Improve Customer Satisfaction

From today's "DM News": Customer satisfaction down again

"Overall customer satisfaction declined in the fourth quarter of 2007, marking two subsequent quarters in which a decline was posted, according to the American Customer Satisfaction Index, released today by the University of Michigan.

In the fourth quarter, the index fell to 74.9 on the ACSI's 100-point scale, down 0.4% from the previous quarter. This news, combined with increasing unemployment, declining house prices, tighter credit, high levels of household debt and rising fuel and food prices is likely to pose challenges this quarter for consumer spending growth, according to the ACSI."

Here's the question I pose today: Is customer service related to the economy? Will, as the article contends, low customer satisfaction equate to less consumer spending?

If so, then it's critical that companies get focused on their customer. Today--not tomorrow.

I'm a firm believer that we can do lots to improve the customer experience, even without spending an enormous amount of money. A couple of no/low cost ideas come to mind:

1. Empower your front-line employees to solve problems. Let cashiers, for example, extend a small discount if a customer wants to buy slightly damaged merchandise. Let the customer service rep extend the web discount, even if the prospective customer called in for service. By empowering the people who talk to your customers, you're solving a problem quickly, making your customer and your employee feel more valued--and those are always keys to satisfaction.
2. Mine your customer database to understand exactly who ARE your most valuable customers. Whether it's in terms of longevity (how long they've been with you) or how much they've spent or how often they buy, make sure you have a handle on just who are your best customers. Then, when you have a handle on this metric, make sure you treat these folks with extra special service. These are the people you definitely don't want to defect to your competitor. So, implement programs designed to show these high-value customers that you care.

We believe that it's always important to keep customers happy. In these crazy economic times, it's crucial.

Use of Customer Data to Set Service Strategies

I was pleased to see this round-table discussion on the newly revamped DM News website: Use data to handle the disgruntled

The article presents 4 slightly different takes on how to use customer information and customer preferences to maximize the customer experience. From prioritizing calls to customer service based on customer value, to knowing when (and when not) to offer price discounts as an incentive, the article provides good insight into the use of customer data to make service decisions.

The takeaways from the 4 authors:

1. Use your CRM system to prioritize your customers according to their value.
2. Freebies and discounts can backfire with customers willing to pay a premium.
3. Data can help marketers turn unhappy customers into supporters.
4. Empowered customers with communication choices are happy customers.

As a database marketer, I absolutely believe in using the power of the database to determine customer treatment. Just one word of caution--don't piss off your customers too much!

Remember a few months ago when Sprint 'fired' some of their most irritating customers? Remember the bad press that abounded? Looking back, I firmly believe that this 'firing' incident was just a bad idea, in terms of negative PR and harm to the Sprint brand.

Yet, from a database marketing perspective, AND according to today's article, Sprint did the right thing. They used customer value to determine customer service levels. In Sprint's case, they were unwilling to expend ANY effort on service to a few pesky customers and chose to fire them, instead of serving them at all. And, it backfired on them...

I guess the lesson learned--while it's very smart to vary treatment and service levels based on overall customer value, you need to remember not to go too far. Common sense needs to prevail so that your well-conceived strategies that look great on paper also work in the real world.

Lack of Service in Direct Marketing Industry

A forewarning--I'm grumpy today. Get ready for a rant.

It's not the holiday blues; nothing bad going on in my personal life. No. Today, my beef is with my own beloved industry, Direct Marketing, and the companies that service this industry. Is it only me, or has customer service from large corporations gone down-hill?

This week has been a doozy. One firm (not to mention any names, but it is a large consumer credit bureau) has decided to pull the rug out from under us, change sales reps midstream while we're in the midst of a large project. To make matters worse, they're throwing more contracts at us and we fear that they plan on increasing our price for data that we have already sold to the client (at the lower price). How is that the right way to treat a customer?

Here's another example: Another vendor (a huge player in the DM industry) sees RRW as a competitive threat as opposed to a client. We're spending serious money with them on behalf of our clients. Yet, we have a difficult time in getting them to deliver what they promise or even provide information that will enable us to more effectively sell their products and services. It's always a battle -- and it's the oddest thing, it makes absolutely no sense.

Overall, we see sales reps who don't seem to care about their clients (or their employers, for that matter). We see senior managers that are WAY too far away from the customer and more worried about pleasing their boss. We see that anytime we want to purchase something that is not generic, or 'off-the-shelf'--something that we need to customize, we run into problems. Employees of these large firms are apathetic; they don't want to take the time and they don't seem to want to make the sale.

Is it just us, or is this something that you're seeing out there? We'd love to hear your battles and stories.

Churn is a Problem for Sprint

It's official. Sprint definitely has customer service issues. Remember the brouhaha in July when Sprint publicly 'fired' some of its high-maintenance customers? Well, we find Sprint in the news again trying to stem their higher-than-industry-average churn rate.

From CRM Buyer: Sprint to Bandage Bleeding Customer Lists by Adding Service Reps

"Sprint Nextel's churn rate -- the rate of customers who jump ship and sign on to rival networks -- has shrunk over the last quarter, but it's still nearly twice as bad as Verizon's. It's a problem that contributed to the recent ouster of CEO Gary Forsee. To cut churn and keep more customers onboard, Sprint plans to hire 150 additional customer service reps."

It will be interesting to see if throwing more bodies at the problem will be effective. While it certainly won't hurt to cut the hold time when customers call into customer service, I'm hoping that Sprint Nextel is looking at their retention issue more holistically.

Are they asking themselves key questions such as:

• What are my competitors (namely Verizon Wireless whose churn rate is 1/2 that of Sprints') doing that I'm not?
• Is it our network?
• How do price-plans compare?
• What about our phones--are they as 'cool', or innovative as our competition?
• How did the negative press generated from the recent customer firing incident impact churn?

Of course, there are teams of bright people at Sprint asking these questions. The real question is--will they find the answers they need to continue to grow and compete with Verizon. I guess we'll all sit back, wait and watch.

Gosh, I bet the folks from the old Nextel who survived that merger are wondering what happened to the good old days when their churn rate was significantly lower than the industry and their Average Revenue per Unit (ARPU) was significantly higher. Perhaps the best question Sprint should be asking is: How do we get back to THOSE 'glory' days?

Customer Service Excellence

Often, we've spoken of the importance of bridging the gap between sales and marketing. A key outcome of accomplishing this is more highly satisfied customers. The way your company interacts with customers before, during and after the sales process is as important as any other element in your marketing strategy. In fact, some argue that it is the most important piece of your marketing strategy.

Case in point . . . in an article from Inside Retailing, author Alison Higgins-Miller talks about the "Customer Service Paradox." Higgins-Miller states that "while CRM systems and customer retention are key focuses for retailers, customer service is not yet seen as a core part of customer retention efforts. I suggest that, in light of the ongoing empowerment of consumers, customer service deserves equal billing with sales and marketing in a retailers’ priorities list." She also argues that the ability for a customer to complain -- then have that complaint resolved successfully -- creates a better customer relationship than one in which there was no complaint. In other words, the consumer was able to effectively interact with the company and experience first-hand (hopefully) great customer service. This great experience leaves a more lasting impression in the mind of the consumer and when they go to purchase again, they think of that company who demonstrated that they cared the last time around.

Excellent customer service also helps marketing and sales better position and sell more product. As Higgins-Miller discusses, "Further, in light of increasing skepticism and immunity towards sales and marketing messages, an effective customer service operation can often become an important marketing channel for an organization. For example, one retail organization emails its customers with regular hints and tips for consumer electronics products they have bought. This is not only appreciated by the customer as a useful, post-sales communication but an opportunity to cross- and up-sell relevant products and services. "

Overall, the importance of fostering a culture of excellent customer service cannot be overstated. From culture to technology to processes, a company can create excellence in customer service. You can start with the basics, and build from there. Higgins-Miller talks about six areas to consider as you look to create excellence in customer service in your business:

Define your strategy -- The first step in creating better customer service is to determine which strategy or strategies are most applicable to your business today. Some organizations start with the simplest approaches, and build from there. Others are more aggressive, using customer service as a communications channel from day one. As part of this it’s vital to listen to your customers and identify their needs, so any strategy developed is in line with their needs.
Assess your technology needs -- Customer service departments are most effective when they are empowered by the correct technology and able to offer the customer multiple contact channels. To provide the customer insight necessary to address a customer enquiry or complaint, for example, it's vital to have a CRM system in place that captures relevant information across all these communication channels and presents this to frontline staff as useful knowledge.
Embrace customer centricity --To deliver first-class customer experiences, the whole organization must make the customer the focus of their efforts and develop new business processes that enable it to provide seamless customer experiences. These processes must often cross departmental boundaries. Marketing departments, for example may be called upon to define new customer-opportunity profiles. Companies that want to achieve top-level customer service must have the ability and commitment necessary to design and implement these innovative business processes.
Empower customers to help themselves -- Provide customers with an individual portal area where they can see all sales and logistics information, perhaps even track queries or complaints. Enable customer to opt in and out of communications from this portal and adjust their preferences. Provide customers with a dynamic knowledgebase of questions, answers, tutorials etc. where they can find answers to their questions themselves. This knowledgebase can also be used internally by frontline staff to help customers with their queries.
Engage your customers proactively -- Don’t wait for customers to voice their concerns directly, regular proactive communications around products and service satisfaction can identify any problems before they get out of hand. Customer feedback will also help your organization to measure customer satisfaction and identify areas for improvement.
Clarity of vision --It's hard to get somewhere - or lead others in the right direction - if you do not know your destination. To improve customer service, managers need to have a strong sense of how customer interaction histories can be leveraged to discover revenue opportunities.

We agree with Higgins-Miller. These are some great areas to take a look at to begin thinking about improving your own customer service arena. Certainly, after giving these six areas some thought, you will be armed with some good data to improve your customer's experiences with your company. And by engaging all areas of the company, you will change the culture of your company to one that creates excellent customer experiences.

Choosing to Lose

Did Sprint Nextel do the right thing when they 'fired' some of their most needy customers?

RRW holds a strong belief that business strategy must be based on customer profitability. We're forever preaching to our clients that it makes no sense whatsoever to implement programs that acquire unprofitable customers. And, we're always trying to push them to direct retention efforts to customer segments that are highly profitable.

Yet, we continue to be amazed at how few companies really have a handle on value or customer profitability.

On the other hand, we are huge proponents of top-notch customer service. We believe that if you treat your customers right then they'll respond in turn with high loyalty. Heck, they may even become evangelists and spew your praises to all of their friends and family, if you treat them the right way.

That's why it's been so tough to develop an opinion on the recent Sprint decision to dump some of their high maintenance clients. This article in Washington Post, however, firmed up my opinion. Sprint Nextel Defends Cutting Customers.

I think that Sprint made the right decision, IF you're only looking at the decision in terms of profitability, or even from a service perspective. Those 1,000 or so customers that Sprint Nextel chose to cut were making 40-50 calls each month to customer service. Clearly this wasn't the right fit (and they may just be kinda wacky to begin with--who has the time to make 50 calls a month??). Handling those calls was certainly detracting from legitimate customer issues.

However, look at all the bad press that this customer-firing incident has caused Sprint Nextel. When you consider that, overall, their subscriber base is more than 50 million customers, how much impact could servicing 1,000 pesky customers really have?
Then, balance service requirements to handle 1,000 wacky customers against the bad press generated from this incident.

Did they do the right thing, overall? The jury is still out, in my opinion.

More on Customer Service--Or Lack Thereof...

Seems to be a hot topic this week, and rightfully so. Accenture performed a study that rated customer service from technology companies. Surprise, surprise, the news isn't good.

See this ComputerWorld article. "Survey: Consumers see Little Value in CRM."

The article reports that many consumer technology companies are alienating customers with less than excellent customer service. "73% of those surveyed said that merely "average" service would prompt them to consider evaluating products of other vendors."

Wow--it's never good to be in the position of losing almost THREE-QUARTERS of your customer base! If I was facing that kind of risk, you'd better believe that I'd take a serious look at customer service and make sure that my retention programs were up-to-date and robust.

More findings from the survey:

Accenture’s research also exposed several additional areas of poor customer service and consumer dissatisfaction. Among the findings:

* More than four in 10 customers surveyed (42 percent) said they had to access customer-service channels multiple times to resolve their problems.
* More than six in 10 customers surveyed (61 percent) said they believe that technology has not improved customer service.
* The vast majority of consumers—78 percent—said the service they receive is “at or below” the level competitors offer.
* Companies are wasting millions of dollars on customer-service initiatives that customers don’t view as important, particularly self-service capabilities.

Hmmm. Perhaps it's true, people really do like to talk to people. There's got to be a middle-ground between self-services that actually DO make your life easier (like being able to renew your library books via an automated service, instead of having to visit in person) and those that don't (like NEVER being able to reach a live person when you call your bank).

Companies need to seek out that middle-ground that balances the correct use of self-service technology with live, real people help, always with the customer experience and customer satisfaction in mind.

The Importance of Customer Service

Now, the last thing I want to do is get up on a soap-box . . . but why is it that some companies just don't get how important it is to provide excellent customer service? With all of the data out there that has proven that it is much more cost effective to keep your existing customers than to acquire new ones, you'd think that all companies would focus on the customer relationship. Apparently, not so much.

An example of this is this post that I found regarding Time Warner Cable's (TWC) recent stock-price woes. In the article entitled Time Warner Cable, New Customers, Same Crappy Service, Tom Barlow talks about TWC's recent opportunity to reverse their reputation for poor customer service. After it separated from Comcast and acquired Adelphia, TWC had a golden opportunity to start fresh with 3.5 million customers. Unfortunately, the fresh start didn't happen. Instead,TWC has already lost 90,000 customers due to somehow not anticipating the overload of these happy, fresh customers to their network. Thus, many customers experienced problems with their TV, internet and telephone connections. They decided to vote with their dollars and go find a provider that worked better.

We each have an opportunity to create customer satisfaction every day -- no matter what our roles are in our companies. In essence, it really doesn't matter what else we do -- because without satisfied customers, well, there are eventually no customers.

In fact, we recently dedicated one of our newsletters specifically to this topic because it is so near and dear to our hearts. It was entitled, Knock your Socks Off Customer Service and one of the most widely commented on of all of our monthly newsletters. Yes, I think we all are on the lookout for good customer service each and every day. OK -- I'll get off that soap-box now.