I've been fortunate enough to spend the last decade of my career working for several technology companies that provide customer service solutions.
I've also seen my career, and the companies I've worked for, evolve in parallel with the customer service technology market.
In this post, I'll be discussing:
- How the customer service technology market has evolved
- How customer effort affects customer loyalty
- How a service management approach to customer service is a better approach than traditional approaches due to the way it reduces customer effort
I initially worked for companies like Cisco and Avaya that provided contact centre technology solutions. These contact centre vendors emerged to route voice calls to the appropriate customer service agents. They then evolved to provide other channels like email and webchat.
These vendors focused on the interaction itself, including ensuring the right person undertook that interaction.
I then worked for companies like Oracle and Salesforce that provided CRM (Customer Relationship Management) systems.
CRM is a vague term these days. However, the term basically refers to the tool used to present an agent with information about the person they were interacting with.
What I felt was missing was the capability to do the work and solve the problems involved, many of which can be quite complex.
The desire to close this gap brought me to ServiceNow. The ServiceNow approach is based on a system of action, not just a system of engagement.
This is what we call a service management approach to customer service. It's about fixing the complex and automating the simple.
When I thought about why a service management approach to customer service is important, I thought about research into customer effort.
Corporate Executive Board (CEB) undertook a thorough investigation into customer effort and how it affects customer loyalty. The organisation published a book in 2013 called The Effortless Experience that detailed its findings. This book was based on one of the largest studies conducted in this space with 97,000 customer interactions across more than 400 different companies.
The CEB attempted to determine which factors most strongly relate to customer loyalty.
The organisation found that reduced customer effort had the strongest link to customer loyalty. If you want your customers to be loyal, just make it easy for them.
The CEB defined customer loyalty as: repurchase; share of wallet; and advocacy.
The book also looked at the drivers of effort. In other words, if effort affects loyalty, then what are the primary causes of effort.
You can see them listed below in increasing order on the impact of effort for the customer. I would classify the first four as relating to the 'engage' phase of customer service — knowing who the customer is, personalising the interaction and maintaining context across channels.
The last driver and by far the most impactful when it comes to effort, is 'more than one contact to resolve'. This typically occurs when a customer calls a provider about a (typically complex) issue and the provider is unable to complete a fix within a timeframe set with the customer. The customer then has to contact the provider at least one more time to fix the issue. Often the customer will not call back.
From my experience at contact centre and CRM vendors, I have developed a strong view on where the gaps are.
The contact centre vendors focus on getting the work (via an interaction channel) to the appropriate agent. The CRM vendors focus on providing the information around who is calling.
Both these approaches focus on the 'engage' phase of customer service ⎯ connecting the customer, engaging with them on different channels and personalising the interaction.
From the drivers of effort above, we can see why the engage phase of customer service is important.
However, when it comes to reducing customer effort and ultimately increasing customer loyalty, it is more important to reduce repeat contacts for complex issues.
This means diagnosing and fixing those issues first time so the customer doesn't need to contact a business more than once. It also means using an approach that means the next customer does not need to contact the business at all to have the issue resolved.
This is the service management approach to customer service. A business that adopts this approach not only engages with its customers, but focuses on resolving their issues.
As I discussed earlier, reduced customer effort has the strongest relationship to customer loyalty. If you want your customers to be loyal, just make dealing with you easy for them.
A service management approach to customer service is better than traditional approaches because it addresses all the drivers of effort. Not just those related to engagement, but by resolving issues that typically relate to repeat contacts, which is the number one driver of effort.
And why is this important? Because, according to Bain and Company's 2013 article The powerful economics of customer loyalty in Australia, net promoters are, on average, worth 2.6 times more than detractors when looking at lifetime spend[1].
This creates a very compelling business case for the importance of having more promoters than detractors, and the importance of delivering superior customer service.
Customer service has evolved. Businesses now have an opportunity to reduce the effort customers spend interacting with them and build loyalty with consequent improvements in revenue and business opportunities. They can also help more customers become promoters rather than detractors and greatly increase their value to the business. If you would like to know more about customer service management, please contact me at mike.knaggs@servicenow.com
[1] Bradley, Katrina and Hatherall, Richard: The powerful economics of customer loyalty in Australia, Bain and Company, 29 July 2013 http://www.bain.com/offices/australia/en_us/publications/articles/the-powerful-economics-of-customer...
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