Keeping the Customer Satisfied

By Samuel Greengard  |  Posted 11-11-2009

Keeping the Customer Satisfied

These days, the term "customer service" might well be considered an oxymoron. Consumers constantly grumble about the quality of service they receive, and businesses often stare down the barrel of poor customer satisfaction ratings.

See Also: Getting a Customer View

Consulting firm Bain & Company has found that as many as 80 percent of senior managers believe their companies provide excellent service but only 8 percent of their customers agree. Eric Clemons, professor of operations at the Wharton School of the University of Pennsylvania, states the obvious: "There are a lot of failures and breakdowns out there."

Horror stories abound. Callers get trapped in seemingly endless Interactive Voice Response (IVR) loops; they can't find phone numbers at Web sites; no one responds to their e-mail messages; and, if they manage to get through to a representative, they cannot get the problem resolved promptly.

See Also: 5 Ways to Flub Customer Service

Why do so many organizations say the right things about customer service but fail miserably to follow through? What does it take to get business processes aligned and employees in sync? And how can an organization keep costs down but ratings up?

There are no simple solutions. "Technology has allowed organizations to do things faster, cheaper and in a more automated way," says Richard B. Chase, professor of the Marshall School of Business at the University of Southern California. "But this doesn't always lead to better results. In many cases what's lacking is value for the customer."

Adds Frances Frei, professor of service management at Harvard Business School: "Customers are frustrated and executives are frustrated. Senior management knows it could solve these problems with more money, but it cannot afford to raise prices."

Beyond Ratings

Keeping customers satisfied is a daunting task for businesses and their CIOs. As a company introduces new products and services--along with greater customization--the opportunity to boost revenues grows.

However, there's a downside, says Clemons. A more complex and demanding support model--and one that involves multiple channels--unfolds. Putting IT systems and processes in place to support dozens, if not hundreds or thousands, of scenarios is an enormous challenge. Training customer support staff and others can stretch already thin resources and budgets.

That's only part of the problem. Many businesses overhype products and services and create unrealistic customer expectations. When a consumer opens a package or subscribes to a service, marketing and reality collide. Frustrated buyers reach out after they're unable to use the product as they had envisioned. And, often, they take their frustrations out on call center reprentatives. These individuals not only have to provide assistance but must also manage buyers' expectations.

On the other hand, Clemons says that there's frequently a huge gap between what an organization strives for and what it actually practices in the customer support arena. Waiters, cashiers, salespeople and others may not fully understand a product or service, or they may lack the time and resources to provide the desired customer experience. Of course, grumpy, burned-out workers aren't ideal ambassadors.

The upshot? Razor-thin margins have pushed CIOs to automate systems and embrace self-service tools. Many businesses are also turning to Twitter and other social media to appease discontented customers who spread ill will globally at the speed of light.

Everyone gains when Internet-based support is done right. However, the risk of problems, conflicts and breakdowns rises exponentially as a firm steers customers away from real people who solve real problems.

The result is a paradox of customer service. A company may cut costs and hit customer satisfaction metrics yet fail miserably, Frei explains. That's because a set of metrics may offer an incomplete or incorrect picture. For example, a business might see a spike in the resolution rate on an IVR or Web-based system but not measure whether customers are dissatisfied with the experience.

Likewise, customer satisfaction surveys frequently create a skewed picture. Many companies use self-serving questions--or fail to address key issues--such as whether the resolution process was handled efficiently. So, while the rep may have performed admirably and received the highest rating, the caller may remain frustrated by the length of time or effort it took to reach a rep or because the incident wasn't resolved in a satisfactory way.

Beyond Automation

Beyond Automation

The attempt to automate systems is fraught with other land mines. Although some self-service systems (such as airport kiosks and automated parking attendants) have changed customer service for the better, others (such as hotel kiosks and retail self-checkout stations) have failed miserably. The reason? The process is too confusing, or there's no upside for customers with more than a few items in a cart, Chase says. If confusion ensues or bar codes don't scan correctly, checkout will take longer than full service.

Successful self-service systems, including Web-based offerings, make ordering or customer support into an entirely seamless experience. Consider Netflix, which consistently tops customer satisfaction ratings. Subscribers peruse descriptions of films, select movies they wish to view, arrange and rearrange them in a queue, and rate films they've watched. As the system tabulates feedback, it suggests other films that are likely to appeal to the subscriber. Netflix backs this up with the ability to click a box if there's a problem with a rental disk and automatically receive a replacement. It also offers phone support if the problem cannot be resolved online.

Other companies have garnered high marks by breaking the mold. Apple, for instance, sends out a replacement iPhone to customers who encounter a problem with a device under warranty. As long as the customer sends a broken phone back within 10 days, there's no charge to a credit card.

Online retailer Orvis simply sends out a replacement if a guaranteed item is damaged or fails. There's no need to return the original item. If a customer abuses the policy, it's possible to flag the account.

What pains many organizations, Clemons says, is that they apply a general template to all customers or penalize 99 percent of their customer base because of the bad behavior of 1 percent. "Today, companies have sophisticated CRM and analytics tools at their disposal," he says. "There's no excuse for not understanding what's taking place."

Getting Smart

Stepping out of the morass is no simple task. Andy Fromm, CEO of Service Management Group, which measures customer satisfaction levels, says that one of the biggest problems for organizations is the inability to differentiate their business and charge enough of a premium for a product or service to provide superior customer service.

Making matters worse, many companies believe that loyalty programs boost customer satisfaction. However, customers are frequently unable to differentiate between programs and, as a result, they become just another form of currency, Fromm says. "They provide a discount because points are easily converted to dollars. But you cannot buy loyalty," he says.

As things become more complex, some organizations are looking to adopt a simpler, more consolidated sales and support model for everything from booking hotel rooms to configuring products online. As Clemons points out: "Reducing options and price points creates less confusion and simplifies support."

Others, such as airlines, have turned to tiered support based on spending levels. Still others are attempting to refocus training, incentives and compensation to align with customer support and organizational goals.

Some CIOs are also re-evaluating outsourcing. Although it may slash costs and eliminate an IT headaches, farming out customer service frequently leads to customer defections. Clemons says language issues may play a role, but cultural factors also enter the equation: "A particular country may be a better fit--even if it isn't the least expensive option." Yet, even if support is outsourced to a U.S.-based firm, "the company might not project a company's values as effectively as a well-trained employee," he adds.

Frei says that when a company establishes the right set of metrics, puts sound technology and processes in place, manages customer and employee expectations honestly, and learns to confront the "physics" of business--that it's impossible to excel at everything and it's essential to decide where to focus resources--customer satisfaction typically spikes.

"There are always trade-offs," she says. "Recognizing this fact is the quickest path to service excellence."