Customer Service and Support in Web Space
By the time students complete this chapter they should be able to:
Explain the evolutionary stages of customer service provision.
Understand the role of customer service in creating sustainable competitive advantage.
Explain the importance of integrating customer service with other customer-facing enterprise activities.
Identify themes that recur in discussions of providing exceptional customer service.
Describe the various technologies and channels used to deliver customer service.
Discuss the steps involved in developing a strategic customer care program.
Distinguish between customer service and customer experience.
Depending on your own perspective, you may want to begin coverage of this chapter with an argument for elevating customer service to a major, strategic role in marketing. My own perspective is that it should be the “5th P” (people) of marketing. That elevates it to a planning and operational variable that would receive the attention and resources that the data at the beginning of this chapter imply it deserves. The chapter carries on the example of Harrah’s by emphasizing the role customer service has played in the turn-around first described in Chapter 4.
The Importance of Customer Service and Satisfaction
The chapter begins with data from the ASU “customer rage” studies. They now seem to be repeating the survey on a yearly basis, so you may want to check the site for any available updates: http://wpcarey.asu.edu/csl/index.cfm.
Data from Accenture indicates that poor customer service or product quality was the most common reason for consumers to switch providers (61% of those who switched) and that poor service has potential to damage the brand image. Burke Marketing Research expands on that by a study of the insurance industry that shows 274 customers out of 6,000 lost to poor service in a given year (Figure 13.1). This study also puts a new set of numbers to the common finding. If customers have problems and complain, most of them can be retained if their problems are resolved or if they are even “mollified.” If they remain dissatisfied, a large number did not repurchase. In the case of insurance a relatively small number did not complain; more of them will not repurchase than those who were satisfied or mollified. The usual advice is to encourage customers to complain; they will be less likely to defect if they are at least heard out. In the case of insurance, that doesn’t seem to be the case. Looking at it from a positive perspective, the continuing example of Harrah’s indicates that CLV is largely driven by their excellent customer service.
The high cost of poor customer service is illustrated in Table 13.1. It offers global data to make the point that people want good, proactive customer service. The continuing case of Harrah’s (now Caesar’s Entertainment) makes the point that it pays. Retrieve the graphic from the second edition at https://www.mckinseyquarterly.com/Gambling_on_customers_1299.
American Express provided the B2C data from their annual study of customer service. It is also a good place to go for updates, especially because they offer different segmentations in some of the annual studies. They don’t post on a single page so search American Express Customer Service Barometer 2011, etc. The 2010 data in Figure 13.2 is especially compelling because of the willingness of young professionals and affluents to spend more than the average customer when they believed good customer service was available.
In the B2B arena, Accenture’s study of CRM programs shows that excellent customer service has the greatest impact on profitability of any of the three key dimensions of CRM. The impact on profitability is substantial. This study doesn’t seem to have been repeated.
Bloomberg BusinessWeek also repeats its ranking (Table 13.2) most years. Search Bloomberg BusinessWeek customer service champs 2011, etc. You can usually find videos and slideshows with their announcement of the ranking. You can also try searching for updated B2B data (Figure 13.3); some years you can find one but it’s not clear that any single organization does satisfaction with B2B suppliers on a regular basis.
A firm that definitely “gets it” is Portakabin. It has a website that, while not particularly attractive, makes the customer service promise over and over. See their site http://www.portakabin.co.uk especially the Customer Charter page http://www.portakabin.co.uk/customer_charter.html.
Students should have a variety of interesting (and probably strongly-felt) answers to what they want in terms of customer service. I find that “know what they are doing/can answer my questions” usually comes up quickly. Figure 13.4 is interesting in that it shows “To be treated with dignity” as by far #1. The gap between what customers want and what they get is substantial. It seems even more inexcusable in light of the fact so many of the items appear to be no cost. They do, of course, require careful customer service training, which is not inexpensive, but all the data in this section point to the fact that the expenditures are worth it.
When you put the data in Figures 13.5 and 13.6 together it seems obvious that while a lot of (older) people would prefer human contact there is potential in lower-cost Internet channels if they are effective in resolving problems.
The Evolution of Customer Service Strategy
Figure 13.7 shows customer service evolving in terms of automation and information intensiveness. Most businesses offer live customer service and some offer no more than that. The second stage is to migrate service to the web. It may be more effective to do so first with extensive live support as the attempt is made to migrate customers to automated self-service to the greatest extent possible. There should also be a live customer rep available, however, when efforts at achieving satisfaction via self-service have not been satisfactory. The final step, and one that few firms have reached, is to engage in anticipatory service. That means identifying potential customer problems and needs before they occur in large numbers, perhaps by enlisting the aid of innovative consumers or lead customers in the B2B space. Then automated responses to the prospective problems can be developed. One method is to use rules-based processes in which a small piece of information provided by the customer allows the system to return a suggested solution. “What model printer do you have? First, press the reset switch located on the right side of the printer.” Push technology can be used to provide timely information that may prevent problems. Anti-virus and firewall software provide a good example. Many of them are updated automatically as need, without the user having to initiate the update. Other downloaded software also lets the user know that updates are available immediately or at the user’s convenience.
This concept includes only telephone and Internet channels for customer service. While that is appropriate to the focus of this text, customer service can be delivered in other channels such as the retail store. Cost data, however, makes it clear why the Internet is such a focus and that even Internet channels vary in cost per contact. Costs range from $9.00 for contact with a live telephone rep to $2.50 email, presumably not an automated one, and to 10 cents for a self-service contact. This makes it clear why most marketers are eager to encourage Internet channels and various forms of customer self service.
Self service can provide satisfaction when it works properly. Customers should be given clear directions to ensure that it works as often as possible and that customers are not the cause of failure. There are many technologies available for customer service. You might remind students of the “Seamless CRM Vision” at the end of Chapter 11. That provides a reasonably comprehensive listing of technologies. Figure 13.5 pointed out that many customers prefer the higher cost personal channels. Figure 13.6 added that younger people may be more receptive to self service. Desirable as it is for firms to migrate to self-service on the web there are some people who will not use or be satisfied with it. The strategy, then, becomes a continuing trade-off between cost and customer satisfaction. That’s where CLV analysis can play a key role.
Eddie Bauer is a good example of self service in the corporate DNA; L.L. Bean is another. You might want to go live to the customer service page of either one to show the options and think about why and how they can be used. Or you might want to ask students for recommendations on sites that have provided good customer service for them. You’re likely to get more age-appropriate recommendations that way.
In spite of the “Using Technology” header for the British Airways case history, that is not the most important point. The real take-away should be how long it has taken, how hard it is to instill a customer service mentality into a corporate culture that seems unfamiliar with the very concept. That allows the point to be made that business processes have to work before good customer service is possible in any channel. When the business process are in place systems can make good use of technology with service by mobile devices and in social media channels being widely deployed today. The keys are an engaged work force and processes that work; again the technology is only an enabler, not a driver of strategy.
This example of the New York Department of Motor Vehicles is a good one, but this section is an excellent opportunity to go live to a site like the DMV in your own state, the local voter registration page (if residents can register online), etc. It creates a great opportunity to talk about what citizens want/expect from government and how the Internet can help deliver, effectively and efficiently. Canada has prize-winning government site http://www.canada.gc.ca/home.html with an impressive mobile portal that has been adding services for a number of years http://www.canada.gc.ca/mobile/wireless-eng.html.
Creating Strategies for Service Excellence
These themes summarize the lessons that emerged from the three case studies. They are:
Excellent customer service cannot be delivered by an isolated customer service department.
Superior customer service requires long-term commitment of both management and resources. Management must make an enduring public commitment (“talk the talk”) to providing exceptional customer service and then follow up, providing the resources needed to accomplish the task (“walk the walk”). Each of the case histories illustrates how long it can take.
Customer service orientation must pervade all parts of an enterprise. All customer touchpoints must have a customer service orientation or the customer experience will not be seamlessly excellent.
Customer service should be part of an organizational quality focus.
“What gets measured gets managed.” Another of the mantras of quality management stresses that enterprises must establish relevant metrics for this “softer side” of the business and apply those metrics in a planned fashion. Exceptional customer service is another of the never-ending journeys on the road to total quality, so it is important to establish mileposts in the form of short and intermediate-term goals.
Technology can help improve customer service. This is stated carefully because technology can also be a dissatisfier if it is not used properly or if it does not work.
Customers want multiple channels for customer service and technology facilitates that.
Customers want to know that there is a human being at the end of the process.
Good customer service can reduce costs, but it is more important to see it as part of overall customer experience excellence.
Price Waterhouse Cooper’s perspective on the evolution of customer care in an enterprise focuses on the effective use of information and technology (Figure 13.10). It begins with simple customer profiles, then moves on to segmentation and analysis of customer needs by segment, and finally arrives at the stage where technology delivers genuine solutions and customers can have a seamlessly satisfactory experience, no matter how they choose to access service. Each stage presents its own challenges, some of which should be apparent to students by now. PWC also makes the interesting point that business that are focused on excellence are more likely to take an overall CRM approach that focuses on CLV than they are to focus on the single element of customer service. It is also important to note that they do not emphasize technology until the customer information foundations are in place.
You may want to simply list these technologies, which are in common usage on the assumption that students are familiar with many or most of them. On the other hand, you may want to take a little more time and give at least one example of each. Note that these are essentially standard technologies in widespread use. A list of newer technologies comes at the end of the chapter.
Telephone (Call Center) Technologies include:
Interactive Voice Response (IVR). How do students feel about the use of IVR technology in your own school, say by the registrar’s office?
Intelligent call routing. The IVR technology, if well used, should direct the customer’s call to the appropriate agent. Some call routing is less transparent to the customer because it takes place behind the scenes with information previously provided by the customer.
Call recording. This is a very transparent technology since it is a legal requirement that the possibility of call recording be revealed to the caller. It may be used for documentation as well as for supervising and training call center reps.
Help desk software that tracks customer service cases.
Website technologies include:
Email response management systems. Automated systems that produce immediate confirmation of site registration or an e-purchase are easy to see. Students may be vocal about whether applications of automated response to queries are useful or not. The ones that are not are very visible. Some are so good that it is difficult to tell whether they are automated or composed by a live person; most are obvious but acceptable for routine communications.
Embedded devices. From a dishwasher that senses how dirty the dishes are to a shirt that has a security authentication device sewn in, there are computer chips in many of the items we use every day. Many of them do perform services of one kind or another.
Mobile applications. Again, there are many devices including smart phones and tablets that can send and receive communications wirelessly.
Agent technology. Agents (or bots) are software that can mimic behavior and learning of human agents. One example is given in Interactive Exercise 13.2. You might want to use Siri in the iPhone 4 as a current example that is not without complaint and controversy. We should also add that these products seem to come and go rather frequently, suggesting that the market is not yet a profitable and perhaps a technologically dependable one.
Voice activation. Speech recognition technologies are especially useful in the mobile environment.
And finally, add customer service in social media. In addition to the examples provided in the text Ford has recently upped its emphasis on providing service on social platforms
http://www.forbes.com/sites/jeanhalliday/2012/03/27/ford-taps-social-media-for-customer-service. The airline industry also has examples of major efforts to improve customer service by using social media: http://simpliflying.com/2011/customer-service-2-0-top-10-airlines-and-airports-performing-customer-service-through-social-media. Search is likely to provide some timely examples because the channel is under development or serious consideration by many marketers.
Themes in Strategic Customer Management
This is another approach to suggesting that customer service does not exist in isolation from overall customer care and customer experience.
Differentiated customer service, while efficient, does have a dark side. Sometimes customers can tell that they are being forced into low-cost customer contact channels. Computer and software firms have become good at it. Unless you have a service contract it is difficult and often expensive to obtain service from a live rep. If you ask students for their own experiences, they will probably be vocal about describing them. However, you need to help them be sure they are carefully differentiating between service that is genuinely bad but not necessarily differentiated and service policies that are directing customers to different channels, hopefully based on an analysis of CLV.
Forrester gives the steps in building anticipatory customer service as:
Build customer service scenarios, based on call center and Internet data. Scenarios are an interesting and useful previously discussed in the B2B and website development chapters. The Patricia Seybold Group has registered a technique for developing scenarios http://www.psgroup.com/consulting_csmcert.aspx. Customer scenarios are helpful for anticipating customer problems and taking steps to prevent them from happening.
Make customer service pervasive; deliver service before it is even requested.
Design the process for seamless escalation to higher levels of service as needed.
Not much has been said about escalation in the chapter. Used in this context, it simply means to move the customer to the next level of service when the current level cannot satisfy him. The pattern might be from self-service to automated email to a chat room. How many times have you been passed along such a chain, only to have to repeat your story (as well as your identifying information, which is even more infuriating) at every level? That is the opposite of seamless!
The final themes relate to the broader issue of customer experience. The content in the text follows Bruce Tempkin’s approach and you are encouraged to access his site for recent studies and case histories: http://experiencematters.wordpress.com. He often makes the point of the final section in this chapter; that customer experience does matter in measurable customer satisfaction that leads to measurable increases in profitability. The final section also points out that if good customer service were easy all firms would be doing it. Instead it is hard and time consuming; the best reasons for regarding excellent customer service/experience as a sustainable competitive advantage.
Throughout the chapter, reference is made to exceptional customer service as the basis for sustainable competitive advantage. Do you agree with this perspective? Why or why not?
Identification of customer service as a basis of competitive advantage is common among practitioners and consultants. If you decompose the statement, I’d suggest that it is a competitive advantage because so few firms do it well. It is sustainable because it takes so long—and requires so much commitment—to turn an organization around and cause it to deliver excellent customer service on a consistent basis. Underlying these statements is the fact that, technology notwithstanding, much of customer service is still based on people and consequently is variable in the services marketing sense.
The Internet has the capacity to increase customer expectations about service levels and also to be the vehicle that delivers service that meets or exceeds those expectations. Take a position on this statement and be prepared to discuss it.
The discussion that supports this statement goes back to the first chapter in which the strategic drivers of speed and rising customer expectations were discussed. The material about consumers in this chapter also supports it. They want responses to their inquiries and problem, and they want them quickly. It is easy to believe that meeting their high expectations lead to expectations that are at least as high, and probably are even higher, the next time around. Research does seem to support that position.
The Internet can facilitate speed of response, but it cannot do so without business processes, databases of relevant information, and information systems that make it all happen.
3. Do you believe that good customer service has a direct impact on the profitability of a business? Can you provide evidence to back up your position?
In the chapter Figures 13.1, Table 13.1, Figure 13.2, and the Harrah’s and British Airways case histories all make the point.
You could ask students to search for additional evidence and they will probably find numerous references. Social Media Examiner often has posts about using social media for customer service and you can find case studies http://www.socialmediaexaminer.com/social-service-allows-startup-to-outpace-the-competition and videos on customer service http://www.socialmediaexaminer.com/how-social-media-has-changed-customer-service there.
4. True or False: Customer service is less important in B2B markets than in B2C. Why or why not?
The discussion on service in B2B markets at the top of p. 353 stresses the importance of service in B2B markets. It is certainly not less important to B2B marketers than B2C. A good argument can be made that each business customer is likely to have a high CLV and that losing one because of poor customer service represents a substantial loss to the company.
5. Moving all service delivery to the web where customers can access it when they need it is the most important aspect of building a successful customer service program. Do you agree or disagree? Why?
Moving services to the web where customers can access them as needed is important. It can satisfy customer needs for speed and immediacy at the same time it can decrease the cost of providing customer service. Web-based customer service should be one aspect of the customer service strategy of virtually every business.
However, based on the material in this chapter, it does not appear to be the single most important element of a customer service strategy. The chapter emphasizes that customers want to be able to access service in multiple channels. They will choose based on a number of situational factors. That appears to be the single most important element of a successful customer service strategy.
Students may also point out that technology can be a dissatisfier when it does not work as needed or anticipated. There are also people who are not connected to the web, some of whom never intend to be connected, and their requirements must be considered when identifying channels for customer service delivery.
6. What are the customer service channels people are most willing to use to resolve problems? The least willing?
Figure 13.5 provides the best summary. It is clear that most people would really like to talk to a human rep on the phone or receive face to face service in stores. Many people do seem to be open to using impersonal channels like the website. It seems reasonable that if people can be convinced of the ease, the convenience, and most of all, the usability of impersonal channels they can be migrated in that direction. That statement probably is not true, however, of many older customers.
7. What are the highest cost service channels? The lowest cost? What implications does that have for effective customer service strategy?
In a general sense, the highest cost channels involve a human being, supported by a good database and sometimes by automation. The data quoted listed a telephone call center with a live agent as the most expensive. Generally, impersonal sources are less costly and the more automated the impersonal source, the lower the cost is driven. The two genuinely impersonal channels covered in the Forrester study were virtual agents and self-service, both of which were a fraction of the cost of an interaction with a live agent.
8. What is the concept of anticipatory customer service? What role can it play in successful customer service delivery?
The concept of anticipatory (also referred to as preemptive because the aim is to prevent problems) customer service is likely to be new to most students. They may even be a bit disbelieving. Can businesses really anticipate customer service needs and prepare to meet—or even meet—them before they even occur. The answer is that not very many enterprises are doing it and doing it well but it can be done. A simple example is the automatic downloading of anti-virus patches to computer systems without intervention on the part of the user.
The Forrester approach requires the building of consumer scenarios using all available sources of data about customer activities. The scenarios are then analyzed to determine where problem are occurring or are likely to occur. Remedies for the problems are then developed and implemented.
A way that is much used for early diagnosis of problems is to monitor social media networks and comments on the enterprise’s own website or on other sites where the target market gathers.
An even more direct way is to enlist the aid of consumer innovators or business lead users. In B2B markets, this is often formalized as a beta test. In either market space innovators can be important early warning indicators of potential problems. The preemptive service concept is to identify problems before they occur in significant numbers and deal with them, however the enterprise develops processes to accomplish it.
If anticipatory service works, it can be very satisfying—that is, if the customer even recognizes that it is happening. “We just downloaded a new security fix” is an example of letting customers know you are working for them behind the scenes.
9. Bloomberg Businessweek recently published a debate feature entitled “Virtual Agents Will Replace Live Customer Service Reps.” Would you take the pro or the con position? Why?
The article http://www.businessweek.com/debateroom/archives/2010/07/virtual_agents_will_replace_live_customer_service_reps.html is brief but thought provoking. It could be assigned for out of class reading prior to class discussion. It has sparked other articles on the subject. This one is more detailed than the original Bloomberg BusinessWeek posting http://www.destinationcrm.com/Articles/Editorial/Magazine-Features/Anybodys-Bot-70830.aspx. A search for the original article title will uncover others. It is clear that the tool has potential, but a lot of that potential is still in the future.
10. Can you identify industries or specific businesses for which mobile customer service apps seem especially desirable?
It almost seems reasonable to ask whether there are any industries or specific business for which mobile customer apps are NOT desirable. That’s how fast the world is changing. Students may however, point out that older customers are less likely to use mobile apps, although not entirely unlikely. They could also point out that some consumers are unwilling to use mobile financial apps of any kind out of security concerns.
But mobile apps for customer service are a real possibility for people who are frequently on the move, and that is most of us most of the time.
11. Can you find other examples, besides Zappos and Best Buy, of companies that are actively using social networks for customer service?
Ford (http://www.forbes.com/sites/jeanhalliday/2012/03/27/ford-taps-social-media-for-customer-service) and airlines/airports (http://simpliflying.com/2011/customer-service-2-0-top-10-airlines-and-airports-performing-customer-service-through-social-media) were mentioned above. Or ask students to recount their own experiences or to search for other examples.
12. Can you identify any ethical issues that are inherent in sophisticated customer service programs?
One was alluded to above. Customers who are not connected to the Internet or who are not technologically sophisticated in general should not be precluded from obtaining customer service because of their lack of technology or the skills to use it. Whether they should be charged, or in what circumstances they should be charged, is a question that deserves serious consideration.
The more general issue is that of differentiated customer service as discussed in the text. At its best, differentiated customer service is based on a sound economic foundation—delivering customer service in ways that are determined by Customer Lifetime Value. Saying that it is economically sound is not the same thing as saying it is ethically unobjectionable. Where to draw the line is not entirely clear. One way is to fall back on the premise that there should be a live person available after technological solutions have been applied and found wanting. Whether there should be a charge and whether that charge should defray the full cost of providing the service are then decisions that must be made.
13. How does customer experience differ from customer service?
Customer experience is the broader concept, including all interactions with the business. Customer experience includes customer service as one kind of interaction but also includes interactions at other touch points like retail stores and the website.
14. Think about the issue of organizational issues and their impact on the delivery of exceptional customer service. Have you encountered any customer service instances in which people in the same organization seemed to be giving you different information or advice? Why do you think this happened?
Most of us can recount numerous examples of poor customer service and asking questions like this tends to open the floodgates. The attributes that students make in terms of causes are often very interesting. Try to focus them on how information systems could be used to alleviate the types of problems they are describing. They may be less aware of the key role of business processes and good training in preventing problems or resolving them.
You may need to specifically ask for good experiences because the overwhelming majority of experiences students want to recount are likely to be negative.
If some of your students have worked in a retail environment, they are likely to have interesting experiences to recount that would shed light on these issues. Once a few students have recounted their customer service experiences it is good to turn the situation around and see if there are students who can discuss their experiences as providers of services.
One major outcome of this discussion should be to drive home the point that managers cannot just issue an order and expect good service to happen. As emphasized throughout the chapter, it takes time, effort, commitment, and resources.
Internet Career Builder Exercise.
Find a reason to contact a website or social network service page (asking for information, searching for support for a previously-purchased product or service, etc.) and make the contact. Keep track of the timeliness, correctness, and completeness of the responses. Be prepared to describe them and to characterize your overall experience.
The experiences of individual students will be interesting, especially to the degree that some are automated responses and some are live and some are likely to be a combination of automated followed by a response from a real person. Perhaps even more interesting will be how many students get no response at all. You might find it useful to tally the timeliness of the responses according to some reasonable categories. Those might be less than 6 hours, 6–24 hours, 1–3 days, more than 3 days, and no response at all. Based on the category into which their response fell, how do students feel about doing business with this site in the future? Also, where do they put automated responses in this schema?
Identify a website that has a significant customer self-help component. Websites for consumer software and consumer electronics companies are especially good candidates, but there are many others. Think of a specific problem or question that you might have in relation to this product. Visit the site and try to solve the problem or answer the question. Describe the nature of your experience and your degree of overall satisfaction.
There are a number of sites that students might choose. The larger the site and the more specific the question they try to answer, the more likely they are to find it a bit difficult. Two sites that would allow you to demonstrate some of the concepts are the Hewlett-Packard site, which has detailed information to support each of its printer lines. Microsoft also has customer self-help databases organized by product. Many of their entries appear to be customer questions and the responses to them. It’s a good lesson in how customer self-help databases (knowledge bases) can be compiled. The large content sites also tend to have a lot of self-help.
Visit the websites you are tracking. Learn as much as you can about their customer service policies. Be alert to how easy it is to find the information you would need as a customer and how complete it appears to be. Note any aspects of the way the site provides customer service that look like they are particularly good or especially problematic. Establish several criteria that identify good service policies. Rank the sites according to your perception of their customer service policies and practices. Be prepared to discuss your criteria and rankings in class.
As suggested in the lecture notes, Eddie Bauer not only provides good customer service, but their customer service is organized in a way that makes it a good model. Once again, students should find a variety of approaches, some of which seem helpful and some of which may appear less so. It will be interesting to find out how many found customer service access buried several mouse clicks into the site and if some did not find a formal customer service page at all.
agent a piece of software that triggers an activity when a specified event occurs; performs a variety of repetitive tasks on the Internet, ranging from searching for content for the search engines and directories to searching for product offerings by e-merchants to provide comparison prices for users.
artificial intelligence applications that exhibit human-like intelligence and behavior and have the ability to learn from experience.
call center department within an organization that handles telephone sales and/or service.
call routing automated telephony systems that route calls to appropriate service agents based on data such as caller’s telephone number or data provided by an IVR system.
embedded service module a device, usually a chip, that is part of a product and that is used to provide remote monitoring and diagnostics of the product’s performance.
ERMS (email response management system) set of applications that handles large volume of email from customers and prospects ensuring that messages receive prompt responses and are distributed to the appropriate agent; provides other functions like metrics
help desk group in an organization that provides support for both hardware and software; also used in connection with specialized software that supports help desk operations.
IVR (interactive voice response) automated telephone systems in which customers key in or speak data and responses and the system responds with a combination of recorded voice messages and real-time information from databases.
rule a statement that takes the form “If . . . then,” specifying an action to be taken, given the occurrence of a particular event.
virtual agent a program that simulates the conversation of a human being and uses artificial intelligence components to learn from experience, in this case to better understand customer requirements.