This is my online-presentation „Stop Trying to Delight Your Service Customers“ about service customer loyalty form February 12th 2015.
Please find the full recording here on the BrightTalk Platform, or watch the slides here on Slideshare:
Conventional wisdom holds that to satisfy service customers, companies must “delight” customers by exceeding service expectations. Studies of all kind of contact-centers and self-service interactions, however, finds that what customers really want – but rarely get – is just a satisfactory solution to their service issue.
To meet customers’ expectations, Service Managers should anticipate and head off the need for follow-up calls, address the emotional side of interactions, minimize the need for customers to switch channels, listen to and learn from upset customers, and focus on problem solving.
Since my English has a funny accent and I’m always tend to speak to fast when I can’t see my audience I’ve written down everything I said here.
Slide 1 – Welcome
Good Morning Ladies and Gentlemen,
My name is Martin Pscheidl and I am happy about the invitation from BrightTalk to attend this online summit.
Today we talk about how to apply good service management practices from non-IT Service organizations to IT Service Management, and vice versa.
You can submit your questions during my presentation via the questions box in your BrightTalk interface.
I will try to answer them at the end of my presentation, because I brought a huge slide deck with me.
If there is not enough time to answer all questions at the end I will post answers to all your questions on our itsmblog. You can find a link to my prepared blog on top of this presentation screen under the attachments.
Slide 2 – Why us?
So, why were we from the Austrian IT Service Management Forum Chapter invited to hold such a presentation?
It is simply because we are part of an international community of users and experts in IT service management. We are working on a not-for-profit base. We are independent. And we are exchanging our experiences and collect best practices to support our members and everybody who is interested in IT Service Management. Our focus topics this year are Service Catalog on the one hand and how to reuse best practices from other service domains for our purposes on the other hand.
And by the way: Yes we are from Austria. You can hear it by my funny accent.
Austria is in Central Europe. The other country with kangaroos is Australia. We have Mozart and we are one of the top nations on the ski world cup!
Slide 3 – Why me?
I am the chair-man of itSMF Austria and have some experience in IT Service Management. I started collecting Knowledge about other service domains like HR and Facilities last year and learn daily.
Slide 4- Trade Mark Acknowledgement
Since ITIL was sold to Axelos our community has to take more care on using ITIL references and so on.
This slide is showing what our legal says!
Beside of ITIL we will hear about HDI, itSMF USA, and the Harvard Business Review, which are all trademarks of their respective holders.
Slide 5 – Service Management Not Just for IT Anymore
The expansion of the principles of IT service management to areas outside of IT has been a topic of conversation in the hallways and gathering places at conferences and meetings for several years. Anyone who has been engaged in the IT and technical support industry over the past few years has noticed significant changes.
In order to learn how service support practices have adapted and been adapted as a result of changes in the industry, and whether ITSM has expanded beyond IT, HDI and itSMF USA collaborated on a survey to learn more about what organizations are actually doing and establish a context for potential future research.
More than half of the organizations surveyed are either applying or planning to apply service management principles in business areas outside of IT.
And ITIL is the most common set of service management practices being applied in non-IT areas.
Slide 6 – Which SM Principles shall we apply? Let’s start learning from Non-IT first!
I assume that everybody in the audience knows these Service Management Principles from the ITIL books. They are all about good or best practices. And there is one top goal for the IT Service Provider: It is the business alignment.
But isn’t exactly the business orientation a weak point in many IT Organizations?
So what principles shall we apply to non-IT Service Organizations to make them more successful?
Or the other way around: Wouldn’t it be better to apply the non-IT service management good practices to the IT management practices first?
So let us start learning from some of the experiences Non-IT Service Organizations has collected in supporting their customers over the last few years…
Slide 7 – Reference Story provided by the Harvard Business Review
A Harvard Business Review article from August 2010 is showing us important insights into the success of support organizations and customer loyalty.
The idea that companies must “delight” their customers has become so engrained that managers rarely examine it.
But ask yourself this: How often does someone foster a company because of its over-the-top service?
How often do consumers cut companies loose because of terrible service? All the time. They exact revenge on airlines that lose their bags, cable providers whose technicians keep them waiting, cellular companies whose reps put them on permanent hold, and insurance companies who don’t understand what vitally important means.
Consumers’ impulse to punish bad service— at least more readily than to reward delightful service—plays out dramatically in both phone- based and self-service interactions, which are most companies’ largest customer service channels.
In those settings the Harvard Business Reviews research shows, loyalty has a lot more to do with how well companies deliver on their basic, even plain- vanilla promises than on how dazzling the service experience might be. Yet most companies have failed to realize this and pay dearly in terms of wasted investments and lost customers.
Slide 8 – About the links of customer service and loyalty / a study with more than 75,000 people
To examine the links between customer service and loyalty, 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. They also held hundreds of structured interviews with customer service leaders and their functional counter- parts in large companies throughout the world.
The research addressed three questions:
- How important is customer service to loyalty?
- Which customer service activities increase loyalty, and which don’t?
- Can companies increase loyalty without raising their customer service operating costs?
Slide 9 – About the Research: worldwide cross industry and product or service
They deﬁned “loyalty” as customers’ intention to continue doing business with a company, increase their spending, or say good things about it (or refrain from saying bad things).
During a three-year period, more than 75,000 B2C and B2B customers were surveyed about their recent service interactions in major non- face-to-face channels, including live phone calls, voice prompts, web, chat, and e-mail.
The companies represent dozens of industries, ranging from consumer electronics and packaged goods to banking and travel and leisure, in North America, Europe, South Africa, Australia, and New Zealand. They isolated the elements of each interaction that drove customer loyalty, both positively and negatively, and controlled for variables including the type of service issue, whether it was handled by an in-house or an outside contact center, the rep’s tenure with the company, the company’s size, the customer’s personality type, the customer’s mood prior to the interaction, switching costs, and so on.
Finally, they conducted several hundred structured interviews in order to understand companies’ customer service strategies and operations in detail.
Two critical ﬁndings emerged that should affect every company’s customer service strategy.
First, delighting customers doesn’t build loyalty, but reducing their effort— which is the work they must do to get their problem solved— really does building loyalty.
Second, acting deliberately on this insight can help improve customer service, reduce customer service costs, and decrease customer churn.
Slide 10 – The Bad-Service Ripple Effect – negative service experiences are stronger!
According to conventional wisdom, customers are more loyal to ﬁrms that go above and beyond. But the research shows that exceeding their expectations during service interactions (for example, by offering a refund, a free product, or a free service) makes customers only marginally more loyal than simply meeting their needs.
89 of the 100 customer service heads they surveyed said that their main strategy is to exceed expectations. But 84% of customers told them that their expectations had not been exceeded during their most recent interaction.
One reason for the focus on exceeding expectations is that fully 80% of customer service organizations use customer satisfaction scores as the primary metric for evaluating the customer’s experience. And managers often assume that the more satisﬁed customers are, the more loyal they will be.
But, like others before this team, they ﬁnd little relationship between satisfaction and loyalty. Twenty percent of the “satisﬁed” customers in the study said they intended to leave the company in question; 28% of the “dissatisﬁed” customers intended to stay.
The picture gets bleaker still. Although customer service can do little to increase loyalty, it can, and typically does, do a great deal to undermine it.
Customers are four times more likely to leave a service interaction disloyal than loyal.
We buy from a company because it delivers quality products, great value, or a compelling brand. But we leave one, more often than not, because it fails to deliver on customer service.
Slide 11 – Obstacles All Too Common! So make it easy – remove obstacles!
Let’s return to the key implication of the research: When it comes to service, companies create loyal customers primarily by helping them solve their problems quickly and easily. Armed with this understanding, we can fundamentally change the emphasis of customer service interactions. Framing the service challenge in terms of making it easy for the customer can be highly illuminating, even liberating, especially for companies that have been struggling to delight.
Telling frontline reps to exceed customers’ expectations is apt to yield confusion, wasted time and effort, and costly giveaways. Telling them to “make it easy” gives them a solid foundation for action. What exactly does “make it easy” mean? Simply: Remove obstacles.
The report identiﬁed several recurring complaints about service interactions, including three that focus directly on customer effort. Customers resent having to contact the company repeatedly (or be transferred) to get an issue resolved, having to repeat information, and having to switch from one service channel to another (for instance, needing to call after trying unsuccessfully to solve a problem through the website).
Well over half the surveyed customers reported difﬁculties of this sort.
Slide 12 – Some companies are doing it better. Tactics that every company should adopt
During the study, the research team saw many companies that had successfully implemented low- customer-effort approaches to service.
Following are ﬁve of the tactics they used—tactics that every company should adopt.
These tactics are regarding thinking about the next related issue, customers’ emotions, reduction of channel switching, customer feedback and empowering of the first line.
We will go into the details and bridge back and try to apply these findings on our Service Management approaches.
Slide 13 – Tactic #1 Don’t just resolve the current issue— head off the next one
Tactic number one: Don’t just resolve the current issue— head off the next one. By far the biggest cause of excessive customer effort is the need to call back. Many companies believe they’re performing well in this regard, because they have strong ﬁrst-contact-resolution (FCR) scores. However nearly a quarter of repeat calls involve downstream issues related to the problem that prompted the original call, even if that problem itself was adequately addressed the ﬁrst time around.
Although companies are well equipped to anticipate and “forward-resolve” these issues, they rarely do so, generally because they’re overly focused on managing call time.
They need to realize that customers gauge the effort they expend not just in terms of how an individual call is handled but also according to how the company manages evolving service events, such as setting up cable service, that typically require several calls.
For instance, a high percentage of customers who ordered a particular feature called will call back for instructions on using it. Therefore you should build, maybe by big data analysis or just by using common sense, so called event clusters, to find out what the customers next issue will be.
When somebody orders a new phone the next question will be about how to transfer his phone book to the new device.
Slide 14 – Tactic #2 Arm team to address the emotional side of customer interactions
Twenty-four percent of the repeat calls in our study stemmed from emotional disconnects between customers and reps—situations in which, for instance, the customer didn’t trust the rep’s information or didn’t like the answer given and had the impression that the rep was just hiding behind general company policy. With some basic instruction, reps can eliminate many interpersonal issues and thereby reduce repeat calls.
You should sift through your call transcripts to pinpoint words that tend to trigger negative reactions and drive repeat calls—words like “can’t,” “won’t,” and “don’t”—and coaches your team son alternate phrasing. Instead of saying “We don’t have that item in stock,” a rep might explain, “We’ll have stock availability for that item in two weeks.” Amazon is doing this since a decade!
Slide 15 – Tactic #3 Minimize channel switching
Minimize channel switching by increasing self-service channel “stickiness.” Many companies ask, “How can we get our customers to go to our self- service website?” Our research shows that in fact many customers have already been there: Fifty-seven percent of in- bound calls came from customers who went to the website ﬁrst. Despite their desire to have customers turn to the web, companies tend to resist making improvements to their sites, assuming that only heavy spending and technology upgrades will induce customers to stay there. That’s wrong: Just implement modern state of the art ITSM toolsets. They provide superior Service Catalog capabilities and can automate the Request Fulfillment processes to increase quality and reduce time to value as well as overall costs.
In one use case the company reduced customer effort just by improving the help section of its website. By eliminating jargon, simplifying the layout, and otherwise improving readability, the company doubled the use of its “top searches” and decreased calls by 5%.
E-Mail In is complete unstructured and ends up in a phone call. Providing forms with selections and suggestions can reduce effort of more or less unstructured incoming messages by up to 80%.
Slide 16 – Tactic #4 – Use feedback from customers to reduce customer effort.
The fourth tactic is: Use feedback from disgruntled or struggling customers to reduce customer effort.
Many companies conduct post call surveys to measure internal performance; however, they may neglect to use the data they collect to learn from unhappy customers. But consider this approach. One insurance company in Australia has frontline reps trained to call customers who have given it low marks. The reps focus ﬁrst on resolving the customers’ issues, but they also collect feedback that informs service improvements. The company’s issue-resolution rate has risen by 31%.
Such learning and intervention isn’t limited to the phone channel. Some companies monitor online behavior in order to identify customers who are struggling.
I was searching more than 5 minutes in the NetFlix Knowledge Base last weekend. A live chat was initiated automatically and the agent at the other end solved my issue within 3 minutes!
When a user calls your Service Desk the Agent should know if the user was searching on the portal fist but didn’t find a solution. By asking a few questions this could give important information about improvement possibilities.
Slide 17 – Tactic #5 – Empower the front line to deliver a low- effort experience
Tactic number 5 Empower the front line to deliver a low- effort experience.
Incentive systems that value speed over quality may pose the single greatest barrier to reducing customer effort. Most customer service organizations still emphasize productivity metrics such as average handle time when assessing the Service Desks performance. They would be better off removing the productivity “governors” that get in the way of making the customer’s experience easy.
An telecommunications provider eliminated all productivity metrics from its frontline reps’ performance scorecards. Although handle time increased slightly, repeat calls fell by 58%. Today the company evaluates its reps solely on the basis of short, direct inter- views with customers, essentially asking them if the service they received met their needs.
Freed to focus on reducing customer effort, frontline reps can easily pick low- hanging fruit.
With a state of the art ITSM solution providing one single truth and one single data store for all integrated ITSM processes this should be easy to handle.
Slide 18 – Tactic #5 – Empower the front line to deliver a low- effort experience
The immediate mission is clear: The Service Managers must focus their service organizations on mitigating disloyalty and increasing customer satisfaction by reducing customer effort.
But service managers fretting about how to reengineer their contact centers— departments built on a foundation of delighting the customer—should consider this: A massive shift is under way in terms of customers’ service preferences. Although most companies believe that customers overwhelmingly prefer live phone service to self-service, the most recent data show that customers are, in fact, indifferent. This is an important tipping point and probably presages the end of phone-based service as the primary channel for customer service interactions. For enterprising service managers, it presents an opportunity to rebuild their organizations around self-service and, in the process, to put reducing customer effort ﬁrmly at the core, where it belongs.
To verify your success you should use the Customer Effort Score
It is measured by asking a single question: “How much effort did you personally have to put forth to handle your request?” It is scored on a scale from 1 (very low effort) to 5 (very high effort). Customer service organizations can use CES, along with operational measurements of such things as repeat calls, transfers, and channel switching, to conduct an “effort audit” and improve areas where customers are expending undue energy.
Many successful service organizations use CES to intervene with customers at risk of defecting.
Slide 19 – Enhance your Self Service Portal, it is the key to satisfied and loyal service customers!
So let’s bring us together all the things we learned.
The key channel for customer service interactions is the self-service portal. And this is the new thing like described in the paper of HDI and itSMF US. It is the same for all service organizations.
For a good service portal we need all answer for all questions the users can ask. Information about all provided services. What they do, what they can, how much they cost, how to buy them, how to apply them, how to configure them, and of course how to repair them when something is broken. Additional all policies should be published here.
To enhance the 1st line capabilities all knowledge for the daily support should get transferred from the specialists in the 2nd and 3rd Line to the first line. And the first line needs access to all configuration information.
As a third step increase the automation for all fulfillment processes. In IT we know latest since ITIL that there is a difference between Incident, Change and Request. And the request fulfillment is different again for each service. Maybe some other organizations still do not know how to differentiate yet.
The next step in your improvement is to collect the ‘suggested next steps’ for your customers.
e.g. when a user gets a new laptop tell him how to transfer his data from his old device.
When you are from HR and a user is new in your organization or location tell him how to apply for the gym and when the staff canteen is open.
When you are delivering a new office cupboard to a user tell him that you key the second key safe and how he can get access when he loses his one.
And then measure Customer Effort Score by asking: “How much effort did you personally have to put forth to handle your request?”
Go back to the dissatisfied customers and try to understand why they were unhappy. And then start over again.
And please do not forget to do this for all service organizations within your company. You can use the same service portal, the same fulfillment automation engine and the same methodology.
Slide 20 – Thank You! Links and resources
So, thank you for listening. You can find links to both papers I was referencing to under attachments.
And yes of course. I would be happy about your feedback. Please rate my presentation.
Like promised at the beginning I will answer your questions now.
But since we run out of time I’ll post my answers on my blog. Please find the link to the prepared blog entry under the attachments, too.
Slide 21 – Questions? Feel free to come back to us!
You can send me an email.
Please visit our blog and our homepage and follow us on twitter! Thank you for listening and have a good day!
Service Management Not just for IT Anymore Whitepaper by HDI and itSMF USA
Stop Trying to Delight Your Customer Article from the Harvard Business Review
Stop Trying to Delight Your Service Customers – Martin Pscheidl – itSMF Austria this slide-deck in a PDF
Please feel free to ask questions here in the comments section!