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.”
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.