CUSTOMER MANAGEMENT EXCELLENCE MIKE FAULKNER Copyright © 2003 John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex PO19 8SQ, England Telephone (+44) 1243 779777 Email (for orders and customer service enquiries): cs-books@wiley.co.uk Visit our Home Page on www.wileyeurope.com or www.wiley.com All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP, UK, without the permission in writing of the Publisher. 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Dedicated to Jacqui, for her inspiration, determination and belief With grateful thanks to Sara for her unstinting help For Sheila, my Mum, to whom I owe a huge debt of gratitude And to the other important people in my life Katie, Hannah and Samuel CONTENTS Introduction 1 PART I 1 Evaluating a Customer-Centric Approach 11 Generic overview 12 Are you price-, product- or customer-driven? 13 Transition towards customer focus 16 Differentiation through service 17 What customer service excellence means to an organisation 19 Readiness checklist 19 Case study: Unipath 20 Case study: London Borough of Newham 22 2 Enter the Customer Service Director 25 Introducing the role of customer director 26 Customer elements of a commercial business 27 How do service personnel keep touch with the changing corporate structure? 28 CONTENTS v What makes customers important enough to have a director? 29 Readiness checklist 30 Case study: Sun Life Financial of Canada 31 Case study: Legal & General Assurance Society 33 3 Recognising the Cultural Needs of a Service Operation 35 Recognising the culture within different organisations 36 Marrying a culture of profit to a service excellence ethic 37 Undergoing a cultural change 39 Change management issues 40 Top-down approach to service culture 41 Readiness checklist 43 Case study: Thames Water Utilities 43 Case study: The Royal Bank of Scotland 45 4 The Shift from Call Centre to Contact Centre 47 The emerging multichannel call centres 49 Managing change while maintaining service levels 51 Multitasking CSRs and keeping staff on-message 52 Linking the data with the rest of the enterprise 55 Readiness checklist 56 Case study: Loop Customer Management 57 Case study: Newcastle City Council 59 PART II 5 Dealing with Lifetime Values 63 Calculating customer lifetime values 64 LTV is a key requisite to realise the full customer value 68 Emerging trends in LTV measurement 69 Is LTV being realised by companies and if so, how? 70 Readiness checklist 71 Case study: Carpetright 72 Case study: Zurich Financial Services 74 6 How to Deal with Unprofitable Customers 77 Evaluating your customers’ value, segment by segment 78 How to differentiate the service offering to your top 10 per cent 81 Should you continue to serve unprofitable customers? 82 How to offload the customers that cost you money 83 Creating a knowledge-base about serial complainers 84 Readiness checklist 85 Case study: Hilton plc 86 Case study: Vauxhall Motors 88 7 Complaint (Feedback) Management 91 Proactively managing complaints 92 Predicting service shortfalls to reduce complaints 94 Establishing transparency in terms of organisational culture 96 When to tell the truth, the whole truth and nothing but … 97 Admitting your failings 98 Communication as a tool to deal with disgruntled customers 100 Readiness checklist 102 Case study: Thomas Cook Retail 103 Case study: The Capita Group 105 8 Reputation Management 107 Executing effective damage limitation 108 How to distance yourself from third-party actions 109 Communicating with customers when you are powerless 111 How companies are addressing third-party issues 112 The emergence of customer unions 113 Readiness checklist 115 Case study: Travelcare 116 Case study: The Boots Company 118 9 Managing Expectation 121 Customer service excellence increases expectation 122 Customer service excellence becomes the norm 125 CONTENTS vi Should service be paid for to reduce customer expectation? 125 Reducing expectation can lead to reduction in customer churn 126 How organisations are dealing with customer perceptions and changes in expectation 128 Readiness checklist 130 Case study: International Rectifier Company (GB) Ltd 130 Case study: Powergen plc 132 PART III 10 Empowering Customer-Facing Staff 137 How empowering staff impacts on staff retention 138 How empowerment impacts on customer retention 139 How to empower staff and to what level 141 Building staff confidence to ensure ownership of complaints 142 Developing a set of discretionary awards 143 Defining exactly how long that ‘extra mile’ should be 145 Readiness checklist 146 Case study: Currie & Brown 147 Case study: WHSmith 149 11 Service Personnel Adopting the Sales Role 151 A satisfied complainer will remain loyal forever 152 Cross-sell and up-sell opportunities with a satisfied complainer 154 How to gain a 360-degree view of the customer 155 Identifying when a customer is satisfied 157 Interdepartmental communications: internal collaboration – a vital link 159 Can service personnel see themselves as sales people? 160 Readiness checklist 161 Case study: Siemens Communications 162 Case study: AON Warranty Group 164 CONTENTS vii 12 Caring for Your Carers 167 Avoiding jadedness in front-line staff 168 Avoiding inconsistent service levels 169 Taking a meaningful interest in your staff and their problems 170 Promoting openness and discussion in the workplace 172 Incentivising staff to go that ‘extra mile’ 173 Acknowledging service excellence through benefits 174 Understanding what motivates your staff and rewarding accordingly 175 Readiness checklist 176 Case study: National Westminster Bank 177 Case study: Mid Kent College 179 The Final Chapter – A Summary 181 The process 182 And the final words for the doubters 186 6 Case studies featuring main category winners from National Customer Service Awards BT Cellnet 187 Eurostar UK 190 Midland Mainline 194 Sainsbury’s Supermarkets 197 Stannah Stairlifts 200 The Trafford Centre 204 Glossary of Terms 209 Index 213 CONTENTS viii . effective CUSTOMER MANAGEMENT EXCELLENCE 2 customer service are far greater than the loss of a few single- minded employees. Be brave; be committed. CUSTOMER. Boots Company 118 9 Managing Expectation 121 Customer service excellence increases expectation 122 Customer service excellence becomes the norm 125 CONTENTS