Is the front line customer service employee a commodity?

A client recently posed an interesting question: Should frontline customer service employees be viewed as commodities where one employee is relatively the same as the other? My client is the Human Resources Director, so unsurprisingly she thought the answer is no. However, her company’s Chief Financial Officer firmly believed the answer is yes.

Who do you think is right? 

The argument for "No"

My client believes there is a meaningful difference in each individual’s ability to be trained, deliver exceptional service, and ultimately generate profits. If you want to attract and retain better talent, you need to invest more in your employees in terms of wages, benefits, and training. There is certainly plenty of empirical evidence to back up this claim (see my recent post, “Three reasons to give customer service employees a raise”).

The challenge, of course, is proving this to a skeptical CFO or even the company’s CEO in a time when the company is focused on reducing costs. Any increase in wages, benefits, or training expense will immediately be seen on the company’s profit and loss statement, but the resulting impact won’t be readily apparent. Even if revenue or customer satisfaction begins to rise, it will be hard to prove that this wasn’t really caused by an improving market, a clever advertising campaign, or a new product line.

The problem my client has in making her case is a lack of hard data to show that she’s right.

The argument for "Yes"

The CFO’s primary concern is controlling costs and maintaining cash flow at a time when profit margins are shrinking. To him, adding costs immediately makes that problem even worse. It’s foolish to spend the money if he can’t prove that investing more in employees will provide a positive return on investment. He is also drawing from his own belief that frontline customer service employees’ performance is more a reflection of the system (products, processes, and management) than their individual strengths.

The CFO’s challenge, however, is the same as the Human Resources Director’s: a lack of hard data. Sure, he can see labor expense on the profit and loss statement, but looking at those numbers in aggregate can obscure what’s really going on. An outstanding employee might generate twice as much revenue as a co-worker, but then leave the company for a higher paying job with better benefits. The replacement employee may cost more to train while producing less revenue, but that story won't be told on the company's financial statements.

Who is right?

My view is both could be right. Great employees will flourish in almost every environment, but those employees are also hard to find. Mediocre employees can become great given the right products, processes, and management, but you need to invest time and money in those things to ensure your employees have the right support.

The best way for the HR Director and CFO to settle their debate is through testing and evaluation. For example, rather than giving all employees a raise, they can pick a test group of new hires to start at a higher salary. This minimizes risk and expense, but it also allows them to compare the test group’s performance to the rest of the new hires who join the company around the same time.

Where do you come out? Are frontline customer service employees truly unique and special? Or, are the vast majority of them really interchangeable?

Would you rather hire rock stars or roadies?

I've seen a lot of help-wanted ads lately from companies looking for Customer Service Rock Stars to join their team. My first thought is, You really want to hire rock stars?!

Let's break this down a bit and see if you'd be better off hiring rock stars or roadies.

Rock Stars

I don't know any rock stars, but I read the news and have seen more episodes of VH-1 Behind the Music than I can remember. I also once had a roommate in college who was in a band. He skipped out on our apartment to move back in with his mom while leaving me to pay all the rent. I'm fairly sure that's an accurate sample size.

What attributes do rock stars possess? Here are a few that come to mind: 

• Talented
• Famous
• Selfish
• Demanding
• Immature
• Entitled
• Obnoxious

The first quality sounds terrific, but it quickly starts going down hill after that. Can your company truly deliver service with a team of people that resemble rock stars?

Roadies

Now, think about roadies. Just in case you don't know what a roadie does, they are the people that set up the stage, lug the gear, and make sure the rock stars have everything they need to play music. I took a tour of Fenway Park in Boston last June when an army of roadies was setting up for a Roger Waters concert. Watching them transform the ballpark was amazing:

Here are some of the characteristics that come to mind when I think of roadies:

• Unpolished
• Hard-working
• Dedicated
• Tireless
• Selfless
• Caring
• Skilled

The first trait doesn't sound too great, but after that list starts looking a lot more like the characteristics you'd value in a customer service professional.

So, back to the question. Who would you rather hire to serve your customers, a rock star or a roadie? 

How to respond to online complaints

It can feel like a personal attack when customers criticize your company in online forums such as Yelp, Trip Advisor, or even on Twitter. Our first impulse might be to fight back by writing a scathing response that sets the record straight on their so-called “facts” and tells the rest of the world this person is an idiot. While this approach may feel cathartic, it will probably do more harm than good.

Here’s a better way to handle online complaints:

First, take a deep breath

Your priority should be preserving your business’s public image. Trading barbs with a customer in an online forum generally has the opposite effect, so it’s best to give yourself a moment to calm down before responding.

Patrick Maguire’s I’m Your Server, Not Your Servant blog recently featured an incendiary restaurant review, an equally incendiary response from the owner, and a follow-up interview with both the reviewer and the restaurant owner. It’s fascinating to gain a better understanding of both parties’ point of view, but it’s also interesting to note that the majority of the commenters felt both were in the wrong. (Read the post here.)

In an example of a worst case scenario, a bookstore owner infamously found herself arrested on battery charges after she confronted a reviewer in person (Read the article in Inc. Magazine). The ensuing press coverage, with article titles like “Angry store owner assaults Yelp reviewer,” was far more damaging to her business than a single reviewer giving the store two stars.

Second, respond strategically

When you respond to an online complaint, you’re not just responding to the complainer; you’re responding to anyone who reads your response. With this in mind, your goal should be to send a message that your business cares about service and you are eager to address any shortcomings.

Here are three tips that consistently work:

1. Respond quickly
2. Assure the reviewer (and anyone else who is reading) that you want to help.
3. Provide a way for the reviewer to contact you privately so you can attempt to resolve their issue.

This approach works whether the complaint is written by a legitimate customer or a jealous competitor who is trying to hurt your business. Either way, it sends a signal to other readers that you are responsive, professional, and care about your customers. You won't win over a vitriolic jerk, but you will win over people who might otherwise have been persuaded to stay away from your business.

Third, look for the hidden truth

Nearly every complaint contains some kernel of truth that you can use to improve service. That’s not to say that you have to agree with everything the person writes about your business, but what if their complaint is really just the tip of the iceberg? Perhaps other people feel the same way, but haven’t voiced their opinion yet. Even worse, they may have just stopped doing business with you. (See more on avoiding icebergs.)

When you think of it that way, someone flaming your business online might actually be doing you a favor. For example, the bookstore owner might have noticed that her critics consistently mentioned that the store was messy and in need of a good cleaning. Even some of the positive reviews agreed that the store could be better organized. Rather than getting defensive, a smart business owner might have taken a day to thoroughly clean and reorganize her store. She could have then responded to all of the Yelp reviewers to thank them for their feedback and invite them to come back for a grand re-opening.

For more information, check out my whitepaper on engaging customers via social media or get a copy of Micah Solomon's outstanding book, High-tech, High-touch Customer Service.

Why I'm rooting for American Airlines to improve service

Customer service at American Airlines generally leaves a lot to be desired, but I'm rooting for them to improve. A stronger American Airlines creates more competition and can bring some much needed stability to a battered industry. This should result in better overall service from the airlines, even if you aren't flying American.

Competition is Good

The airlines may be much maligned for their overall service, but their industry score on the 2012 American Customer Satisfaction Index (ACSI) was the highest its been since 2003 (see the results here). The traditional carriers like American, Delta, and United continue to lag in service quality, but newer airlines such as JetBlue and Southwest Airlines have picked up the slack considerably.

Without competition, things can get ugly. Look at what happened to Continental Airlines after merging with United. Their ACSI score was 18 percent higher than United in 2010. Two years later, the combined airline's ACSI score declined 13 percent. It will probably get worse since they were responsible for a whopping 33.6 percent of passenger complaints filed with the Department of Transportation in the first half of 2012 (source: The Consumerist).

Competition in the airline industry often comes down to where you fly.

I'm based in San Diego, which isn't a hub for any airline, so my options vary depending on where I'm going. If I want to fly nonstop to San Francisco, I can shop three airlines for the best combination of fare and service. On the other hand, when I travel to Dallas in October to speak at the 2012 ICMI Call Center Conference and Demo, I am literally going two hours out of my way to avoid flying American even though they are my only option for a nonstop flight. I instead chose better fares and service at Southwest Airlines.

Taxing on the runway at DFW

Stability is Needed

Customer service often suffers when businesses struggle. It might start with employee discontent, where employees' concerns over their own jobs create a distraction that negatively impacts their service. This has been happening at American Airlines for quite some time, though their flight attendant union ratified a new labor contract on Sunday which might improve things a bit (see the story here).

Service gets worse when companies start making radical moves in an effort to turn things around. American Airlines is actively considering a merger with another airline, most likely US Airways. Recent history suggests that won't bode well for customers, as evidenced by the United-Continental merger and even the recent decline in service at Southwest Airlines as they merge with Air Tran (see Five Reasons Why Ratings Are Down at Southwest Airlines).

Perhaps worst of all is when an airline goes completely out of business. In March 2008, Aloha Airlines filed for bankruptcy and then abruptly cancelled all of their flights. Ten days later, ATA Airlines (another airline that primarily served Hawaii) followed suit. The result was thousands of stranded passengers and a temporary spike in air fares to and from Hawaii that made it difficult for many people to even get home.

What's Next?

I really don't know, but I fear the worst. Do any airline industry experts care to handicap their chances of turning things around?

Three reasons to give customer service employees a raise

Updated: March 8, 2023

I once managed the call center for a catalog company that sold a wide range of imported collectables.

Our call center reps had to have a lot of knowledge. They dealt with sophisticated customers who had high expectations and were expected to handle both sales and customer service calls.

You might think we paid well, but our company had cash flow problems. The company's owners mandated a starting wage that was in the bottom 25% of the market.

This made it hard to hire great people.

I asked the CFO many times to raise wages. He always said no, citing the company's cashflow issues.

It wasn't until years later that learned to make a better pitch.

In this post, I’m focusing on three benefits of paying your customer service employees more. I'll also show you how I used these techniques to convince a tightwad CEO to increase pay.

#1: Hire better talent

Good employees don’t come cheaply. They tend to have more options than less skilled or poorly performing employees.

Offering a higher wage immediately gives you access to better talent.

The problem is executives don't like to spend money if they don't have to. So how do you convince them?

By tapping into the another big way executives make decisions: benchmarking.

CEOs spend a lot of time worrying about what other companies are doing. They tend to follow suit when they see a trend.

So show them the trend.

Here's the graphic I showed the tightwad CEO who was paying bottom-barrel wages:

At the time, he was paying his customer service reps $12 per hour. (This was a few years ago, wages are even higher now.) I wanted him to raise wages to $14 per hour.

This graphic provided a clear visual that he was paying bottom-market wages.

A few well-placed stories can help make the case.

Ask your CEO or CFO to name a few companies they admire for outstanding customer service. Here are a few that are almost always on the list:

• Trader Joe's

• Costco

• In-N-Out Burger

These companies are all low-margin businesses that pay their employees above-market wages.

Your CEO is wavering now, but they're still hesitant. So eliminate some risk by proposing a simple test:

1. Post a job at the new rate

2. Compare the quality of applicants to what you got at the old rate.

I did this with the tightwad CEO. He was blown away by the volume and quantity of applications they received.

#2: Get Better Results, Faster

You should expect more from employees when you pay them more. They bring more skills, ability, and passion to the job than someone who is willing to work for less.

A great to make this case is to focus on the issue your CEO cares most about.

The tightwad CEO cared most about the conversion rate. This was the percentage customers who called with a product question and then made a purchase.

The current rate was 33%. The CEO wanted it to be higher.

I asked him what the conversion rate needed to be to justify raising wages from $12 to $14 per hour. He crunched the numbers with his CFO and came back with 35%.

So I proposed another test:

1. Hire a new rep at $14 per hour.

2. Measure their conversion rate after 90 days.

3. See if they can beat 35%.

The tightwad CEO agreed to do the experiment. What happened next was amazing.

His contact center director hired a great new employee who was passionate about the company's products and had great customer service skills.

Her knowledge and skills also inspired the rest of the team. They were excited to have a new coworker they could really count on.

After just 30 days on the job, the entire team’s conversion rate was 45%!

#3: Reduce Turnover

Good employees won’t stick around very long if they feel undervalued, especially if they can get the same job for higher wages.

The real cost of employee turnover can be enormous when you factor in the cost of covering for absent employees (overtime, lost productivity, etc.) and the cost of recruiting and training new ones to take their place.

Paying just a little more might be much less expensive than the high cost of employee defections.

Here's how to run the numbers:

1. Download this turnover cost calculator.

2. Calculate the cost savings of a modest reduction in turnover.

3. Ask your CFO to validate your calculations.

Getting your CFO involved can give your numbers more credibility.

I did this with one client and the CFO estimated the company could save $100,000 per year in direct costs by improving retention a modest amount.

He surprised me by also estimating an additional $1,000,000 in soft cost savings. These are essentially cost savings that would likely result from increased retention, but hard difficult to measure.

The CEO probably wouldn’t have listened to me if I had shared those numbers, but she did listen to the CFO.

Conclusion

Wages aren't the only reason great employees stay or go. There is a whole list of factors that influence employee performance, engagement, and retention.

It’s ultimately about culture, and how you pay your team is part of that.

For example, 95% of job applicants consider culture before applying. And 64% of customer service employees have left a company because of culture. (Source)

Here are some more resources to help you:

1. Report: Wages are one of 11 factors tied to burnout risk

2. Book: Build a customer-focused team with The Service Culture Handbook

Your service is only as good as the weakest link in the chain

A recent post on Micah Solomon’s excellent College of the Customer blog discussed how companies who only pretend to care are doing their customers a disservice. He described a service failure where a hotel sent him a pre-arrival email inviting him to contact the general manager with any special requests, but then failed to deliver when Solomon took them up on their offer. (Read the post here.)

This type of experience is frustrating, and Solomon makes the point that the offer comes across as disingenuous when it’s not fulfilled. That may be true, but I’d be willing to bet the problem is just as likely the result of a broken service process. According to John Goodman, vice chairman of the noted customer loyalty agency TARP Worldwide, these types of failures are responsible for as much as 60 percent of customer complaints. (See more in Goodman's book, Strategic Customer Service.) 

Here are a few examples:

A hotel promises its airport shuttle will arrive every 20 minutes, but it takes an average of 25 minutes to drive the route. The result is the shuttle is usually late. Fail!

A new credit card arrives in the mail. The accompanying letter instructs the cardholder to go to a website for instant activation, but the web address doesn't direct the customer to an activation page. This causes the customer to spend extra time searching the company's website for activation instructions. Fail!

A consultant sends his client a link to an archived webinar, but the client can’t open the link. The result is the client has to send another email to ask the consultant for a working link. Fail! (Okay, this one was me. Soooooooo embarrassing.)

How to eliminate broken processes

There are at least three great ways to prevent service failures that are the result of broken processes.

1. Test
Test things out before sharing them with your customers. Timing the route between the hotel and the airport before writing the shuttle schedule would allow the hotel to determine how long it actually takes. If the hotel realized ahead of time that driving the route took 25 minutes on average, the hotel could revise its schedule or add more shuttles to avoid disappointing guests.

2. Map the touch points
Identify how and where your customer will interact with your company (a.k.a. touch points) and make sure they are all aligned. The credit card company could have mapped their new credit card activation process to ensure the enclosed instructions clearly sent customers to the correct website or optional toll-free number. (See my previous post, Why ALL touch points count.)

3. Act quickly on feedback
There will still be occasions when a customer discovers a process is broken before you do. When that happens, act quickly to fix it. In my case, I had tested out the webinar link ahead of time and it worked fine. When my client reported the problem, I had to do some research to find out why it didn't work for her. As soon as I found the cause, I emailed the corrected the webinar link, apologized for the inconvenience, and thanked my client for bringing it to my attention. I also revisited my webinar software and learned how I had inadvertently caused the problem so I won’t do it again.

A little more (PG-rated) bathroom humor

Awhile back, I posted a small collection of signs found in or near restrooms. They were all good for a laugh, but also served as a reminder that we need to see things through our customers eyes. (See: "A little bathroom humor"). 

My friend Dawn emailed me a photo a few months ago for my "next blog post" on bathroom signs. I guess this means it's a series. Well, Dawn, I finally have enough photos to share. A few of the establishments were even in on the fun this time around.

This is the sign that Dawn sent. I'm sure it settled many arguments.

This was on the inside of the mens room door at a Salt Creek Steakhouse. 

Sounds like the coolest restroom ever!

This is sage advice at the Tilted Kilt. (I understand something similar is in the ladies room.)

What are we really talking about when it comes to service?

P.T. Barnum famously bet on his customers getting confused by fancy words when he wanted to pump up profits at his museum. Barnum posted signs marked “This Way to the Great Egress” that led people towards what they assumed was the museum’s latest attraction. Gullible patrons were surprised to learn that "egress" is really just another word for exit when they followed the signs straight out of the building.

That sort of trick wouldn’t pass muster with today’s customers (imagine the Yelp reviews!) but there’s still plenty of confusing language used in customer service. Clearing up this confusion may be one of the keys to preventing service failures in your organization.

Here are a few examples:

Customer Satisfaction. What is it? Is it good? Or, is aiming for customer satisfaction setting our sights too low when we really should be achieving customer delight? And, if customer delight is the goal, should I scrap my C-Sat survey in favor of a C-Del metric?

Employee Engagement. It seems to be a matter of fact that positive employee engagement is strongly correlated with high levels of customer satisfaction. Or is it correlated with high levels of customer engagement? What exactly is employee engagement anyway? Even the top employee engagement consulting firms don't agree (see my post).

Outstanding service. This is good, right? Just ask five people and they’ll all agree. Then ask them what outstanding service looks like and they’ll all give different answers. None of them will be necessarily wrong, just different. (See my simple explanation.)

These are really rhetorical questions in an effort to highlight the need for a common frame of reference, though I wouldn't mind you sharing your answers in the comments section below.

Practical Application
Here are a few simple examples of how you can establish a common frame of reference when talking about customer service.

Training. Before conducting customer service training, I work with my clients to create a clear definition of outstanding service using a Customer Service Vision tool.

Surveys. Before writing your survey questions, take a moment to think about what you really want to learn about your customers and what you will do to act upon that data. (See "C-Sat: So what?")

Strategy. Frame customer service or employee engagement initiatives around SMART goals rather than writing fuzzy objectives like “improve customer service.” 

A deeper dive into an email service failure

A few weeks ago, I wrote a blog post detailing a service failure I experienced via email. I had contacted the office that runs the indoor soccer league I play in to get my team’s schedule for the upcoming season. My blog post summarized the exchange and offered an analysis of what went wrong along with some tips for improving responses to customer service email.

What happened next was an unexpected surprise. A colleague emailed to point out what I could have done as a customer to receive better service. Over the next few weeks, I showed it to participants in several of my customer service classes and they had similar observations. (You can read the original post here and see if you can spot what I could have done better.)

A small misunderstanding
Many email service failures start with a small misunderstanding. The customer doesn’t provide enough detail in their email or perhaps explains the problem poorly and then the customer service rep misinterprets what the customer is looking for.

Of course, you can’t put the onus on your customers to improve their communication. What you can do is take the time to read each email and ensure you fully understand what’s being asked before responding.

Unseen pressures that lead to poor emailing
The big question then is why don’t people take more time to read and understand emails before responding? We know that these small misunderstandings can lead to unnecessary back and forth, wasted time, and ultimately customer aggravation. So why don’t companies do more to fix it?

With the help of several participants in my training classes, I was able to put together a list of possible reasons why people don’t take enough time to properly respond to customer service emails.

• Yabba Dabba Do. It’s late in the day and their brain has already clocked out.
• Time crunch. They are rushing to get through a mountain of email.
• Text happy. They learned all their emailing skills from text messaging.
• Distractions. They are too distracted to give the email their full attention.
• Reading skills. Their reading comprehension is less than what it needs to be.

I’m sure this is only a partial list of reasons why customer service reps don’t often take the time to see past small misunderstands and figure out what their customers really want. What other reasons would you add to the list?

5 Ways Squarespace Gets Service Right

I spend a lot of time diagnosing service failures, but occasionally I like to profile an organization that’s doing something right. One of those organizations is Squarespace, a company that provides (in their words) “everything you need to create an exceptional website.” Their amazing customer service is a template that we can all learn from, but I also have an ulterior motive for writing this post. I want to publicly encourage them to keep up the good work.

Here are five things we can all learn from Squarespace:

1. Offer a great product that's simple to use
I’m currently building my fourth website using Squarespace, this one for my upcoming book Service Failure. I'm not very technical and don't want to hire an expensive web designer, so Squarespace is a perfect solution. You can use Squarespace to secure your domain name, design your website, and add content all without ever touching a bit of code. Best of all, it's easy to learn and use and their stuff just works.

I wish I could say the same thing about all the technology I work with, but too often I find it difficult to master, riddled with glitches, or both. Customers can be delighted with a great product, but they can also be delighted with the absence of aggravation.

2. Provide value
Squarespace is constantly enhancing the value they provide to their customers. For example, earlier this year they changed their pricing structure to simplify their plans. In my case, they actually offered me a credit when I switched plans because they were now offering more for less.

Compare that to other well-publicized price changes, such as Netflix's 60% price hike or Bank of America's infamous plan to charge debit card users $5 per month. Pricing is clearly a sensitive topic, but you'll win a lot of hearts and minds if you give customers more for less rather than less for more.

3. Respond quickly to customer inquiries
Squarespace clearly realizes that many of their customers are technically challenged like me, but that doesn't mean we're patient when we encounter a problem. Thankfully, whenever I've sent Squarespace an email to ask for assistance I've quickly heard back from an elite member of their support team who was able to help. Their responses are fast, thorough, and professional.

This stands out from companies who don't respond quickly, respond but don't actually resolve your problem, or don't respond at all. Customers hate to wait and we really don't like going back and forth either (see my survey on email response times). When we need help we want it fast and Squarespace gets that.

4. Be authentic and human
Customers crave authenticity, and nothing kills authenticity faster than overly scripted communication. Squarespace’s website, blog posts, customer emails are all straightforward, easy to understand, and are unencumbered by flowery marketing dreck. Better yet, their support professionals are allowed to use their own unique personalities when communicating with customers.

Authenticity is a breath of fresh air when we're used to dealing with so many customer service reps who are required to stay within a tightly controlled box (I really don't like scripts). 

5. Think like a customer
Squarespace recently announced a new version of their service, Squarespace 6, that promises to be a quantum leap forward from their existing platform. At the same time, they’ve wisely opted to indefinitely support users on the old system. Why is this important? Because it recognizes the extensive time and effort many of us have put into building our websites. Providing continued support means we aren’t forced to make the change. Of course, they’re also offering to let users make the switch for free, even allow people to running both versions at the same time, so users are tempted to try out version 6.

This is an example of seeing things from a customer's point of view. A company lacking in customer focus may have become so enamored with their new technology that they forced everyone to switch. This strategy gives Squarespace a way to attract new customers or delight existing ones without giving their most loyal fans a reason to be upset.