CUSTOMER SERVICE IN NEW ZEALAND
What NZ companies are doing
well and poorly.
The main thing
To succeed in business
you must have profitable customers who stay with you a long time.
Having loyal customers is not enough. They must also be profitable
customers.
This may seem like
common sense but it isn’t. It makes sense but it is not common sense
because:
-
Very few companies know which of their
customers are profitable.
-
Not many track customer retention.
-
Only a small percentage know what share
of their customer’s business they have and how that varies from year
to year?
The goal
To have profitable customers who stay with you a long
time, your goal must be to create the kind of experience that will:
1.
Persuade your customers to purchase your products and services.
2.
Encourage them to keep their business with you.
3.
Interest them in buying more from you.
4.
Motivate them to tell others about you.
The reality
Are companies both
in New Zealand and around the world able to create that kind of experience
for their customers?
The answer is a resounding,
no!
Results from studies
around the Western world show that large numbers of customers are
very unhappy with how hey are being treated. What is staggering is
not what upsets customers but the number who are upset. For example,
90% of British consumers who made a complaint last year were unhappy
with the way the complaint was handled. Another study showed that
82% of people who used a call centre said they had to wait too long.
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.
A global study showing that customer satisfaction
with airlines is at a 15 year low and another British study where only
one out of eight companies gave service their customers rated as excellent.
Call centre customers are not 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. Companies appear to perform just as poorly 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.
A New Zealand banking survey 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 worth complaining to
their bank and of those who did complain, only 42% were satisfied with
the way their complaint was handled. Indeed, at the time of the survey,
44% still had not had their problem resolved.
A New Zealand study by Rainger and Brunton, showed that 42% of New Zealanders changed suppliers
last year because of poor customer service. More alarmingly, a significant
percentage of customers said customer service is deteriorating in New
Zealand. One customer was even reported as saying that the level of
service is so bad that, “you can understand how people become violent!”
The present study
The model
The model used to assess the ability of New Zealand
companies to look after their customers is the model used in the Customer
1st programme. This model, designed by Dr Ian Brooks and
staff at Telarc, identifies 5 processes containing a total of 32 activities
considered to be essential to providing customers with a great experience,
not just once, but consistently over a period of time.
The five processes are:
1.
Customer experience and order fulfilment (8 activities).
2.
Effective staff management (8 activities).
3.
Managing results to drive improvement (6 activities).
4.
Effective leadership (4 activities).
5.
Entering your customer’s world (6 activities).
Methodology
Companies were assessed by trained reviewers using
the model outlined above. The review process included interviews with
senior and middle managers, frontline staff and customers.
Companies who scored a 4 or a 5 on the 5-point scale
were considered to be excelling in that activity. To achieve a rating
of 4, the activity had to be performed systematically and customers
had to say it was being done very well. To achieve a 5, the activity
had to be performed systematically, customers had to say it was being
done very well and the company regularly reviewed and improved its
performance in this area.
Companies
scoring 0, 1 or 2 were considered to be doing poorly. A
score of 0 means the activity was not being done at all. A score of
1 indicates it was being done in a very basic and unstructured way.
To achieve a 2, the activity had to be done systematically or customers
had to say it was happening. A
score of 2 was considered to indicate a weakness because for something
to be considered done effectively, it would have to be noticed by customers and it
would have to be done consistently over time, and that would mean it
would have to be done systematically.
An activity was considered an area of strength for
NZ companies if 50% or more of the companies studied excelled in it.
Similarly, an activity was considered to be a weakness if 50% or more
were doing it poorly.
We would expect the results
to be better than if a random
sample of companies had been
assessed.
We need to keep in mind that not only is the sample
quite small but we have a self-selected sample that is likely to be
made up of companies already committed to providing their customers
with a great experience. Thus we would expect the results to be better
than if a random sample of companies had been assessed.
Where New Zealand companies excel
Of the 32 activities assesses, New Zealand companies
excelled in 10.
Not surprisingly, the strongest area of excellence
was in the traditional area of business management, managing results
and the equally traditional activity of “Monitoring
financial performance so that your business is sustainable.” 86% of
all companies studied excelled in this area. Perhaps the surprise here
is that 14% did not excel!
The second area of strength was in the leadership
process and the activity of “keeping abreast of developments in your
industry and marketplace.” 76% of companies excelled in this area.
Three activities tied for the third area of excellence. It is encouraging to see that these were all
in the area of customer experience and order fulfilment. 71% of companies
excelled in:
1.
Making their customers feel welcome.
2.
Helping their customers decide what to buy.
3.
Managing the transaction well. This includes:
o
Being accessible.
o
Giving people a choice of communication channels.
o
Having the correct information to accept, process and charge for the
purchase.
o
Competent inventory management.
o
Having evidence of satisfied customers.
Only 59% of companies excelled
in looking after staff so they want to look after the customers.
There was quite a big drop to the fourth area of excellence.
This was in the process of effective staff management and the activity
of “looking after staff so they want to look after the customers.” 59%
of companies were doing this well. This is a disturbing finding if
you think that nearly half of the companies in this self-selected population
are not excelling in this area, an activity which is essential to get
right if you are going to provide your customers with a great experience.
The fifth area of strength was the activity of “understanding
their customers’ needs” in the area of customer experience and order
fulfilment. 57% of companies excelled in this area. Again, this is
an disturbing result when you consider how basic this is to succeeding
in business.
Two activities tied for the sixth area of excellence. One was also in the area of customer experience
and order fulfilment and one in the process of effective staff management.
55% of companies excelled in “providing their customers with a friendly
environment” and 55% in the activity of “knowing the kind of person
they need to hire to be able to deliver the kind of experience their
customers want to receive.”
None of the areas of excellence
related to the process of entering the customer’s world.
The final are of strength was also in the process
of effective staff management. 53% of companies did well at “hiring
the kind of person they need to be able to create the kind of experience
their customers want to receive.”
None of the areas of excellence related to the process
of entering the customer’s world.
What is done poorly
Of the 32 activities assessed, 5 were considered to
be done poorly by New Zealand companies and another 7 were improvement
opportunities for a significant number of New Zealand companies.
The biggest area of weakness was in the customer experience
and order fulfilment process. 81% of companies do not tell their customers
the kind of experience they can expect to receive when they do business
with them. This result is not surprising as the concept of making a
promise to customers is a new idea recently introduced into New Zealand
by Dr Brooks. Some large New Zealand companies such as IAG
and Kiwibank have found the customer promise to be a useful tool in
creating a great experience for their customers.
Companies generally do not know the kind of experience
their customers are looking for.
There was a huge drop to the next
area of weakness which was in the process of effective staff management.
59% of companies were poor at “helping staff understand the kind
of experience their customers are looking for.” This will be related
to the first area of weakness outlined above, the common cause being
that companies generally do not know the kind of experience their
customers are looking for and that, in turn, is because they don’t
ask.
Two activities were tied for the third level of weakness.
One of these was in the area of leadership. 55% of companies were weak
in the activity of “everyone in the organisation sharing the company
vision.” The second was in the process of entering
the customer’s world. 55% of
companies were poor in the activity of “bringing the world of the customer
into the workplace.” These are both important activities in giving
staff the ‘big picture.’ If staff do not understand pr share he company
vision, they will not be able to help their company to succeed in reaching
its aspirations. Similarly, if staff do not understand their customer’s
world, they will not be able to help their customer to succeed.
Companies put themselves first,
instead of the customer.
The fourth area of weakness was also a leadership
issue. 50% of companies were poor at having policies and procedures
that make their vision a reality. You must see examples of this everyday
as a consumer and I imagine your staff live with this every day at
work. Companies put in place policies that protect the company not
the customer, and develop procedures that work for the company not
the customer. Thus, from the customer’s perspective, the company is
putting its own interests first.
Other areas of weakness exhibited by fewer than half
of the companies (40% to 50%) were:
1.
Staff management: Introducing new staff to the company, products, systems
and services (45%).
2.
Managing results: Understanding that staff performance directly affects
customer retention (43%).
3.
Entering the customer’s world: Using what has been learned about the
customer and their world to change the business (43%).
4.
Entering the customer’s world: Thinking like the customer instead of
about the customer (43%).
5.
Customer experience: Following up to check the customer is happy (41%).
6.
Staff management: Staff understand the needs of their internal customers
(41%).
7.
Managing results: Involving staff in improving the business (41%).
None of these should come as any great surprise. It
is well recognised that companies often fail to induct staff properly
and typically fail to follow up with their customers after the sale.
It also no surprise that companies are doing little to enter their
customers’ worlds as most companies are focussed on their own internal
issues.
Summary
Even in this self-selected sample, the activities
at which most companies excel are those linked to the traditional management
model (financial management and keeping abreast of industry and market
developments), or to the traditional areas of customer service (making
customers feel welcome; helping them with the purchase decision; managing
the sales transaction; providing a friendly environment). It is encouraging
to see that 60% of the companies studied excelled at looking after
their staff but perhaps disappointing that only 55% knew the kind of
person they needed to hire in order to give their customers a great
experience and only 53% excelled at hiring that kind of person. Similarly,
it was disappointing to see that only 57% of companies excelled at
understanding their customers’ needs. None of the areas of excellence
related to entering the customers’ world to understand them and their
needs better.
Of the 32 activities assessed, 15 were considered
to be done poorly by New Zealand companies. The biggest areas of weakness
were not telling customers the kind of experience they can expect to
receive when they do business with the company and not telling staff
the kind of experience their customers are seeking. These are probably
caused by the fact that most companies do not attempt to find out how
their customers would like to be treated. Two other areas of weakness
related to leadership: getting staff to share in the company’s vision
and bringing the world of the customer into the workplace.
Conclusions
To improve the experience customers receive, and arguably
customer retention, competitive advantage and profitability, New Zealand
companies need to do a better job of:
1.
Entering their customers’ world to learn about the their customers’ businesses
and their customers’ preferences for the way they are treated.
2.
Show customers they understand this.
3.
Make sure staff understand this and the company’s vision so they are
focused on something bigger than the transaction.
4.
Ensure their policies and processes allow staff to put the interests
of the customer first. The research by The Public Trust in New Zealand
cited earlier, suggests that customers want to deal with organisations
that are prepared to put their customers’ interests ahead of their
own.
5.
A large number of New Zealand companies need to do a better job of:
o
Staff induction.
o
Following up after the sale.
o
Putting themselves in the customer’s shoes.
o
Making sure staff look after their internal customers.
o
Learning more about their customers and using this information to drive
business improvement.
o
Involving staff in improving the business.
