What your CFO really needs to know about customer service

Jeff Toister January 7, 2014

Let’s face it. We customer service professionals aren’t particularly good at making a business case for investing in customer service.

Improving service is a good idea. That’s established. But things get a little murkier when we start talking about dollars and cents.

When it comes to money, we often find ourselves applying the logic of the South Park’s underpants gnomes:

Phase 1: Improve Customer Service

Phase 2: ?

Phase 3: Profit

Unfortunately, its Phase 2 that CFOs really care about. It’s where we prove whether or not money spent on improving customer service is a profitable investment.

What we need is a framework. Something that can show our CFOs how investing in customer service is a wise business decision.

Costs of Failure vs. Costs of Control

Way back in 1956, Armand V. Feigenbaum described a process called Total Quality Control in an article published in the Harvard Business Review. Feigenbaum’s framework was innovative at the time because it showed that investing in a quality product or service could save money in the long run.

The Total Quality Control framework differentiates between costs associated with failure and costs associated with controlling quality (detecting or preventing failure).

When applied to customer service, Feigenbaum’s framework can make a nifty business case that your CFO will love.

Step 1: Identify Failure Costs

Start by identifying the real costs associated with service failures. Here are some examples of failure costs:

Customer contacts (calls, emails, etc.).
Discounts given to compensate for service failures
Product or service replacement costs
Cost of repairs or product service
Lost business

Step 2: Identify Control Costs

The next step is to identify the costs associated with controlling quality. Feigenbaum breaks these down into two categories: costs associated with detecting failures and costs associated with preventing failures.

Examples of detection costs:

Quality monitoring
Product inspection and testing
Customer service surveys
Mystery shoppers

Examples of prevention costs:

Training employees
Hiring more customer service representatives
Product design
Technology investments

Step 3: Identify the business case

You can make a credible business case for improving service if you can demonstrate that investments in detecting and preventing service failures will result in a net savings.

Here’s a simple example:

A small online retailer was concerned about losing sales due to poor customer service. Customers would call in with detailed product questions if they couldn’t find the answer online. This was an opportunity for the customer service representative to close the sale and prevent the customer taking their business elsewhere.

An analysis revealed the problem was staffing. The tiny customer service department would get overwhelmed with phone calls. The customer service reps would rush through each call to get to the next person, which made it harder for them to close sales.

Money is tight in a small company. A cost-benefit analysis was required to see if hiring a new customer service rep made business sense.

The Director of Operations and CFO got together and came up with these estimates:

Failure cost: $124,800 per year in lost sales
Prevention cost: $39,000 the annual cost of adding one additional customer service rep

That was the business case. Spending an extra $39,000 would earn an additional $124,800.

The retailer decided to hire a new customer service representative based on this analysis. Just one month after hiring a new employee, the results justified the move. Sales were already on pace to increase by nearly $150,000 as a direct result of hiring the new employee.

The Partner Technique

Jeff Toister January 1, 2014

You'll have better luck serving angry customers if you make them feel like you're on their side. This is called the Partner Technique.

Here are some examples of using partner behaviors:

Shift your body language so you're both facing the problem together
Listen carefully to customers so they feel heard
Use collaborative words like "We" and "Let's"

It's hard to be upset at someone who wants to help us. Most customers naturally calm down when they realize you are listening to their issue and trying to be helpful.

One final note: Being on the customer's side doesn't necessarily mean you aren't on your company's side. It just means that you are making an effort to understand your customer and help them succeed.

Overcorrect When Solving Problems

Jeff Toister January 1, 2014

There’s a great line in the book Human Sigma by John H. Fleming and Jim Asplund:

Feelings are facts.

Customers use feelings to form their perception about the service they receive. These feelings are much stronger, and much more important than what actually happened.

Service failures can create strong feelings about poor service. Research shows that fixing the problem might not be enough to make the customer feel good again.

If we want our customer to feel great, we have to overcorrect.

Here are some examples:

A winery shipped wine to the wrong address. They fixed the problem by sending a new shipment to the correct address and overcorrected by letting the first recipient keep the wine they incorrectly received.

A cable repair technician fixed a glitch in the customer’s cable system and then overcorrected by showing the customer how to boost their wifi reception.

A technical support agent helped a customer access a locked account and then overcorrected by showing the customer some new features that would save her time.

In each of these cases, the customer went from feeling bad about the problem to feeling great about the extra level of service they received. All because of the overcorrect.

Be Careful With Extras

Jeff Toister January 1, 2014

We're taught to always go the extra mile. You can't go wrong with giving a customer a little extra, right?

Well, sometimes you can.

A free dessert at a restaurant can backfire if the guests are already stuffed or watching their diet. Do they eat something they don’t want or reject such a nice gift?

An upgrade to the deluxe package at the car wash can backfire if the customer is in a hurry and finds the smell of air freshener to be sickening.

Upgrading an airline passenger's seat to an exit row can backfire if it separates her from the rest of her family.

Try to see things through your customer's eyes before giving your customer a little extra. And, when in doubt, ask them first.

It shows you care and it might help avoid an uncomfortable situation.

Take a Break and Recharge

Jeff Toister January 1, 2014

Building rapport with customers can be difficult when you're tired.

Unfortunately, the fast-paced nature of many customer service jobs wears us out. Continuously jumping from one task to another can ultimately lead to something called Directed Attention Fatigue.

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?

Corporate culture's hidden influence on customer service

Jeff Toister December 12, 2013

Culture has unseen influence on our behavior.

This post originally appeared on the Salesforce Blog. You can also read my latest Salesforce blog post, "How to Satisfy and Delight Your Customers."

Camille was a guest service associate working in a hotel. She had natural service instincts and had received hospitality training. Despite her qualifications, Camille routinely provided poor service.

She did it deliberately.

Camille didn’t enjoy providing poor service. She felt terrible every time she did something she knew would disappoint or frustrate one of the hotel’s guests. But she did it anyway.

Why would an intelligent and capable person work against their own instincts and values? The answer is corporate culture.

Go Along to Get Along

Camille’s hotel had a toxic culture. Associates were disengaged. Management was ineffective. Guests were viewed with disdain. Going against this culture would cause Camille to be ostracized by her co-workers.

Camille made the conscious decision to go along with the hotel’s cultural norms so she could get along with her co-workers. Research and practical experience suggests that most of us would do exactly what Camille did.

Here’s an example from a simple exercise I’ve facilitated many times. I ask my audience to answer a few review questions that cover my presentation so far. They’re also told that a few additional tasks will be displayed on the screen while they’re answering the review questions. I emphasize that answering the review questions is the first priority but ask the audience to complete the additional tasks as well.

The first additional task appears on the screen fifteen seconds after the review activity begins:

“Switch pens with someone.”

Most people instantly stop what they’re doing to switch pens with another participant. Some people interrupt other participants and tell them “We’re supposed to switch pens.” Still others find their pen suddenly snatched from their hand by someone a bit too eager to complete the task.

The exercise continues like this for several more minutes until the review questions are answered. No matter that I told them to prioritize answering the questions over completing the additional tasks. Participants consistently stop what they’re doing when each new task is displayed on the screen.

They just can’t help themselves. Despite people’s initial intention to focus on the review questions, social pressure makes it almost impossible. Even the people who try to stay on task are verbally or even physically cajoled into doing the wrong thing.

My little exercise is hardly new. Psychologist Solomon Ash ran a novel experiment in 1951 where he found that social pressure caused people to answer to simple question incorrectly. You can see an excellent re-enactment on YouTube.

Customer service leaders can prevent social pressure from derailing customer service by setting clear expectations, actively encouraging good performance, and quickly correcting poor performance.

I like to give participants a second try when I run the review question activity. This time, we cover set of behavioral expectations before we begin. For example, participants agree that they will ignore the additional tasks until they answer all of the questions.

An interesting change occurs in round two. There is now social pressure to do the right thing. A few participants still can’t help themselves and stop what they’re doing whenever a new task appears on the screen. But this time around, it is much easier for other participants to ignore them since the majority of people are intently focused on answering the questions in line with our agreement. Some people even remind these over-eager participants that they’re supposed to be answering the review questions first.

Unconscious Social Norming

I interviewed Camille for my book, Service Failure, and included her story in a chapter called “Conformity is Contagious.” It was courageous of her to give an honest assessment of her work performance. It was also unusual to find someone like her because employees often aren’t aware that culture is influencing their behavior.

Culture is often developed as groups of people co-develop social norms. These norms can be altered as new people join the team. A new employee might create a divisive atmosphere. That in turn might cause the team’s performance to drop. Good employees might leave and be replaced by more bad apples. Soon, service levels begin to decline. This leads to more angry customers which in turn makes everyone’s job even harder and less enjoyable.

The unconscious impact of social norms was first discovered in 1935 by psychologist Muzafer Sherif. He conducted an experiment where people were placed in one end of a dark room with a tiny point of light displayed at the other end of the room. A phenomenon called the autokinetic effect makes the light appear to move even though it really isn’t.

Subjects were asked to estimate how far the light had traveled. When acting alone, their estimates varied widely. When they were placed in a group, subjects quickly established a group norm. Interviews conducted after the experiment revealed that subjects weren’t aware that their perceptions were influenced by the other people in their group.

How do you ensure customer service teams develop positive social norms?

The key is to be deliberate about the culture you want. Define it. Identify the types of behaviors that match and don’t match. Constantly support and reinforce these behaviors with employees.

There's a model called the Employee Engagement Cycle that identifies several specific places where an organization can deliberately influence culture:

Recruiting: hire people who will be a positive influence.
On-boarding: show new hires how to be a part of our culture.
Development: remind employees of cultural values through regular training.
Evaluation: include cultural alignment in the employee evaluation process.
Exits: encourage employees to leave the organization if they don’t fit the culture.

Camille’s Conclusion

There was a happy ending to Camille’s story. She left the hotel with the toxic culture and joined another hotel. Her new employer had a culture that valued outstanding service and Camille felt much more comfortable. She fit in by being herself.

People sometimes ask me if customer service skills come naturally or can they be acquired. I think Camille’s example proves it’s a bit of both. She had the natural skills to be great, but she had to be in the right environment to use them. Once she found that environment, Camille was able to build on the skills she already had and become even better at service.

Engaging customers via social media? Get a personality.

Jeff Toister December 10, 2013

Almost four years ago, I ran a little experiment to see how companies engaged their customers via Facebook and Twitter. The results were dismal.

Fast forward a few years and surly we’ve got this social media thing figured out, right?

Not really. According to Socialbakers, brands are answering only 60 percent of customer questions on Facebook and only 38 percent on Twitter. Not surprisingly, Zendesk’s 2013 Q3 customer service benchmark ranks Twitter and Facebook as the two worst service channels in terms of overall satisfaction.

Perhaps these brands are following the sage advice from Mark Twain (or was it Lincoln?) who said:

Better to remain silent and be thought a fool than to speak and remove all doubt.

If you’ve seen this story about Amy’s Baking Company in Scottsdale, Arizona, you’ll understand why keeping quiet on social media can be a good idea. Their Facebook meltdown was epic.

There are some brands who do it right

Some brands do get it. They engage customers with a bit of personality and flair. They use social media to help solve problems, generate positive word of mouth, and increase customer engagement. Here are a few examples:

Cuvaison Estate Wine was one of the brands in my original experiment. I’m happy to say they’re still doing a great job. Their outstanding wine is complimented by a social media personality that is fun, upbeat, and inclusive. Here’s an example:

Post by Cuvaison.

American Airlines does a great job of responding quickly. Their personality is empathetic and helpful. They handle complaints with class even when passengers are seemingly unaware that severe weather has cancelled thousands of flights across the country.

@emilysteichen Oh no, Emily. We're truly sorry your flight has been cancelled. Have you been rebooked?
— American Airlines (@AmericanAir) December 10, 2013

And then there’s Tesco Mobile. They’re re-writing the book on dealing with social media complaints with a an edgy, snarky personality. I'll admit to reading their tweets purely for the entertainment value. Check out this example:

@JayFeliipe Are you really in a position to be turning girls away?
— Tesco Mobile (@tescomobile) October 16, 2013

It gets even better. They recent had an epic Twitter conversation where they looped in other UK brands. Buzzfeed called it the best Twitter conversation you’ll read today. Check out this gem from the exchange:

@RealJaffaCakes @YorkshireTea Maybe you two should get a room... we bet you're always dunkin' your biscuit in their tea.
— Tesco Mobile (@tescomobile) November 13, 2013

A word of caution

There’s one potential downside to having a great social media personality. You’ll be encouraging customers to air their gripes in public if you are funny and helpful online, but uncaring and clueless via traditional service channels. Do a check and make sure your service channels don’t have multiple personalities.

Five New Ways to Quickly Improve Customer Service

Jeff Toister December 5, 2013

There aren't any shortcuts in customer service. Or are there?

There’s no magic pixie dust that improves customer service quickly and easily. Or is there?

Well... It turns out there are a few shortcuts.

I recently hosted a webinar to share some of my latest customer service research. It focused on five ways companies could quickly take their customer service to the next level with minimal expense or effort.

This is a follow-up post with links to additional information and resources.

Webinar Link

You may want to start by watching the 47 minute webinar. (Secret tip - you can even jump ahead and fast-forward.) You can access a recording by clicking on the link below:

Webinar: Five New Ways to Quickly Improve Customer Service

#1: Outstanding customer service must be defined

If you asked your employees to describe outstanding customer service, would you get a consistent answer?

The answer is "Yes" at companies with a customer-focused culture. They have a shared definition of outstanding customer service that acts as a compass to keep everyone pointed in the same direction.

Helpful links:

#2: Get customers to learn your name

Customers’ perceptions of service quality improve when they know you and like you. Helping them get to know you by name is a good way to ensure they look at you as an individual and not just “that customer service person.”

Here are a few tips:

Introduce yourself to customers
Call your customers by name so they feel more comfortable doing the same
Follow-up with customers to remind them who you are

Helpful link:

Blog post re-capping my research

#3 Make a great first impression, or recover fast & powerfully

First impressions play an important role in framing a customer’s perceptions of service quality.

Good first impressions are neutral and are unlikely to be remembered.
Great first impressions create a lasting positive perception.
Poor first impressions can linger unless there's a fast and powerful recovery

Helpful links:

#4 Customers inflate wait times by an average of 36 percent

We all know that customers hate to wait. They often perceive the wait time is even longer than it really is. Smart companies identify factors that influence wait time perceptions and help customers feel like the wait is actually shorter!

Helpful link:

Blog post on “Jedi mind tricks” for reducing wait time perceptions

#5 Chronic multitasking is frying our brains!

I took a poll during the webinar to see what else people were working on in addition to tuning in to me. The average participant admitted to engaging in 5 or more activities while attending the webinar!

It’s natural to want to multitask in our busy lives. Unfortunately, a growing body of research suggests this is unproductive and even unhealthy.

Helpful link: