13 Ways To Calculate The True Cost of Customer Service

Poor customer service is costing your company money.

You’ve probably seen one of those articles with “39 customer service stats you can’t ignore” or something similar. They all share some scary numbers:

• Poor customer service costs billions

• People tell lots of other people about service failures

• Don’t even get me started on social media

Unfortunately, your executives aren't as excited. 

They like the idea of good customer service. They're just reluctant to invest in improving it. Things like creating a customer service vision, implementing a more useful survey, or training employees cost time, money, and resources.

Three things executives don't like spending are time, money, and resources.

So how can you get your executives' attention?

General statistics won't do it. You need to put some real numbers on how customer service is affecting your business.

Here are 13 ways you can calculate the true cost of customer service.

How does customer service affect revenue?

Your executives are much more likely to listen if you can connect customer service to revenue. Try to demonstrate a clear link between investing in better customer service and generating more revenue.

These examples won't apply to every situation, so try to find one that works for yours:

1. Repeat Business. Start by identifying your churn rate (the percent of customers who leave). Use your Voice of Customer Program to estimate how many leave due to poor service. Calculate the lost revenue.

2. Average Order Value (AOV). This statistic works great in environments like retail where service has a direct impact on sales. Determine the average value of a single order. Identify specific ways that improved service could increase that number. Calculate the additional revenue you could gain.

3. Sales Per Hour. I like this metric even better than AOV for situations where hourly employees are generating sales. You pay employees by the hour, so why not calculate how much revenue they generate per hour? Determine the current rate, identify factors that will improve it, and calculate the potential revenue gain.

4. Lifetime Value. A customer who spends an average of $50 may not be impressive. But, what if they spent $50 every week and could reasonably be expected to remain a customer for ten years? That customer is suddenly worth $26,000 to your business ($50 x 52 weeks x 10 years = $26,000). Calculate the average lifetime value for your customers and you'll see exactly how important they are.

5. Returns. Customer service can prevent products from being returned due to customer error. Better customer education can lead to better customer satisfaction with your product. Estimate the percentage of your returns that could have been prevented. Multiple this percentage by the dollar value of your annual returns. This calculation, known as preventable returns, represents the potential saved revenue due to improved service.

6. Lost Sales. Poor customer service can cost you sales in a number of ways. Rude employees and long lines might cause customers to abandon a planned purchases. A phantom stockout (where the item is in stock, but can't be found) can also cause customers to leave empty-handed. Calculate the revenue lost to these problems and you might have a case for investing in service.

What does it cost to service customers?

It stands to reason that better service will reduce costs. The trick is showing your executives exactly how this happens in your business.

Here are a few examples. Try to see if any are relevant to your business.

7. Service Discounts. Companies often give customers freebies or discounts to compensate for poor service. For example, a restaurant might offer a free dessert when a meal is poorly cooked. Calculate the cost of these discounts and estimate the potential savings you could achieve by reducing the problems that cause them.

8. Employee Attrition. Customer service employees don't like to play for a losing team. Turnover often improves when employees feel they are empowered to help their customers. Calculate the cost of turnover (including recruitment, training, and lost productivity costs). Estimate the savings you could achieve from reducing turnover by a reasonable amount. You can use this worksheet or this guide to help you.

You'll need to know your labor cost per contact for the next few examples.

This is your employees' fully loaded salaries (including taxes and benefits) divided by their average contacts per hour. For example, if you pay a customer service agent $15 per hour (including taxes and benefits) and they handle an average of 10 calls per hour, then your cost per contact is $1.50.

9. Contact Reduction. Identify the top reasons why customers contact you. Determine whether there's a problem you can solve that would prevent customers from needing help. Estimate the number of contacts that could be reduced by solving that problem and calculate the potential savings by multiplying the number of contacts saved by your cost per contact.

10. First Contact Resolution (FCR). Determine the percentage of issues that are resolved on the first contact. (Here's a handy guide from Oracle.) Improving FCR means reducing wasteful contacts. Set a target for FCR improvement and use your cost per contact to calculate the projected savings.

11. Escalation Rate. Complex contacts often get escalated from a less expensive source to a more expensive source. For example, escalating an issue from chat to phone costs extra money. Start by identifying the number of escalations for a specific time period (week, month, quarter, etc.). Next, multiply this figure times your cost per contact for the more expensive channel. Finally, estimate the potential savings you could achieve from reducing escalations by a reasonable amount.

How does customer service affect word-of-mouth marketing?

You can acquire more new customers through better customer service. Happy customers will tell friends and family members about your business. This is known as word-of-mouth marketing.

See if either of these examples will work for your business.

12. Referrals. Track the number of new customers you gain via referrals from existing customers. (You can also use a Net Promoter Score survey to gauge your customers' likelihood to refer.) Calculate the value of these new customers using Average Lifetime Value or a similar statistic. Estimate the revenue gain from improving your referral rate.

13. Online Rating. Your business's ratings on online review sites like Yelp and Trip Advisor directly correlate to new customers. One study estimated that a one-star increase in a restaurant's Yelp rating leads to increased revenue of 5 to 9 percent. You can put together a business case for improvement by making some reasonable assumptions about the value of enhancing your company's online reputation.

Resources for reducing customer service costs

I realized I've covered these metrics at a very high level. You might be looking for some additional guidance. Here are a few resources to help you out:

• Listen to the legendary Jeanne Bliss share a fantastic approach.

• Check out this case study on sharing KPIs with executives.

• You may also contact me directly with your questions about performing these calculations.

Finally, this post is part of an on-going series about the connection between operational excellence and customer service. You can read the other posts here.

What To Do When Your Service Hits the Fan

The 36-room hotel faced a perfect storm of problems.

It was normally a stopover for cross country travelers, but a winter storm had shut down the interstate. Many people altered their plans and decided to wait out the storm at the hotel.

The little hotel was suddenly sold out.

To make matters worse, the hotel's reservation system went down. This meant the front desk agent didn't know which rooms were vacant and which were not.

She felt completely stuck when she checked some guests into a room that was already occupied and it looked like every other room in the hotel was reserved.

She couldn't send these guests back out in the storm, but she didn't think she could accommodate them. Meanwhile, there was a growing line of restless and weary guests waiting to check-in.

Almost any business faces a moment like this when operations go haywire and cause big customer service headaches. It's crucial that you know what to do in these situations.

Step 1: Get a Grip On What's Important

Imagine you're the front desk agent at this hotel.

You're trying to accommodate an angry couple you inadvertently checked-in to an occupied room. There's a growing line of restless guests behind them waiting for service. The phone's ringing off the hook. 

What is the most important thing for you to do in that moment?

The front desk agent's number one task should have been to do a room check. She needed to get an accurate list of which rooms were occupied and which were not.

Here's why:

• She needed to find a vacant room for her guests.

• She risked checking more people into occupied rooms without that list.

• She need to know whether the hotel was truly sold out or had vacant rooms.

It's imperative that you get a grip on the most important thing when service hits the fan. It doesn't do any good to panic and spin your wheels.

Here are a few more examples:

In a retail store with a huge line, the most important thing might be taking a moment to organize a line so people aren't crowding the registers. You can even use a few secret tricks to make the line feel shorter.

A contact center facing a huge spike in contacts due to a service outage might update it's hold message, automated email responses, website, and social media accounts to advise customers about the delay. This will give customers information they need and possibly prevent a lot of phone calls.

I was once dining at a restaurant when the power went out. The most important thing at that moment was safety. The staff cleverly deployed extra candles throughout the restaurant and made sure all of the walkways were clear. Servers escorted guests to the restrooms and supplied them with flashlights.

Lines get long. Emergencies happen. You need to get a grip or it will get worse.

Step 2: Conduct An After-Action Review

It's amazing how many companies deal with the same issues over and over again, but don't learn from them.

This wasn't the first time that bad weather had shut down the interstate and unexpectedly filled up the hotel. It would likely happen again.

So, what could the hotel learn from this experience so they could be better prepared the next time?

For example, they needed a procedure for manually keeping track of rooms when their reservation system went down. (This isn't difficult in a 36-room hotel.) The employee could have remained cool, calm, and collected if she had a good handle on the operations.

Think about other situations where a problem is likely to happen again.

A contact center might get a huge spike in calls when marketing launches a new promotion without telling anyone. It's annoying to the contact center manager that nobody in marketing bothered to give her a heads-up. But, it's foolish to expect anything different the next time around unless the contact center manager has a better plan.

Here's how you should conduct your after-action-review.

1. Define the problem. (Ex: checking guests into occupied rooms)

2. Identify the root cause of the problem.

3. Determine what you can do to fix it.

Step 3: Be Proactive

You can save a lot of grief by being proactive at the first sign of trouble.

The challenge is recognizing that first sign. At the hotel, it wasn't the computer system going down, the sudden flood of reservations, or the road closures.

It was the weather forecast. 

They knew about the potential storm days in advance. They should have started making preparations for the possibility that they'd suddenly sell out, lose power, or worse. This might include proactively confirming reservations, testing emergency procedures, and scheduling extra staff.

Think about things that you can do to be proactive.

1. Identify a signal that trouble may lie ahead.

2. Create a procedure to handle it.

3. Test the procedure to make sure it works.

Assessing The Cost

That storm cost the hotel more than a few angry guests. The beauty of tying customer service to operations is you can attach real dollars to the situation. 

Here were some real impacts that could be measured:

• Service Discounts. Many rooms had to be discounted due to customer service issues.

• Lost Revenue. The hotel may have had vacant rooms that could have been sold to guests.

• Repeat Business. The hotel risked losing repeat guests due to the service failures.

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One Thing Great Customer Service Managers Do Differently

Great customer service managers always seem cool, calm, and collected.

This flies in the face of reason. The typical manager spends most of their day putting out fires or running to the next meeting. There never seems to be enough time to get everything done. 

How can these elite managers remain calm? Where do they find the time to coach, train, and develop their employees?

Great managers do at least one thing very differently than everyone else.

Meet The Ever-Present Teddy

My wife, Sally, and I traveled in December to spend Christmas with family. We stopped for a night at a resort on our way back home.

That's where we met Teddy. He was a supervisor who seemed to be everywhere we went.

We first met Teddy when we arrived at our room. He and another associate had just dropped off some fruit as a welcome amenity. Teddy and his colleague took a moment to help bring our bags in and give us a brief orientation.

We later saw Teddy at dinner. Our server noticed that we enjoyed wine. She mentioned that Teddy was helping her learn more about wine too. Teddy was working in the restaurant, so he stopped by our table to chat about wine for a moment.

The next morning, we saw Teddy in the restaurant again at breakfast. He spotted us and came over to our table to say hello. We talked for a moment before he went off to show a server how to set up a table for a large group.

Every time we saw Teddy, he was doing one thing that great customer service leaders do differently. Did you spot it?

He was constantly training and coaching employees. 

Teddy showed an associate how to deliver an amenity to a room so the associate could do it himself. He helped a server learn about wine so she could serve her guests more confidently. He helped another server set up for a large party so she knew what to do the next time.

Teddy never did the work for them. He also didn't leave them to struggle by themselves. He did the task with them side-by-side so he could show them the right way to do things through hands-on instruction.

Show, Don't Take

Managers often make the mistake of doing their employees' work for them.

They take on a problem and fix it because they know how. It's an instinctive move that feels faster when the manager is pressed for time.

This causes two issues. 

First, the employee doesn't learn how to solve the problem or complete the task. This leads to the second problem - the manager has all but guaranteed that they're going to have to deal with the same issue again.

I call this the manager's paradox. You can either spend time you don't have developing your employees now, or spend twice as much time fixing problems later.

Managers like Teddy don't do their employees' work for them. They'll often do employees' work with them, but this is different. It's part of an ongoing process to delegate, empower, train, observe, and coach employee performance. 

It's hard work, but the reward is a motivated and capable team of employees.

Resources

There's a certain bravery involved when your plate is full, but you take a moment to develop yourself and your team. It causes short-term pain, but long-term gain.

I've compiled a list of 51 terrific resources - books, websites, blogs, and other tools.

The One Thing You Gotta Fix Before You Fix Service

The new year is a time to start new initiatives.

Perhaps improving customer service is on your radar. Maybe there have been a few complaints. You might think your team is good now but they could be better. Or, it could be that your boss added "improve customer service" to your objectives.

I want to save you some time and a lot of headaches. There's one thing you must do before you work on improving customer service.

You need to improve operations. Read on to see what I mean.

How Operations Impacts Service

Customer service expert John Goodman examined the source of service failures in his book, Strategic Customer Service. Here are his statistics:

• 20 - 30 percent are caused by the employee

• 20 - 30 percent are a result of customer errors

• 60 percent are caused by poor products, processes, and marketing messages

That last part is all operations.

Let's say you traveled over the holidays and rented a car. You arrive at the car rental counter after a long flight and are told that the car you rented isn't available.

Your experience suddenly turns sour. You might even be unhappy with the rental clerk's lack of helpfulness or empathy. But, it all started with your rental car not being there. If it was, the whole situation would have been avoided.

Cable companies are universally derided for their service quality, but most of their problems are operations. Technical issues are operational problems. You call for a repair technician and encounter another operational problem - the four hour service appointment window. (These happen because the company can't or won't manage to a tighter window.) When the repair technician still arrives late it's due once again to operations. 

Rude employees are a side effect of these poor operations, not the cause.

Here are just a few more ways that poor operations affect service:

• Employees spend less time engaging customers and more time fixing problems.

• Service failures continuously reoccur when the operational problem isn't fixed.

• Employees lose motivation when the solution is out of their control.

Customer service training won't fix problems caused by poor operations. In fact, my own calculations make employee training responsible for just one percent of service quality.

Why Having Fewer Options Leads to Better Service

Sheena Iyenger and Mark Lepper set up an experiment in 2000. They wanted to see how adding more choices affected consumer behavior.

Their experiment was conducted in an upscale grocery store called Draeger's Supermarket in Menlo Park, California. The store was known for having a large assortment of products such as 250 varieties of mustard.

Iyenger and Lepper experimented with an in-store sampling booth with two variations. One variation offered 6 different varieties of jam. The other offered 24.

The display with 24 varieties of jam attracted more customers with 60 percent of passers-by stopping at the display compared to only 40 percent of people stopping at the display with just 6 varieties.

Surprisingly, people who encountered the display with just 6 varieties of jam were five times more likely to make a purchase than people who encountered 24 varieties.

It turns out that offering fewer choices can be good for business. Here's how. 

Fewer Options = More Sales

A recent furniture shopping trip revealed how easy or complex a buying decision can be. 

My wife and I found two furniture stores that offered sofas we liked. One was Living Spaces. They really did service the right way and we ended up buying a sofa and a love seat from them. (A recent blog post described other ways that Living Spaces does service right.)

One of the biggest differentiators between the two stores was the number of options available.

Living Spaces had a much larger selection of sofas. However, their helpful salesperson narrowed it down to just a few choices once we described what we were looking for. Each choice had a simple one-page sales sheet that visually depicted the various size and configuration options. Making a choice was easy.

The other furniture store overwhelmed us with choices. One sofa that looked promising had a complex code book full of possible configurations. Even the salesperson struggled to decipher it all. There were six different options for the arms alone. It was too much.

Like the jam experiment, limiting options helps Living Spaces sell more.

Fewer Options = Lower Costs

Costco is famous for keeping its costs low and passing on those savings to its members. One of the ways it does this is by offering fewer options than its competitors.

The graph below shows the approximate number of individual items sold at Costo and its two major rivals, Sam's Club and BJ's.

Data Source: iStockAnalyst

Notice that Costco has 24 percent fewer items than Sam's and 46 percent fewer items than BJ's. Having fewer items allows Costco to rely on fewer employees to maintain inventory in it's stores. It also enables the chain to negotiate better deals from its vendors and offer lower prices to its customers.

Fewer choices haven't hurt Costco's service. The chain leads the American Customer Satisfaction Index for specialty retailers with an 84 percent rating.

Fewer Options = Better Operations

Last year, I wrote a post called Why McDonald's Customer Service Sucks in Three Charts. 

One of those charts depicted the proliferation of menu items at the chain. The menu had grown 365 percent since 1980.

Data Source: Fortune

The staggering number of menu items causes a lot of operational problems as employees struggle to keep up with so many options. One study found that 12 percent of McDonald's drive-through orders contained an error.

Compare this to fast food champ In-N-Out. They're consistently rated extremely high in both customer service and food quality. One big difference? The In-N-Out menu contains just six items.

Solutions

One of my favorite customer service books is Uncommon Service. It describes the need for trade-offs. A business can only be really, really good at something if it's willing to be not so good at a few other things.

This book provides a great lesson in simplicity.

If you want to delight your customers, offer great prices, and make your operations run like a well-oiled machine, you need to sacrifice selection. 

Your customers, and your employees, will appreciate it in the long run.

The Magic Phrase That Will Get You Better Service

As customers, we sometimes run into a wall.

That wall is a customer service employee who either can't or won't solve our problem. It's clear they want us to just accept defeat and go away. They try to end the conversation by quoting policy, citing impossibilities, or simply saying "No."

I've discovered a magic phrase that cuts through this obstacle.

At a restaurant, it helped convince a server to remove an improperly prepared entree from the bill. I used it to get a cable company representative to credit my account after a service interruption. The phrase helped me talk a customer service agent into manually delaying an online order so a shipment wouldn't arrive while I was traveling.

Even when this phrase doesn't work, it still helps. More on that in a moment.

Here's the phrase:

Is that something you're empowered to do?

The phrase does two things. First, it requires you to be specific about what you want the employee to do for you.

If you're being tactical about it, you'll make sure your request is reasonable. Asking a restaurant to comp a poorly prepared meal that you can't eat is reasonable. Asking them to comp your dinner companion's meal too may not be.

The second thing this phrase does is it eliminates any confusion about empowerment. As I noted in a blog post earlier this year, one reason employees aren't empowered is they don't stop and think about what they really can and cannot do.

Asking this closed-ended question lets you know where you stand.

If an employee replies, "Yes, I am empowered," then the only reason they would refuse a reasonable request is because they don't want to do it. I've found that most try to help when they suddenly realize they can help.

If the employee replies, "No, I'm not empowered," then you're wasting your time arguing with the employee. In fact, it's a little unfair to continue badgering them about something they have no control over.

This is where the phrase works even when it doesn't. Here's a recent example:

I had purchased a couple of wine refrigerators. After completing the sale over the phone, I received an email from the sales rep asking me to sign a lengthy terms and conditions sheet. Many of the terms and conditions were contrary to the terms she had described to me when she booked the sale.

It felt like a classic bait and switch. For example, the sale rep told me the cost of shipping was included in the price of the refrigerators. The terms and conditions sheet clearly stated that shipping was not included.

I emailed and asked her to change the written terms and conditions. She replied and told me they couldn't be changed. So, I called the company and spoke to her manager. He told me the same thing -- the written terms of sale couldn't be changed.

That's when I asked him my magic question. "I'd like to purchase these refrigerators, but only if the written terms match what your sales rep quoted me over the phone. Is that something you're empowered to do?"

The sales manager told me no, he was not empowered to do that.

Further discussion was now pointless. The magic phrase had saved me the continued aggravation of getting stonewalled by a sales manager who couldn't help me. Instead of arguing, I politely ended the call and then called another company that sold the same products. 

This time, I encountered a sales rep who was able to sell me the same refrigerators under favorable terms for a lower price. 

Inside Perspective: Interview With FCR's Jeremy Watkin

A few weeks ago, I published this post highlighting ways that the size of a company or individual team could impact service quality. The surprising conclusion was that small and large companies generally fared equally well, while mid-sized companies struggled the most.

Jeremy Watkin, Head of Quality at FCR, was kind enough to give me some insight into how his company tries to maintain a boutique feel even as it continues to grow. FCR is a leading contact center outsourcer with 1,400 employees spread over six contact centers in Oregon. One of the more interesting things that FCR does is limit the size of its contact centers to approximately 300 employees. 

Last Thursday, Watkin joined me for a Google Hangout interview so we could go a little more in-depth into some of FCR's best practices.

Highlights

Here are a few highlights from the interview.

Team Within a Team

FCR creates teams of employees (called colleagues) to serve individual clients. This helps maintain a small-team feel even as the organization itself continues to grow. The biggest challenge here is keeping a low supervisor to colleague ratio. FCR generally strives for 1 supervisor to 15 colleagues, but their rapid growth can sometimes inflate that ratio to 1 to 20 or higher.

Growing Pains

Data from customer service software provider Zendesk shows that mid-sized companies generally provide poorer service than small or larger organizations. There isn't clear data to explain why, but Watkin offered a good theory. He suggested that mid-sized organizations are generally small companies that have grown past the point where they can manage things informally, but they don't yet have the standardized systems and processes that large companies have in place.

Employee Motivation

Watkin mentioned that 62 percent of FCR's workforce is comprised of Millenials. This makes it important for FCR to respond to the unique challenges of motivating their colleagues. Watkin said they frequently draw from the principles outlined in Daniel Pink's book, Drive. (He also wrote a great post on this topic for FCR's blog.)

The interview lasts just under 30 minutes. It's interesting to gain Watkin's first-hand perspective on keeping things small, even as an organization grows.

Who You Are Is How You Serve

Two recent customer service experiences stood out for opposite reasons. One was good while the other was poor. They both reminded me that we put a bit of ourselves into every service interaction.

Let's start with the bad one. 

The Bad One

Take a look at the picture below. The car on the left is parked well over the line. The car on the right is mine. I can't get in because the car on the left is too close to my door.

Photo credit: Jeff Toister

I was parked outside a coffee shop. I went back in and started asking customers if they owned the car that was blocking me in. It felt awkward interrupting people's conversations, but they were all gracious and kind. 

Several customers expressed empathy. They'd been there too and knew how it felt. Unfortunately, none of them owned the vehicle.

I went back out to the car. There were other stores around, so perhaps someone was running a quick errand and would be right back out. No luck. 

But, I did spot a few clues. There was a lot of paraphernalia in the other car that indicated this person worked in the coffee shop.

I went back in and asked a barista if one of the employees owned the vehicle. She asked around. Yes, one of the employees did. 

We walked out to the parking lot so she could move her car. When we got to the car she said, "Sorry, I was in a hurry." It was an insincere apology and an excuse wrapped into one.

Could this person really go back to work and deliver outstanding customer service? It's hard to imagine someone so inconsiderate would suddenly become gracious, attentive, and helpful when she punched the clock.

The Good One

Here's a confession. Every Fall, I spend a lot of Saturdays in a bar.

My wife, Sally, graduated from Texas A&M. She helps organize a weekly college football watch party for Texas A&M alumni (called former students) in San Diego. It's a great way to meet new people, reconnect with old friends, and have some fun while watching the game.

Our watch parties are held at McCarter's Bar & Grill. We've had the same server for every game this year, Savannah. She gets a lot of help from her co-workers, but she's the primary person who looks after our group. 

It's hard work. Savannah is a whirlwind of activity taking drink orders, food orders, refilling water glasses, clearing dishes, etc. She's always smiling and never loses her cool. 

I still can't figure out how she keeps track of everyone's tab when we're all grouped together and constantly mingling. 

Someone in the club bought Savannah a Texas A&M t-shirt. She wears it on game days to show her support. It makes her look like she's part of the team since many of us are wearing the same shirt.

The games typically last four hours, so we've gotten to know Savannah a little. The genuine, friendly person who takes care of our group is who Savannah really is. She's authentic.

And, I must add, McCarter's is lucky. Savannah happily does the work of three people. 

Who Are You?

A lot of customer service is fake. 

Interactions are scripted. The are rules that govern the types of emotions we express, even when we aren't really feeling them. We're expected to fight our natural instincts and graciously serve that offensive, unreasonable customer because they are a customer.

Behind that facade is something real. We put a bit of ourselves into every encounter. Hopefully, we're like Savannah. Or, we can earnestly aspire to be that type of person.

There's probably a reason I don't know or don't remember the name of the barista who blocked my car door. Definitely don't be like her.

New Research Reveals Why Customers Hate Call Centers

Nobody likes calling customer service.

The list of gripes is a mile long: confusing phone menus, intolerable hold times, and a lack of agent empowerment all annoy us.

New research from Mattersight reveals a few specific reasons why customers are dissatisfied. What's surprising is it's not a poor product, service, or policy that's at the heart of the problem. It turns out the heart itself is feeling ignored.

Finding #1: Customers don't want to call

It's easy to get confused by channel preference data.

Microsoft's 2015 U.S. State of Multichannel Customer Service report revealed that the phone is still the most popular channel. Their survey shows that 81 percent of customers use the telephone to contact customer service on a regular basis.

At first glance, it seems like customers actually do want to call you. Otherwise, another channel would be more popular, right? Here's where Mattersight's data provides some additional perspective: 

Only 28% of customers call customer service as their first attempt to solve a problem.

This means that most customers who call start somewhere else. Microsoft's study found that 57 percent of customers start online, but customers might also try another channel like email, chat, or social media. They end up calling when they can't solve their problem on the first try.

Smart companies work to prevent calls by providing better service through other channels, particularly self-service. This keeps their customers happy and allows them to serve customers more efficiently.

Finding #2: Customers are already upset

Calling customer service can feel like navigating an obstacle course. Think about all a customer has to go through just to get someone on the phone:

1. They experienced a problem.

2. They couldn't resolve it without calling.

3. They had to navigate through an annoying IVR system.

4. They had to wait on hold.

Mattersight's study revealed this is a major problem:

66% of customers are frustrated before they even start talking with a customer service representative.

This frustration makes the customer service agent's job a lot harder in several ways:

• People instinctively want to argue with or flee from an angry customer.

• A customer's negative emotions can be contagious.

• Angry customers are more judgmental and less open to ideas. 

Smart companies realize the best strategy for working with upset customers is to have fewer upset customers. They work on identifying and fixing root causes rather than deploying their customer service agents as human punching bags.

Finding #3: Customers aren't happy after the call

Call center agents routinely overlook their customers' emotional needs. Here's another stat from Mattersight that sums it up:

75% of customers have felt frustrated after talking with a customer service representative, even if their problem was solved.

Serving emotional needs is the real secret sauce in customer service. Unfortunately, we tend to focus so much on solving the problem that we miss out on helping the customer feel better.

A 2011 study from Bain highlights a terrific example. They looked at Net Promoter Scores for airline passengers who experienced a flight delay or cancellation. The data revealed that the way the issue was handled had a much heavier influence on their rating than the event itself.

Solutions

All of these findings revolve around attending to your customers' emotional needs. Here's a short video that gives you a glimpse into that way that tending to emotional needs can make a difference.

Manage upset customers like a pro from Working with Upset Customers by Jeff Toister

So, what can you do to make calling your company a better experience for your customers? Here are three suggestions:

First, give customers fewer reasons to call. Relentlessly search for icebergs and fix those problems. Improve the quality of your self-service options so customers can solve issues on their own.

Second, make it easier for customers to call. Remove or reduce barriers like clunky phone menus and long hold times. Consider adding a callback feature like Fonolo if you routinely have large spikes in call volume.

Third, train your agents to serve their customers' emotional needs. You can use the Working With Upset Customers training video on lynda.com. You'll need a lynda.com subscription to view the entire course, but you can pick up a 10-day trial here.

On Thanksgiving, Give Thanks to These Unsung Service Heroes

While most Americans are enjoying Thanksgiving dinner, retail employees in stores across the country will be hard at work. That's because a long list of retail stores will be open on Thanksgiving.

Those hardworking employees deserve our thanks. In many cases, they have no choice but to work the holiday. 

There are other customer service employees who deserve our thanks too. They're the unsung heroes of Thanksgiving (and other holidays). Here are just a few we should give thanks to:

Thank you to the airline employees, airport workers, and security personnel who make Thanksgiving travel possible. Likewise, much appreciation is due to gas station attendants, convenience store employees, fast food workers, and coffee shop baristas who allow millions of Americans to take a road trip to see their families.

Thank you to the hotel associates who make our families feel at home when there's not enough room in our actual home. 

Thank you to the chefs, servers, bussers, and other restaurant employees who feed so many people who'd rather not prepare a big feast or know they'll never do it quite as good as their favorite restaurant.

Thank you to the homeless shelter employees, social workers, and volunteers who help feed less fortunate families on Thanksgiving.

Thank you to the movie theater employees who give us all an outlet when we still want to spend time with family, but also want to get out of the house.

Thank you to the football players, officials, team employees, television employees, and stadium workers who all make it possible for us to watch football while we relax in the living room. Football may just be the one thing we actually have in common with some of our family members.

Thank you to the EMTs, hospital employees, police officers, and other emergency workers who come to our aid when we overdo it on turkey or get into an accident because the roads are so crowded.

Thank you to all of the people I forgot to mention for not getting too upset that I forgot them. You know I didn't mean it. I appreciate you too.

So many people will be working this Thanksgiving. If you should require their service, I hope you will treat them with kindness and respect. Thank them for all that they do to make it possible for so many of us to enjoy this day.