The Service Imperative: Why Customer Experience is More Important than Ever — Aug 2019

So my wife and I refinanced our house earlier this summer (as I’m now fond of saying: “I liked our house so much, I purchased it three times!”) – the low rates were just too appealing and the last time we refinanced was 15 years ago, so we dropped the rate by about 2%.  At the closing, I joked with the small credit union that our loan would probably be sold before our first payment was due.  The lender said: “oh no, we usually don’t sell our mortgages, so we look forward to servicing your loan for many years to come.”  They sold it within two weeks!

I made our first payment, so imagine my surprise after about three weeks we received a late notice from the original lender.  Not eager to have a black mark on my credit report (or get tangled in a loophole of late fees and other paperwork), I called them.  I didn’t get a human, but an automated voice response system (don’t you just love those?!).  And the outgoing message was quite telling: “If you received a double statement in May, please disregard the second bill.  We are working on correcting the system issue.  You can disregard late statements, penalties, and collection notices.”  Wonderful, I thought.  Not only did their system somehow miss that my loan was sold, but they must have had a meltdown earlier this spring with all of their customers.

On my second call attempt, I got a human, who apologized for the error and told me pretty firmly that I would be ok – that they wouldn’t report my late payment to credit bureaus (which is good since I didn’t actually have a late payment), that I wouldn’t be responsible for late fees (also good, since I’m no longer a customer), and that I could ignore the statement.  Which I did for about two weeks…

Until I got a notice from the former lender that they didn’t have my home owners insurance information. Not sure why they’d need it, since my homeowners insurance information has been comfortably resting with my new lender for about seven weeks now.  I’m going to ignore this statement, but I’m growing less confident that I won’t have a black mark on my credit history from a lender that doesn’t even hold my mortgage (I’m checking credit reports monthly now).

I’m sure you all have had similar service frustrations.  From long waits at the airport (MSP was averaging more than two hours earlier this week – yikes) to endless automated phone loops to disinterested retail sales people to missing or late package deliveries, customer service has become an oxymoron.  A recent Wall Street Journal article captures it well: “Today, companies crunch data and use artificial intelligence to determine exactly how angry a customer has to be to bolt,” says author Sharon Terlep.  “Many are walking right up to that line.”

Terlep goes on to explain how technology today tracks everything: how long customers are willing to wait on hold; how many pop up ads they’ll tolerate online; technology is even used now to monitor customers’ tone of voice (to detect anger or frustration).  According to Terlep: “companies know what steps they must take to keep [customers] loyal – and which they can skip.”

I’d personally like to think that technology can enhance the customer’s experience, but a growing amount of evidence shows that it may be doing the opposite.

I also think that after a period of 10 years economic growth, American organizations may have become a little complacent: most organizations – certainly most businesses – have done pretty well the last decade, thank you very much, so the need to pay attention to customer experience has somewhat subsided. 

Here’s why all this matters – consider these data, compiled from various sources and reported in this handy customer service guide:

  • 90% of customers dissatisfied with the service they receive will not come back or buy again.
  • Only 4% of unhappy customers bother to complain.  For every complaint we hear, however, 24 others go un-communicated to the company.  So if you have 5 complaints a month, that means another 120 customers had complaints but just didn’t share them with you.  But they did share them with others…
  • Unhappy customers tell his or her story to at least 15 other people.  That’s not the “word of mouth” you want about your organization. 
  • Of the customers who register a complaint, between 54-70% will do business again with the organization IF the complaint is resolved.  That number goes up to 95% if the customer feels the complaint was resolved quickly.  This is commonly referred to as “service recovery”: we all make mistakes, but it’s how quickly and thoroughly a company resolves those mistakes that determines whether a customer will remain loyal and engaged.
  • 68% of customers who quit doing business with an organization do so because of company indifference.  In other words, if you don’t respond and/or resolve a customer-related issue, your customers perceive that as not caring about their business.  And it takes 12 positive incidents to make up for one negative incident in the eyes of customers.

There is also research from Harvard that claims that it costs anywhere from five to 25 TIMES more to acquire a customer that to retain one.  So there is a massive ROI between high levels of customer satisfaction and the bottom line of a company. 

We are all asked to do more with less these days.  With generally leaner (and meaner?) workforces that are trying to get the same (or more) work done with generally smaller staffing, in my opinion, this is a recipe for disaster when it comes to customer service.  So what can organizations do to provide an excellent customer experience?  Here are nine general strategies:

  • Develop listening and learning approaches to capture the voice of your customer.  Organizations need a way to hear – and understand – customers’ needs, expectations, and requirements, not just about the products and services they are buying, but how they prefer to buy them…the whole customer experience pre-, during, and post-sale.  Think surveys, focus groups, mystery shoppers, comment cards (online or paper), and a variety of other tools.
  • Consider the touchpoints you have with your customers – the phone calls, the face-to-face interactions, the emails, and so forth.  And then proactively think about how you can create positive interactions – experiences that satisfy or exceed customers’ expectations.  Consider doing this in a team or department meeting to get everyone on the same page and exchange ideas for better service touchpoints.  Every single touch with a customer creates a “moment of truth”; in many cases, you have one opportunity to make or break a relationship.  Which means…
  • Identify processes that touch the customer – ordering processes, inquiry processes (like call/contact centers and your website), complaint and suggestion processes, physical space (your lobby, your “store”), and certainly service/product delivery processes – and ensure that each of these customer-facing processes is designed to ensure more service “deposits” than “withdrawals.”  Eliminate steps that don’t add value for the customer; make it easy for them to do business.  Then,
  • Focus on your workers: train your staff to ensure that they have the skills and tools necessary to serve customers, internal and external.  Cross-train employees so they can step up to fill a variety of needs, which also gives you capacity and flexibility in your staffing model.
  • Reward staff for their good customer service (and for service recovery).  Build a culture that truly focuses on the customer.
  • Focus on workforce engagement.  Empower your people to take care of customers.  Ritz Carlton is known for their credo “Ladies and gentlemen taking care of ladies and gentlemen,” and they back it up with empowering their staff (right down to the housekeeper) to spend up to $2000 to satisfy a customer’s need, without approval.  Your team is in the best position to understand customer needs; remove barriers and let them take care of who pays the proverbial bills.
  • Invest in simple technology.  Consider systems that provide direct value to the customer through better information, faster delivery, or improved accuracy.  These could be Customer Relationship Management (CRM) software to help you track and manage customer relationships, social media to help you listen to – and communicate with – your customer community, or any number of other customer-facing technologies.  But use it to enhance the customer experience, not damage it.
  • Baby your best customers.  There are different opinions on this, but I believe it’s wise keep your most active buyers coming back with faster service, extra attention, and flexible rules.  Segment your customers not only by size, industry, and other quantitative demographics, but also by buying behavior, levels of engagement, and needs. And then focus on those that are most important to your organization.  Not all customers are created equal, and segmentation is the only way to understand – and respond to – different customer needs and profiles.
  • Measure your customers’ engagement.  Research shows that having fully engaged customers (instead of just satisfied ones) will lead to sustainable, long-term performance.  Engaged customers are those that are committed to the organization and its offerings, are loyal, are willing to make an effort to utilize its services, and will actively advocate for and recommend the organization to others.  There are ways to measure customers’ engagement levels (such as the simple Net Promoter Score), and that information will help organizational leaders determine the effectiveness of all of their processes on satisfying customers’ needs.

These tips don’t only apply to retail or service-oriented businesses.  They apply to manufacturers, schools, healthcare providers, non-profit and governmental agencies.  Every organization has customers or stakeholders.  And every organization therefore has touchpoints that either make or break customers’ perception of the organization.  Remember, 90% of dissatisfied customers won’t come back: so there is a huge financial return for those organizations which truly focus on customers rather than just talk about customer service.

This fall, PEN is hosting two special full-day retreats that focus on excellence customer service (and also excellent leadership and workforce engagement, as all three are inextricably tied): 7.5 Keys to Leadership Effectiveness, Customer Experience, and Workforce Engagement, October 8 in Chaska (at the Oak Ridge Resort & Conference Center) and October 10 in Red Wing (at the St. James Hotel).  The workshops are facilitated by Bryan Williams of B. Williams Enterprise LLC (formerly of Ritz Carlton), one of PEN’s long-term partners (and highest rated facilitators!). 

The workshop will be highly interactive, engaging, and valuable for leaders and other professionals from all sizes and types of organizations.  Filled with tools, best practices, and proven methods, the workshop will focus on essential aspects of strengthening and sustaining a strong service culture.  For more information, visit the links above.  Don’t miss this valuable opportunity to improve your organization’s customer, workforce, and leadership performance!  With the ROI of customer experience so high, all organizations can – and should – invest in focusing on the customer.

What comments do you have regarding customer service?  Participate in a discussion on this topic: visit our LinkedIn group to post a comment.  And follow me on Twitter @LassiterBrian!

Yours in Performance Excellence,

Brian S. Lassiter

President, Performance Excellence Network

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