strategic customer service john goodman

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Strategic Customer Service This page intentionally left blank Strategic Customer Service Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty, and Maximize Profits John A Goodman American Management Association New York • Atlanta • Brussels • Chicago • Mexico City • San Francisco Shanghai • Tokyo • Toronto • Washington, D.C Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 Tel: 212-903-8316 Fax: 212-903-8083 E-mail: specialsls@amanet.org Website: www.amacombooks.org/go/specialsales To view all AMACOM titles go to: www.amacombooks.org This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought Library of Congress Cataloging-in-Publication Data Goodman, John A Strategic customer service : managing the customer experience to increase positive word of mouth, build loyalty, and maximize profits / John A Goodman.—1st ed p cm Includes index ISBN-13: 978-0-8144-1333-3 ISBN-10: 0-8144-1333-1 Customer services Customer relations—Management I Title HF5415.5.G672 2009 658.8Ј12—dc22 2008055729 ᭧ 2009 John A Goodman All rights reserved Printed in the United States of America This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019 Printing number 10 Contents FOREWORD xiii INTRODUCTION: WHY STRATEGIC CUSTOMER SERVICE? Beyond the Complaint Department Why Bother with Strategic Customer Service? Everyone Has a Stake in Service The Origins of This Book The Structure of This Book 10 Starting Strategically 11 PART 1: THE IMPORTANCE OF CUSTOMER SERVICE SEEING CUSTOMER SERVICE STRATEGICALLY: Understanding the True Role of Customer Service in Your Business How Customer Service Affects a Business 15 16 The Bad News 16 The Good News 18 Making the Business Case for Improvements in Service 19 Clarifying Key Concepts 21 A Model for Maximizing Customer Satisfaction and Loyalty 23 Do It Right the First Time (DIRFT) 25 Respond Effectively to Questions and Problems That Arise 25 Feed Data About Issues to the Right Parties 26 Capitalize on Opportunities to Sell Ancillary or Upgraded Products or Higher Levels of Service and Create Connection and Delight 27 First Steps to Strategic Customer Service: Economic Imperative and VOC 28 Key Takeaways 29 v vi Contents WHAT DO CUSTOMERS WANT (AND WHAT SHOULD WE DELIVER)? Understanding Customer Expectations and Setting Goals Strategically 31 Unexpected Reasons for Unmet Customer Expectations 32 Trends in Customer Expectations About Service 33 Broad Trends in Customer Expectations 34 Operational Expectations for Tactical Customer Service 36 Setting Service Goals Strategically 41 Operationalizing the Process Goals 43 Financial Goals 46 Key Takeaways 48 PART 2: IDENTIFYING IMMEDIATE REVENUE AND PROFIT OPPORTUNITIES TACTICAL RESPONSES AND STRATEGIC SOLUTIONS: Dealing with Customers’ Problems and Addressing Their Causes 51 Tactical Versus Strategic Problem Solving 53 Five Steps to Tactical Problem Solving 54 Step 1: Solicit and Welcome Complaints 55 Step 2: Identify Key Issues 56 Step 3: Assess the Customer’s Problem and the Potential Causes 57 Step 4: Negotiate an Agreement 57 Step 5: Take Action to Follow Through and Follow Up 59 Six Tasks Connecting the Tactical Response to the Strategic Feedback Loop 59 Task 1: Respond to Individual Customers (and Capture Data) 60 Task 2: Identify Sources of Dissatisfaction 61 Task 3: Conduct Root Cause Analysis 61 Task 4: Triage to Solve/Resolve Systemic Problems 62 Task 5: Provide Feedback on Prevention 63 Task 6: Confirm Improvement of Product and Service Quality 63 Unconventional Management Wisdom 64 Redefine Quality 64 Aggressively Solicit Complaints 65 Get Sales Out of Problem Solving 65 Assume that Customers Are Honest 65 Key Takeaways 66 Contents FIXES AND FINANCES: Making the Financial Case for Customer Service Investments 67 The Case for Great Customer Service How CFOs Think 69 71 Questions to Guide Modeling the Customer Experience The Market Damage Model: What’s the Damage? 72 74 Data and Output Financial Impact vii 75 77 What Is the Payoff if We Improve? Objections to the Market Damage Model The Word on Word of Mouth 78 80 81 Quality and Service Allow You to Get a Premium Price The Market-at-Risk Calculation: Identifying Customers’ Points of Pain Across the Whole Experience What About Customers With Limited or No Choice? 82 Impacted Wisdom Key Takeaways 88 89 INFORMATION, PLEASE: Developing an Efficient, Actionable Voice of the Customer Process The Objective of VOC and Its Key Building Blocks Three Sources of VOC Information and What They Tell You Internal Metrics Customer Contact Data Survey Data The Attributes of an Effective VOC Process Unified Management of the Program A Unified Data Collection Strategy Integrated Data Analysis Proactive Distribution of the Analysis Assessment of Financial Implications and Priorities Defining the Targets for Improvement Tracking the Impact of Actions Linking Incentives to the VOC Program The Two Major Challenges in Using Customer Contact Data in VOC Programs Developing a Unified, Actionable Data Classification Scheme Extrapolating Data to the Customer Base Getting Started in Improving Your VOC Program Key Takeaways 84 87 90 91 93 93 94 95 97 98 98 99 99 100 100 101 101 101 102 104 105 106 viii Contents PART 3: RESPONDING TO CUSTOMERS’ QUESTIONS AND PROBLEMS DEFINING PROCESSES THAT WORK FOR CUSTOMERS: Using the Eight-Point TARP Framework for Delivering Service Framing the Work 112 Tactical Functions 114 Intake 114 Response 115 Output 115 Control 115 Strategic Service Functions 115 Analysis 116 Evaluation and Incentives 116 Staff Management 116 Awareness 117 Why Use the Service Delivery Framework? 117 The Flowchart of the Framework 120 Best Practices for Improving Specific Functions and Activities 122 Activities Within the Tactical Functions 122 Activities Within the Strategic Functions 125 Implementing the Framework Map the Tactical Service Process with Visual Tools 111 127 128 Use Employee and Customer Input to Redesign the Process 128 Tweak the Technology to Enhance Tactical Service 129 Create or Strengthen the Analytical Functions 129 Enhance Strategic Service Across the Organization 129 Practice Continuous Improvement 129 Get Your System Framed 130 Key Takeaways 130 TECHNOLOGY AND THE CUSTOMER INTERFACE: Creating Systems That Customers Will Use—and Enjoy Why Customers Love-Hate Technology 131 132 When Customers Hate Technology 133 When Customers Love Technology 133 Getting the Customer-Technology Interface Right Make the System Intuitive for Both Novices and Veterans 134 135 Contents ix Create a System That Will Save the Customer Time and You Money 135 Educate and Encourage Customers to Adopt the Technology Cheerfully 136 Start With a Few Functions to Guarantee Success 138 Which Technology Should You Apply? 138 Nine Technological Applications to Consider 138 Interactive Voice Response 139 E-Mail and Chat 140 Web sites 142 Web Video 143 Automated Web-Based Self-Service 144 Recording Interactions 145 Mobile Communications 146 CRM and Data Mining 146 Machine-to-Machine Communication 147 A Few Words on ‘‘Push’’ Communications 149 Key Takeaways 150 PEOPLE ARE STILL PARAMOUNT: Four Factors for Creating Sustained Front-Line Success 151 The High-Turnover Mentality and Its Subtle Cost 152 The Alternative to High Turnover Factor 1: Hiring the Right People 153 154 Positive Attitudes Make a Difference 154 Proper Staffing Is Essential 154 Factor 2: Providing the Right Tools 155 Give Employees the Information They Need 156 Empower Them to Act 157 Use Feedback Channels 158 Factor 3: Offering the Right Training 158 Four Types of Training 159 Factor 4: Supplying the Right Motivation 161 Competitive Compensation 162 Superior Supervision 162 Excellent Evaluations 163 Avoiding Problems with Satisfaction-Based Incentives 166 Recognition and Advancement 168 242 Into the Future monthly reinforcement by front line managers Best-practice companies devote at least two hours per month to revisiting basic skills and response rules Focus on the Long Term Stable, cumulative incentives will promote a long-term focus, yet many companies revamp their incentives annually While they may be trying to keep things fresh, the result is often confusion and diffused efforts The auto company unit with the industry’s best scores assures executives that satisfaction incentives will be in place for at least three years and increases the rewards as higher metrics are achieved This approach assures people that ‘‘the rules won’t change next quarter and this is not the flavor of the month.’’ Bonus Guideline: Be Careful with Net Promoter Scores Many executives are now using the Net Promoter (NP) Score as a major metric (The Net Promoter Score, developed by Fred Reichheld, is a measure of customers’ willingness to recommend, that is, to spread positive word of mouth.) One well-known article refers to ‘‘the only question you need to ask—would you recommend us?’’ It’s not a bad question, but the NP Score is calculated by subtracting ‘‘detractors’’ (respondents who give you a or below on the 10-point response scale) from ‘‘advocates’’ (those who give you a or a 10) There are three difficulties in using the NP Score First, it assumes that customers who give you a or an are ‘‘benign.’’ This is not true, as they are probably spreading mediocre word of mouth and are not loyal Second, the NP Score provides no diagnostics Third, different situations can generate the same score For example, most customers (say, 65 percent) could be in the middle, 30 percent could be advocates, and 15 percent could be detractors Your NP Score would be 15 (30 ‫ מ‬15 ‫ס‬ 15) Alternatively, you could have a highly polarized market in which 55 percent are advocates and 40 percent are detractors, and your NP Score would again be 15 (55 ‫ מ‬40 ‫ ס‬15) Clearly, you must understand the diagnostics and distributions behind these scores and estimate the revenue at risk for each month that the status quo continues Use Incentives in Specific Environments Linking incentives to metrics always presents challenges Here are specific issues to address in specific environments A Thousand Things Done Right 243 Satisfaction Incentives for Contact Centers Linking satisfaction metrics to incentives is both easier and harder in contact centers than in the rest of the organization It’s easier because of the link between employees’ actions and customer satisfaction and loyalty It’s harder because the dissatisfaction with the CSR might actually be caused by a poor response rule or from emphasizing minimal talk time, which leads to truncated calls and short explanations These also lead to increased callbacks and encourage callers to shop the system Table 12-2 shows the types of data typically used for linking incentives to metrics and the strength of their correlation with actual loyalty An appropriate balance for reps tends to be one-third operational metrics (such as adherence to procedures), one-third impact and outcome metrics (first-contact resolution; recommend overall and by issue), and one-third team behavior, attendance, and input into problem prevention When present, cross-selling should have a separate incentive Call monitoring and satisfaction surveys should generate similar outcome results If, for example, the rep scores 95 on internal call monitoring, but customers rate the rep at 65, there’s a lack of alignment You may be requiring and measuring behaviors that customers see as unimportant, and neglecting behaviors that would boost loyalty It’s often useful to ask the person doing the monitoring, ‘‘How would you rate the caller’s satisfaction at the end of the call?’’ and use the scale used in the customer survey The two scores should be reasonably close Table 12-2 Correlation Between Various Metrics and Loyalty Type of Metric Basic Operations Metrics Operations Audit Metrics Operations Impact Metrics Outcome Metrics Content Call-center performance ASA, talk time, abandonment, time in queue Call quality monitoring, e-mail audit Calls closed on first contact data by issue, calls transferred, multiple calls, fulfillment, timeliness Outcome data (satisfaction and loyalty attribute ratings and escalations) Strength of relationship of metrics to actual loyalty Low Moderate Strong Congruent 244 Into the Future Satisfaction Incentives for Operating Units and Varying Locations For an entire company or a subsidiary, use operations impact metrics and overall satisfaction and loyalty, for instance with products and services, along with willingness to buy again or recommend Many companies use an index of two or three such metrics Some leading companies simply focus on the ‘‘recommend’’ metric, assuming that all the others are generally collinear with it Either approach works In different regions within the United States or across countries, TARP has found that people rate satisfaction differently For example, we’ve found that residents in the northeastern United States usually give lower ratings for identical levels of service than those in the South (except Florida) Worldwide, satisfaction and loyalty ratings differed in several studies using identical service metrics For instance, customers living in France tend to rate their satisfaction lower than customers of the same companies living in the United Kingdom And Japanese tend to give fewer top ratings than Americans On the other hand, market action questions, such as willingness to purchase again or to recommend, are answered much more consistently around the world So while it’s not possible to have a comparable worldwide satisfaction index, it is possible to have a comparable loyalty index Satisfaction Metrics and Incentives for Dealers and Field Units When customers are served by dealers and field units, the dealer’s or unit’s actions carry over to the company’s rating Customers see the company as being responsible for the service provided by dealers and field units But TARP has also found that customers will, to a degree, differentiate between the two entities and give ratings that can vary by as much as 30 percent for actions taken by a dealer and by a company or headquarters Still, there is significant spillover Even when headquarters handles a call perfectly, if the dealer fails to follow through on headquarters’ promises, headquarters will be partly blamed for the failure, as well it should be TARP has found that the best way to motivate a dealer, field unit, or channel is to show that poor service hurts it as well as the company in terms of eroded loyalty and bad word of mouth Such economic modeling has proved very effective in motivating dealers to focus on satisfaction in the automotive, motorcycle, insurance, and franchising industries Satisfaction Incentives for Internal Customer Service Most of the metrics for external customers also work for internal customers There are A Thousand Things Done Right 245 two exceptions: complaint behavior and loyalty Internal customers tend not to complain because of fear of retribution and a belief that nothing will change TARP has seen noncomplaint rates as high as 93 percent in internal IT, HR, and government settings Thus, it’s best to collect data on trouble reports and then ask the customers how much time they waste each time the problem occurs As to loyalty, internal customers often perceive no ability to switch providers because they’re required to use the internal service or the designated contractor Yet TARP has seen many creative ways to switch providers, such as giving small contracts to local IT-support companies or simply using nonsanctioned providers, both of which create extra costs The question to ask is, ‘‘If you could get this service from someone else at the same price, how likely would you be to continue to use our internal service?’’ TARP has found that customers take the hypothetical question seriously even in monopolistic situations The other key questions are how often these problems occur and how much time you waste each time that they occur DELIVERING A GREAT EXPERIENCE THROUGH CHANNEL PARTNERS If aligning functions to deliver the intended customer experience is difficult when these functions are within the company, consider the challenges when they’re not This occurs when your customers are primarily the customers of your distributors, retailers, agents, brokers, or other sellers or resellers This also occurs when your products or services are used in other products or services or when you enter into licensing agreements (I’ll refer to all of these as situations involving channels and channel partners.) In all of these cases, you automatically lose substantial control over the customer experience How much you lose depends on the type of channel partner and the nature of your arrangement The more formal agreements, such as marketing alliances, joint ventures, and licensing agreements, can allow you to establish more control over the customer experience, yet difficulties arise even then For instance, even major brands such as Calvin Klein and Martha Stewart have learned that retailers and distributors can place their reputations and their revenues at risk 246 Into the Future Many arrangements tend to favor the channel over the provider of the product That’s because the provider of the product often needs the channel (say, Wal-Mart) more than the channel needs any single provider The provider usually has limited access to the channel’s customers and to information on those customers Providers generally compete fiercely for the best channels, and anyone that such a channel views as troublesome may see other providers treated more favorably Channels in most categories vary wildly in the customer experiences they deliver TARP’s research has found that in durable goods and technology, a bad channel experience can reduce loyalty to the brand by at least 20 percent and as much as 80 percent—a veritable disaster for the brand Yet the manufacturer or brand manager can little about it, given that customers not want a relationship with every provider they buy from indirectly They want their grocery store to rectify problems with their Swanson frozen dinner and their men’s shop to fix their Hickey Freeman suit What’s a provider to do? There’s no easy solution Clearly, you must business with the most reputable channels available to you, given business realities Those realities include the ways in which your products, prices, profit requirements, and customer experience match those of the available channels So the first goal would be to create a customer experience that’s compatible with those of the channel partners you want to cultivate This means setting the bar high relative to your competitors and finding like-minded channel partners Five other ways to create and deliver a good customer experience when dealing with and through channels are to: Obtain good information on customers Share your customer data and research with channel partners to encourage them to improve your customers’ experience Communicate with your customers Provide useful premiums to prompt customers to register at your web site, and then keep in touch with them Make it easy to complain Make it easy for customers to complain via a toll-free ‘‘support’’ number and your web site; genuinely welcome complaints and news of problems Design promotions carefully For packaged goods, promotions A Thousand Things Done Right 247 are as large a source of complaints as quality issues; given the number of activities and functions involved, promotions must always be simple and well executed Partner with your channels Use the contracting process with channels to set expectations regarding the customer experience and service levels Also, provide your channels with incentives to report problems in enough detail that they can be prioritized It’s worth taking the time to clearly formulate your views of the customer experience and to communicate them to your channel partners In a sense, you can think of your channels as customers themselves, and compile useful information on them and on their experience with you— and then set expectations that can be met or exceeded NEVER DECLARE VICTORY; FOREVER STAY THE COURSE We have worked with almost half of the Fortune 100, as well as with many other extremely successful companies One of the most disturbing and disappointing occurrences I’ve seen is a really successful company with stellar customer experience that eventually stumbles I’ve seen this happen in the auto, computer, food retailing, insurance, and pharmaceutical industries, among others I attribute this to two major issues First, the company makes a major non-service-related mistake, such as a bad product decision followed by ignoring signals from the Voice of the Customer The outcome prompts an unenlightened senior executive or financial manager to ‘‘slash and burn,’’ shortchanging service to reduce costs I have actually seen two companies decide to ship defective products to make their sales numbers, knowing that warranty complaints would skyrocket, and then reduce the warranty period, leaving customers without reasonable recourse and service without reasonable solutions Both companies deservedly fell on very hard times Second, I’ve seen companies ‘‘declare victory’’ and even become arrogant, thinking that they can no wrong They believed their own hype and the satisfaction awards they had received A great experience and continued loyalty was assumed, and attention and support went else- 248 Into the Future where in the company Then new managers with new priorities came into critical functions They sought to make a name for themselves and service was wonderful, so they cut costs and corners Inevitably, service started to decline, often imperceptibly at first, then more markedly, usually taking about seven years to hit bottom In a half-dozen companies, we’ve had to revisit the company in five to seven years to remind it why and how it used to deliver great customer experiences Creating great customer experiences—the key to continued loyalty and growth in revenue and profits—demands constant, diligent emphasis on and execution of the basics You need ongoing Voice of the Customer information, well-designed systems and dedicated people, and financially justified policies and problem-solving procedures You also need to understand the truly important strategic and tactical roles that customer service plays in creating the customer experience Those roles have been so underplayed or poorly played in so many organizations that investing in customer service is one of the highest return opportunities in business today Invariably, the data, the survey findings, and the experiences of companies that take a strategic approach to service bear this out, and I invite you to help your organization to realize those returns KEY TAKEAWAYS You must have a detailed process map of all the touches your organization has with the customer Marketing, sales, and operations must agree to shift problems and tasks to service when service can handle them better; in most cases, sales should not be involved in solving routine problems and delivering routine service You must have at least 20 percent of incentive compensation tied to customer experience metrics or the program won’t work A chief customer officer can facilitate alignment among the functions delivering the customer experience by using persuasive data to gain management commitment and achieving small successes followed by larger ones Complaints to your channel partners usually cause a 20 percent decrease in loyalty to your brand Your channel service reflects on you; you have to be certain that channels understand the A Thousand Things Done Right 249 value of a great customer experience to both of you and that they deliver it Once you’re consistently delivering great customer experiences, the gravest danger is that you cut corners and shift your attention elsewhere; you can never declare victory POSTSCRIPT What I’ve covered in this book is truly the tip of the iceberg of TARP’s 38 years of experience TARP has papers and data from literally every industry in existence If you have issues that I have not addressed, please contact me at jgoodman@tarp.com and I’ll be happy to share our experience This page intentionally left blank Index AAA, 173 accessibility, 36–38, 44 accountability, 116, 198–199 actions, tracking impact of, 101 advertising campaigns, 195 Allstate, 3, 137 Amazon.com, 39, 147, 184 American Express, 8, 51, 65, 157, 204 Amtrak, 156 analysis activity, 116, 125 anger, diffusing, 159–160 AOL, 141 Apple, 223 AT&T, 26 attitudes of job candidates, 154 Audi, 192 automated Web-based self-service, 144–145 automatic teller machines (ATMs), 92 Avaya, 222 average revenue per customer, 21 Avis, awareness, 117, 120, 126–127 bad news, spread of, 17 Bank of America, 71, 197, 200 Barlow, Janelle, A Complaint Is a Gift, 35 best practices for improving functions, 122–127 Blann, Jim, 157 brand, 190 consistency, 34 customer expectations, 193–196 impact of strength, 192 value of, 194 brand equity, 12, 192 brand-aligned customer service accountability for, 198–199 communications, 201–202 defining, 191, 197 emotional connection with customer, 202–203 formal processes, 201 increasing alignment, 205–207 measurement and feedback, 200–201 promise tied to company heritage, 197–198 values to reinforce, 199–200 call centers, 212 Canadian Tire, 65 captive customers, 87 Carlson, Jan, 196 case-tracking system, 165–166 cell phones, 146, 222 channel partners, 245–247 chat, 140–142 Cheesecake Factory, 73 Chick-fil-A, 23, 70, 73, 173, 183, 202 chief customer officer (CCO), 229–239 chief financial officers, thought process, 71–72 China, Chocolate Moose, 190 choices for customers, limited, 86–88 CIT Finance, 140 Citibank, 92 Citizen Research Assistance Programs, 10 classification schemes best practices, 123 for VOC data, 98–99, 102–104 Coca-Cola, 17 communications, 201–202 machine to machine, 148 mobile, 146 proactive, 117, 127, 149–150, 182 ‘‘push’’, 149–150 between sales and service, 238 technology in, 221–223 Compaq, 40 compensation, 162, see also incentiives competition, learning from, 185 complaint department, vs customer service, 251 252 Index A Complaint Is a Gift (Barlow), 35 complaints by customers, 21, 26 frequency, 16–17 handling of, 19, 113 profit impact, 67 sales opportunities from, 27–28 soliciting and welcoming, 55–56, 64–65, 126–127 consistency, 25, 34, 201 of information, 202 in VOC data, 102 contact centers, incentives for, 243 contact solicitation, 117 contact-handling flowchart, 119, 120–121 continuous improvement, 129 control, tactical functions for, 115 Cook, Sue, 12 cost center, view of customer service as, costs of creating delight, 178–179 of fixing or preventing problems, 46–47 cross-selling, 40–41, 45, 127, 186–188 CSR, see customer service reps customer base, extrapolating data to, 104–105 customer contact data, 94–95, 96 customer dissatisfaction, 17, 61 calculating sales lost from, 74–80 employees and, 18, 26 customer errors, 33 customer expectations, 24 about service, trends, 33–41 and brands, 25, 193–196 exceeding, 173–174 impact of, 100 reasons for unmet, 32–33 and satisfaction, 22 customer experience, 235–239 customer relationship management (CRM) systems, 28–29, 146–147 customer satisfaction, changing, 194 model for maximizing, 23–27 regional rating differences, 244 customer service brand equity and, 191–193 case for great, 69–71 clarifying roles, 237–239 goals of, 52 impact on business, 16–19 labor shortage in, 213–214 managers’ view of, 8–9, 112 objectives and measures, 43 operational expectations of tactical, 36–41 outsourcing, 8, 214–218 performance, 169 performance measurement, 67–68 recording interactions, 145–146 role in growth of business, viewing strategically, 28–29 see also brand-aligned customer service customer service reps feedback to, 145–146 high turnover and cost, 152–153, 229 hiring, 154–155 information from, 184 productivity measurement, 68 questions by, 56 response to customer problems, 60 tools for, 155–158 customers actual vs hypothetical experiences, 92 education of, 39–40, 136–138, 211, 219–220 emotional connection with, 27, 182–183, 202–203 information from, 184–185 input to process redesign, 128 interface with technology, 134–138 with limited or no choice, 86–88 love/hate relation to technology, 132–134 permission to receive e-mails, 149 questions to guide modeling of experience, 72–73 recognition and knowledge of, 35–36 soliciting and welcoming complaints from, 55–56 tiered relationships, 203–205 value to company, 21, 73 views of technology, 132 see also Voice of the Customer (VOC) data storage, retrieval, and distribution, 115, 124–125 unified collection strategy, 98–99 data mining, 146–147 defective products, 32 delight, 22, 188–189 cost of creating, 178–179 cost/benefit analysis, 179–180 creating, 40–41, 180–183 defining, 174, 175–177 economics of creating, 177–180 Dell, 199 developmental training, 160–161 DIRFT (Do It Right the 1st Time), 23–25, 32 disaster prevention, 192 Disney, 71, 198, 199, 202 dissatisfied customers, see customer dissatisfaction documentation of problems, 59 early adopters, 219 Eddie Bauer, 57, 137 education, 45 of customers, 39–40, 136–138, 211, 219–220 see also training e-mail and chat, 140–142 Index emotional connections with customers, 27, 182–183, 202–203 empathy, 35 employee satisfaction, 42 employees, 203 communication with, 201–202 and customer dissatisfaction, 18, 26 empowerment to act, 157–158, 199 evaluations, 163–168 and information, 96–97, 156 input to process redesign, 128 mistakes by, 33 morale, 52 motivation, 161–168 pure accountability, 199 recognition and advancement, 168 strategic functions for managing, 116–117 training, 117, 126, 158–161 training on flexibility, 58 see also customer service reps environmental concerns, 225–227 escalation code, 103 estimates, and customer expectations, 183 evaluation of employees, 163–168 as strategic function, 116, 125–126 expectations, see customer expectations Faulkson, Joe, FedEx, 184, 197 feedback, 158 in brand-aligned customer service, 200–201 on problem prevention, 62–63 feedback loop in DIRFT model, 26, 52 finances, assessment of implication and priorities, 100 financial goals, 43, 46–48 first-call resolution, 38–39, 44, 68, 152 Flexible Solution Spaces, 58, 158, 182 flowchart, for mapping tactical service process, 128 follow-through on customer call, 39, 44–45, 59 follow-up on complaints, 115, 125 Ford Motor Company, lawsuits, 53–54 GE Answer Center, General Motors, 148, 204 Giant Food, 154 Gladwell, Malcolm, The Tipping Point, 81 Gonier, Dennis, 174, 178 goodwill, 192 Grainer, Marc, Harley-Davidson, 202 Harvard Business Review, 34 Hewlett-Packard, 136, 226 hierarchical scheme for data, 104 hiring of customer service reps, 154–155 Holiday Inn, 31 253 home-based staff, 155 Honda, 70 honesty of customer, 56, 65–66 human contact, 36 Iams, 182 improvements, 71, 100–102, 129 incentives, 116, 125–126 linking to right metrics, 239–245 linking to VOC program, 101 Index of Marketing Quality, 200 India, information employee access to, 156 sharing, 99–100 innovators, 219 intake, tactical functions for, 114 integrated data analysis, 99 distribution, 99–100 integrated voice response surveys, 215–216 interactive voice response (IVR), 139–140 interface of customers with technology, 134–138 internal customer service, incentives for, 244–245 internal follow-up, 115, 125 internal metrics for VOC, 93–94 strengths and weaknesses, 96 Internet, 8, 222 Intuit, 182 JetBlue, 73 Jitterbug cell phone, 220–221 John Deere, 8, 127 Kano model, 175–176 Kelleher, Herb, 198 Key Bank (Cleveland), 136 Knauer, Virginia, L L Bean, 157 labor trends, 212–218 shortages in customer service, Lands’ End, 137, 141 lead customers, 205 Levi’s, 199, 203 Lexus, 8, 70, 221 ‘‘life management’’ communications, 223 ‘‘lifetime value’’ (LV) of customer, 73, 77 listening programs, 183–184 logging contact data, 114, 122–123 loyalty, 41, 72, 85, 239 best predictor of, 97 delight and, 177 of dissatisfied customers, 17 loss of, 75, 193 model for maximizing, 23–27 254 Index machine to machine communication, 148 management and brand-aligned service, 198 listening to recorded interactions, 145 unconventional wisdom, 63–66 view of customer service, 8–9 of VOC program, 98 market damage calculation to measure, 75 defining, 74 financial impact, 77–78 Market Damage Model, 71, 73 analysis of improvements with, 78–79 objections to, 79–80 word-of-mouth included in, 81 market research, and VOC, 92 Market-at-Risk analysis, 71, 73, 83–86, 101 marketing, 236 Marriott Hotel, 6, 200, 202 Merck, 213 metrics for employee evaluation, 164–166 linking incentives to, 239–245 mobile communications, 146, 222 model for maximizing customer satisfaction and loyalty, 23–27 motivation, 161–168 Motorola, 7, 74, 158 multiplier, 22 Polaroid, 127 policies, explaining to customers, 137 political trends, 223–227 poor service, customers’ response to, 2, 15–16 Postma, Jan, 72 price avoiding competition on, impact of quality on, 82–83 proactive communications, 117, 127, 149–150, 182 problem logging system, 45 problem resolution immediacy of, 34 sales personnel and, 65 tactical vs strategic, 53–54 problems cost of fixing or preventing, 46–47 preventing, 62 prioritizing, 84 term defined, 21–22 process goals, 43–46 process mapping, 236–237 Procter & Gamble, 48 products adoption curve, 220 complexity, 218–221 enhancing value, 181 promises, broken, 39 ‘‘push’’ communications, 149–150 negotiating agreement in problem solving, 57–59 Neiman Marcus, 65 Net Promoter Score, 242 Netflix, 137 new customers cost of acquiring, 18 technology interface to accommodate, 135 Nieman Marcus, 57, 190 noncomplaining customers, and lost business, 75 QUALCOMM, 223 quality confirming improvement of, 63 impact on price, 82–83 redefining, 64 questions, by customer service rep, 56 ongoing training, 161 online payments, 136 open hours, 36 operating units, incentives for, 244 opportunity analysis, 116, 121 orientation of new hires, 159–160 outcome goals, 43 output, tactical functions for, 115 outsourcing, 8, 214–218 part-time staff, 155 payments, online, 136 PDAs, 146 people-oriented culture, 151–152 personalized service, 35–36, 147 Peterson, Esther, phone calls, unreturned, recording interactions, 145–146 recruitment, 116–117 referrals, follow-up, 115, 125 refunds, unconditional, 57 regulatory issues, 224–225 Reichheld, Fred, 242 remedial training, 160 response to customer problems, tactical functions for, 115, 123–124 retaining customers, 18 revenue, impact of problem prevention and resolution, 20 rewards, 126 Richardson, Elliott, 10 Ritz-Carlton, 200 Rogers, Everett, 219 root cause of problem, 103 analysis, 61–62, 155 safety issues, 224–225 sales and account management, 236, 237–239 Index sales opportunities, from complaints, 27–28 satisfaction, defining, 22 ‘‘satisfaction planning’’, 100 satisfaction surveys, 72 satisfaction-based incentives, avoiding problems with, 166–168 scheduling, 117 matching to workload, 155 Scott, Mark, 214 screening, 114, 122 self-diagnostic capabilities of machines, 148 self-service, automated Web-based, 144–145 service goals, setting strategically, 41–48 service improvements, 19–21 Sharp, 137 Six Sigma magazine, 90, 96 Smith, Bob, 69–70 Southwest Airlines, 202 staff, see employees stakeholders, in-service, 7–9 Starbucks, 71, 157, 176, 198, 199, 202 strategic customer service mental shifts required at start, 11 required thinking for, 16 revenue impact, 47 rewards, 5–6 strategic feedback loop, 59–63 strategic functions, 113, 115–117 activities within, 125–127 responsibility for, 121 strategic problem-solving, vs tactical, 53–54 strategic service, enhancing, 129 strategic view, 2–3 success, continuing efforts for, 247–248 supervision, 162–163 surveys, 90, 92, 166, 184–185 corrupt distribution, 166–167 problems with, 167–168 for VOC data, 95–97 Swift Meat Company, 65 systemic problems, triage to solve, 62 tactical customer service, operational expectations, 36–41 tactical functions, 112–113, 114–115 activities within, 122–125 responsibility for, 121 tactical problem solving vs strategic, 53–54 tasks connecting to strategic feedback loop, 59–63 tactical service process, mapping, 128 Taguchi, Genichi, 34 targets for improvement, 240 TARP, analysis of companies with great service, 152 Diffusion of Anger and IANA Problem Solving training, 159–160 255 financial services industry study, 195 Flexible Solution Space, 58 Market Damage Model, 71, 73, 74–80 Market-at-Risk calculations, 71, 73, 83–86, 106 study of VOC process, 90 TARP framework for delivering service, 111–114 contact-handling flowchart, 119, 120–121 implementing, 127–129 reasons to use, 117–120 Taylor, Powell, technical problem-solving, steps in, 54–59 technical support, 151 technology, 129, 131–132 applications, 138–148 in communications, 221–223 customers and, 134–138, 211 trends, 218–223 telephone transfers, 37 testing customer interface, 135 text messaging, 146 Theuerkauf, Jon, 30n 3M, 71 The Tipping Point (Gladwell), 81 toll-free numbers, vs Web contacts, Toyota, 71, 161, 168, 213 ‘‘trained hopelessness’’, 34 training, 117, 126, 158–161, 201–202 incentives and, 240–241 transactions automated web-based self-service for, 144–145 enhancing value, 181 trends in customer expectations, 33–41 labor, 212–218 political, 223–227 technology, 218–223 trust, 157 turnover of customer service reps, 8, 152–154 twittering, 146 Tylenol, 192, 199–200 United States Postal Service, 198 Union Pacific, 137 United Airlines, 131 United Mileage Plus Visa, 51–52 UPS, 198 up-selling, 186–188 US Airways, 58 USAA, 73 user-friendliness, 37 value, as service goal, 41 vehicles, technical complexity, 148, 220 video, Web, 143 viral marketing, 81 visual communications, 222 256 Index voice mail, 37–38 Voice of the Customer (VOC), 28–29, 41–42, 90–91 attributes of effective, 97–101 challenges, 101–105 improving, 105–106 objective and key building blocks, 91–93 sources of, 93–97 voice-recognition, IVR with, 140 waiting period on telephone, 37 Web contacts, vs toll-free numbers, Web video, 143 websites, 38, 137, 142–143, 222 Whirlpool, 223 White House Office of Consumer Affairs, Whole Foods Market, 57, 203 Wilson, Kemmons, 31 ‘‘word of mouse’’, 10, 17, 23, 81 word of mouth, 4, 12, 22–23, 41, 70, 73 delight and, 179 impact on sales, 82 measuring, 242 negative, 75 quantifying impact, 81 Xerox, 74 Yates, Jane, 199–200 Zaltman, Gerald, 194 [...]... experience, analysis, and common sense in John Goodman s Strategic Customer Service Dennis E Gonier, CEO, TARP Worldwide Strategic Customer Service This page intentionally left blank INTRODUCTION Why Strategic Customer Service? depends on its keeping customers satisfied with the goods or services that it offers, yet most executives tend to view the customer service function of their business as little... responsibility has led me to conclude that they have one thing in common: a strategic view of, and approach to, customer service A strategic view perceives customer service as vital to the end-to-end customer experience, and thus to the customer relationship This view also considers customer service to be a full-fledged member of the marketingsales -service triumvirate Such a view starts with setting expectations,... messages, and from handling of customer complaints to the overall management of the entire customer relationship In these ways, customer service acts as a strategic catalyst for every organizational function and process that touches the customer Why a strategic catalyst? Strategic customer service stands at the point where all organizational strategies come to fruition in a great customer experience—or do... service has evolved Why Strategic Customer Service? 5 far beyond the complaint departments of 30 or more years ago to become pivotal in building and sustaining customer relationships WHY BOTHER WITH STRATEGIC CUSTOMER SERVICE? The payoff from a strategic approach to customer service is simple: more revenue, higher margins, lower costs, and positive word of mouth producing more customers at a lower marketing... Asking Customer Service Reps 184 Customer Compliments 184 Surveying Customers 184 Watching the Competition 185 Cross-Selling and Up-Selling 186 The Right Way to Cross-Sell 187 Establishing a Cross-Selling System 188 Foster Creative Delight 188 Key Takeaways 189 10 BRAND-ALIGNED CUSTOMER SERVICE: Building the Service Strategy Into Every Function 190 Customer Service as the Guardian of Brand Equity 191 Customer. .. begins when you see the true role that the service experience plays in your business and the broad impact of customer service on your financial performance This chapter will help you see your customer service function in strategic terms and grasp its true potential The chapter begins by examining several ways in which customer service and customer reactions to service can affect an organization for better... to provide them with superior service, or at least the right level of service given economic realities Yet most of them also hold outdated or erroneous views of customer service Perhaps the most prevalent of these views is that customer service in all its forms—call centers, retail salespeople, Why Strategic Customer Service? 9 field service personnel, and technology-based systems—is an organizational... under-serving customers Strategic Customer Service is a port in this economic storm—an intellectual reminder that nothing in one’s bag of tricks is more powerful than a positive customer experience Since I first met John Goodman in the 1980s, I have admired his work and thought leadership John is a very popular speaker and sought after consultant Since founding TARP Worldwide in 1971, John has helped... then looks at how financial decisions about customer service and the overall customer experience are currently made, and how they could be made strategically After pausing briefly to clearly define several key terms that will arise in most discussions of customer service, the chapter turns to presenting a model for a customer service function that can play a strategic role in your organization It finally... general content: Part 1, ‘‘The Importance of Customer Service, ’’ describes strategic customer service and its behavioral context in detail and introduces the financial rationale for investments in improvements to your customer service Part 2, ‘‘Identifying Immediate Revenue and Profit Opportunities,’’ reveals things you can do right now to enhance the basic customer experience and produce more useful
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