Would you do business with you?

Eric Fraterman

If more company presidents and their senior managers asked themselves this question, taking the view of their customers, many would answer "probably not." The reason? Customer Service! 
 

If more company presidents and their senior managers asked themselves this question, taking the view of their customers, many would answer "probably not." The reason? Customer Service! Much has been said, done, and written about customer service during the last three decades. Millions of dollars have been spent on programs, training, surveys and systems. However, the results have been disproportionate and often outright disappointing. In an issue of Fast Company magazine many years ago the cover story declared "Betrayed! The biggest lie in business is 'the customer is in charge'… How could an idea so right go so wrong?" But surely, you may say, every company wants to delight its customers? That may be true, but although bold promises have been made, bad results remain a frequent and astonishing reality. The issue is not that service is poor.

The real issue is that the promised and necessary great service is harder to deliver than ever! Here are some relevant numbers about the stagnant state of Customer Service and the importance of service to success: 

• The American Customer Satisfaction Index (University of Michigan Business School) stood at 75 in 1995, 73 from 1998 to 2002, and has only slowly recovered to 76 in 2010, with several dips in between.
• The Accenture Global Customer Research study revealed that in 2010 two thirds of consumers switched service providers due to customer service. From 2009 to 2010 customer satisfaction declined for each of 11 customer service characteristics.
• Also, more than 54% of consumers are not willing to compromise on levels of customer service, product options, product quality and frequency of communications with companies in exchange for lower prices.
• According to a report by Bain & Company 80% of companies believe they deliver a superior customer experience. Only 8% of their customers agree.
• Only one in three customers who have a problem and contact the organization for help are satisfied with the response they get. Customers who contact an organization for help and are dissatisfied with the response are 30 to 40% less loyal. Only 14% of customers leave for product reasons; 68% leave because of poor treatment by employees.
• A study by Michael Hepworth & Associates indicated that the average North American company has 11% of its revenue at risk as a result of customer problems and the way they are handled.
• $1 spent on advertising yields less than $5 in incremental revenue, but that same $1 spent on improving customer service can yield over $60 in incremental revenue.

So what are companies doing to resolve this issue? Today too many company leaders spend their time and resources looking for magical technology solutions. Call it “the Great Systems Seduction” if you will. Since we live in an age of "real time" and "1-to-1 marketing," the Customer Relationship Management (CRM) Systems business has been burgeoning. However, a good system does not equal good service. The European Centre for Customer Strategy predicts that future CRM effectiveness will be assessed less through hard measures and more through the stories people tell about a company and the softer and more emotional experience provided. This means companies must give the customer distinctive service experiences so they will become advocates, telling stories to their friends and colleagues and provide a convincing recommendation. Only if your people are 'turned on' will you generate such legends! 

The disappointing reality in all of this is that the human element is frequently overlooked at the expense of the systems challenges. Enduring and real customer service success requires a passion for people–both employees and customers. Author Jim Clemmer observes that "Too many managers treat 'their people' as assets with skin wrapped around them." The flip side, as once expressed by Debra Fields, President of the highly successful Mrs. Fields Cookies, is that "Customer service does not come from a manual or a system. It comes from the heart. When it comes to taking care of the customer, you can never do too much and… there is no wrong way if it comes from the heart!" Much touted case histories of (US based) customer service and experience winners such as financial services giant USAA and retailer Zappos reinforce this. In other words, we need a balance between managing things from the head, and leading people from the heart. While rational strategy is essential, emotional intelligence accounts for as much as 70% of the personal and organizational success factor. 

One financial services company president in Toronto used to say that he was “pathological” about the importance of customer service. He practiced what he preached with his head and his heart and went in four years from a number 10 to 2 market position. Unfortunately there are too few leaders like that. For many, the distance between head and heart is far greater than the typical 16 inches… and therein lies the root cause of customers' continuing disappointment with the service they receive. But, if the customer is king, why are so many companies simply not getting it? The reason is there is often misalignment between the people and the systems in place to manage them. The challenge for today's business leaders is to put their people front and centre; to pursue short-term results while continuously aligning technology, work processes, and structure around the people to enable them to become customer-focused in all aspects of operation. After all, a sharper customer focus means a sharper competitive edge. 

There are two lessons in this: 

1. More organizations need to think more frequently and harder about the people factor in customer service, and
2. They must also pay fanatical attention to managing each customer touch-point ('Moment of Truth') to provide winning and endearing customer experience.

This is serious and hard work, and demands passion from leaders. They must be prepared to walk the talk, be patient, pay attention to customer detail, and constantly work on people  and customer-focussed alignments. Only then, will business leaders truly be able to say "Yes, I want to do business with me." 

Eric Fraterman is a customer-focus consultant in Toronto, Ontario, Canada. He can be reached at: [email protected]