Customer service takes a turn
There’s an interesting article in the January/February issue of Harvard Business Review by Matthew Dixon and some associates from CEB, a consulting group, about customer service agents that I think is worth a look.
Most of us understand the phenomenon that new customer service channels such as social, email, knowledge bases and the like have left the service agent with harder problems to solve. Those channels are here to stay because they cost pennies to solve problems, when they work well, but conventional agents can cost many dollars to resolve an issue. So there’s a decided bias for self-service where possible.
But as I wrote in “Solve for the Customer,” we need to ensure that there are graceful transitions from the channels to agents or we risk a backlash. As a matter of fact, some amount of backlash in the form of irate customers confronting agents is par for the course, but how are we preparing for this?
The HBR article suggests that we’re mis-staffing the call center for today’s activity. I say mis-staffing rather than anything else because the staffing model is simply old; it’s built on the assumptions of another time that no longer reflects service realities. The article summarizes a study of over 1400 service agents from diverse industries and many countries and its conclusions are interesting to say the least. It groups agents into seven different buckets and characterizes them and in this demonstrates the mis-alignment of skills to need.
The predominant type of agent in the study is labeled The Empathizer and they make up 32 percent of agents covered in the study. An Empathizer says the report, “Enjoys solving others’ problems; seeks to understand behaviors and motives; listens sympathetically.” That’s fine and harkens back to a time when all sorts of easy and hard problems visited the call center. But the agent type that’s more effective for today’s need is labeled The Controller, which the study describes this way—“Outspoken and opinionated; likes demonstrating expertise and directing the customer interaction.”
Unfortunately, Controllers make up only 15 percent of agents in the study and while they are ranked #1 in effectiveness, they are ranked #3 in service manager desirability. The reason is simple. Controllers, like good sales people, go off script; they relish their freedom to roll up their sleeves and solve a problem and they aren’t terribly enamored of following all the rules set down in a manual.
Here’s the rub: by the time a do-it-yourself customer gives up on tracking a problem through a maze of sometimes contradictory or confusing information on the Web, they aren’t likely to want a long empathetic encounter with a service agent. They’re much more likely to want someone to FIX their problem, pronto. That’s where the disconnect happens. Controllers take charge and provide comfort of quick resolution with little fuss that empathizers, despite best efforts, might not.
What to do? The article suggests that we get more controller types into the service mix but that suggests a change of mindset in the hiring process and even in the job description. If you advertise jobs for self-starters or other similar descriptions, you have to be able to let them, well, you know, self-start. That’s a big effort for managers used to controlling and scripting the action but it’s increasingly apparent that the change is needed.
There are approaches for making changes in the service department suggested in the article and I encourage you to read and consider them though I won’t summarize them here. But in an age of job depletion due to automation it’s great to see this article because it pinpoints one area where human interfaces are needed and also a mode of working that shows how technology can augment human actors.
The Long Retreat Up Market
SAP is holding Sapphire, its annual user meeting in Orlando this week. Sapphire is one of the premiere events on the IT tradeshow calendar along with Microsoft Convergence, Oracle Open World, Sage Insights and Salesforce.com’s Dreamforce. These events each draw tens of thousands of people from around the world and each has a distinctly different vibe.
Sapphire is solidly ERP and enterprise computing (yes, I know they have CRM), Open World is about enterprise computing too but with more emphasis on a rounded picture that includes the front office, SaaS and, even before the addition of Sun, there was a strong hardware element as well. Microsoft focuses on front and back office but tries to appeal to a broader market of perhaps the Global 2000 with an array of front and back office solutions. Dreamforce is, among all of them, the most forward looking.
Salesforce has taken a decidedly different path to the enterprise. First, ERP is not on its radar. Though the company has a small subsidiary that specializes in financials, it was an acquisition that demonstrated the power if Force.com, the company’s development platform. Salesforce’s approach is to not look back at traditional financials but to imagine what the fully articulated front office will be and then to deliver it. In the process, they have made huge strides in platforms, database, development technologies, social media for business and more. The approach keeps them ahead of an increasingly crowded field of conventional front and back office computing.
Over the last few months I have watched as the ERP/CRM companies have all solidified positions relative to new technology. Each offers a cloud computing strategy that supports multiple flavors of hosting including multi-tenant SaaS but also, and somewhat distressingly for me, solutions that amount to hosting a data center off premises in ways that don’t look much different from historic approaches. In their uniformity they have basically kicked the can down the road for another decade — roughly the life span of conventional offerings.
No one wants to tell their enterprise customers that the days of on premise computing are limited and that running a single tenant instance in a datacenter in another zip code is at best a temporary solution. In 1999 we saw a controlled panic as companies worked to beat a deadline to update their systems to the four-digit date format of the new century. In ten years we’ll likely see a similar event as some of the same companies realize they have simply exported their conventional data center problems — lacking some standards, upgrades that were delayed and fighting the cost of buying hardware — but that they have not solved them.
So the ERP companies now all look poised to go through the next ten years with architectures that are a jumble of old and new. Moreover, they have all embraced similar strategies that support the idea of placing small systems, presumably in a cloud configuration, at their satellite locations while retaining a more conventional ERP system in the center to consolidate regional data. This is a brilliant, though severely flawed, strategy in my humble opinion.
There isn’t a major enterprise vendor who doesn’t think that they’ll be able to sell their version of cloud computing and a satellite configuration to their existing customers but I think there’s some danger in that. It looks like a classic retreat up market for the majors.
At the grassroots level there are companies like NetSuite, Microsoft and perhaps WorkDay that will not only take on the satellite work but their presence there will ideally situate them to grow up market and displace the legacy vendors. It makes good sense. As NetSuite CEO Zach Nelson observed at SuiteWorld last week, there has never been a software company that successfully invaded the lower reaches of the market from the enterprise but the world is full of examples of companies that grew up from the grass roots to take over important market segments. If you recall, this is precisely what Salesforce did with Siebel.
NetSuite is already ideally suited for this work with front and back office systems covered as well as ecommerce. Furthermore, the company introduced its ability to operate multiple divisions in different currencies with reconciliation across borders several years ago. NetSuite increasingly looks like a grassroots company with greater ambitions and if the keep innovating around the full suite of ERP, I think the world will look very different in ten years.
The challenge for the legacy vendors is to get out of their comfort zones. To take on cloud computing not as they wish it would be, complete with the fat margins they and their shareholders have grown to know and love. Rather they need to better emulate the lean and highly competitive companies they need to sell to and who are nipping at their heels.
I am writing this before the first keynote of Sapphire, it will be interesting to compare this analysis with the proceedings next week.
Late addition: Check out this short article in the Harvard Business Review for a similar take on the subject.
Your Customer Service Duty
There’s good news for any manager who has grown exasperated with trying to delight customers through “over the top” service. You may be working too hard and the benefits are not forthcoming. We’ll do anything to keep customers because they tend to buy more from us and the cost of replacing them if they leave is so high. But according to a study published in Harvard Business Review, “Stop Trying to Delight Your Customers” by Matthew Dixon, Karen Freeman, and Nicholas Toman, vendors would be better off sticking to their service knitting instead of looking for ways to “delight” them. This is not to say that the customer experience is unimportant, just the opposite. The question is what constitutes the customer experience from the customer’s perspective.
“Stop Trying to Delight Your Customers” is important because it is so thorough. According to the article, which first appeared in HBR in July 2010, “the Customer Contact Council, a division of the Corporate Executive Board, conducted a study of more than 75,000 people who had interacted over the phone with contact-center representatives or through self-service channels such as the web, voice prompts, chat, and e-mail.” The researchers also held hundreds of structured interviews with customer service leaders.
Their conclusions mirror what some people in CRM have been saying for a long time. Customers’ opinions of service quality, and their experiences, are determined by how well the vendor attends to the matter at hand — meeting the customers’ needs. According to the study, refunds, freebies and the like are only marginally effective at making customers loyal. What works exceedingly well on the other hand is attention to the basics. From the report, top loyalty eroding problems include:
- 56% report having to re-explain an issue
- 57% report having to switch from the web to the phone
- 59% report expending moderate-to-high effort to resolve an issue
- 59% report being transferred
- 62% report having to repeatedly contact the company to resolve an issue
Most interestingly the report points to a new metric that has greater predictive value for customer loyalty than customer satisfaction or even the Net Promoter Score (NPS) — the Customer Effort Score or CES. The CES measures customer effort as ranked by the customer, on a scale of 1 to 5 with 5 being very high effort. Think of it like the friction in a customer service encounter, the lower the friction, the lower the customer’s effort and the happier and more loyal the customer.
The article’s findings and recommendations paint a picture of how any company — without massive investment in the latest fad technology can make itself easier to do business with. Often removing service friction is as simple as removing old policies and procedures that no longer apply, making websites easier to navigate and anticipating the customer’s next need based on the case information. For instance, the authors cite a situation with Bell Canada in which a high percentage of “customers who ordered a particular feature called back for instructions on using it.” By anticipating the next call and routinely providing instructions, Bell Canada “reduced its ‘calls per event’ by 16% and its customer churn by 6%.”
Is it really that simple? Apparently.
This is all very interesting to me because for a couple of years I’ve been trying to raise the issue that no matter what else we do in the customer service interaction, we need to ensure that we solve the customer’s problem. While it seems rudimentary, I feel we’ve lost sight of the idea amid the need to reduce call time, deflect issues to other channels and cross sell or up sell. I have gotten to the point that I am recommending to clients that they adopt policies that equate customer resolution with a duty to the customer spelled out in black and white.
The idea of duty might seem odd to some but the idea isn’t new and I have written about it before. You can trace it back through American and English Common Law to the Magna Carta. It may seem unusual but the idea of a vendor’s duty to a customer was codified into law in the great charter — the first example of a constitution-like document in Western Civilization.
Among the duties in question is the reception an innkeeper owes to a customer and it is still in force today. If you’ve ever arrived at a hotel with a reservation and for one reason or another there were no rooms available you might have been surprised at the level of service the hotelier provided to find you a room at a competitor’s place. But they weren’t just being nice, the hotel has a legal “duty to receive” and that goes all the way back to June 15, 1215 at Runnymede.
Taking a duty-based approach won’t solve every problem associated with providing customer service. But the CES metric and the stories quoted in the HBR article make it clear that customer service is where a company “re-sells” itself to a customer, regardless of whether or not the customer takes a cross sell recommendation.
So there’s something to be learned from the HBR study as well as from the hospitality industry. We couldn’t find better sources or better examples of how all businesses ought to provide customer service.
Analytics Is the Social CRM Secret Sauce
A lot of information is coming together this quarter that begins to put new spin on Social CRM. While we’ve all been busy getting networked in our personal lives and professionally, a huge mountain of data has been accumulating that will make our work in social technology more valuable.
Last week Harvard Business Review released a report sponsored by SAS Institute which shows that while many enterprises are well on their way in adopting various social technologies for business use, the number that also are deploying analytics lags. I know of at least two other reports that will contribute similar information when they arrive on the scene too.
This disparity between data accumulation and data analytis is temporary because as an organization accumulates customer data without basic analytics most of the data is useless. If you want to know who your best customers are, it’s relatively easy to get a report that says who bought the most in the shortest period of time. But with analytics you can also delve into the data to ask questions of the why and why not types and there life gets interesting.
Asking why can often uncover alternatives, things that were or were not done and to examine the root causes. In finding those causes you can uncover new opportunities, revenue that is there for the taking because you know where and how to look.
Last week in Las Vegas I listened to many smart people from big companies discussing how they used SAS Analytics to gauge customer sentiment, run marketing campaigns and manage the conversations they have with customers. I learned about millions of found dollars brought to the bottom line because analytics were able to make sense of the data thrown off by each customer transaction.
Now, granted, in a billion dollar company a few million bucks may not seem significant but it’s the easiest money you can make. There’s nothing to invent, market or sell to get the revenue, it simply comes from doing a job better. Also, if you happen to be lucky enough to own the P&L for a department using analytics, your growth goal in a challenging economy might look a lot easier to attain with analytics.
Consider the above as playing offense, analytics help with defense too. According to the Harvard study, most companies don’t know what their customers are saying about them or where (Facebook, Twitter, blogs etc.) they are saying it. Even my crude research a few weeks ago into using search engines to discover how many customers dislike their vendors, indicates a certain lack of intelligence about the outside world. If hundreds of thousands of my customers were angry enough to write blogs about my company, I would want to know who they were, but most vendors aren’t at the level of having the appropriate tools yet.
Using analytics to digest customer sentiment and make the data actionable is another way that a company, through reputation management, can potentially earn more on the work it does thus taking some pressure off growth objectives.
So for these and other reasons, social media is building the case for a virtuous relationship between analytics and the data that social media generates. As a result I see plenty of reasons that analytics will continue to shed its outdated reputation as a technology that is only used by an elite few in an organization. The big data sets involved also make a strong case for web based analytics processing to help defray the hardware costs, at least for some vendors.
Embedding analytics in the applications and processes—especially those governed by social media—that deal with customers and capture their data will become more important over time. That’s why it is inescapable to me that analytics will become the secret sauce of a well-run social media or social CRM implementation. Isn’t there an old adage that says it’s not the data it’s what you do with it? There should be.
