NLP For Business

Customer Service

Customer service, especially in the shape of a call-centre - is to customers one of the most visible and significant aspects of organizational performance. To many organizations however customer service is one of the most challenging and neglected areas of management, including those with modern call-centers.

For customers the quality of customer service determines whether to buy, and particularly whether to remain a customer.Think for a moment how you yourself behave as a customer. You can perhaps think of an occasion when poor customer service or an unhappy exchange with a call-centre has driven you to leave a supplier, even if the quality and value of the product or service itself is broadly satisfactory.

The significance of customer service eludes many senior executives, let alone the methods of establishing and managing customer service standards and quality. Our own experiences as customers demonstrate all the time that many large organizations fail particularly to empower customer-facing and call-centre staff, and also fail to design policies and systems to empower customer-facing staff and enable effective customer service. Often these are defensive strategies because staff are not trusted, and because competition is feared, or because simply the policy-makers and systems-designers are too far removed from customers and their customer service expectations.

Pricing strategy also plays a part on customer service - especially strategies which effectively discriminate against existing customers in favor of new customers, which in certain situations borders on the unethical, never mind being stupid in a customer service context. This is strange since by any reasonable measure or criteria - in any market or industry - it costs far more to gain new customers than to retain existing customers. Neglecting, constraining or failing to optimize customer services capabilities is waste of great opportunities.

Instead many organizations and their leaders are habitually fixated on sales, marketing, advertising and promotion - desperately striving to attract new customers - while paying scant regard to the many customers that are leaving, just for the want of some simple effective customer service and care. We see this particularly in highly competitive and profitable sectors such as communications and financial services, where new customers are commonly extended better terms and attention than existing customers. No wonder customer turnover ('churn') in these industries can reach levels exceeding 25%. Leaders and spokespeople will blame the competitive market, and the fickleness of customers, but ultimately when a customer leaves a supplier it's because they are unhappy about the service they are receiving - otherwise why leave?

Benefits Of Effective Customer Service

The central aim of effective customer service and call-centres is retaining customers, but when an organization gets this right the acquisition of new customers - and so many other things - automatically becomes much easier too.

Retaining customers - enabled by excellent customer service - produces many positive benefits for the organization aside from the obvious revenue and profit results:

Retaining customers through effective customer service enables easier growth, indirectly and directly, for example by sustaining healthier volumes and margins, and by business expansion from word-of-mouth referrals.

High levels of customer retention via effective customer service also improves staff morale and motivation. No-one enjoys working for an organization that feels like a sinking ship, or where stressful arguments or pressures prevail. When customers are happy, all the staff are happier too - and more productive.

Improved staff morale and motivation resulting from reducing customer attrition also positively benefits staff retention and turnover, recruitment quality and costs, stress, grievance, discipline and counseling pressures.

Reduced customer attrition and upset naturally reduces litigation and legal problems, from customers or fair trading laws.

Retaining customers also enables the whole organization - especially middle-managers - to focus more on proactive opportunities (growth, innovation, development, etc) rather than reactive fire-fighting, crisis management, failure analysis, and the negative high pressures to win replacement business.

Having a culture of delighting and retaining customers fuels positive publicity and reputation in the media, and increasingly on the web in blogs and forums, etc. The converse applies of course, when nowadays just one disgruntled customer and a reasonable network of web friends can easily cause a significant public relations headache.

For these and other reasons the cost difference and relative impacts on organizations between gaining and retaining customers can be staggering. A useful analogy is that only a fool tries to fill a bucket of water when the bucket has lots of holes.

Better to fix the holes and stop the leaks before you try to fill the bucket. Especially consider the actual cost of retaining customers when all that many customers require is not to be upset.

While the trend is apparently for more people to complain (mobile phones and the internet make it easier to do so, and people are less tolerant than they used to be) this does not necessarily mean that customers are more likely to migrate to competitors.

In fact these days time pressures and the 'hassle factor' combine to create huge inertia in people's decision-making, which means although they might complain more, they have less inclination to actually change suppliers because of the time and inconvenience of doing so. There are arguably some exceptions in fast-changing sectors, but largely inertia tends to make it more likely for customers to stay than go.

People behave like organizations, when the true costs of change in time and hassle are recognized often to be greater than the savings that the change will achieve. Consequently most people prefer not to change suppliers - they have better things to do with their time - which means that retaining customers should actually be easy - if only organizations would attend to the basic customer service principles and keep customers happy. In short, customers largely don't usually leave unless they are upset enough to do so.

Contrast the cost of achieving happy customers - virtually zero aside from normal customer service and operating overheads required to run a business - with the costs of marketing, advertising, selling, sales training, sales management, credit-control and account set-up, that necessarily arise in the acquisition of new customers. Consider also that the main factor in keeping a customer - even if the situation appears irretrievable - often comes down to a simple apology or update - just by keeping someone informed and avoiding upset - and compare this with the huge costs of acquiring a new customer.

It is then easy to see that the costs of gaining a customer can be five, ten, a hundred or a thousand times greater than retaining a customer.

And yet from the customers' view many organizations seem unaware or dismissive of the need to priorities great customer service above many other perhaps more exciting or fashionable initiatives - typically related to sales, marketing, advertising, technology, the web, etc.

These high-profile customer acquisition activities, plus systems, policies, procedures, training, etc., all play a major role in running a high-quality organization, but the glue which holds it all together for the customer - and often the only thing that really matters to the customer, is the quality of customer service that the customer feels and experiences.

Within customer service there are many elements which must be organized to make effective customer service happen properly - pricing strategy is important of course - but the crucial constant factor is the human element - how people are treated and communicated with - because simply, customers are people, and people tend to behave like people and respond to people - they do not behave like computers, and they do not respond like machines. Policies, systems, technology all enable customer service, but none of these actually determines effective customer service. Only people - your employees - can do this, particularly when serious problems arise which by their nature must be escalated to a 'real person'.

People - your employees - also (if encouraged and enabled) perform another critical customer service function - that of giving feedback and suggestions to improve customer service systems, policies, processes, technology, etc. Often policies and technology are dreamt up by managers or consultants working away from the actual day-to-day customer-facing activity.

Feedback and recommendations from customer service staff - and customers too - are vital in refining and improving the systems and policies within which the function is operating. So again, people - your employees - are the most crucial in shaping effective customer services capabilities.

Ignorance and avoidance of these factors is a problem, but also a big opportunity. Where customer service is neglected and ignored the function is powerful lever waiting to be pulled. Improving customer service - especially empowering and listening to customer service staff - offers many organizations a bigger return on investment than any other initiative.

Customer service is generally the critical factor in determining whether a customer buys and is retained, which is ultimately what the organization exists to do - to serve and retain customers.

Mind’s Eye Consultancy International Standard Code of Practice for Customer Service, provides an excellent basis for understanding, planning or reviewing your customer service approach. The Code of Practice is summarized and reviewed below. The full Customer Service Code of Practice is an excellent template for anyone considering how to address customer services, whether setting up a customer service capability for the first time, or seeking to improve and existing customer service department or team.