If Customer Experience is so Important, how come it's done so badly?

If Customer Experience is so Important, How Come it is Done so Badly? Service Strategy in a Sales and Cost Conscious World

This article advocates a pragmatic but thorough review of service strategy, balancing a clear focus on what really matters to the customer with necessary sales targets, cost and benefits management.

Increasingly, customers appear to be tuned in to customer experience, and poor service 'naming and shaming' should have brought about a powerful effect on organizations that wish to protect their reputations and service standards. The UK Institute of Customer Service (ICS) has raised the stakes through its recent introduction of their Customer Satisfaction Index: Consumers in UK and Ireland are encouraged to rate their satisfaction with the service they receive from banks, retailers, hotels, utilities and a range of other organizations.

The Index enables consumers to see what sectors give the best service and who the top organisations are in each sector, while organisations can benchmark their performance against the best in the country. Based on US experience, Robert Crawford, ICS director, says the Index keeps organizations on their toes, and customers in touch. But does this pressure to improve service work in practice?

Most organizations say customer satisfaction is an important issue - that's the accepted wisdom, which few would dare to challenge in public. Customer charters, targets and service standards are commonplace and customer expectations have increased. But the jury is still out on the degree of improvement in levels of customer experience-companies are very mindful that service provision is an expensive business and, in addition, for many companies the drive is to achieve sales targets. Employees may be given titles such as 'customer experience agents' but they are often measured on how many sales opportunities they convert or referrals that they generate. Sales take priority over service-look at any advertisement for new recruits to customer experience positions for high street financial service organizations, for example, and the emphasis is skewed towards sales. It appears that, in practice, many businesses have lost sight of the fact that excellent service drives sales.

Service as a source of competitive advantage

There is light at the end of the tunnel: best practice organizations do recognise that the provision of better customer experience experience is a source of competitive advantage. To achieve this, consistent service delivery is carefully managed, based on a few relevant target areas. It means that apparently easy budget cuts do not prune back service. It also means that organizations recognise that the value of customers grows the longer they remain with you. Many credit card customers, for example, need to stay with the organization for over five years before they become profitable. Customers are more likely to remain loyal if the quality of service they receive is high.

Of course, improving levels of customer experience is not an easy fix: it is now all too clear for managers introducing service improvements that customer experience is far more than smiles and being courteous.

Customer experience depends on weaving together a complex web of such factors as the effect of the organization's history, its culture and structure, the leadership style which has developed and how it translate into recruitment practices, development and coaching styles, measurement systems and targets. The systems, procedures and processes that have evolved can strangle or encourage service, for example through the rewards it develops and its management of information flows.

Twenty years ago, British Airways set a service benchmark when it vastly improved its image and service through an high profile campaign Putting People First, going to endless trouble to satisfy the customer and, importantly, seeing service as internal as well as external with everyone working together to serve the customer. But then gradually recognition of the cost of this provision started to build up and the budget airlines took huge chunks of customer and market share from 'full service' airlines.

High-profile organizations have chosen to put sales revenue and cost savings above service, with apparent impunity. Budget airline Ryanair's apparent disdain for customer experience is balanced by the popularity of its 'no frills' approach, its chief executive Michael O' Leary lashing out at money-draining service at airports which it criticises as 'Taj Mahals' of opulent wastefulness. Car supermarkets offer bargain basement prices, and hardly a salesperson to answer questions in sight- yet customers still come back for more.  We live in a world of dual standards. Most banks behave in a high-handed manner to their customers, bolstered by the lack of competition. Many NHS hospitals find it almost impossible to operate procedures which treat their customers, the patient, with dignity.

It remains widely accepted and tolerated that many organizations do not give consistently good service and large organizations in particular are often frustrating for the customer to deal with. Yet they remain profitable and prosperous. However, the power of the customer should not be under-estimated. The rise in use of the internet and in particular social networking sites had led to a more informed and selective consumer. They are more likely to pay attention to their peer group's views about products and services than to pay attention to a company's promotional material or advertising. For example, when booking a hotel or resort many customers now consult the website TripAdvisor to reference fellow customers'comments and scores before making a choice of hotel. Customer experience is a key differentiator and arbiter of competitive advantage.

Managing in a customer-focused way is a challenge too far for many: it may mean knocking down a well-established edifice of strategy, processes and structures, with many organizations assuming they know what the customer wants, and never testing this out. Lowly customer experience employees may feel disempowered and disgruntled and, despite the rest of the organization being in apparently good shape, can let the company's image down.

Tom Peters grew to prominence proclaiming the message that organizations need to be turned upside down to serve the customer, the familiar organization pyramid should be reversed, with attention and status given to front-line customer contact employees. But turning an organization upside down is more than many managers will undertake, particularly as service delivery channels have become more complicated- the internet has added an extra layer of complexity, outsourcing contact centres and logistics has made control more difficult.

Set priorities and follow through

We advocate a rigorous and realistic approach to service provision. Instead of a blanket 'We do everything possible to satisfy our customers', companies should target key areas and implement them in an exemplary manner. According to ICS research, the factors that matter most to customers can be grouped into five attributes:

• professionalism,
• problem solving,
• timeliness,
• quality/efficiency
• ease of doing business.

Each organization needs to determine what really matters to its customers and how the organization can best uniquely meet their priorities. For a number of years, Cranfield has run a workshop Service Performance: Strategies for Success. This allows participants' organizations to be able to develop a coherent approach to analysing specific aspects of their company's performance to achieve operational improvement. They benefit from rubbing shoulders with other managers who face similar service issues and are prepared to challenge an organization's sacred cows. For true customer experience:

Clarify your service offering, explicitly and in detail. Review how much real top management commitment there is to service quality.

Be clear about the image that your service communicates to customers and prospective customers, and how it satisfies customer expectations.

Look again at operations from the customer viewpoint. Review standards, systems and procedures for 'drift'. Study how customer expectations and perceptions are managed during and after the service.

Create 'Listening Posts'

We advocate using regular 'listening posts' to continually listen to customers' views and opinions and to find out what is really important to them. These can take the form of qualitative measures such as customer focus groups and one to one interviews and quantitative measures such as questionnaires, comment cards and on-line surveys. These allow managers to:

• listen to its customers
• establish their priorities in the customers' terms
• recognise gaps in service delivery
• pick up signals of customer defection and acts upon them
• monitor progress
• encourage fresh approaches
• makes continuous improvement part of everyday business
• promote ways for customers to remain loyal, stay with the organization and do so profitably for the business

This will only happen if information overload is countered by absolute focus and determination to follow through on the, say, top three things that really matter to the customer- trying to do them all often leads to hopeless overload.

A new book, 'Punching In: The Unauthorised Adventures of a Front-Line Employee' By Alex Frankel, Collins 2007, reveals how important it is to find out what really happens on the customer front-line. By working as a service employee in different well-known companies - Gap, Apple store, UPS, Enterprise Rent-A-Car and Starbucks - the author discovered frontline employees who were:

• Weighed down with detailed manuals they hadn't time to read
• Offered distracting sales incentives and promotion carrots for generating new business
• Checked upon every minute of the day
• Swept along by peer pressure to live corporate values and solve customer problems flexibly.

Technology

Technology has potentially boosted strong service delivery, but only if it is carefully managed. Websites can offer information and answer specific customer queries. Specialist software tracks service levels and identifies deficiencies for management action. Powerful databases monitor individual customers' preferences and buying habits. They should be used to help improve the service provided.  However many organizations use them as a sales tool to target customers with products and services:  financial services organizations for example use this data to spot sales opportunities. The offer of an account 'review' often leads to the organization trying to sell something to the customer. Technology should be used to improve service, thereby increasing customer loyalty-however, much data is used as a sales tool or lies unanalysed and under-used.

Superior Complaint Handling

Mistakes are bound to occur, but increasingly high performers recognize that superior service organizations sort out mistakes rapidly and to the satisfaction of the complainer, rather than denying them or fighting the customer. Research suggests the end product is increased loyalty. Best practice organisations view complaints as a golden opportunity to put things right. They also review how they handle complaints and tackle the root causes to prevent further occurrence.

Use customer testimonials

Handling public relations for service success should be part of a clearly defined strategy. On-line banking organisation, First Direct is a good example of this; it uses customer testimonials on its websites and in its advertising and promotes the service awards it has received on its website.

In conclusion

As a starting point in improving service, adopt a real-world approach to service strategy and implementation, one which is bound to be constrained by cost limitations and sales targets. But don't let this lead to relentless and insidious cutting of corners: set priorities for service which is based on a razor-sharp focus on customer priorities and expectations, and set up systems to ensure they are put into practice to a high and consistent standard.

Some Critical Questions

• What is the percentage of time and money that you spend on service versus sales training?
• Where do you currently spend most of your service budget? What does this tell you about priorities?
• Has service spend declined in real terms over the years?
• In practice, how does service fit into your business strategy and priorities?
• Have you checked your service brand and performance out against your customer priorities recently?
• When was the last time that you asked your customers what they thought of your service (not just on tick boxes) -and acted on the results?
• How easy do you make it for customers to feed back complements and complaints?
• What service improvements have you made to your business in the past six months?

Steve Macaulay is a Learning Development Executive at Cranfield School of Management and Sarah Cook is Managing Director of strategic customer care and leadership specialists, the Stairway Consultancy. Steve can be contacted on ++44(0)1234 7511222, email s.macaulay@cranfield.ac.uk,  Sarah on ++44(0) 1628 526535 email sarah@thestairway.co.uk

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