Customer Centricity
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Issue #181

Tuesday, April 9, 2013



Eight Customer Service Trends for 2013 - Part 1
by Harry W. Heermans

In the previous newsletter, we glanced in the rearview mirror to see how customer and technical support organizations performed in 2012.  In this issue, we gaze into the crystal ball to describe eight trends for 2013, compiled from a variety of thought leaders, including:

  • Forrester Research (Kate Leggett and Art Schoeller)
  • The Temkin Group (Bruce Temkin)
  • Fonolo (Omar Zaibak)
  • IDG
  • Interactive Intelligence
  • Customer Contact Council
  • American Express Global Customer Service Barometer
  • SupportIndustry.com

Trend 1: Customers are increasingly demanding but more companies are listening to them

Customers were asked, “In general, would you say the customer service experiences you have with companies usually miss your expectations?” The percent who answered “Yes” increased from 26% in 2010 to 29% in 2011 to 31% in 2012, according to the 2012 Global Customer Service Barometer. This is not a welcome trend.

To reverse it, companies must know what their customers’ expectations are. According to Forrester, more companies are tapping into what their customers think of them, with 68% adopting Voice of the Customer (VOC) programs in 2012, a 13% increase over 2011. SupportIndustry.com finds higher VOC participation, 92%. This trend is likely to continue, because 90% of customer service decision makers believe that good customer service is critical to their company’s success.

Trend 2: Proactive customer service

Traditionally, customer support organizations have been reactive in nature, responding to inbound issues and problems rather than anticipating them. Continuing a trend that began three years ago, companies are becoming more proactive, with about 29% of them sending outbound messages to customers in an effort to foster better customer relationships and to cut costs by reducing the volume of incoming calls, emails, etc.

In a survey conducted by Forrester for Nuance Communications, customers overwhelmingly indicated their interest in receiving at least one proactive notification, ranging from 80% of cable/telco customers to 93% of travel industry consumers. As an example, more companies are using proactive notification systems, which broadcast information such as workarounds for known bugs, service alerts, new service offerings and knowledge base content.

Another way customer support organizations are being proactive is to anticipate why customers’ issues are not resolved on first contact and putting in place measures to insure they are. In fact the biggest complaint customers have is the excessive effort they expend having to call back (62%) or re-explain an issue (56%).  Service departments often track this via First Contact Resolution. What they do not realize is that this metric inflates their sense of satisfactory service because 22% of repeat calls are related to issues they categorized as resolved on first contact, according to the Customer Contact Council.

Bell Canada addressed this issue head on. They found that after ordering a new feature, a high percentage of customers called back to find out how to use it. Customer Service Representatives (CSRs) now offer a tutorial on how to use the feature at the same time the feature is ordered. They discovered this relationship by studying “event clusters”, how subsequent calls are linked to the initial contact. CSRs are now trained to resolve the initial problem and to anticipate future ones. This has reduced the company’s “calls per event” by 16% and customer defections by 6%.

Trend 3: Less focus on productivity metrics and more emphasis on outcome metrics

Customer support departments will rely less on incenting customer support representatives for meeting production metrics like Average Handle Time and First Contact Resolution (FCR) in favor of rewarding them on outcome metrics like Customer Satisfaction (CSAT), Net Promoter Score (NPS), and Customer Effort Score (CES). All three of these outcome measures are grounded in the customer experience and relate directly to customer loyalty, the willingness of customers to continue doing business with a company, increase the amount they spend, and say positive, not negative, things about the company.

Consider CSAT. Customer service may not be the primary reason customers purchase initially, but they often leave because of a bad customer experience. By one estimate, 47% of consumers stopped spending completely with companies which responded poorly after a bad experience. Conversely, satisfied customers are four times as likely to repurchase. Retaining existing customers goes directly to the bottom line because it costs so much less to keep an existing customer than to acquire a new one.

NPS (see Customer Centricity Newsletter Issues128 and 129) measures how likely customers are to recommend a company based on customer service interactions. This can be a major factor in gaining new business through the willingness to provide references and also correlates highly with repurchasing at the company level.

According to the Customer Contact Council, an even better metric is the CES. This is a single question, asking customers to rate how much effort they had to put forth to handle their request. Their research shows that 94% of those reporting low effort intended to repurchase and 88% said they would increase spending.

Outcome measures like CSAT, NPS, and CES are gaining adherents because they relate directly to what companies value most, profitability through customer loyalty, while production metrics like AHT and FCR merely measure activity in an effort to control costs. Enlightened companies are viewing their customer support departments less as cost centers and more as value creators, downplaying production metrics in favor of outcome metrics. Indeed, one Australian telecommunications company eliminated productivity metrics completely from its Tier 1 agents’ evaluations and saw repeat calls drop by 58%.

Trend 4: Retaining staff

Customer service organizations, especially call centers, continue to struggle to retain staff. By one Cornell University estimate, average annual turnover for all contact centers is 33%, with the highest turnover being in the subcontractor (51%) and retail sectors (47%) and the lowest in the business (28%) and telecommunications (26%) industries. According to the Center for American progress, it costs about 20% of a worker’s salary to replace him or her, so turnover is a substantial business expense.

Forward looking customer service organizations will employ strategies that have been shown to boost employee retention. One trend is increasing agent-to-agent collaboration, breaking down the traditional Tier 1, 2, and 3 structures in favor of a more collaborative environment with more emphasis on subject matter experts. This is especially effective in engaging the millennial generation, an increasing source of call center staffing who have been raised on the collaborative approach. Engaging employees by putting them into problem solving teams has been shown to reduce the quit rate dramatically. In companies where over 30% of call center staff are in collaborative work groups, the retention rate is 50% higher than those where under 30% of staff take part in problem solving teams.

A second trend is that successful companies will look to new research, like that of Daniel Pink’s on motivation, to keep employees. (See Pink’s influential book, Drive). For example, Pink points to the power of giving people more autonomy in the workplace, like allowing them to form self-directed teams. Support organizations where over 30% of agents are in self-directed teams show a 38% better retention rate than those where fewer than 30% are members of these work groups. 

In the next newsletter, we’ll discuss the final four trends.

If these trends are affecting your organization and you would like guidance in dealing with them, Customer Centricity stands ready to help. Contact us to see how our assessment methodology, actionable plans, and project leadership can generate success.

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Available Talent

As our clients can attest, Customer Centricity talent is comprised of seasoned resources with “scars of experience” who bring incredible focus to drive key business initiatives to successful conclusion. An example of a resource currently available is:

Experienced customer support leader, pioneering a proactive customer care model incorporating best practices and forward-looking trends to guide organizations through strategic, tactical, and operational change. Specific experiences include:

  • Startup implementation: Built technical and customer support departments from the ground up for six fast-paced startups, driving them from concept to fully functioning operations in a variety of industries.
  • Global leader: Engineered the merger of two multi-national customer care operations, then directed the combined organization spanning three continents. Founded a contact center in India.
  • Revenue focus: Transformed a customer support division from a cost center to a multi-million dollar profit center. Turned a call center with a 72% budget deficit into one with a 29% surplus. 
  • Technology management:  Installed a variety of CRM systems, ranging from $15K to $2 million, with one implementation featured in CRM Magazine. Directed a $1 million global Automated Call Distribution project. Managed software engineering projects, Quality Assurance teams, and Computer Operations. 
  • Process improvement: Crafted SOPs, SLAs and metrics to insure customer satisfaction and loyalty that comply with federal and international standards (e.g., FDA, Sarbanes-Oxley, HIPAA, Basel III).
  • Staff building: Fostered staff-friendly workplace culture through coaching and mentoring, resulting in retention rates twice the industry average. Cited by three CEOs for team building skills.
  • Training: Designed, developed, and delivered hands-on end-user courses for three organizations. Coordinated a 40 course university computer curriculum and taught at four colleges. Delivered an action plan for improving training for the world’s leading product lifecycle management software company.
Our primary objective is to make you look good through the successful completion of your business-critical initiatives. In addition, we seek to serve as a mentor to effectively transition and/or develop key skills in your organization so that you are not dependent on external resources for the long term.

If you’d like to learn more about how Customer Centricity can help you, please contact us. We’re happy to serve as a sounding board and determine if there is real potential to assist you.




In This Newsletter

  • Eight Customer Service Trends for 2013 - Part 1
  • Available Talent

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Recommended Reading


For a comprehensive guide to Customer Relationship Management, you are encouraged to read CRM In Real Time: Empowering Customer Relationships.

As described on Amazon.com:

This comprehensive guide to Customer Relationship Management (CRM) draws on Barton Goldenberg's 20+ years of experience guiding firms to a successful implementation of CRM solutions and techniques. Goldenberg demonstrates how the right mix of people, process, and technology can help firms achieve a superior level of customer satisfaction, loyalty, and new business. Beginning with a primer for executives who need to get quickly up-to-speed on CRM, the book covers a full range of critical issues including integration challenges and security concerns, and illuminates CRM's key role in the 24/7/365 real-time business revolution. CRM in Real Time is an essential guide for any organization seeking to maximize customer relationships, coordinate customer-facing functions, and leverage the power of the Internet as business goes real time.

 

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