Scanes Bentley explores what's keeping chief executives awake at night: A double dip recession? More intrusive regulation? Hitting the quarterly numbers? Possibly all of these. But one issue is starting to be seen as pivotal to business success. The customer agenda is fast becoming the CEO agenda.
Service is increasingly seen as the new battleground. Products are increasingly commoditised, development cycles have shortened and ‘fast follower’ strategies mean that competitive advantage is soon eroded. A strategy built on market leadership on price can work for the very few with genuine economies of scale and cost leadership. For the rest, it's a scramble to the bottom, which is great for customers but not so great for shareholders.
High customer retention and satisfaction drives loyalty, increased share of wallet, and lower cost to serve, with fewer customer contacts and none of those pesky complaints.
Is this a pipe dream? Very few companies can really say they have achieved leadership in customer service. Increasingly, the CEO wants to know why — and who is accountable for it.
The rise of the CXO
A growing number of UK companies are appointing a new face to the C–Suite — the CXO. That's C as in Customer and X as in eXperience. CXOs have been commonplace for some years in the US but can now be found at Lloyds Banking Group and Everything Everywhere (the newly merged Orange/T-Mobile communications leviathan), among other major plcs.
CXOs have one of the most challenging jobs in business. Most companies are seeing a radical shift in power in favour of customers — what some execs refer to as ‘the new normal’.
Customers have more power than ever
Customers have never been so empowered. The recession has focused minds on the value of retaining, rather than just acquiring, customers. The internet has transformed information availability — with comparator sites like confused.com and comparethemarket.com bringing real price transparency and much more aggressive customer behaviour.
The importance of social media
But most of all, there's social media, where it gets really scary. 78% of consumers now say they trust peer recommendations on social media sites while only 18% trust advertising. Conversely, customers have never been so able to broadcast their dissatisfaction.
After treating a musician's baggage somewhat casually and failing to be sorry enough about it, United Airlines ended up having to deal with a multi–million–view YouTube phenomenon. The unhappy customer busked his way to internet superstardom while the value of United's brand slumped. Closer to home, Lily Allen's not–so–complimentary views of BT broadband were repeatedly broadcast to thousands of British consumers. Individual customer complaints have never had such a wide audience.
Companies invest in customer service but customers are unimpressed
Expectations for how quickly companies can improve service are running way ahead of the ability to deliver. A recent Accenture study focusing on communications and high-tech vendors showed that six in 10 vendors had made significant investments in their customer service capabilities — including contact centre improvements, knowledge management and online service — all of which received increasing spend. Eighty percent of companies believed their service proposition had improved.
Sadly, customers didn't agree — nearly a quarter of individual customers and enterprises believed that service and support had actually degraded while these investments were being made. One customer care leader commented, ‘there's a lot of head scratching out there. We feel like we're pulling the levers but there's no response. It's like we're running to stand still.’
And the stakes are getting higher. As a leading financial services manager put it, ‘in retail banking you could for many years remain highly profitable by delivering just about OK service. In the new world of customer power, even customer apathy around switching current accounts could eventually go the way of mortgages and general insurance with far more customer churn. That could play havoc with banking margins’.
Some boards and ceos now review customer-centric metrics such as Net Promoter Score (NPS) and the metrics often make for grim reading. The challenge is to turn customer experience measurement into customer experience management.
Why aren't customers satisfied?
The high street and web are awash with customer-centric initiatives: customer first, Brilliant Service, Customer Charter. So why is it so hard to deliver?
There are a few common issues. The service strategy may not line up with the vision or there may be no strategy. Budget realities may intervene and stymie customer support improvements — or budget may be spent on initiatives which ultimately do nothing to improve how customers feel they are served. Organisational design may not be in synch with customer need. CXOs have to be accountable for the totality of the customer experience to be successful, but too often the contact centre, digital, in-store and service delivery organisations have different owners with different priorities.
KPI management is a problem
KPI alignment can also be problematic. It is far from unusual to have executives managed (and bonused) on one metric — like NPS or customer satisfaction — while the contact centre focuses on different metrics like up–sell sales or handle time. This is sometimes because real business intelligence is constrained by legacy technology infrastructure and inadequate reporting. Perennial contact centre management issues persist and create inconsistent delivery and experience — particularly where outsourcing or off-shoring has been badly handled. The inability to deliver results can lead to a plethora of short term and tactical initiatives which can confuse frontline support staff and make matters worse for customers.
While each customer success story is rooted in deep industry knowledge and product innovation which varies from industry to industry, there are some commonalities that apply across the board.
CXOs need to be empowered
Companies don't achieve customer delight without an empowered CXO who has control of all customer-impacting decisions and a steel chain of accountability beneath them, right down to the front line. Organisations must also be aligned behind one set of KPIs which make a difference to pay right down the line and are rooted in voice of the customer insights and reporting. Customer feedback must be sought to address unintended ‘pokes in the eye’ — like communication or process changes which seem illogical to customers.
Employees must be engaged
Unengaged employees don't delight customers either, so CX leaders place as much emphasis on employee satisfaction as customer satisfaction metrics. They recruit talent wherever it can be found, minimise attrition, invest in training, and drive a coaching culture across the enterprise. Technology ensures that customers find a seamless service across all channels and is used to improve the service experience.
Organisations must take service seriously
Customer service has been a slow burning fuse in the UK. In truth, organisations take service seriously when it starts to hit the bottom line. Across the Atlantic, demand for compensation for any service glitch is absolutely the norm and customer tenure is measured in weeks not months. Things are changing fast. There has never been a better time to start listening to customers.
Scanes Bentley is a managing partner at Accenture