CRM doesn't mean “best customer service” for everyone
By Fred Newell
According to a GartnerG2 report, online retailers looking to solidify their business amid difficult economic conditions must deliver convenience to customers above price. The survey reports that 79 percent of online customers value convenience when making a purchase, more than twice as many as the 32 percent of respondents who say lower prices are their main concern.i Erin Kinikin, vice president of the research and advisory firm Giga Information Group, says surveys of ISP businesses show consumers consider good service equivalent to competitive pricing ‹ both the top reasons for subscribing. Kinikin rates strong service at EarthLink as the reason for an attrition rate about half that of EarthLink¹s similarly priced competitors.
We read every day that customer expectations of service are on the rise. Like Moore¹s Law of computing, customer expectations seem to be doubling every eighteen months. And, that¹s not just for online retailers and ISPs. Service is important for every business ‹ but is it everything? Is its importance the same in all industries, for all companies and, more importantly, for all customers?
Customer Expectations
Companies have always believed “best customer service” for everyone is a hallmark of CRM. Unfortunately, trying to serve everyone equally well usually means serving everyone equally poorly- an expensive, inefficient effort. The concept of CRM changes that. Letting the customer manage the relationship means delivering the service level the individual customer wants in the trade-off on price. Some retail chains have been founded on this principle. For example, Wal*Mart knows it¹s not Nordstrom, and offers less expensive items without the consistently outstanding customer service. IKEA says, ³We do our bit. You do yours. It¹s easier to save money when we all lend a hand.² They ask customers to assemble their own furniture and manage their own delivery. IKEA also does not accept special orders and has limited service in their stores. While Wal*Mart and IKEA don¹t customize service levels for individual customers, both are examples of CRM in action - delivering only the service level customers want which, in turn, allows
them to offer lower prices.
No More, No Less
Trying to provide ³best customer service² to everyone is one more reason for CRM failure. Customers look for different levels of service from different businesses. The same customer who is annoyed at having to wait thirty seconds for a sales associate at Saks will wait patiently in the long check out lines at K-mart and Wal*Mart. The contrast in customer expectations is not just different for different companies in the same industry. Customers¹ service expectations vary by industry as well. Customers have learned not to
expect the same level of service from their utility or phone company that they do from their bank or broker. The more personal the business relationship, the higher the expected level of service.
None of this is new. What¹s new is the need to realize that both expectation of and desire for service vary by each individual customer ‹ even within a company. So the fact that customer expectations of service are on the rise does not mean you should try to provide ³best customer service² for every one of your customers ‹ only the level of service each individual customer desires and expects. Providing more leaves you overgiving for no benefit; providing less means you are going to lose a customer.
Allowing the customer to manage the relationship not only deepens the relationship between the customer and the company, but it can also save the company money. This is not a matter of cutting corners to see how little service you can get away with for a customer. Finding the right balance requires the company to create the kind of dialog with individual customers that will teach the firm each customer¹s individual service requirements. When companies get this kind of feedback they are often surprised at how
much money they were wasting in providing services some customers found to be of no value.
A Good Example
Xiameter, an online arm of Michigan-based Dow Corning that sells silicone products directly to industrial buyers, understands this. They instituted a ³no service² approach for some of their best customers who didn¹t really require follow-up customer service and tech support. Michael Lanaham, commercial director of Xiameter, says, ³A lot of customers were saying to us, ŒWe buy a lot of silicone, we know how to use it, and we don¹t need the technical expertise you are known for.¹² For these customers, Xiameter has
set up a less expensive real-time ordering and inventory system that offers no technical support. Sales communications are handled primarily by e-mail, with responses normally given within one business day.iii This is the ideal win-win situation. Customers don¹t have to pay for tech support they don¹t want or need, and the company is able to reduce the size of the service staff to save money.
E-Service And Self Service
An early 2002 Gartner report on e-service sites studies that show 70 percent of corporations believe they have a well-run contact center that provides their customers with good customer service. Yet only 46 percent of their clients report being satisfied with the service. Gartner proposes that world-class e-service requires enterprises to adapt to users needs and requirements, saying, ³Customers are demanding more information, easier and expanded access, and support through newer channels. Through YE2002,
enterprises that properly implement e-service solutions that enable their customers to get better, easier access to information through more channels will increase customer satisfaction by between 5 percent and 10 percent.²iv
A 2002 study of 500 business-to-business marketers, by Performark, Inc., found that 60 percent of the marketers did not respond to customer inquiries within sixty days. The study measured responses to over 1,000 inquiries made via the Web, business response cards, and toll-free telephone calls. Clearly, it will take more than the Internet to improve companies¹ responsiveness. Many companies say that their Web sites serve important marketing purposes, however companies are not using their Web sites as the cost-effective customer relations tools they could be. Moreover, as customer inquiries continue to rise, most contact centers are not making proportional increases in staffing, and in many cases are even being forced to reduce the number of customer service representatives (CSRs). The growth of online customer interaction and the increased performance pressures on conventional call centers will force companies to implement the kind of e-service solutions Gartner proposes. Giving customers better, easier access
to information through more channels is more than just cost effective, it is the start of empowering customers through CRM.
Not all companies understand. In an Insight Interactive survey, 52 percent of companies did not consider automated customer access relevant to their CRM strategy.
I am indebted to Richard Forsyth, CRM-Forum, for this perfect example of bad and good. If you need online support for a Sony Vaio PC you need to register with the Sony Club Vaio Site where you are asked to provide:
An 8-digit product code (pre-completed)
An 8-digit serial number (pre-completed)
A user ID and password
A significant amount of personal data
You are then given a 16-digit customer ID which you are never asked for again but are afraid to lose. Beyond all that, the product codes in the Web site are often different from the ones on your PC or in the marketing literature, making it difficult to buy the right memory for your PC. (This was the case at the time this was written. A later visit to the site showed an update that eliminated some of Forsyth¹s horrors, but the sight was still
difficult to navigate.)
Forsyth contrasts this with a similar service from Dell where you are asked to provide only a 6-digit service tag number or a 9-digit express service code, both printed on the bottom of your PC.
Forsyth gives a banana peel to Sony and a gold star to Dell.
Network provider 3Com saved $16.8 million in 2000 by encouraging its customers to switch from its support center to its Web site, and learned that some customers actually prefer self-service when it is done well.
³When it¹s done well² is the key, yet as few as 30 percent of Web retailers provide personalized recommendations or ³my page² features. Joe Lethert, Performark founder and chairman, says, ³Even companies that are responding to inquiries are not doing a good job. They are saying to their prospects and customers: Œeverything you want is on the Web site. Go find it yourself.¹² Lethert makes the point that customers enter the sales pipeline at different levels of readiness and need to be nurtured differently.viii
According to a study by RightNow Technologies customers are looking for e-service that¹s fast, meaningful, compelling, and customer-driven: Fast. Customers expect to be able to find the right information and content immediately. They have little patience for intro screens or repeated clicks on menus. Meaningful. Customers expect the information they find on the Web will be timely, up-to-date, and relevant to their immediate needs. If it isn¹t, they will develop a bad impression of the company. Compelling. Customers expect content will be presented in a way that¹s interesting, interactive, and focused. These expectations are a result of their other online experiences. Customer-driven. Customers don¹t want to have to wade through marketing-oriented propaganda to find what they¹re looking for. Companies must, therefore, ensure their e-service content is driven by the most frequent customer questions ‹ not by what company staffers think customers might be most interested in. CRM will change the customer-driven objective to demand that e-service content be driven not by the questions the average customer asks most, but by the known interests of the individual customers the company is trying to empower.
One of the problems with companies doing self-service well is that too many of them consider self-service a cost reduction program instead of an advantage for the customer. In a 2002 study from KANA almost half of consumers surveyed said that the most negative aspects of dealing with a company is having to repeat their orders, questions, mailing address, and payment method, due to the company¹s failure to track their interaction history. On the positive side, 45 percent of those polled said that having a
personalized account set up, either in a call center, on the Web, or via e-mail, made their interaction ³more beneficial.²ix The ability to get it right at the point of customer interface is becoming critical as consumers continually raise their standards as the result of experience. Unsatisfied customers are quick to spread the bad word. In a year long study of online customer experience and expectations conducted by the Future Foundation for First Direct confirms this. The study shows that the proportion of respondents that actually warned other people against using Web sites at which they had experienced as having bad service had nearly tripled in one quarter, and they had told more people than previously.x
There are some stars. Federal Express¹ website lets the customer explore services, shipping, and packaging options, as well as opening accounts, tracking and getting proof of delivery ‹ all in a convenient friendly format that allows the customer to control every aspect of a transaction. The company confirms incoming messages and responds to them within five business hours in one of eight languages. Frederick Smith, chairman, president and CEO of FedEx has been finding ways to empower customers since he founded the business. He was the first to provide software to his corporate customers,
empowering them to fill out their own shipping forms and do their own tracking of shipments. The goal at FedEx is 100 percent accuracy, quality, and customer satisfaction on all transactions. Every part of a transaction has some measurable quality to it. The system identifies failures from the customer¹s point of view then looks for ways to correct its mistakes. (The employee-centric culture at FedEx helps assure this customer care. A spokeswoman for the company says, ³If we take care of the needs of our
people, then they¹ll provide the service our customers expect.²)xi
Wendy Close, CRM research director at Gartner, has studied companies that she says are getting cross-channel customer service right. She reports Compaq¹s global e-business applications group bolstering it¹s ³one face to the consumer² strategy by providing its partners with one user profile, allowing one entry point for security and one simple log-in, and consolidating various business groups within the company to present a single image to customers. Close says, ³Compaq projects that these partner and customer management efforts will contribute $100 million to earnings during the next three years.²
Close cites Harrah¹s Entertainment, one the world¹s largest gaming companies, as having done an especially good job of taking the multichannel approach to a new level by Combining a single-view philosophy with loyalty programs and CRM analytics. ³Its emphasis on multichannel contacts,² she says, ³allow it to create a holistic view of its customers.²
Close¹s third winner is Boise Cascade Office Products. ³Not only has Boise Cascade moved to create a consistent customer experience across its Web site, call center and other touch-points² she reports, ³it has involved its customers in the process, exposing customers to its programs during design, implementation and testing.²xii
The fact that customer expectations are on the rise does not mean you should try to provide best customer service for every one of your customers. Alan Crowther, managing officer, Adjoined Technologies, makes our case, ³Most of the focus [today] is on segmenting the level of service based on the value of the customer. Companies are looking to spend more on their better customers and less on lower value customers. As a result, these companies save on the cost of customer service because they are only
delivering a high level of service to the customers who provide most of the profits. Differentiating service based on customer profitability also is an effective way to define which customers are most valuable, which have the most potential for growth, and which might best be politely ushered to a competitor.²xiii
It¹s worth repeating. Companies trying to provide the best customer service to everyone as part of their CRM efforts are one of the reasons why CRM isn¹t working. Even Computers can¹t make everyone feel special. This leaves us with two rules of service for the new CRM:
- Don¹t try to offer the same service benefits to all customers. Learn what individual customers want. Invest in the ones who can be profitable for you.
- Let your profitable and potentially profitable customers manage the relationship on their terms by learning the level of service each individual customer wants and delivering no more and no less.
