and resolve customer problems or complaints.

The study was conducted by the council with Satmetrix, a customer experience and word of mouth consulting and technology company.
“Customer experience is one of the most critical determinants of brand strength and business growth. Yet most organizations and senior marketers suffer from major blind spots and gaps in the way they interact, handle and respond to customer issues or problems,” says council executive director Donovan Neale-May. “CMOs must assume ownership for the customer experience and establish enterprisewide measures and disciplines to ensure continuous improvement. We are missing a major opportunity to turn customer pain into competitive gain at every touch-point through better use of web and contact center technologies and processes.”

Nearly two-thirds of companies do not have a formal program in place to monitor and measure the voice of the customer, the study finds. Only 13% have deployed real-time systems to collect, analyze and distribute customer feedback. While 74% receive customer feedback via e-mail, only 23% track and measure the volume and nature of these messages. And while the voice of customers is spreading online through social media, only 14.5% of companies track word of mouth on the Internet.

“Companies must become more sophisticated and committed to both leveraging customer experience as a key business metric and instituting companywide processes that drive improvement,” says Laura Brooks, vice president of research at Satmetrix. “Measurement is not an end in itself. Companies need to commit themselves to understanding the key determinants of their score and continuously strive to improve their customer experience competitiveness.”