How to Benchmark Your Way to Mediocrity

An entrepreneur named Sara recently emailed me to ask about customer service benchmarks. 

She was writing a business plan for a new company and wanted to figure out what sort of Key Performance Indicators (KPI) would be right for her new company's customer service operation. 

Benchmarks are a good place to start. 

You can look at what other organizations generally do for things like customer satisfaction, response times, and first contact resolution. These metrics give you a starting point for developing your own standards.

So, I sent Sara this guide to using customer service benchmarks along with a few examples. I also sent her a word of caution: relying on benchmarks can be a great way to establish very mediocre customer service.

Here's why.

Photo credit:  Sean MacEntee

Photo credit: Sean MacEntee

The Downside of Benchmarks

Benchmarks represent averages.

That's by definition the middle of the pack. Right now, the average customer service rating isn't very good. The American Customer Satisfaction Index is at a low point

Nobody says, "We're hoping for average customer service," but that's exactly what you're doing if you rely on benchmarks to set the bar for your team's performance. Average not a very high bar to shoot for. 

There's another problem with benchmarks. These studies often look at what companies are doing, but there's frequently a gap between what businesses are doing and what customers actually want. 

Email response time is a great example. Research suggests that companies need to respond to customer emails within one hour to meet consumer expectations. However, the benchmark response time for customer service operations is currently four hours.


Alternatives to Benchmarks

There are a few things that companies can do to be above average.

One option is to study consumer preferences. For example, you can read up on the 2016 State of Multichannel Customer Service report. You can provide better service if you focus on delivering what your customers expect rather than worry about what other companies do.

Another idea is to find out what your competitors are doing and then do it better. In Reinventing the Wheel, bicycle store owner Chris Zane described how he would look for opportunities to make his competitors uncomfortable. For example, he decided not to charge customers for any parts that cost less than a dollar. It was a goodwill gesture to customers but it also created an advantage over competitors who nickel and dimed customers for every little part.


When Benchmarks Are Good

Benchmarks aren't all bad. There are times when they can be really helpful. 

I once had a client who was having a hard time attracting talented customer service employees. The problem was the company paid well below market wages. This meant that a strong job applicant could easily earn more money doing the same job somewhere else.

The company's CEO initially balked at the idea of raising the starting wage. He was concerned about increasing costs without getting anything in return.

I used a benchmark to help change his mind.

First, I showed him the salary range for the customer service job. I was careful to highlight where his company's starting wage fell on the bottom of the range and where my proposed increase landed.


This got his attention. Next, I tied wages to business results by asking him what a new employee would need to do to justify a $2 per hour wage increase. 

The CEO did some quick calculations and figured that if a new rep could add a sale to 35 percent of customer inquiry calls, it would pay for the wage increase. The current rate was 33 percent, so this seemed well within reach.

Finally, I proposed an experiment. Let's raise the starting wage by $2 per hour for the next new hire and see what happened. The CEO agreed.

The results were striking. The customer service manager received many more qualified applicants for the open position than ever before. The person she hired ended up being a star! Within 30 days, she was adding a sale to 45 percent of customer inquiries, which more than paid for the $2 hourly increase.

The CEO was very happy. 

The salary benchmark helped me make the case, but I also had to add my own analysis on top of that. You can get similar results if you can apply your own critical thinking to benchmarks.

Zendesk 2015 Q1 Report Reveals Live Chat Insights

A new report from Zendesk reveals new insights into live chat.

Zendesk is a leading provider of customer service software. Their 2015 Q1 Benchmark report analyzed live chat data from 2,261 companies.

This post summarizes a few of Zendesk’s more interesting findings. For example, live chat delivers the highest customer satisfaction rating among contact center channels with a 92 percent average. 

You can download the full report here.

Faster Problem Resolution

Implementing chat in a contact center can lead to faster problem resolution.

Companies that introduced Zendesk’s Zopim live chat software saw a significant drop in API and Web Form contacts. These are channels that customers typically find when searching for support on a company’s website. 

Moving to chat allows customers to resolve their problems faster. Zendesk recorded an average chat duration of 10 minutes and 35 seconds. Most companies take an hour or more just to respond to contacts submitted through an API or Web Form.

The grainy graph below shows the percentage of contacts by channel prior to implementing live chat in green. The percentage of contacts after implementing live chat is show in yellow.

Source: Zendesk

Source: Zendesk

Slow Reply Times

There’s still room for improvement when it comes to reply times.

When a customer initiates a chat, they typically have to wait for an agent to respond. In some ways, this is like being on hold when you call a customer service line.

Predictably, customers prefer a faster response.

The average time to first reply is 1 minute and 36 seconds. However, Zendesk noted that customer satisfaction begins to drop once first reply time crosses the 50 second mark. 

Another large drop in customer satisfaction happens just after the two minute mark.

Source: Zendesk

Source: Zendesk

An Emerging Channel

Zendesk’s data also shows that live chat is still an emerging channel.

Most companies are seeing very low chat volume:

62 = Average monthly chats per company

Individual agents aren’t handling a high average volume either:

22 = Average monthly chats per agent

Companies with a low volume of chat contacts face a number of challenges:

  • Live chat agents typically need to support other channels too
  • Training can be difficult when volume is so low
  • Scheduling is tricky at low volumes


Whats Next?

Live chat offers two advantages over phone that companies could capitalize on.

First, it has the potential to deliver higher customer satisfaction. It’s a perfect channel for today’s multi-tasking, keyboard addicted consumer. 

Second, chat’s can be more efficient to serve. A typical agent handles two to three chats simultaneously. This means chat agents have the opportunity to serve more customers per hour than phone.

The key to getting this right is response time.

Live chat has to offer a response time of less than 50 seconds to be competitive with phone. Otherwise, the channel will simply continue to divert contacts away from slower channels.

Three Social Customer Care Trends You Can't Ignore

Note: This post was originally posted on LinkedIn. You can find more of my LinkedIn posts here.

Social customer service was a big topic at last week’s Contact Center Expo and Conference. (You can read my re-cap here.)

At the conference, Susan McDaniel from Execs in the Know participated in a panel on social customer care where she shared some interesting statistics that really captured the audience's attention. Afterwards, she was kind enough to give me a copy of the 2013 Customer Experience Management Benchmark Study that’s co-produced by her firm and Digital Roots.

Here’s a breakdown of three big trends revealed in the report. If your company serves its customers through social media, you'll want to know about these.

Customer Care Involvement

One of the most promising trends is that customer service teams are getting increasingly involved with social channels.

The numbers looked bleak a year ago.

The Execs in the Know benchmark found only 10 percent of customer service departments owned social customer care. A Ragan study reported this number at 19 percent. Regardless of whose study you follow, the number was ridiculously low.

That number has jumped to 36 percent in the latest report.

It’s a step in the right direction, but it’s also a clear sign that many companies still don’t get it. The majority of corporate social media is still controlled by marketing (42 percent).

Two things happen when marketing dominates social media and doesn't coordinate with customer care.

  1. Customer support issues go unanswered.
  2. Service channels offer an inconsistent experience.

Social media is social + media. It’s not just for marketing.

Impactful Customer Communities

Remember when everyone was talking about Web 2.0 being the next big thing? We envisioned a world of social interaction where communities of customers could help each other.

That was in 2004.

Ten years later, we may finally be getting serious, with 41 percent of companies hosting a community forum.

Customer service software providers like Zendesk are making it easier than ever to set up communities that put FAQs and customer-driven forums side-by-side. These communities can help customers get the answers they need quickly while reducing service costs.

The online student community at Penn Foster was recognized at the Contact Center Expo and Conference with an award for Best Use of an Emerging Channel. Two stats from their success story really jumped out:

  • Emails were reduced by more than 40 percent
  • Their cost per interaction has dropped an average of $1.06 per year since 2010

Reduced cost is enticing, but it's important to remember that costs were reduced by making a community that people actually found useful and engaging.

Companies Slowly Getting Serious

This last trend is really a collection of metrics that suggest companies are starting to take social customer service more seriously.

  • 82 percent of social media engagements are made by employees (vs vendors)
  • 80 percent have policies about what conversations to engage in
  • 66 percent provide social media agents with training

All of these represent significant increases over last year’s benchmark.

Of course, the one that really jumped out was ONLY 66 percent provide social media agents with training. Apparently, the remaining 34 percent are left to their own devices. Perhaps figuratively and literally.

If you’re not training your social agents, you’re asking for trouble.

What’s Next?

Social customer service finally seems to be maturing, but it still has a ways to go.

Facebook is 10 years old. Twitter is 8 years old. More than 90 percent of companies use these channels to engage customers.

It’s about time more companies figure it out. Key areas for improvement include:

  • Faster response times
  • Fewer ignored questions
  • Consistent service quality across all channels

The few companies that get it right can really stand out from the rest that don’t.

Benchmarks Give Mixed Reviews for Retail Customer Service

How does your service measure up?

How does your service measure up?

You can learn a lot from customer service benchmarks. You just have to be willing to conduct a little analysis.

Two retail sector customer service benchmarks were published earlier this month. The results are a mixed bag. One thing is for certain - smart retailers will take note of a potential problem.

First, the good news. Retail customer satisfaction is up overall.

The 2013 American Customer Satisfaction Index for the retail sector was 77.9 percent, up 1.7 percent from 2012. This score was bolstered by supermarkets, drug stores, and specialty retailers all posting gains in satisfaction. Amazon boasted a 4 percentage point gain in satisfaction while Netflix continues making a comeback with a 5 percentage point gain. Then there’s Charles Schwab, whose satisfaction rating grew a whopping 9 percentage points.

There were also some ominous signs.

The 2013 Q4 Zendesk Customer Service Benchmark for retail customer satisfaction declined 6 percentage points from Q3. A slight decline in the fourth quarter is normal in retail when sales volumes and crowds increase with holiday shopping. However, the Q3 to Q4 decline was three times larger in 2013 than it was in 2012. 

Zendesk’s analysis pointed to growing agent workload as one potential culprit. 

They are a customer service software company, so they were able to analyze their clients’ aggregate ticket volume. (These interactions are typically contact-center based, rather than face-to-face in a retail store.)

Customer service departments typically get busier in Q4 due to holiday shopping. In 2012, the average number of tickets handled per active customer service agent increased 13 percent in Q4 from Q3. This spike grew larger in 2013 when the increase was 17 percent.

This bears repeating. In 2013, customer service employees had 17 percent more work to do in Q4 than they did in Q3. That's nearly a full day of extra work, based on a typical five day workweek.

Mo' work equals mo' problems.

Problems take longer to solve when workloads increase. Longer wait times lead to increased customer aggravation. Too many aggravated customers can cause customer service employees to feel burnt out.

Higher workloads for customer service employees can also lead to inconsistent service for individual customers.

Employees look to cut corners when they feel pressured to get more work done. Rapport-building diminishes. An emphasis on speed can actually hurt first contact resolution

It can become a vicious, self-reinforcing cycle that leads to even higher volumes.

Customer service employees often modulate their effort level during busy periods. They work faster when volumes are high, but they also work slower when volumes are low. Temporarily low volumes are seen as an opportunity to rest and recover before the next onslaught begins.

Managers have a hard time keeping up too. The extra volume means more issues demand their immediate attention, leaving less time for coaching employees and solving problems.


Will 2014 Be the Same?

It’s admirable to try to avoid the Q4 madness from 2013. So, what will you do?

I’d focus on three things if I were in your shoes:

Here's what your contact center agents are really thinking

Do you know what your contact center agents are thinking?

Do you know what your contact center agents are thinking?

A study from BenchmarkPortal reveals new insights into what contact center agents are really thinking.

The Agent Voices study was based on over 5,000 surveys with contact center agents in North America. It reveals that overall job satisfaction among contact center agents is 76.2 percent. Not surprisingly, the thing agents like best about their jobs is working with customers.

There are a few interesting highlights that deserve attention from contact center managers.

New agents need more support

A whopping 92.9 percent of agents gave their new hire training program high marks, but only 60.8 percent felt their transition from training to the contact center floor was adequately supported.

The training program itself may be part of the problem.

Call center agents must simultaneously use a wide variety of skills to do their jobs. This may include recalling product knowledge, navigating a variety of software programs, and interacting with the customer in an appropriate way. Many call centers train their new hires on one skill at a time, which makes them easier to learn.

Unfortunately, this method can also cause agents to experience a form of mental gridlock when they first try to use all the skills together at one time. This typically happens as agents make the transition from training to the contact center floor.

Call centers can overcome this problem and speed up new hire training by moving to scenario-based training. I’ve used it to cut new hire training time by as much as 50 percent while still improving new hires’ performance. You can learn more about this approach from an article I wrote for ICMI earlier this year.

Agents want a better work environment

Most call center agents really want to do a great job for their customers and 83.8 percent said they’re proud to work for their organization. The survey also showed that call center agents generally gave their co-workers high marks and felt a strong sense of teamwork.

These results were tempered by some signs that work environment needs improvement in many centers. One of the most striking findings was that only 44.6 percent of agents agreed that their working atmosphere is usually optimistic and positive.

One explanation is the way responsibility is structured in many contact centers. Agents often solve problems caused by another department, such as a shipping error made in the warehouse or a bug in a new software program. They must also frequently rely on someone in another department to implement the solution. 

It can be discouraging to repeatedly face problems that appear to be outside of your control. Many contact center agents are susceptible to a condition called Learned Helplessness where poor service seems like a foregone conclusion. Agents experiencing Learned Helplessness can stop trying to serve their customers if they believe their efforts will be fruitless.

Good relationships with supervisors, but not executives

A contact center agent who works for a financial services firm recently told me that executives routinely ignore contact center agents when they see them in the elevator. This may be a wider trend - only 56 percent of agents said they trust the messages from senior management.

Things are a little rosier on the relationship front when it comes to agents’ direct supervisor. A total of 77.6 percent reported they had a good working relationship with their direct supervisor.

The lesson here is executives must be visible in the contact center. They need to take time to listen to their frontline agents and explain their strategies and policies. Acknowledging employees in the elevator probably wouldn't hurt either.

Agents don’t feel heard

A majority of contact center agents don’t feel heard. Only 39.1 percent felt their leaders exhibited effective listening skills and only 45.7 felt their opinion was valued.

This may help explain why many employees don’t pass along feedback to management. I uncovered this trend earlier this year in a post titled Why Employees Don't Pass Along Customer Complaints.

Customer service needs work

Agents tend to feel their own teams do a pretty good job on customer service, but the company as a whole needs work. Only 47 percent felt that decisions in their organization were aimed at achieving the highest possible level of quality for their customers, but 71.3 percent felt their customers could trust them.

This disparity may be a product of two things. One, contact centers can sometimes be an outlier where other parts of the organization aren’t nearly as focused on service. Anothe possibility is contact center agents may suffer from the Dunning-Krueger effect where they overrate their own ability in comparison to others. 

What do you think?

If you are a contact center agent, or manage contact center agents, it would be great to hear from you. Are these results true for your center? Or, is your environment a little different?

What we can learn from customer service benchmarks

Benchmarking can help you improve customer service.

Benchmarking can help you improve customer service.

I recently teamed up with Jen Waite from inContact to present an ICMI Educast on benchmarking. It’s a short, informative webcast that explained the value of benchmarking in call centers and provided practical tips for getting started. It’s definitely worth checking out if you work in a contact center.

The process got me thinking about broader applications for benchmarking customer service. Regardless of your industry or customer service specialty, there’s probably a relevant benchmark that can help you identify ways to resolve problems, validate performance, or gain executive buy-in for a new ideas.

Here’s an example of a question that’s relatively easy to answer using benchmark data:

Is customer service really getting worse?

According to the American Customer Satisfaction Index (ACSI), customer satisfaction has actually gotten slightly better in the past 20 years.

Source: American Customer Satisfaction Index

Source: American Customer Satisfaction Index

What causes all the ups and downs? One explanation is the ACSI tends to be a leading indicator of changes in the US gross domestic product: 

Source: American Customer Satisfaction Index

Source: American Customer Satisfaction Index

Admittedly, it can sometimes be difficult to draw meaningful conclusions for such high level data. Here are a few more practical ways you can use customer service benchmarks.


Competitive Analysis

Benchmarks can let you know how you stack up against your competition. 

For example, let’s say you work at a telecommunications company and want to know whether your 77 percent customer satisfaction rating is any good. You could look at the latest ACSI benchmark report to discover the industry average is 74 percent.

Given this context, your customer satisfaction rating isn’t bad, but you may want to do more to distance yourself from the pack.


Identify Industry Trends

You can use benchmarks to spot specific trends in your industry. 

Suppose you work for a retailer and want to know whether you should invest in self-service technology for customer service. A benchmark report from customer service software provider Zendesk reveals two compelling stats for the retail industry:

  • 53 percent of self-service attempts result in the customer contacting the retailer directly for support. (Compared to only 25 percent for all industries.)
  • 21 percent of self-service attempts are made via a smart phone.

The first statistic suggests that a lot of retailers haven’t figured out effective ways to consistently provide their customers with self-service. You may need to look outside your industry for good examples.

The second statistic suggests that a mobile self-service option may be important to your customers. Zendesk’s data reveals overall growth of 50 percent in mobile self-service in just one year.


Learn Customer Expectations

It’s helpful to know what customers generally expect when creating systems, policies, and procedures. Designing something that will fall short of customer expectations is a recipe for disaster.

What if you wanted to know how quickly customers expected responses to inquiries sent via various service channels?. You could turn to Oracle’s Consumer Views of Live Help Online to learn about customer expectations for Facebook and Twitter response times. My own email response time study could fill in the gap for email. Here are the averages:

  • Facebook: 2 hours
  • Twitter: 2 hours
  •  Email: 1 business day

Keep in mind these are averages, which means a certain percentage of customers expect even faster responses. The data suggests your service channels needs to be very responsive just to meet your customers' basic expectations.


A word of caution

There’s a famous Mark Twain quote that serves as a cautionary notice to anyone using benchmark data:

There are three kinds of lies: lies, damned lies, and statistics.

In other words, approach benchmark data with caution. Take time to understand where the data is coming from and then use the data to make generalizations rather than absolute statements. Recognize that there are many ways to slice and dice data to fit a certain point of view.

For instance, how could we settle the question of which airline offers the best customer service?

I could easily nominate Alaska Airlines, my personal favorite, by citing JD Power’s airline industry rankings. For 2013, Alaska Airlines topped the traditional category.  A Jet Blue fan might counter by showing me both the JD Power Index for low-cost carriers  and the ACSI airline index where Jet Blue currently leads both. An international traveler might suggest that Singapore Airlines is the best because they're the highest rated airline on the Conde Nast Reader’s Choice poll, ahead of both Alaska and Jet Blue. 

See what I mean? There are no absolutes. It’s often very easy to find benchmark data to support several equally valid arguments.

The opposite can hold true as well. The credibility of your benchmark data will quickly come under fire if it refutes a strongly held opinion.

Suppose I asked you to name the best city for pizza in the United States. Is it New York? Chicago? According to Trip Advisor, the answer is San Diego.

I live in San Diego and even I don’t believe that one.