Customer Service & Experience: "Executives Have No Idea What Customers Want".

This is a recent Forbes blog entry by Andrea J. Ayers, president of customer management at Convergys. The findings are sad but true, in my experience also.


A new study shows a major, dangerous disconnect.

Convergys recently surveyed several thousand U.S. consumers across 10 major industries to find out what they really think about customer service. We also surveyed executives in each of those industries.What we learned is surprising.We learned that we've shifted from a service economy to the experience economy, where customers are in control, unsuccessful brands are commodities and successful brands create consistently superior experiences.

We also learned that company executives are woefully disconnected from their customers when it comes to delivering the customer experience. One result was truly shocking in its implications for consumer-driven businesses: While most company executives say they have a solid understanding of their customers' experience and expectations, consumers vehemently disagree.
In fact, consumers say that companies not only don't know their needs, they also don't care. Where executives would give their companies' customer service "B" grades, consumers give them "D" grades. What's even worse is that executives have no idea how this disconnect is affecting their companies' futures.

Nearly half of consumers (47%) say they don't believe company executives understand their experiences, citing problems such as rude customer service staff or employees who provide the wrong information or never solve the customer's problem. More than one-third (41%) of the customers who take the time to complain don't think companies listen to or act on their feedback.

But that doesn't mean customers are doing nothing. On average, more than half will defect--leaving a company flatly--based on bad customer experiences, without ever telling the company why.

And the problem doesn't end there. Nearly nine out of 10 customers will tell their friends and colleagues about their bad experiences, creating a negative ripple effect in the prospective customer base that has serious implications for a company's future success. Yet the executives we surveyed thought that only 20% of customers shared the news about their bad experiences--a significant mismatch with the customer view.

And the biggest misunderstanding among executives? If customers don't complain to them, it means they don't have a problem and everything is fine. This is the silent but deadly company killer.

This silence is masking broken feedback channels and customer attrition, which can be lethal for certain industries. Across all industries, 17% of interactions result in a customer leaving the company. In the credit card industry in particular, 43% of customers will stop doing business with a company after a bad experience they did not take the time to report. Our research found that hanging on to existing customers is critical, because their lifetime value increases exponentially over time. In the credit card industry, a small retention increase of 5% can have a huge profit impact of 125%.

To compound matters, the "millennials" are here. The arrival of this younger generation has raised the stakes significantly for companies trying to build solid relationships with their customers. These young customers are tech-savvy and prefer to have their customer service needs met through a wider variety of channels--more than just the call center and the Web. Mobile applications, social networks and virtual worlds such as Second Life, to name a few, are their realms.

If executives think they have a handle on what their customers want, they need to try analyzing the customer service experience of a millennial. Unless a company changes its customer management strategy to address them on their turf, millennials will leave quickly and quietly in large numbers and head for the companies that do "get" them, making silent attrition an even bigger challenge than it is today.

Based on Convergys' research, here are the 10 most important things your customers want you to know:

1. The sharp contrast between what executives think they know and what customers say they don't underscores a fundamental management problem: managing inside out for maximum efficiency instead of taking feedback from the outside and using it to improve the customer experience.
2. Customer perspectives and preferences are the formula to feed into internal efficiencies. Execs would do well to scrutinize the information on those feedback forms and satisfaction surveys and put them to work.
3. With no actionable information available, companies are doomed to make the same customer service mistakes over and over, unless executives get serious about their customers. Executives need to understand that negative customer experiences--even those they'll never hear about--have a direct correlation to attrition, so it's important to work on improvements that drive customer satisfaction.
4. The fact that a customer won't tell a company about his or her dissatisfaction but will tell others means that not only has the customer gone, but also that the company has no idea why, and word is spreading throughout a widening circle of potential customers.
5. A satisfied customer isn't necessarily a loyal one. Even a satisfied customer who rates a company's service as exceptional will leave that company for one that provides better value. Customers are satisfied when a company successfully completes transactions and understands their needs; customers are loyal only when they receive value beyond the ordinary parameters of service. The more extraordinary the value, the greater their loyalty, but it differs by customer. The millennial population might see automated, fast interactions as a value that engenders loyalty, for example, while a retiree might attach special significance to personalized instruction.
6. Silent attrition varies by industry, but in general, companies are losing about 12% of their customers this way, with the defectors poisoning the well among potential new customers. Silent attrition, particularly in this economy, can spell the difference between a company's success and its failure.
7. Service is paramount: No fewer than 78% of consumers believe service trumps personalized features, and 86% of customers say service defines the brand. Customers rate brands based on their own experience with a company, and virtually all leading brands can charge a premium by making service their defining characteristic.
8. Skepticism is on the rise, with 86% of customers becoming more distrustful in the last five years. A prime example? When the economic crisis hit full-swing in September 2008, 95% of U.S. customers said they distrusted the financial services industry. Companies must understand that they have to convey trust from the front line. Smart companies in beleaguered industries are committing substantial resources to ensure concerned customers contacting them have superior experiences that boost trust.
9. One size does not fit all. Those consumers preferring automated channels have doubled in the last four years, with 55% of the population preferring automated resolution to waiting to speak with someone on the phone. Companies must balance automated self-service with agent-assisted service and deliver a seamless customer service experience every way they serve their customers.
10. Millennials are 43% more likely to seek assistance through their preferred automated channels. Nowhere is the preference for self-service more notable than among younger customers who have grown up in the Internet era. For millennials, online interaction is ingrained. They see value in social networks, perceive needs through viral communications with colleagues and order and pay through the Web. They want their service needs handled the same way. Actively embracing the value shift to social network-based service and multi-channel automation is mission critical now to ensure the loyalty of a new generation of customers.
    

The ability to deliver an excellent customer experience is a competitive necessity. This experience is not a fixed is critical to building strong relationships with those customers. Skill in managing the customer experience across an array of changing service channels and segments now plays an increasingly important role in a company's success.

Here are the steps companies need to take to reconnect with their customers:

• Cover the Basics First: Help customers when they need it, and present personalized offers only when they make sense. Our data say customers don't want to hear about special offers or add-ons when they need service. Companies should make those offers only at times when and via channels where customers are receptive.
• Ensure "One and Done": Companies need to refocus their customer service on resolution, not speed. Customers want a "one-and-done" experience, and they don't care how they get it as long as their problem is solved quickly. Companies should favor policies that empower employees to resolve issues without needing to transfer to the customer or escalate the issue, even if it means taking a little more time.
• Take and Outside-In Approach: Create multiple options, using multiple channels, whereby customers and employees can provide feedback and incentivize decision makers to act on that feedback. Resolution has to be immediate, or it won't help. It's worth remembering that every successful communication can be a customer saved.
  

In summary, customers want very reliable help packaged as good customer service, yet companies are still struggling with basic customer service. Of the factors that mattered most to customers, personalization--the focus of so many customer-experience initiatives--ranks at the bottom, below knowledgeable, helpful employees who are able to address a customer's needs on first contact.

True personalization doesn't mean that the customer service agent knows a customer's name when he or she contacts them; it means the company has taken the time to know how best to serve every individual customer well. The companies that understand this will succeed.