The State of Customer Service
Organizations Are Using the Wrong Measures
How to Solve the Problem
The Potential for Improvement
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Most organizations fail to measure the enormous waste of poor customer service; use the wrong metrics to track results; overlook the importance of taking a holistic approach to enhance outcomes, and are still grappling with how to use technology, let alone AI, to enhance the customer experience. Despite the sorry state of customer service today, these four experts foresee a turnaround in the face of generational changes and competitive pressures, and in part by technology.
Click here to view or listen to the show. The expert panelists are:
Graham Hill, Founder, Janus svp, an advisory firm which manages transformation projects for clients primarily in the retail financial service, telecoms, automobile and aviation industries.
Ramon Portilla, Founder, HumanX Insight, a customer experience analytics firm; former Director UX Research, Meta; Former Senior Director, Customer Insights, Walmart.
Alex Mead, Global Customer Service Experience Director, working with multiple companies through Alvarez & Marsal and directly.
Allan Steinmetz, Chief Executive, Inward Strategic Consulting, a global agency specializing in marketing, branding, change management, and communications.
Here is a summary of their comments, edited for brevity.
Everyone agrees that customer service has never been worse, except for a brief period of improvement during Covid when they agree there was a small increase in empathy due to widespread shared suffering and disruption.
Mead. It is probably worse now than it has ever been before Covid, and I think it was better 10 years ago when we seemed to get the dumb stuff right. Right now, it’s just falling off a cliff; the basic process is messed up. I’ve lost count of the number of CEOs, CFOs, CTOs, and CIOs that are so ignorant and clueless about this entire area. It's ironic to me that the custom experience movement that was created 10 or 15 years ago has ironically ruined customer experience.
Portilla. When companies say they wish to improve their resolution rate from 72% to 74%. well, guess what, 74% is not enough and that’s putting an increasing amount of pressure on companies to address the issue across all their channels...A customer who walks into a store with a list of 20 items might only buy half if they have an unpleasant employee experience.
Steinmetz. I think that customer service and customer experience are a high priority for most organizations. It's something they talk about and want to achieve. The challenge is they really don’t know how to do it, and that’s where the gap is. The other issue is that they send mixed messages to the internal constituencies that are opposite of what they hope to achieve for their customers...I think the primary reason is board governance that has an outmoded focus on revenue and short-term shareholder returns.
Graham. Before this program I did a little research and by all accounts customer service has never been worse. Ironically, it improved a little during Covid, because everyone was suffering and needing support and service, and that brought out a lot of empathy. In many ways, we’ve fallen back to where we were before Covid. We need to return to the service basics we were implementing in the 1990s.
Today, most organizations place more emphasis on measuring the processes, call times, resolved/unresolved issues rather than outcomes.
Mead. The metrics I always make sure I improve are our conversion rates, retention rates, and how many customers were interested in our product service or solutions? I don't measure CX, I measure if we are failing to sell to how many customers or failing to fulfill our promises to how many customers. We must talk in the same terms as the profit and loss statement.
Hill. When I work with clients, what I see often is that they're focused on things from the past: the inputs, not the outcomes....If you think about it, most customer service processes have never really been designed for customers...They're not measuring outcomes for customers, that is, that they get what they wanted the way they wanted it done...The economics are incontrovertible, going all the way back to the Service Value Profit Chain.” (The research, by James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., and Leonard A. Schlesinger, originally published in the 1990s, finds a clear link between having highly engaged customers, happy customers, and financial results.)
Looking for a customer service dividend? You can get 10% higher profitability if you have a high level of satisfaction in your sector. Employee productivity can more than double, and you can actually reduce costs because complaints cost money. It’s a win for customers and it’s a win for companies. Often CX has become either a ceremonial role, a check-off-a-box, because the job doesn’t have any true responsibility or authority over service because it leaves out so many different parts of the customer journey owned by different people.
Beyond convincing CEOs of the value of turning customer service into a profit center, the process requires a strategic approach that starts with defining the company’s purpose or North Star—the value it creates for its customers and stakeholders—and then putting someone in charge who has authority and accountability over all the employees, systems, metrics, and outcomes that affect those outcomes. (This concept of purpose is not to be confused with the purpose-washing over the last few years that is being quickly discredited.)
Portilla. Organizations need to leverage technology to understand customers at every level, such as the lifetime value of a customer, because you need to understand the full journey. If we make customers happy along the way, they're going to start spending more...Everyone in customer service or experience should spend dedicated time working with all the employees involved with delivering customer service...Human resources needs to take a much bigger role in developing employee metrics that are relevant to the customer. Companies need to connect the dots between the customers and the employees. They share many of the same issues with both—they want to attract great people and keep them.
Steinmetz. The first thing I do is to ask the CEO if the organization has a shared purpose, a clear definition of why they are in business. If they are not able to state the core purpose, and if their employees and customers can’t, there is going to be a disconnect between the two, and that’s one of the first things we must address. When you get the right kind of of alignment, there’s generally going to be a higher level of employee and customer satisfaction. That's really the first thing, and there's a whole framework and process to address that. If all that works, you will have greater customer loyalty and greater customer lifetime value. You are better able to measure the metrics of your quality of product and manufacturing to support that. And you can better recruit and retain talent.
Hill. It all starts with customers...I always begin by looking to see who I think the target customers are, what they are trying to do when they come in. What do they want from us? How are they reaching out? You must start with who you are dealing with. Then you must look at the other side of the coin. What are the products or services you offer? How do you make money? What is the business model? Where do we want the journey to go? What do we want to do when we get there? Where do you find the convergence of both the customer’s and company’s needs? How do we co-create value? The one scorecard I rarely see is customer-perceived value. You need to be able to boost that to understand how you mutually create value.
Mead. The person in charge of CX must have complete authority over the entire process and all the people involved. That means going out with the people who do the job to find out what’s really going on and what is possible. You must understand the entire experience and all the people involved at every touchpoint understanding the journey from your customer’s standpoint, not yours, and set very clear goals based on the on the outcomes you are trying to achieve related to, yes among them, bottom-line returns for shareholders.
Portilla. I’m optimistic. I know what I am doing is right and I’m not going to give up and I know not everyone is going to listen. I am a big believer in humanity, in the importance of experience that’s going to be at the center of business. I want to encourage companies to leverage the new technology and not be afraid of it. If we lead with a human angle, it cannot take control of us.
Steinmetz. I think with the growth and the influence of Gen X, we will have to evolve to be more focused on the customer experience, but the process will start with employee purpose rather than the customer experience.
Hill. I think it's going to get better, but before it does that, it's going to get worse. It needs to get worse before people realize it can get better. The solution is going to be focused on the service experience rather than the customer experience, because the delivery of service is at the heart of all the experience we go through anyway.
Mead. I'm optimistic. I think it’s going to happen because the younger generations will not tolerate anything other than being able to say to whatever technology they are using precisely what they want with all the specifications, and when they want it delivered and to where. And, if the package is not there, with the most minimal effort, they are going to want to know where it is. If they can’t do that, they’ll move on to another company. We are now so far from that type of experience it frustrates me to no end, but we will get there because customers will tolerate nothing less.
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