Serving and Deserving Customers
Over the last decade or so, there’s been plenty of lip service paid to “focusing on the customer,” but, on average, businesses have little to show for it. Despite some progress since the late 1990s, customer satisfaction in the U.S. isn’t quite as high today as it was back in 1994, according to first-quarter 2006 data from the American Customer Satisfaction Index. And a recent global survey conducted by the Human Resource Institute and the American Management Association (2006) shows that most organizations think they should be doing more to focus on customers.
This is despite the fact that there’s a virtual consensus about the importance of customers and the pitfalls of ignoring them. Lackluster customer service is, after all, a chief reason that dissatisfied customers go elsewhere. About half of more than 2,000 U.S. and UK consumers responding to a survey said poor service had prompted them to make a change, according to Accenture (2005). To make matters worse, dissatisfied customers like to talk – 68% said they would share negative experiences with others, according to a separate Accenture loyalty study (“Customer Loyalty,” 2005).
So why haven’t businesses made as much progress in customer satisfaction as they have in the area of product quality, as measured by dependability and number of defects? One likely answer is that, unlike total quality, customer focus has not been tightly woven into the fabric of the entire organization. The results of the AMA/HRI survey show, in fact, that organizations could do a much better job of integrating customer focus throughout their organizations rather than leaving it to the sales, marketing and customer service functions.
James P. Womack, president of the Lean Enterprise Institute, points to the example of the typical customer service help line. “It exists – usually outsourced and increasingly offshored – to stand between the producer and the consumer when goods and services fail to work properly. In fact, it would be more accurate to say that it exists to get rid of customers as cheaply as possible,” he wrote in Fast Company (2006).
That might be putting it too strongly. Some managers claim that offshoring boosts the quality of customer service as well as saves in labor costs. Others aren’t so sure, however, noting that initial cost advantages have been partially eroded by escalating turnover and quickly rising wages. Annual turnover rates in Indian call centers, for example, are as high as 30% (Prakash, 2005), and there have been some reports of problems with customer satisfaction.
But offshoring itself is probably not the root of the problem. If customer call representatives don’t have the skills or aren’t provided with the tools and authority they need to resolve customer problems, then it doesn’t matter where they’re located. A report from global consulting firm Strativity Group, Inc. found that only about one-third of the 230 executives from surveyed firms in North America, Europe, Asia, Australia, Africa and Latin America said that employees had the resources and authority to provide customer support (Strativity Group, 2006). And the AMA/HRI survey confirms that organizations don’t think they’re doing as much as they should to empower employees to solve customer problems.
In short, poor customer service is likely due to managerial practices that treat customer service mainly as a cost. Womack believes that businesses need to rethink their attitudes toward customers, and he recommends viewing customer complaints as opportunities to reshape and improve product and service lines. Rather than trying to pacify annoyed customers as inexpensively as possible, companies could hire what he calls “a new sort of customer-service representative” who has the skills and talents to figure out what’s ultimately causing customers’ problems. This representative must also have close enough contact with the company to ensure that underlying problems are truly addressed (Womack, 2006).
Getting to the root of customer problems is, in fact, a strategy that’s been used by Fujitsu Services, which provides outsourced customer solutions. By hiring and training the kind of personnel capable of determining the true source of complaints and how to eliminate them, the firm has reportedly been able to dramatically reduce the overall number of complaints. “As the company has progressively applied this problem-solving approach to all of its customers, it has moved beyond its original role as a mediator between vendors and frustrated consumers to become an analyst and optimizer of entire IT response systems,” noted Womack and Daniel T. Jones (2005) in the Harvard Business Review.
Other experts also see the advantages of listening harder and working more intelligently with customers. Russ Westcott of R.T. Westcott & Associates and editor of the Certified Manager of Quality/Organizational Excellence Handbook notes that establishing a formal process for listening to the “voice of the customer” allows a firm to remedy situations before they escalate into complaints and to identify patterns indicating potential problems (Westcott, 2006).
If such approaches are to be embraced, however, management will need to adopt a mindset that treats unhappy customers in much the same way that quality programs treat product defects: as indicators of costly and inefficient work processes. The idea is to view unhappy customers as opportunities for improvement. How organizations parlay such opportunities will ultimately influence customers’ decisions as to whether or not companies deserve their business.
For other research reports from the American Management Association, please click here.
For an article called “The New Power Ratings,” please click here.
For quarterly scores from the American Customer Satisfaction Index, click here.
For a summary of the article “Lean Consumption,” by James Womack and Daniel Jones, click here.
Documents used in the preparation of this TrendWatcher include the following:
Accenture. “Poor Customer Service Is Top Reason Consumers Switch Service Providers, Accenture Survey Finds.” Press release. July 26, 2005.
American Customer Satisfaction Index. “National Quarterly Scores.” Obtained July 24, 2006.
American Management Association and Human Resource Institute. Magnifying Customer Focus: A Study of Current Trends and Future Possibilities 2006-2016. New York: AMA, 2006.
“Customer Loyalty Can Be Lost in a ‘Click.’” CRM Today, December 22, 2005.
Prakash, C. “Outsourcing Companies Struggle to Curb Attrition Rates.” News India-Times. ProQuest. December 2, 2005, p. 18.
Strativity Group. 2005 Customer Experience Management Study: No Money, No Love. 2006.
Ward, Paul. “What Builds Customer Loyalty? Take the Long View (Part I).” CRM Today, December 27, 2005.
Ward, Paul. “What Builds Customer Loyalty? Take the Long View (Part II).” CRM Today, January 10, 2006.
Westcott, Russ. “Your Customers Are Talking, but Are You Listening?” Quality Progress, February 2006, pp. 22+.
Womack, James P. “The New Power Ratings.” Fast Company, January 2006.
Womack, James P. and Daniel T. Jones. “Lean Consumption.” Harvard Business Review. EBSCO. March 2005, pp. 58-68.
This is despite the fact that there’s a virtual consensus about the importance of customers and the pitfalls of ignoring them. Lackluster customer service is, after all, a chief reason that dissatisfied customers go elsewhere. About half of more than 2,000 U.S. and UK consumers responding to a survey said poor service had prompted them to make a change, according to Accenture (2005). To make matters worse, dissatisfied customers like to talk – 68% said they would share negative experiences with others, according to a separate Accenture loyalty study (“Customer Loyalty,” 2005).
So why haven’t businesses made as much progress in customer satisfaction as they have in the area of product quality, as measured by dependability and number of defects? One likely answer is that, unlike total quality, customer focus has not been tightly woven into the fabric of the entire organization. The results of the AMA/HRI survey show, in fact, that organizations could do a much better job of integrating customer focus throughout their organizations rather than leaving it to the sales, marketing and customer service functions.
James P. Womack, president of the Lean Enterprise Institute, points to the example of the typical customer service help line. “It exists – usually outsourced and increasingly offshored – to stand between the producer and the consumer when goods and services fail to work properly. In fact, it would be more accurate to say that it exists to get rid of customers as cheaply as possible,” he wrote in Fast Company (2006).
That might be putting it too strongly. Some managers claim that offshoring boosts the quality of customer service as well as saves in labor costs. Others aren’t so sure, however, noting that initial cost advantages have been partially eroded by escalating turnover and quickly rising wages. Annual turnover rates in Indian call centers, for example, are as high as 30% (Prakash, 2005), and there have been some reports of problems with customer satisfaction.
But offshoring itself is probably not the root of the problem. If customer call representatives don’t have the skills or aren’t provided with the tools and authority they need to resolve customer problems, then it doesn’t matter where they’re located. A report from global consulting firm Strativity Group, Inc. found that only about one-third of the 230 executives from surveyed firms in North America, Europe, Asia, Australia, Africa and Latin America said that employees had the resources and authority to provide customer support (Strativity Group, 2006). And the AMA/HRI survey confirms that organizations don’t think they’re doing as much as they should to empower employees to solve customer problems.
In short, poor customer service is likely due to managerial practices that treat customer service mainly as a cost. Womack believes that businesses need to rethink their attitudes toward customers, and he recommends viewing customer complaints as opportunities to reshape and improve product and service lines. Rather than trying to pacify annoyed customers as inexpensively as possible, companies could hire what he calls “a new sort of customer-service representative” who has the skills and talents to figure out what’s ultimately causing customers’ problems. This representative must also have close enough contact with the company to ensure that underlying problems are truly addressed (Womack, 2006).
Getting to the root of customer problems is, in fact, a strategy that’s been used by Fujitsu Services, which provides outsourced customer solutions. By hiring and training the kind of personnel capable of determining the true source of complaints and how to eliminate them, the firm has reportedly been able to dramatically reduce the overall number of complaints. “As the company has progressively applied this problem-solving approach to all of its customers, it has moved beyond its original role as a mediator between vendors and frustrated consumers to become an analyst and optimizer of entire IT response systems,” noted Womack and Daniel T. Jones (2005) in the Harvard Business Review.
Other experts also see the advantages of listening harder and working more intelligently with customers. Russ Westcott of R.T. Westcott & Associates and editor of the Certified Manager of Quality/Organizational Excellence Handbook notes that establishing a formal process for listening to the “voice of the customer” allows a firm to remedy situations before they escalate into complaints and to identify patterns indicating potential problems (Westcott, 2006).
If such approaches are to be embraced, however, management will need to adopt a mindset that treats unhappy customers in much the same way that quality programs treat product defects: as indicators of costly and inefficient work processes. The idea is to view unhappy customers as opportunities for improvement. How organizations parlay such opportunities will ultimately influence customers’ decisions as to whether or not companies deserve their business.
For other research reports from the American Management Association, please click here.
For an article called “The New Power Ratings,” please click here.
For quarterly scores from the American Customer Satisfaction Index, click here.
For a summary of the article “Lean Consumption,” by James Womack and Daniel Jones, click here.
Documents used in the preparation of this TrendWatcher include the following:
Accenture. “Poor Customer Service Is Top Reason Consumers Switch Service Providers, Accenture Survey Finds.” Press release. July 26, 2005.
American Customer Satisfaction Index. “National Quarterly Scores.” Obtained July 24, 2006.
American Management Association and Human Resource Institute. Magnifying Customer Focus: A Study of Current Trends and Future Possibilities 2006-2016. New York: AMA, 2006.
“Customer Loyalty Can Be Lost in a ‘Click.’” CRM Today, December 22, 2005.
Prakash, C. “Outsourcing Companies Struggle to Curb Attrition Rates.” News India-Times. ProQuest. December 2, 2005, p. 18.
Strativity Group. 2005 Customer Experience Management Study: No Money, No Love. 2006.
Ward, Paul. “What Builds Customer Loyalty? Take the Long View (Part I).” CRM Today, December 27, 2005.
Ward, Paul. “What Builds Customer Loyalty? Take the Long View (Part II).” CRM Today, January 10, 2006.
Westcott, Russ. “Your Customers Are Talking, but Are You Listening?” Quality Progress, February 2006, pp. 22+.
Womack, James P. “The New Power Ratings.” Fast Company, January 2006.
Womack, James P. and Daniel T. Jones. “Lean Consumption.” Harvard Business Review. EBSCO. March 2005, pp. 58-68.