SERVICE EXCELLENCE IS ROCKET SCIENCE!

17 key drivers of service excellence
that will produce a competitive advantage

For the past six months, I have been speaking and writing about how poor customer service is around the world1. The other day, I flew to Wellington. The plane was 20 minutes late, my bags which had priority tags on them were last off the plane and the car rental company had cancelled my booking for a car. And it was not even Morning Tea time!

Study after study reveals that throughout the English-speaking world, customers are outraged by the way companies treat them. As one New Zealander said in a recent survey, “You can understand how people become violent!”2 Indeed in Britain, violence is a very real problem as an increasing number of retail shops report “queue incidents.” Overcrowded conditions, poor queue management and lack of staff are causing stress and agitation among customers.

Customers are not disappointed. They are outraged.

What is staggering is not what upsets customers but the number who are upset. For example, 77% of all British consumers had at least one major problem with a product or service they purchased last year. Complaints were lodged by 83% of these customers and 90% of British consumers were unhappy with the way the complaint was handle! Similarly, a New Zealand banking survey3 found that approximately half of all bank customers had a problem with their bank last year. Only about half of these people thought it was worthwhile complaining to their bank and of those who did complain, 58% were dissatisfied with the way their complaint was handled. Indeed, at the time of the survey, 44% had still not had their problem resolved and in the case of one bank, the figure was 68%.

A recent global study shows that customer satisfaction with airlines is at a 15 year low and another British study finds that only one out of eight companies gives service their customers rate as excellent. Contact centre customers are not even that generous. In a recent study, not one customer surveyed said they had had an excellent call centre experience. Fifty percent described the service they experienced as poor or very poor.

Dissatisfaction with contact centres is widespread.

Indeed, dissatisfaction with contact centres is widespread. Mention a bad experience you had with a contact centre at a party and the topic of conversation is set for the night! In one study, 95% of the customers using a contact centre said they had to make repeated calls to get anything done. Fifty percent described the service they experienced as poor or very poor. Another study found that 82% of people who used a call centre said they had to wait too long4. In that same study, 77% complained about having to repeat their story to different people, and after all that, 70% said they did not get their problem solved!

Companies appear to perform even worse when it comes to answering emails sent to their web sites. One study showed that 90% of customers expect to receive a response to their email in 24 hours but 61% of companies fail to reply within that period and 47% never reply at all! Companies seem to be just as bad at responding to emailed sales leads. Fourteen percent of such emails are never answered, and the companies that do respond, take on average four days to send a standard automated response. And that is when people are trying to spend money with the company!

Service is not getting better. It is getting worse say consumers.

Managers and business owners like to think they are improving the way they treat their customers, but in the eyes of their customers they are not. In the UK, 67% of customers say that customer service has not improved in the past five years and in New Zealand, a large proportion believe that service is deteriorating. For example, 30% believe that service at petrol stations and from local authorities has declined in the last year or two5.

Companies should worry about these results because they affect the way people shop.

In the UK and USA, 50% of customers change at least one major supplier every year because of poor service. In the New Zealand study by Rainger and Brunton, 42% of New Zealanders said they switched suppliers last year because of the way they were treated. When customers telephone a company and cannot get through, 31% hang up and try another company and 24% give up altogether. One study found poor experience with a contact centre caused 56% of customers to stop doing business with that company. In New Zealand, 25% of customers who had a bad service experience said they would never do business with that company again.

Poor service results in customer dissatisfaction, defections and lower profits.

The experience customers receive also impacts on the bottom-line. Overseas research shows that there is a direct link between the quality of the service customers get and the prices they are prepared to pay. In New Zealand, customer service expert Paul Linnell estimates that the problems Kiwis have with their banks puts 29% of banking customers at risk of defecting and thus creates a 23% drop in customer loyalty. This puts between 8% and 12% of a bank’s profits at risk says Linnell.

If you want to have a large number of profitable customers who will stay with you for a long time (and who would not?) then you need to create a customer experience that will:

1. Persuade customers to buy your products and services.
2. Make them happy to pay the prices you want to charge.
3. Encourage them to stay with you.
4. Interest them in buying your other products and services.
5. Motivate them to tell others about you.

After hearing me talk about how badly customers believe they are being treated, managers usually come up to me with glassy eyes and a forlorn look on their faces. “But it’s not rocket science,” they say shaking their heads. “Why are companies providing such poor service?”

It is rocket science!
Because service excellence is rocket science! There is far more to being able to create a great experience for our customers than most of us think. Therefore business owners and senior managers underestimate what has to be done to attract and keep customers.

In my view, there are 32 activities in five areas that drive an organisation’s ability to deliver a great customer experience (see Figure 1). Eight of these are directly related to interacting with the customer during the purchase process; eight relate to effective staff management; four to effective leadership, six to the management of the business and six to getting to know the customer better.

Based on research I have just completed into what New Zealand companies do well and what they do poorly6 , I believe that 17 of the 32 activities that drive service excellence are critical to competing effectively in today’s marketplace.

17 key activities will give you a competitive advantage through service excellence.
5 activities you must do well simply to keep up.
The other 12 will differentiate you from the pack.

The 5 activities you must do well.
Five of these activities are done well by a large proportion of the New Zealand organisations reviewed in my study (see Figure 2). Therefore to compete effectively you must also do these activities very well.

Clearly, these are important activities to get right for any company wanting to provide its customers with a great buying experience. Nevertheless, they make up what is traditionally considered to be customer service and would be nothing more than what all customers would expect to see happen. In other words, do these activities well and no one will notice. Do them poorly, and you will have an outraged customer on your hands.

Interestingly, of the 50 companies studied, 71% excelled in the first three activities but only 57% excelled at understanding their customers’ needs. The latter finding is concerning given that understanding customer needs is one of the most critical and basic components of business success.

Most New Zealand companies appear to be good at looking after their staff.

The fifth area in which NZ companies excel is related to effective staff management. This is the activity of looking after your staff so they are willing and able to look after your customers. This is a key driver of service excellence because staff who do not believe they are valued by the organisation they work for will not care either about the organisation or about looking after its customers. Poor morale does not produce friendly enthusiastic staff who are prepared to go the extra mile. Thus it is disappointing to see that only 59% of the companies reviewed were doing this well.

None of the activities in which New Zealand companies excelled had anything to do with getting to know their customers better.

It is significant that none of the activities New Zealand companies excelled in had anything to do with getting to know their customers better.

12 activities done poorly
It appears that 12 key drivers of service excellence are being done poorly by 40% or more of the companies studied (see Figure 2). This is bad news for customers but great news for any organisation trying to get a competitive advantage through service excellence.

Several of the activities companies do poorly are inter-connected and therein lies an interesting story.

81% of companies do not tell their customers the kind
of experience they can expect to receive.

59% do not tell their staff how their customers want to be treated.
Is this because companies do not know?

The biggest area of weakness is that companies do not tell their customers the kind of experience they can expect to receive when they do business with the company. Eighty-one percent of companies were poor at this. Consequently, customers have no idea of what to expect when they deal with a company and the chances of them being disappointed are very high – which may go a long way to explaining the results of the customer satisfaction surveys cited at the beginning of this article.

The second area of weakness is that companies do not tell their staff how their customers wish to be treated. Fifty-nine percent of companies were poor at helping their staff understand the kind of experience their customers are looking for. Thus staff cannot put themselves in their customers’ shoes, something done poorly by 43% of companies. This in turn drives behaviours that lead to dissatisfied (and sometimes outraged) customers.

55% of companies do a poor job of bringing the world
of the customer into the workplace and

43% are not using what they do learn to improve
the way they run their businesses.

Why do companies fail to perform in these areas? Perhaps it is because companies do not know a great deal about their customers, or do not use what they know effectively. It seems we know little about our customers’ businesses7 and their preferences for how they wish to be treated and do business with us. Moreover, what we do know does not get passed on to staff or used to improve the way the business operates. Fifty-five percent of the companies studied do a poor job of bringing the world of the customer into the workplace and 43% are not using anything they do learn to improve the way they run their business.

Not only are companies not telling staff how their customers want to be treated, they are not telling them much about the company vision. In the present study, 55% of companies did a poor job of making sure everyone in their organisation shares the company vision. Without understanding the ‘big picture’ - what the company hopes to achieve long-term and the overall experience that will keep customers for life – staff will focus on only the transaction. Thus they may make short-term decisions that are not in the company’s long-term interest.

50% do not have policies and procedures that
enable staff to look after their customers well.

In many companies, the internal rules and systems prevent staff from providing excellent service. Half of the companies studied did not have policies, processes and procedures that put their customers’ interests first and therefore would enable staff to create the kind of experience their customers are looking for. This is probably one of the biggest reasons why customers are so outraged and staff feel helpless to do anything about it. For example, on a recent flight to Australia, the cabin crew announced that a new company policy meant customers could not longer use silver coins to purchases drinks and snacks. The crew then spent the rest of the flight saying no to customers who presented silver coins.

45% do not induct new staff well.

Another area of weakness was introducing new staff to the company, its people, products, systems and services. This was done poorly by 45% of the companies studied. Most companies will admit they do not put enough effort into inducting new staff properly but most also underestimate the consequence of poor induction practices. If staff do not know much about the products and services they are selling and if they do not understand how their company operates, they will not be able to create a great experience for their customers. Other research I have done suggests that consumers consider product knowledge to be a key component of good customer service. Over two-thirds of the people I spoke with rated product knowledge in New Zealand as being poor or only fair. Perhaps poor induction is the reason.

Forty-three percent of the companies studied appeared to have little understanding about how staff performance affects customer retention. Companies may say they understand the relationship between staff behaviour, the customer experience and customer retention but they are doing little to ensure they get it right. Few companies measure staff performance and satisfaction and then relate it to customer satisfaction and retention. Therefore, they cannot give staff feedback about what they are doing well and poorly or help staff to understand how their behaviour impacts on the customer’s experience and buying behaviour.

43% are poor at putting themselves in the customers’ shoes.

Forty-three per cent of companies were also poor at putting themselves in the customers’ shoes. In most companies, people think about the customer not like the customer. If business owners, managers and staff put themselves in the customers’ shoes before they allocated resources, set policy, made decisions, took action or even opened their mouths, the customer experience would improve dramatically. So many things that companies do make sense to those working inside the company but no sense to those on the outside.

41% are poor at following up.

Forty-one percent of companies are poor at following up after the sale to check the customer is happy with the sales process and the product or service they purchased.
Making an after-sales follow up call is smart business. It allows you to catch and
correct any problems the customer may be having and it shows you care. It also gives you an excuse to stay in touch with your customers and serves to strengthen the relationship you have with them.

The internal customer is not looked after.

Most of us understand that, at the end of the day, the service paying customers get cannot be better than the service staff give each other within the company. However, 41% of the companies studied were poor at ensuring their staff meet the needs of their internal customers. For the customer to have a consistently great customer experience, there needs to be as structured and disciplined an approach to provide excellent customer service within the company as there is to the paying customer.

Staff are not involved in business improvement.

The last major area of weakness was involving your staff in finding ways to improve the business. This was done poorly by 41% of the companies. Staff have good ideas and staff who deal with the customers know what works for customers and what does not. Smart companies make use of this knowledge and involve their staff in business improvement activities. Smart companies also realise that if staff are involved, they will support any proposed changes and be motivated to make them work rather than trying to sabotage them.

The biggest areas of opportunity
The biggest area of weakness, and therefore the biggest area of opportunity for companies wishing to gain a competitive advantage through service excellence, is to get to know customers better. Companies need to allocate resources, motivate staff and build processes to discover how their customers want to be treated and learn about their business. Then bring the world of the customer into the workplace so front-line and support staff can put themselves in the customers’ shoes and understand what they have to do to make the customer successful.

The biggest opportunity to gain a competitive advantage through
service excellence is to get to know your customers better.

Your customers will tell you everything you need to know to get a competitive advantage. You just need to ask the right questions (see Figure 3), listen to the answers and then do something with what you have learned. Companies need to understand their customers’ businesses and how their customers prefer to be treated.

Once you understand your customers better, you can turn your attention inwards. Are you hiring the kind of people who are willing and able to give your customers the service experience that would delight them? Are you inducting new people into the company so they have a good knowledge of your products and services; the company’s policies, processes and procedures; who their colleagues are and their roles and functions; your major suppliers and how they work with you?

Is all of this worth doing?

It is, because 100% of your profits comes from your customers!

1 See “Are we really taking customer service seriously?” in Customer Excellence, October – December, 2005.

2 From a study by Rainger and Brunton reported in the Sunday Star Times, Business Section, October 9th, 2005

3 “Customer satisfaction – can you bank on it?” Customer Excellence magazine, January - March, 2006.

4 The other day, I cooked a barbecue dinner while waiting for Sky TV to answer the phone.

5 For more information, read “Are we really taking customer service seriously?” in Customer Excellence, October – December, 2005.

6 For more information about the methodology of the study, see www.ianbrooks.com/servicenz

7 In a survey by the National Association of Purchasing Managers in the USA, 75% of their members said their suppliers do not understand their business.

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