Making Customer Service a Boardroom Issue
February 16, 2012
So, unemployment has reached its highest level since 1994. Jobless figures released last month by the Office for National Statistics showed a rise to 2.69 million. Every week we hear of well-known brands going into administration and there has been a substantial increase in the number of firms experiencing financial distress, compared with 12 months ago. Turbulent times.
There will be no more Kodak moments. After 133 years of trading, the company has been unable to make the necessary transition to the 21st century. Kodak’s downfall was primarily its inability to adapt to an increasingly digital world. It’s my belief that organisations which fail to adapt to the rapidly escalating and sophisticated demands of their customers – who are of necessity becoming more obsessed with value for money and wish to have much greater input through co-creation and collaboration – will see their fortunes decline. Conversely, the ones that put serving the customer right at the heart of their business strategy, aligning people, processes and systems will be the ones that don’t just stay the course, they will flourish.
This is no fluffy ‘let’s be nice to our customers,’ maxim. There is a clear link between customer service and company bottom-line success. A major report published by the Institute, ‘The Return on Investment from Customer Service – the Bottom Line Report’ gathered findings from over 150 senior executives in the private and public sectors and included 23 case studies. Just the very act of gaining customer insight, it found, will bring about a positive return on investment. 74% of the sample group agreed that ‘gathering and acting on customer feedback’ is very likely to lead to ROI whilst 81% believed that ‘gaining an understanding of the customer viewpoint’ will also very likely lead to positive ROI.
It costs more than £6500 to replace a lost customer
The findings carry a warning. There needs to be a fundamental shift away from what we traditionally measure, or rather what we do with the evidence provided from the measures. Simply recording the basics won’t cut it any more. Yes of course, customer satisfaction is a prime indicator of how we are doing, but we also need to be interrogating far more complex areas such as how customers perceive the value of their relationship with the service provider, what kind of culture of service quality has been established and indeed, the whole customer experience. As a profession, we are still measuring what is easy to measure. We need to grapple with the hard stuff. Organisations which want to obtain and use this diversity of data will need to take a more holistic, strategic approach to providing a culture of service quality.
Losing customers is becoming a distinct and alarming reality for many organisations. More than a quarter of customers (27%) have changed their usual supermarket in the last few months and a significant number (41%) have switched their food and household goods. This comes from research the Institute conducted late last year with senior decision makers at 250 of the UK’s largest consumer firms – and 1000 individual consumers.
The key findings were that customer churn is seen by over a third of businesses as the biggest challenge to their bottom line in the coming year, threatening some £2.2billion of revenue. The cost of replacing a lost customer is estimated at more than £6500 by senior managers who also predict it will take a staggering 56 days on average to make that replacement.
76% of the UK’s GDP is service related
Let’s look at a formula for tacking the problem. I referred earlier to the importance of aligning your processes, people and strategy. In essence, that means ensuring that the people who work for you have the appropriate skills and a strong positive attitude towards delivering customer service and are rewarded for this. It means embedding a customer service culture into your corporate culture, measuring hard customer data, looking at how you structure your business functions, employing a clear approach to your channel management and how you integrate social media to engage with customers. And above all it requires an integrated and focused strategy across and throughout the organisation which aims to deliver an excellent customer experience and is embedded in the heart of your business.
Cutting back on service is a false economy. Around 76% of the UK’s GDP is service related – and the number of people working in customer service has almost tripled in the last eight years. I don’t believe that good customer service happens naturally. Organisations and ultimately their customers benefit from investing in developing and training employees in customer service skills and behaviours. Customer service is a profession with the required skills and competences. Co-ordinate the development of your people with a defined and measurable service strategy which emanates from the boardroom and infiltrates every part of your business – and you will have a far stronger foundation on which to build customer focused initiatives. Treat your customers as people, not numbers and demonstrate that you understand their needs by delivering a consistent and empathetic service. Customers will become advocates for your business and less likely to switch. 83% of the customers we surveyed in our customer churn research identified the quality of the service they received as being important to their loyalty. No longer can the retailer or service provider call the shots – the customer has the power and knows it.
In a fiercely competitive and tough environment, service will be the critical differentiator.
Jo Causon is chief executive of the Institute of Customer Service, an independent not-for-profit organisation with over 370 organisational and 6000+ individual members. It aims to lead customer performance and professionalism and to be the first port of call for all issues around customer service, providing advice, research, professional networks and independent accreditation.