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7 Best Practices for Transforming Service Transactions into Valuable Customer Experiences

By: Ernan Roman in Human Capital Review
June, 2012

For today's empowered customers – whether B2B or B2C – customer service is more important than ever before. This is especially true of socially-connected customers. The American Express Global Customer Service Barometer, released in May of this year, found that “1 in 5 Americans have used social media to get a customer service response at least once in the last year”.

Socially-engaged customers also communicate their experiences far more broadly than the general population. On average, they tell twice as many people about bad service experiences, and nearly three times as many about good ones. They also spend 21 per cent more in exchange for good service (compared with 13 per cent among the general population).

Most importantly, customer service has a direct impact on the bottom line. According to a recent Dow Jones study, companies lose 50 per cent of customers every five years. And 68 per cent of customer defections take place because customers feel poorly treated.

The upshot is clear: businesses need to transform their service transactions into valuable customer experiences. Do so, and your customer service call centre can contribute to growing customer value and engagement, instead of being part of the reason customers leave and complain. »

Traditionally, businesses have treated customer service as an expense centre, relegating it to operations. A key metric was to cut costs by optimising for low talk time. But innovative marketers are proving that customer service, long perceived as a cost centre, can be deployed as a strategic resource that generates revenue.

The legendary merchandiser QVC has built a long-standing record of customer loyalty by focusing on improving the front-line customer experience. Executive leadership for change and innovation in the customer experience has been provided by John Hunter, EVP of Customer Fulfillment Services. According to Hunter: “The penalty for not listening to the customer today is a lot steeper than it was in years past; similarly, the penalty for service failures becomes steeper in a social media environment, with more impact to your brand.”

Of course, investing in service doesn't mean ignoring costs. It means balancing them against potential gains. Hunter: “Reducing customer wait time, providing customers with the information that they need to buy the product, and making buying fun and simple are all critical deliverables for our customers. As a result, our percentage of repeat customers continues to rise."

Jim Bush, Customer Service Czar at American Express, has pushed the envelope even further. For AmEx, service is a major driver of market valuation and shareholder value.

Like all innovative marketers, Bush shifted the focus of his service team from reducing call time to building engagement. He discussed his reasons, and the results, with Fortune Magazine's Geoff Colvin: "I thought about the opportunity of capitalizing on every interaction and moving away from being a cost of doing business to being an investment in building relationships. Every one of those moments of truth is an opportunity to make a difference to customers in a personalized way."

Even today's most cutting-edge businesses use customer service to drive online engagement. In 2010, my son, Elias, launched Songza, a streaming “Music Concierge” service that provides expert-curated playlists for every occasion. Their goal is to make it easy for listeners to find the right playlist, at the right time, and per their preferences. Their business is fully digital (very few mobile app businesses have call centres), but customer service is still a major driver of new customers and increased engagement.

The vast majority of Songza's customer service operation is completely transparent: it takes place on social media sites that are totally public and easy to rebroadcast. But rather than treating this as a reputation management risk, they treat it as a customer engagement opportunity. Elias explains: "Most of our service events take place when someone @'s us on Twitter with a suggestion, question, or problem. We immediately answer, because we monitor Tweets that mention Songza 24/7. To keep the experience positive, we answer in a way that shows we’re thrilled that the person uses Songza, that they’ve gotten in touch, and that we can be helpful. (Whenever possible, we inject humor and quirk into the dialogue to show that we’re human beings.) Often, the person’s first response is to retweet one or more of our responses. The second response is often tweeting something about Songza."

As Songza has discovered, delivering amazing customer service is the most predictable and controllable way to grow referral traffic from Twitter. »

If I could boil the revolution in customer service down to a handful of best practices, it would be these 7:

1. Treat service as a high-value driver of revenue and retention
Perhaps no company has better demonstrated the growing importance of customer service than Zappos, which CEO Tony Hsieh built into a billion-dollar business in less than 10 years. He did it by using his customer service team to maximise value rather than minimising expenses:

“Looking at every one of our interactions through a branding lens instead of an expense-minimizing lens means that we run our call centre very differently from others. We … want our reps to…develop a personal emotional connection with each customer … Usually when marketing departments do their ROI calculations, they assume that the lifetime value of a customer is fixed. We view it as something that can grow if we create positive emotional associations with our brand.”

2. Optimise for customer loyalty
Dropping “low call time” as your service goal doesn't mean ignoring key performance metrics. AmEx optimises for Bain's ”Net Promoter Score”. “For every servicing transaction we ask, ‘How can we get the customer to feel better about American Express and recommend it to a friend?’ That’s a promoter.”

3. Offer high-quality service across channels
The principles of multi-channel marketing are well known: deliver the right message to the right person at the right time ― and per an individual's media preferences. If you focus on a single channel at the expense of others, you're neglecting a significant portion of your customer base. The same holds true for customer service. In addition to call centres, essential service channels include email, live chat, social media, online product guides and FAQs.

4. Give front-line service people more authority and respect within your organisation
For instance, you might provide people with the autonomy to spend up to a certain dollar amount to resolve customer problems. Then, turn those employees who spend those corporate dollars effectively into internal role models for the rest of your organisation.

5. Re-examine your compensation plan
If the pay your customer service personnel receive is not commensurate with what your company says about its belief in good customer service, then you won't attract top-notch people who can deliver on that promise. Most importantly, make sure that your compensation structure matches your goal: don't ask your reps to optimise for engagement while tying bonuses to low call times.

6. Train reps to engage in authentic conversations
Too often, customer service people know all about the technical and product/service feature issues, but have not received thorough and ongoing training in people skills and effective customer engagement. As a result, reps too often sound robotic. They need to conduct authentic conversations which are based on empathy and personalised data. And to do so, they need training!

7. Do a skills set assessment
Take a closer look at the people you're putting on the customer service phone or face to face on the front lines. If some of those people are simply not cut out for the empathetic, “people-first” task of hearing customers out, making them feel heard, and cheerfully solving their problems, you need to reassign them to other departments. This will lift the morale, and strengthen the customer focus, of everyone who remains.

The mindset I've outlined requires businesses to rethink their customer service operations radically. Start with the best practices I've listed above, and you'll be on the path to success.

New Book Release: Voice Of The Customer Marketing
"This is the definitive playbook for this new customer-driven era."
—Frank Eliason
Senior Director, National Customer Operations, Comcast
"Thank you, Ernan, for tuning us in to the inner voice of our customers! A deep understanding of our customers' needs and preferences is essential for our future growth."
—Karen Galley
President, Patient News Publishing