Cause and effect

It seems obvious, given what we’ve discussed on this blog before, but customer service really does impact customer retention. A new study from the United Kingdom shows that telecom companies there have lost customers as result of poor customer service.

The article in says that the study, entitled The Cost of Poor Customer Service: The Economic Impact of the Customer Experience (conducted by Genesys Telecommunication Laboratory)  found that ” roughly 73 percent of customers ended a relationship in the United Kingdom due to a poor customer service experience.” Additionally:

The study reported that the average value of each lost relationship is £248, or about $394, per year, for a total of £15.3 billion, or $24.3 billion, a major figure in today’s unstable economic times.

Clearly, there is a bottom line component to good customer service: it helps to stave loss. It also is good to keep in mind that each customer that is lost due to bad customer service carries an impact beyond his/her business: the business of people he/she knows and advices.  Bad word of mouth can also damage a business.



Employees are key in customer service

Quality customer service has been shown time and again to help businesses obtain and retain customers.  The key in providing customer service is with front line employees, that is, anyone charged with dealing with the public.

Airlines have many front-line employees: gate agents, flight attendants, reservations personnel and so forth. It stands to reason that these employees make a huge difference in how passengers perceive their flying experience.

Kevin Gray writes for BNet about how American Airlines dealt with incentivizing employees to provide better customer service. American Airlines had tried a bonus program for employees that helped make flights leave on time, but they failed to factor in weather. The program backfired as employees were frustrated. In 2007, American formed a Customer Experience Team .  Gray writes:

On the customer-service front, adding clear-cut metrics helped make the monthly bonuses less subjective. The staff was given certain requirements: greeting first-class passengers by name, for example. Bonuses varied depending on the marks the team received in customer-satisfaction surveys.

He adds:

In the compensation world, American’s pay-for-performance method is known as line-of-sight incentive; it gives workers concrete goals they can see and achieve. A big benefit of line-of-sight, argues Jim Kochanski, a national compensation expert with Sibson Consulting, is that it fosters positive peer pressure.

The take-away is that it is imperative to realize that employees are key in providing customer service. To incentivize them to do so makes good sense, but watch how you do it. Bonuses are one way. What are other ways companies can help improve employees’ stake in customer service? Please share in the comments.

Empathy or calmness?

What type of customer service do you prefer? Calm or empathetic? Efficient or caring? The answer may depend on the situation and perhaps it is not an either or question.  Perhaps the best customer service is empathetic, yet efficient in taking care of our concern. After all, if all we get is empathy but not follow through then we are where we started. However, if customer service is calm, and efficient, but not understanding or caring of our situation, we feel misunderstood.

Anthony Tjan, blogger at the Harvard Business Publishing blogs has a fantastic post about what we can learn about customer service from smaller companies. He boils it down to empathy. Smaller companies care more about their customers, and can act in ways that are sensible to the situation rather than scripts and pre-ordained outcomes.  Larger companies teach their customer service representatives to be calm rather than empathetic. Repeat the same comments even if they don’t make sense to the situation at hand. Many of us get more flustered with this bland, uncaring response.

Again, perhaps companies that get the right measure of empathy and calmness, efficiency and understanding are the ones doing the best job. We often need a sympathetic ear, but we also need action.  What do you think?

Extreme customer service?

As we have discussed before, customer service has increasingly become a differentiator in business today. Some businesses are using better customer service to set them apart, to drive traffic and to increase sales. Today we came across a press release about a new online businesses that sells designer women’s shoes.  To se the business apart, the owner has decided to use “extreme” customer service, including staff availability on telephone, Twitter and others; hand written thank-you notes; and the ability to try the shoes for free.

We think this is a good tactic.  Extreme customer service may turn a one-time shopper into a loyal customer. It has been said before that you get 80% of your business from 20% of your customer base.  So it makes sense to build customer loyalty.

Do you have any examples of extreme customer service? Please share them in the comments. We are interested in knowing what companies are doing to attract and retain new customers.

Some companies are getting it

You may have heard this week that General Motors (GM) is offering a customer satisfaction guarantee to people who buy its cars. Basically, a GM customer has up to 60 days to return a car is he/she is not satisfied, and get a full refund.  GM is trying to improve its customer satisfaction by giving customers peace of mind about a large purchase. It is also getting some great publicity mileage out of it. You can read more about GM’s program here.

Verizon has been plagued by a bad customer service reputation. Verizon Southeast (not country wide) is trying to remedy the situation by introducing the “Verizon Service Commitment,”  as reported here by the St. Petersburg Times. The company is publicizing the new policy in a a series of advertisements running in Florida.

The bottom line is that these large companies are coming to realize that customer satisfaction is an important business goal. They both are pledging/guaranteeing that customers will be satisfied with the product/service. An added bonus, which we are sure is intended, is the positive publicity this type of program elicits.

Your thoughts?

Customer service is a business strategy

Many think of customer service as a tactic–something to be deployed to quell customer unhappiness. In fact, customer service, as we have discussed before, works best when it is proactive, when it attempts to stave off customer unhappiness instead of dealing with complaints only.

Nissan South Korea agrees. It’s CEO, Greg Phillips, was interviewed by the Korean daily, JoongAng Daily. Here is an excerpt from his response to a question regarding marketing:

“What works the best, however, is word-of-mouth, and this is only achieved through first-class service.

Sales sell the first car, but service sells the second, third and fourth cars. Our focus on service can help us build trust with our customers as we gain their confidence. We are aiming to make long-term commitments rather than a short-term sales increase.”

Read the entire interview here.

Phillips is deeply aware that service is important in ensuring a happy customer experience. Happy customers are return customers, or customers that help in word-of-mouth (WOM) marketing. Making service front and center becomes a strategy to ensure positive WOM marketing.

Evaluating your efforts

How can you know if your customer service is up to par? You may hear negative feedback if something goes wrong and a disgruntled customer writes a letter to management. However, you want to know how you are doing before things get out of hand.  You need to conduct an evaluation.

There are several assessments that are important:

  • Staff performance
  • Customer satisfaction
  • Identify customer requirements

Periodic evaluations and audits of your customer service efforts will ensure that you are meeting your customer service targets.

You can conduct these assessments in many ways. One way is to hire an outside firm that specializes in customer experience assessments (mystery shoppers). Another is to have outside companies administer specialized questionnaires to your customer service staff.  Yet another way is to have customer panels to evaluate the customer experience and to identify what is most important to your customer base.

Whatever method you choose, evaluating your customer service performance is one of the best ways to ensure that you are meeting your customer expectations.