Is customer service truly part of your culture?

As a starting point, ask the following questions:

• Does your corporate mission statement include providing excellence in customer care and service?
• Is providing excellent customer care included in your long-term vision statement?- Are customer service objectives well articulated within your company?
• Is measuring customer satisfaction embedded in your process for all customer-facing activities?
• Do you have ongoing customer satisfaction improvement processes?-
• Are employee performance metrics (including promotions, bonus, etc) – including senior positions – aligned with customer satisfaction?
  

If you answer "No" to any of these questions, you have likely identified an organizational weakness and an opportunity for improvement that will help you meet customers' high expectations.

Improving customer service while reducing costs-to-serve

Jack Springman of the UK firm Business & Decision outlines the key steps for firms seeking to increase customer satisfaction while reducing costs - with the end result that the costs-to-serve is optimised.

Reducing costs and growing revenue are seen as alternatives a business must choose between, perhaps not mutually exclusive but certainly opposing forces. In reality they are two sides of the same coin – businesses rarely have the funds to invest and grow if they have not sharply prioritised expenditure and cut to the bone that which adds little value to either the business or customers. Also initiatives which reduce cost can simultaneously improve customers’ experience, the business ability to generate revenue or both. Businesses looking to optimise their costs to serve should consider enacting the following, if they have not already.

The first potential action is transfer customers from field sales account managers to telephone account managers. This offers a number of savings - typically an office-based sales manager can handle three times as many customer accounts as someone in the field through not having to travel. Secondly, salary levels are typically lower. And thirdly, there is no need for a company car or other travel costs.

In addition this transfer can improve the customer’s experience – smaller customers who might have only been visited twice a year will get a regular monthly call. There is no need for any contact to last an hour just because the salesman has travelled an hour to get there. Equally office-based account managers are easier for customers to contact due to their not spending time in lengthy face-to-face meetings or driving. From the customers’ point of view, service is both more timely and time spent in conversations is more productive.

From the business point of view there are benefits arising from more direct supervision. Pricing corridors can be more strictly enforced, as can process adherence (such as making sure all interactions are captured in the CRM system, transforming information that would otherwise rest in salesmen’s heads into corporate assets). Also there is greater opportunity to identify reasons for below average performance then deliver the necessary coaching.

Not all customers can be transferred to office-based account managers. Larger customers may demand a regular field sales manager visit; and when customers’ needs are complex or there are multiple buying points, regular visits make sense for the business as well. Even in such circumstances there are typically opportunities to transfer sales support activities currently performed by field sales managers to office-based staff. For example, running reports to prepare for meetings, preparing proposals or quotes, dealing with administration tasks, ensuring queries are addressed by the customer service team in the first instance rather than sales managers. When analysed, the amount of time spent by sales managers doing the job they are supposed to – selling to new customers, growing existing accounts – can be scarily low. Relieving them of ancillary tasks, both ensures they serve their customers better and generate more revenue for the company.

Scope for win-wins?

If transferring customers and activities to office-based staff is the first stage, the second is the transfer of activities performed by office-based staff to self-service. Providing an additional channel increases choice for customers. They can perform routine activities – place repeat orders, submit requests – unconstrained by suppliers’ working hours (particularly relevant for owner-managed businesses where much administration is done during evenings or at weekends), in a time-efficient manner, without fear of being sold to. Self-service works particularly well with smaller customers where the opportunity for cross-selling is limited – size of customer and interaction complexity being the key determinants of what is transferred to the web channel. For the business it means information is directly entered into its systems by customers, so fewer people are required.

In addition to direct system entry, queries can be answered by staff in lower cost locations via email. And the next stage is the transfer of activities to lower cost locations – whether that be onshore (e.g. in development areas where staff costs are lower and grants are available), near-shore (Eastern Europe, North Africa) or traditional offshore locations such as India. Customer satisfaction ratings typically dip when activities are first transferred but rise again once the transition period is over, frequently surpassing previous levels. While accent and culture can cause communication issues, there are a number of positives. Those performing service roles are often better educated than those they have replaced. Secondly, they see customer service as a career. A number of Eastern European cities have specialised in customer service delivery, developing thriving service centre industries as a result and now see themselves as having surpassed traditional onshore locations in service centre management expertise.

Sitting across all these opportunities is process efficiency. Typically a distinction is made between increased efficiency (reducing costs) and increased effectiveness (improving service). But rectifying service breakdowns – typically when the service representative fielding a customer call needs to make internal calls (sales, supply chain and logistics) to resolve the query – improves both. The customer’s query is resolved quicker – ideally at first contact – and the employee costs incurred in resolution (both for customer service and other staff) are also reduced. Activities which consume a lot of time offer greatest scope for such win-wins.

Any business seeking to improve service effectiveness should start by looking at opportunities for improving service efficiency. Getting the basics right will not deliver a differentiated customer experience – there is asymmetry in what satisfies and what delights – but it does provide opportunities to increase customer satisfaction while reducing costs. And focusing on both together will help optimise costs-to-serve.

Key Differentiating Characteristics of Customer Focused Companies

Kohli, Jaworski & Kumar created and validated a scale of market orientation called MARKOR consisting of approximately 20 questions covering their three dimensions of market orientation. This scale has been used in scores of articles since its creation, which indicates strong reliability. Scales like this help us better understand important concepts because each question is a validated observable attribute of an otherwise unobservable, latent concept.

So here are a few of the 20 indicators that measure market orientation in the MARKOR scale:


Intelligence Generation

1. Meeting with customers to determine current/future needs.
2. An in-house market research department.
3. Ability to detect changes in customers' product preferences.
4. At least annual surveys of customer perceptions.

Intelligence Dissemination

1. Regular interdepartmental meetings on market trends and developments.
2. Important events in the market or with key customers are shared quickly with all affected departments.
3. Regular dissemination of customer satisfaction data at all levels of the company.

Responsiveness

1. Recognition of changes in customers' product or service needs.
2. Alignment of product development efforts with customer needs.
3. Regular, interdepartmental planning to respond to changes in the business environment.
4. Responsiveness to customer complaints.
5. Making concerted efforts to modify products or services to fit customer needs.

Are these all the elements of a customer centric organization? Of course not. But, according to Walker Research, these are some of the key differentiating characteristics of customer focused companies - the characteristics most likely to produce the beneficial company performance associated with high levels of market orientation. In other words, research has shown that companies with the above characteristics have significantly better long-term performance.

A Customer Focus Culture leads to Higher Financial Performance

The Seattle based Institute for Corporate Productivity (i4cp) published a study: A Customer-Focused Workforce Leads to Higher Business Performance that reveals the power of a market-oriented culture.

What's the key to creating a customer-focused organization? Here's one of the answers from the trenches of a high-performance company: "A culture of accountability makes a good organization great and a great organization unstoppable."

That nugget of wisdom is part of i4cp's new major study on customer focus, conducted in partnership with the American Management Association. They found that accountability that starts at the top is critical to customer focus.

67% of respondents from high- market-performing companies that are good at focusing on customers say their organizations hold at least one corporate officer responsible for the customer experience. By contrast, a tiny 3% of lower-market-performing firms that are poor in this area hold an officer accountable.

Companies that excel in overall performance do something else about customer focus differently, too. They make sure that a commitment to customer service doesn't stop with senior leaders - or even with customer-facing employees. Leaders of top-notch firms create customer-focused cultures that suffuse their organizations, reaching from sales professionals with daily customer contact to production-line employees who may never have a conversation with a consumer but whose efforts are just as vital to company success. Nearly seven out of 10 high-performing organizations say they work to build such a power culture. Lower performers? Fewer than half.

"Alignment of the corporate mission, vision and goals with customer satisfaction" is viewed as a critical practice, according to one study participant from a high-performing company. "Bringing these concepts to the employee level and creating secondary visions that align their actions with the overall vision has increased [our] focus on exceeding customer expectations.

"Four out of five respondents from high-performing companies say that financial growth is the key driving force behind their focus on customers. Certainly, i4cp research has shown that market focus - which revolves around a focus on customers - is one of the five core attributes of high market performance. So it makes sense that a corporate culture centered on customers is likely to yield positive bottom-line results. But how does an organization seeking better performance bring about that kind of culture shift?

Along with accountability, communication and training are among the most vital components in culture-building approaches, the study found. "We are more actively sharing competitive data with lower levels of the organization," one business leader revealed. In addition, the company is "instilling a culture of innovation and customer obsession to drive behavior focused on the customer.

"Multiple respondents from high-performing companies described their firms' educational efforts. Customer-focused training "is part of our onboarding and new employee orientation," said one. Another cited "continuous training on customer care practices" and a third explained, "We run training on a different customer service topic every month."Companies that achieve high levels of performance in today's volatile marketplace demonstrate not only a dedication to customer service but also a commitment to anticipating customer needs and being proactive in meeting those needs. This type of forward-thinking mindset is one of the hallmarks of a culture that is truly customer focused.

i4cp's 4-Part Recommendation:

1. Include accountability for customer service and satisfaction in performance reviews for managers and employees alike. 40% of i4cp respondents say they hold their entire executive teams responsible for customer focus. Reinforce accountability by aligning rewards and recognition with customer-focus goals.
2. Build a powerful corporate culture that supports an organization-wide commitment to customer service. One study participant explains how: "We developed a new, customer-focused mission statement and had a bottom-up planning session to gain buy-in and establish critical success factors and SMART objectives. We will align our HR, organizational, management and communication practices to align with these objectives."
3. Retool internal communications to ensure support for a customer-focused culture. Share customer stories, feedback and insights with all employees. Involve senior leaders in modeling customer-focused behavior and in communicating the company's customer-centric values and mission.
4. Make customer-service training an ongoing commitment. Begin during employee onboarding and follow through with more training on a continuing basis. One company participating in the study demonstrates how to make the process enjoyable by offering a "Lunch'n Learn Customer Appreciation Program."
   
   

Customer Insight – understanding what customers are thinking and feeling, not just what they are saying.
Understanding the Customer Journey – documenting how a customer interacts with an organisation exposes existing and new opportunities to impress and also areas where the customer is unhappy and which need to be addressed, which means truly bringing in the voice of the customer into the organisation.
Market Positioning – this looks at the competitive positioning of an organisation against others in its market and identifies areas in which to invest in order to increase competitive differentiation. This is based on extensive Capgemini research.
Identifying Opportunities – identification of a prioritised list of opportunities for improvement using the Capgemini prioritisation tool that measures Customer impact as well as financial. We will identify activities that should be stopped as they add no value as well as new opportunity to deliver to the customers the things that will drive their Customer Satisfaction.
Measurement – identifying the correct measurements to use to gauge the operational efficiency as well as ensuring the measures that are important to the customer are obtained and given the right level of profile.
Governance – identifying and implement procedures and processes to embed the Customer at the heart of an organisation on an ongoing basis and ensuring accountability.
Employee Commitment – it is critical that the culture of the organisation is customer orientated, we review what needs to be done for the employees to make this happen.

Plain Talk About the State of Customer Service and Why the Voice of the Customer is Key

I read this interview on ContactCenterWorld.com with Sue Warner, Call Center Manager at Southampton Solent University. It is about the state of customer service in this day and age and who provides good and bad service in the different industry sectors. I liked it because here is one professional who expressess the state of the nation in a nicely succint fashion and touches on What Matters.


In your opinion, do you believe the customer service you get today from other companies is better or worse than it was say 5 years ago?
About the same and very variable. Some companies and organisations have realised the importance of Voice of The Customer and using customer focused measures such as First Time Resolution and SPOC, whilst others seem focused on cost savings and practices and applications which drive inflexibility and failure demand.

Do you believe there is a correlation between the service you receive as a consumer and your loyalty to the supplier?
Yes. Absolutely. If I feel that a business is focussed on my needs and is trying to improve I will stick with it, whereas those who pay lip service to customer focus and are driven purely by internal measures which compromise my experience will soon be ex-suppliers to me.

In your opinion, which industry sectors provide great service and which ones are poor?
Please do not name individual companies just sectors.I believe service is highly variable across most sectors and it is this variation which reflects most people's experiences.

Talking about bad experiences, where do companies go wrong with the service they provide?
There are too many reasons given to "justify" why call centre operatives can't deal with a particular query. Lack of interest in my needs is displayed in favour of internal "operational" considerations. Lack of customer focus. Inefficient transactions. Long transaction times, delays and inflexibility. In short, focussing on the WRONG things.

Have you noticed any differences in service from people from different cultures?
Indian call centre agents are extremely polite (sometimes phrases used are positively arcane). They do seem to want to do the right things even if this isnt always possible. Very deferential though.

If you had to give just 1 tip regarding the use of technology in relation to improving customer service, what would your tip be?
Build the technology around customer needs (current and anticipated) VOC comes BEFORE technological solutions. (Why should a customer care about technology unless it is delivering better service?)

If you had to give just 1 tip regarding staff in relation to improving customer service, what would your tip be?
People are generally more capable than managers give them credit for and enjoy being involved in solutions. Treat them as you would wish them to treat your customers and involve them in improvement. They usually know what needs fixing and just need the tools and methodologies to help them.

If you had to give just 1 tip regarding business processes in relation to improving customer service, what would your tip be?
People are only 4% of the solution. Before focusing on monitoring, training etc, do the real work of finding out "how the work works" Focus first on failure demand and the causes of it, then move on from there. Fixing highly inefficient service processes can be relatively simple and fun if approached in the right way.

In your opinion, how should contact centers measure the level of service they give?
Voice of the Customer is key. Identify those things which are CRITICAL TO QUALITY for your customers and build a "vital few" KPIs around those. Measures such as first time resolution and single point of contact may well be far more important than "Average Talk Time" etc. Align process performance to meet with key organisational goals and build rewards and recognition systems around these.

Fast Guide to Fundamental Facts & Figures on Customer Focus and Service

My strategic partner for customer service training, Ray Miller, is the author of the book That's Customer Focus (You can order it via my website). Ray recently prepared this summary of the headlines of much of the Customer Focus, Service Excellence and Customer Experience Research. I wanted to share this, to make sure you have our fingers on the pulse of what customers and business leaders are saying and thinking. It’s not listed in any order as it is all important!

80% of companies believe they deliver a superior Customer Experience; however, only 8% of their customers agree.
This represents a significant difference in perception and since it is the customers’ perception that drives their buying behavior, this is pretty scary.

Beyond price and product quality, your customers value how they are treated. Only 12 -14% of customers leave for product reasons while 68% leave because of poor treatment by employees.
To make matters worse, most of your customers do not complain about poor service because they don’t think it will do any good.

Only 4% of unhappy customers ever complain; 90% do not bother to complain and simply go elsewhere.
Your customers are looking for maximum value when spending their hard-earned cash, particularly in this economy.

Depending on the report you look at, from 85% to 95% of senior business leaders believe that the next competitive differentiator is Customer Experience.
The customer experience requires the active participation of everyone in your organization. Creating and implementing a comprehensive Customer Focus strategy will differentiate your business.

In this market, Companies are losing at least half of their “satisfied” customers.
“Satisfy” means providing nothing more or less than the customer expects. Customers want to deal with those who demonstrate that their business is valued. Creating a Customer-Focused Culture is a proven strategy for both short-term success and long-term growth.

The average value of customers is 8 to 10 times their initial purchase depending on the research we have reviewed. The cost to attract a new customer is 5 to 6 times more than your cost to save an existing customer.
Keeping your existing customers is cheaper and more profitable than getting new ones. Yet most companies are focusing their marketing efforts on obtaining new business, sometimes at the expense of their existing customers.

The cost of poor service ranges between 25% to 35% of your operating expenses.
Aligning internal processes and ensuring every employee understands how he or she contributes to the customer experience will reduce the cost of poor service. Why not move the total of these expenses from your expense journal to your operating profit.

Low customer focus companies average a 1% Return on Sales and lose 2% market share a year. High customer focus companies average a 10 -12% Return on Sales and grow 5 – 6% a year.
Customer Focus is a profit strategy.

A 5% increase in customer loyalty will contribute between 25% and 125% directly to your bottom line.
I’m repeating myself but Customer Focus is a profit strategy.