I have been fortunate in my career to benefit from a number of remarkable mentors. My first professional job was in a financial services organization working for Dwight Prade. It was Dwight who bestowed upon me the title “Customer Relationship Manager.” This was long before the era of CRM systems. Because switching providers in our industry was relatively easy, Dwight emphasized the importance of keeping and growing the value of customers. He was the first to expose me to the fundamental concepts and measures of customer satisfaction, customer lifetime value, customer loyalty and advocacy, share of wallet and product adoption rate. Dwight was adamant about customer service quality and experience, long before these were the buzzwords of today. He understood the power of customer referrals. A primary value he expected all of his team to follow was that every problem or request from a customer was worthy of our attention and resolution.
A few companies later I joined the Motorola Semiconductor business. Gary Daniels was a mentor to me through most of my 14-year tenure. I know I’ve shared various Gary Daniels’ stories with many of you, including the one about phone messages. Some of you may remember the days before voicemail. Gary could not tolerate a ringing phone. If someone wasn’t at their desk and you heard a ringing phone you were expected to answer it. In those days, we had notepads for taking phone messages. Being in Sales and Marketing, it was common to find a hefty pile of phone message slips waiting for you. Gary’s rule was “return all phone messages by the end of the business day.” Gary used to say, “it is a small world, today the person who is a supplier may be your customer tomorrow, the customer today may be your boss tomorrow.” He was very reluctant to install voicemail. He did so with the conditions that your phone could never go to voicemail if you were at your desk, and that the rule of returning calls by the end of the business day still applied. How many of us violate this “rule” today and are lax about returning phone calls?
Both Dwight and Gary were what may be deemed today as fanatics about customer service quality and experience. Both believed that you only have one chance to make a first impression and that every touch was a moment of truth. Both believed that customer retention was critical to long-term success. Recent customer retention research conducted by Ascarza, Neslin, Netzer, Anderson, Fader, Gupta, Hardie, Lemmens, Libai, Neal, Provost, and Schrift revealed that “85% of customers report that companies could do more to retain them. While a majority of top executives report that customer retention is a priority within their organization, 49% admit to being unhappy with their ability to support their retention goals.”
This study examined whether companies should use RISK (determined by scoring models that rank customers based on their likelihood to defect) or LIFT (whom the impact of the intervention is highest, regardless of their intrinsic propensity to churn) to determine which customers to target in order to reduce churn and improve retention. They found that Lift is more effective.
Here’s the rub: churn might be less of an issue and customer experience might be better if companies were fanatical about service quality. A key example is just being able to reach a person or have a problem quickly resolved. With the advent of automated voice response many companies have forgotten the power of the human touch. In some companies, I never reach a real person unless I select the sales or billing option. More and more companies are encouraging you to use their website for support rather than talking with a person. My long-time associate Richard Hatheway lamented over several poor customer service experiences in his recent LinkedIn article, Customer Service Isn’t.
It seems the more we focus and complicate a process, the worse it becomes. And I fear this is playing out in regards to customer experience. Gary and Dwight instinctively knew what Valerie Zeithaml, A. Parasuraman and Leonard Berry learned in their research on what customers use when evaluating service quality. They shared the results in their book, Delivering Quality Service, first published in 1990. Zeithaml, Parasuraman and Berry identified five dimensions valued by customers from what they referred to as their SERVQUAL research:
- TANGIBLES: Appearance of physical facilities, equipment, personnel, and communication materials
- RELIABILITY: Ability to perform the promised service dependably and accurately
- RESPONSIVENESS: Willingness to help customers and provide prompt service
- ASSURANCE: Knowledge and courtesy of employees and their ability to convey trust and confidence
- EMPATHY: Caring, individualized attention the firm provides its customers
The SERVQUAL research showed the dimensions’ importance to each other by asking customers to assign 100 points across all five dimensions. The two most important dimensions are reliability and responsiveness accounting for over 50% of how customers evaluate service quality.
As organizations increase the use of artificial intelligence (computer systems performing tasks that normally require human intelligence), machine learning (giving machines access to data and let them learn for themselves) and/or self-service to support customer service, we should remember that while computers and machines can work 24/7 and don’t require time off or benefits, one of Gary’s adages still rings true: “people do business with people.” The time when companies who have quality people providing quality experiences will have a competitive advantage may not be far off.
While it is worthwhile to map the customer experience, conduct voice of customer research, and establish customer advisory boards, it is important to master the basics of customer service. Reliability, responsiveness and empathy will go a long way toward keeping and growing the value of your customers.
Are you ready to have an organization full of service fanatics?