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Archive for March, 2008

 Hello, Houston… We Have A Customer Service Problem

Monday, March 31st, 2008

Mar. 31, 2008 (Investor’s Business Daily delivered by Newstex) –

A Verizon (NYSE:VZ) customer thought he was making a routine call this month by dialing toll-free to ask for a rebate. But he got an unexpected jolt when a recording directed him to another number that turned out to be a phone sex line.

Verizon Communications VZ quickly corrected the wrong number. But the damage was done. The customer blogged about the incident, which caused the wireless carrier to issue a public apology for the flub.

Such bizarre glitches are unusual. Yet the rise of blogs, camera phones and video Web sites means buyers today have a much larger megaphone to amplify their gripes.

In turn, companies that focus on consumers — including phone carriers, retail stores and banks — need clear policies to make customer service a top priority, says Bruce Temkin, an analyst at Forrester Research. (NASDAQ:FORR)

“Customer service comes at that point 14 time when customers are highly engaged in the problems they have,” Temkin said. “So it’s always a difficult and important moment of truth for the company.”

A new study from Accenture (NYSE:ACN) ACN found that 59% of people had actually stopped doing business with companies in the past year due to poor service. That’s based on a survey of 3,500 consumers on five continents. Just under half of those polled said their service expectations were met only sometimes, rarely or never.

Often the problem stems from cutting costs at the expense of customers, says Robert Wollan, global managing partner for Accenture’s service transformation business.

He says companies are misguided when they keep people on hold longer or slash store hours just to save money.

“There are still many gross examples of companies (encouraging) the wrong behaviors,” Wollan said. “You have to align the company’s goals through the eyes of the customer.”

Spotty Service

Everyone knows that customer service is vital, but lots of firms still address the task haphazardly. For instance, only 10% of retailers measure customer satisfaction on a weekly basis. Just 8% do so annually.

Even more surprising, 6% of retailers don’t have any set schedule at all in tracking customer satisfaction. That’s according to an annual survey of 137 retail firms by the National Retail Federation and IBM (NYSE:IBM) IBM.

One clear step to improving satisfaction involves appointing a high-level executive with real authority to enforce service levels. At some companies, this role is known as the chief customer officer.

Another tactic is to create programs which stress “the voice of the customer,” as Temkin puts it. For instance, this can involve assuring that all complaints get resolved on a single call, rather than being handed off to multiple reps.

“Companies have to look at every interaction from a customer point 15f view,” Temkin said. “This gets the whole company thinking about things from the outside in.”

He says all interactions should be judged by how well they help customers reach their end goals. Managers, moreover, need to focus on three key questions to get service levels right. They are: Who are your users? What are their goals? And how can you help them achieve those goals?

Companies should take responsibility for any problems, and communicate their message clearly. In addition to showing empathy for consumers, managers must find concrete ways to resolve problems. They also need a clear method to measure success, Temkin adds.

“The fact is that customer service is really, really hard,” he said.

ForeSee Results is a firm that measures online customer loyalty for retail Web sites. In 2007, its aggregate customer satisfaction rating fell by 1.3% to 74%. The rating declined for nearly half of 40 online retailers last year due to higher consumer expectations, ForeSee Results’ CEO, Larry Freed, said on a recent conference call.

Retailers whose scores improved last year included Barnes & Noble (NYSE:BKS) BKS, Wal-Mart (NYSE:WMT) WMT and Best Buy BBY, according to Mark Mahaney, a Citi (NYSE:C) Investment Research analyst who hosted the conference call.

Mahaney says there are essential elements that contribute to improved customer scores like this.

“Focusing on brand consistency, increasing product selection and enhancing the user experience are some of the best ways to gain ground in customer satisfaction,” he wrote in a note to investors.

Lower-priced stores can deliver strong customer service too, so long as consumer expectations are clearly defined and met. Ensuring that people know what they’ll get — not necessarily “wowing” the customer — is the key, says Temkin.

“What is the customer’s expectation for the brand, and how often do you meet that expectation? You need to line up to that mark every time you touch a customer,” he said.

Beware Of Churn

Intense competition in telecoms means even satisfied customers will drop their phone plans to get a still-better experience. Such turnover is known as customer churn.

Sprint Nextel S is battling a major churn problem due to weak service. Sprint (NYSE:FON) was ranked 106 of 112 companies for quality of service in a Forrester study last year. Sprint also finished dead last among the eight mobile service providers.

Sprint CEO Daniel Hesse blames his company’s sinking stock price on weak service. Many irate customers have dumped Sprint, pulling down its sales and shares. On a recent earnings call with analysts, Hesse said improving the customer experience has become “job one” for Sprint.

“Because of the customer experience we provided last year, churn is accelerating,” he said. “In conclusion, our business is not performing well right now, because we have not provided the right customer experience.”

Sprint isn’t alone. In a recent survey of 2,000 mobile phone users in the U.S., 96% said they wouldn’t hesitate to switch carriers to get a better experience. In fact, 72% had already made a switch due to a negative experience.

The Harris Interactive (NASDAQ:HPOL) survey was commissioned by Chordiant Software (NASDAQ:CHRD) CHRD, a maker of business software for customer service.

Another call center technology firm, Amdocs (NYSE:DOX) DOX, found similar results in its survey of more than 2,000 consumers in the U.S. and Britain. About four in five consumers were satisfied with their service levels. Yet one in three said they would switch to another carrier to get better services for mobile games, entertainment and ads.

Another customer service software firm, RightNow Technologies (NASDAQ:RNOW) RNOW, has developed new features to monitor consumer topics and emotions on service calls. In this way, call center agents can use the software to get more context about a caller’s specific concerns and service history.

 Using Customer Service as a Branding Opportunity

Friday, March 21st, 2008

Thanks to Web, Advertiser Can Engage in ‘Conversational’ Marketing With Customers

Published: March 20, 2008

NEW YORK ( — Conversing with consumers and finding out what they think about their brands has become a whole lot easier for marketers because of the web. And whether it’s an actual customer-service call or inquiry or responding to a comment on the corporate blog, marketers need to start looking at each interaction as a marketing opportunity. That was one of the main themes that emerged during the “Listenomics: So you want to be a conversational marketer?” panel at the Ad Age Digital Conference.


The panel’s moderator, Pete Blackshaw, exec VP-strategic services at Nielsen Online, asked the three panelists, “Is this marketing or is it customer service? In the age of consumer control, is there an opportunity to really build consumer loyalty through that type of interaction?”

Interactions equal growth
Tony Hsieh, CEO and director,, said those interactions have been the force behind the company’s growth. “The way we have grown the company is focusing on customer service and not actually spending a lot of money on marketing or paid advertising,” Mr. Hsieh said. “We take the money we would have spent on advertising campaigns and instead put that back into the customer experience and grow through repeat customers and word of mouth. For the past nine years that’s been our primary source of growth.”

Mr. Hsieh said his company gets nearly 5,000 calls a day from customers and it views each of those interactions as a branding opportunity. “At that point you have the full attention of that customer,” he said. “That’s the time where you have a huge opportunity for you to shine.”

Linnea Johnson, director-consumer services, Unilever, who called her division the “Stitch and Bitch Club,” said the world’s second-largest consumer package-goods company should be doing more to take advantage of those types of interactions.

Talking ‘your ear off’
“We’re a little bit behind the momentum,” she said bluntly. “The consumer services department can talk your ear off about all of the information of the brand, tell you what brands to use and cross-sell you but what we’re not allowed to do is take ideas from you. So the minute someone calls up who has a really forward thinking way to promote Dove and Suave, we have to shut them down because that’s what legal tells us to do.”


She believes the consumer-services divisions, especially in the consumer package-goods space, could play a significant role in the development of marketing campaigns based on the interactions they have with consumers. “In the CPG industry [consumer services] are the people who are really entrenched in the company’s brands,” she said. “And there’s a lot of information we could help you with when you build your campaign or build your ads to deal with consumers.”

Rick Clancy, senior VP-corporate communications, Sony Electronics, and primary author of Sony’s first consumer-oriented blog, said Sony also had legal concerns about accepting unsolicited ideas from consumers. “But once you decide to dive into the pond of social media you have to do away with that,” Mr. Clancy said. “We get ideas on my blog that are shared throughout Sony and in fact a few of them have been incorporated.”

 Leveraging The Internet In The Recession

Tuesday, March 18th, 2008

Marc E. Babej and Tim Pollak

This will be the first recession in which the Internet will play a central role for the American consumer–and for marketers.

Of course, the Internet was around during the shallow recession of 2001, and almost 50% of Americans were using it. But it was not yet embedded in our way of life, largely because broadband penetration was, at the time, only about 20%. Today, more than 70% of the population is online, with more than 80% of these Internet users having high-speed access.

The Internet has empowered consumers as never before, providing previously unknown and unimagined opportunities to make informed decisions with detailed information, product ratings, expert and user-generated reviews and price comparisons on anything from computers to coffee beans to cat food.

In good times, when consumers feel cash-rich and time-poor, they can afford to be less diligent about their spending. But as economic pressures mount, sentiment changes. People feel cash-poor and are more willing to invest time and effort in getting the best deal.

What sets the current recession apart is that, for the first time, consumers have a tool that empowers them to subject everyday buying decisions to the kind of scrutiny formerly reserved for big-ticket items and large business-to-business transactions.

Marketers should anticipate this shift. They will not be able to rely on ads to pull the wool over consumers’ eyes–or on imagery to wow them.

Maybe even more important, it won’t be as easy for companies to control the expense line to make up for the loss of top-line revenues. In past downturns, cutting corners on quality has been a virtually foolproof way to cut costs and boost margins, at least in the short-run.

Not this time. Not when consumers can set the bar higher and easily find what they want at the lowest possible price. Not when any degradation of product quality or crummy service experience is subject to being instantly “outed” by the bloggers and reviewers on the myriad user-generated consumer review sites.

“Caveat emptor” now has a companion: “seller beware.” Even the slightest marketing chicanery is liable to be instantly pilloried on a global network, especially when consumers are fearful and on edge.

A confluence of factors has increased the likelihood of more consumers turning to the Internet to manage their way through their personal household recessions.

Let’s start with the price of gas. Shopping online is just less expensive than driving to a store. Depending on how and where you shop, you can find tax savings and shipping deals online.

And the downturn is dovetailing with a plethora of new, category-specific consumer review sites. Joining broad-based veterans like Epinions, BizRate and CNET are narrowly-focused comparison shopping sites specializing in coffee, beauty products or pet supplies.

There’s also been an explosion of online retailers: from Amazon and its brethren, to the online divisions of bricks-and-mortar retailers, to the many niche stores that exist only online. And then there are the Internet’s versions of “mom and pops,” “stores” that do business within the cozy confines of eBay (nasdaq: EBAY news people ) or Craigslist. It all adds up to a bonanza of choices for cash-strapped consumers–and a new set of challenges for those who sell to them.

Virtually anyone selling anything should be online, with as much sophistication as they can afford or muster. And they should follow two cardinal rules:

–Maintain quality and don’t over-promise. When anyone who uses your product or service can readily find an audience to whom to complain, the road from credibility to ruin is very short.

–Keep a close eye on pricing. The online dynamic is totally different than having customers in your store, where they might be willing to pay a premium because they’re there. Facing a page of pricing options online, shoppers can go to another “store” in a matter of seconds.

Online shopping–and the use of price-comparison engines and consumer-generated reviews to make buying decisions–has been growing steadily throughout the decade. The recession is going to supercharge that growth as current users find new categories in which to shop online and as millions of others jump in to manage their shrinking budgets.

As shoppers become increasingly comfortable with the process during this downturn, it is likely that the combination of convenience and easy-access to comparative information could cause enduring changes in consumer behavior.

Marc E. Babej and Tim Pollak are partners at Reason Inc., a marketing-strategy consulting firm that works with clients in a range of categories, including media and entertainment, financial and professional services, packaged goods and the public sector.

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