Ten Ways to Fix Contact Center Turnover

Attrition is the biggest contact center challenge in 2016.

That's according to this research from Strategic Contact that outlined the top contact center challenges for 2016 . You could probably change the year and the result would be the same. High turnover is always a problem in contact centers.

This post outlines ten proven ways to improve contact center attrition rates. But first, check here to run your turnover numbers and see if you really have a problem. 

You should know the answer to three questions:

• How much does turnover cost?

• What's your annual bad turnover rate?

• What's a reasonable target rate for bad turnover?

These numbers will tell you how much your contact center can gain from improving turnover. They're probably the first thing your CEO or CFO will look at if you want to invest in fixing this problem.

1. Conduct Stay Interviews

Don't wait until your best agents give notice. 

Schedule stay interviews with your top employees. Consider conducting stay interviews with a cross-section of other employees too. These are interviews designed to find out what keeps your employees from leaving. (Here's a great overview from Inc. Magazine.)

The goal is to learn exactly what factors prompt these agents to stick around so you can keep doing those things. You also want to learn what might cause them to leave.

2. Raise Wages

A client of mine was notoriously tight fisted when it came to employee wages. He quickly changed his mind when I showed him this chart:

It showed the $12 per hour average wage he was paying his contact center agents was at the bottom end of the pay scale compared to the range for similar jobs in the area. Paying at the bottom of the pay scale created two problems:

• His company couldn't attract talented employees at that wage.

• Any talented employees he developed quickly left for an easy raise.

In my client's case, raising wages to $14 per hour quickly paid for itself in three ways:

• He recruited better employees who needed less training.

• He recruited better employees who were more productive.

• Employees stayed longer because they were more satisfied with their pay.

3. Hire For Culture Fit

Let's face it - not every person will love working for your contact center.

The trick is finding, and hiring, the people who will. This might be a problem if you tend to lose a lot of agents within their first six months. 

One tool that can help you do this is called an Ideal Candidate Profile. This describes both the skills and cultural attributes that an employee must have to fit in with your contact center.

You can use this worksheet to create your own Ideal Candidate Profile.

4. Improve Training

Great hiring won't help you keep employees if they don't get sufficient training. Poor training programs can create turnover in a number of ways:

• Agents never get the confidence to do their jobs correctly.

• Agents never get the skills to do their jobs correctly.

• The training is so bad that agents quit before finishing.

Many contact centers can reduce their new hire training time by 20 - 50 percent while getting better results if they simply adopted more modern techniques.

Toister Performance Solutions helps clients design new hire training programs, but you can also make many improvements on your own. The starting point is setting good learning objectives.

You can also read my article, 5 Ways to Train Contact Center Agents Faster.

5. Create Career Ladders

Many contact center agents don't view their job as a career.

It's often seen as a stepping stone to something else, or perhaps a good way to earn some money for a short period of time.

A career ladder is a defined path that spells out ways for employees to grow within your organization. For example, many contact centers have different agent tiers. A new agent can earn progressive responsibility and pay by getting promoted into higher tiers.

In other companies, agents are actively recruited into other departments. 

Whatever the case may be in your organization, creating opportunities for your agents may entice your most talented people to stay longer.

6. Identify Toxic Leaders

Take a close look at your turnover rate by leader. Are agents quitting certain leaders or teams at a much faster rate than others?

An abnormally high turnover rate could signal a toxic leadership style. That individual leader may benefit from additional coaching or training. Or, they might not be cut out to lead people in your company.

The flip side is also helpful. Take time to study leaders whose agents rarely leave or frequently get promoted and see if you can identify what they do differently.

7. Focus on Short Commutes

The length of your employees' commutes might have an impact on how long they stay.

This fascinating post suggests that 30 minutes is the maximum time contact center employees are willing to commute. The post also cited research showing that employees with a commute of 10 minutes or less are 20 percent more likely to stay with your contact center six months or longer.

There seems to be a little more tolerance for longer commutes if employees are taking public transportation.

This data suggests that contact centers should employ a hyper-local recruiting strategy, embrace more work at home options, or both. 

8. Empower Your Agents

ICMI released a study last year revealing that 86 percent of contact centers don't fully empower their agents.

Empowerment is closely connected to attrition. One of the things agents consistently say they dislike about their jobs is the inability to do what's necessary to help their customers.

Employee empowerment isn't easy, but you can use this guide to get started.

9. Stop Demotivating Agents

Contact center leaders have focused on motivating their agents for as long as I can remember. 

They try incentives, slogans, and snazzy banners. Gamification is the latest agent motivation fad. None of it seems to really work.

That's because agents don't have a motivation problem. The issue is demotivation. Agents become steadily demotivated the longer they're on the job.

Take a look at this data from Benchmark Portal:

Good agents fundamentally want to help people. Make it easy for them to do that, and they're more likely to stay. Make it hard for them to help customers, and they'll probably quit.

Here's some more compelling data about why agents don't need to be motivated.

10. Do A Real Engagement Assessment

Many contact centers do an annual employee engagement survey. 

Contact centers do these surveys because they understand the link between employee engagement and retention. Unfortunately, most of those surveys are a waste of time. 

The way these surveys are designed, they rarely lead to actionable changes that can take a meaningful bite out of agent attrition.

I've had success with a counter-intuitive approach that doesn't rely on employee opinion. It instead takes a hard look at the underlying processes that drive engagement.

One client used this assessment to cut their turnover by 50 percent and save $150,000.

You can do the conversation starter assessment yourself. Or, let's talk about a more comprehensive version.

What About Culture?

You might be wondering why I didn't suggest improving your contact center's culture.

The trick with culture is it's a pretty squishy concept. However, if you look carefully at my recommendations, you'll see that they all contribute to a strong culture.

In other words, follow these suggestions and you'll be on your way towards building the type of culture that attracts and retains talented agents.

Does Your Customer Service Team Have a Turnover Problem?

Employee turnover is a constant worry for customer service managers.

This was a huge topic for ICMI's conference advisory board, a group that gives input on programming for ICMI's contact center conferences. I serve on the board and we recently had a planning call for the 2016 Contact Center Demo and Conference. A significant portion of the meeting focused on contact center attrition.

Individual customer service leaders have been sharing this concern with me too. It's also a hot topic on the Inside Customer Service LinkedIn group.

The challenge here is separating facts from feelings. Turnover feels bad, but the customer service profession generally experiences higher turnover than other industries. 

Do you have the facts that tell you whether or not it's really a problem? And, if it is a problem, how big a problem is it?

I've put together this guide to help you find the answers to these questions.

Source: Chris Griffith

How to Calculate Employee Turnover

You can start by calculating your overall turnover rate using this formula for a particular time period (one year, one month, etc.):

Employee Separations / Active Employee Count = Turnover Rate

For example, let's say you had 40 employees leave and you have 100 active employees (on average) over the course of one year. Your turnover calculation would be:

40/100 = 40%

It's also helpful to calculate your bad turnover rate. Bad turnover is when an employee is either fired or quits the company entirely. Good turnover is when an employee leaves the job for another opportunity within the company, usually a promotion.

So, your bad turnover rate formula is this:

(Employee Terminations + Employee Quits) / Active Employee Count = Bad Turnover Rate

Let's say you had 40 employees leave, but 10 of them were promoted into other positions within the company, 5 were fired and 25 resigned voluntarily. 

Your bad turnover rate calculation would be:

(5 + 25)/100 = 30%

Is Turnover a Problem?

Once you've calculated the turnover rate, it's time to find out if turnover is really a problem. 

Keep in mind that nearly every customer service team will experience some employee turnover. What you really want to know is whether your team's turnover rate is normal. There's two ways you can look at this:

One option is to compare your current turnover rate to historical trends. For example, you might be concerned if this graph represented your team:

But wait! That graph just shows overall turnover. Let's see what happens when we separate good and bad turnover trends.

Here, it looks like bad turnover is relatively steady, but we're doing a better job of feeding talent into the company.

Another option is to compare your turnover rate to market averages. The tough part about this approach is good data can be hard to come by. 

Industry associations sometimes publish this data based on member surveys, but it may or may not be region-specific. Your local chamber of commerce might publish this data, but it may or may not be industry-specific.

The other problem with these external benchmarks is they typically don't separate good turnover from bad turnover, so it's all lumped together.

Whatever benchmark you choose, it's fair to make some assumptions. The goal is to find a reasonable normal turnover rate that you can compare to your own turnover percentage.

You probably don't have much to worry about if your turnover rate is normal or below normal. If it's above normal, I recommend setting a goal for improvement based on the difference.

Like this:

• Current bad turnover rate: 30%

• Normal bad turnover rate: 20%

• Goal: Reduce bad turnover by 33% (down to 20%).

Is Turnover a Costly Problem?

High turnover seems bad, but it's important to determine how much it's really costing you. Putting real dollars and cents on the issue will help you make the business case for any necessary improvements.

You can use this turnover cost spreadsheet to calculate the true cost. The spreadsheet looks at many expenses associated with turnover:

• Training costs

• Hiring costs

• OT costs due to short-staffing

There's a section there for both hard and soft costs, but I recommend focusing on hard costs. Using real dollars has much more credibility with executives.

My suggestion is to run two calculations:

1. Calculate your current bad turnover cost

2. Calculate what your turnover cost would be if your bad turnover rate was normal

The difference between the two calculations is your potential savings from improving turnover to a normal rate.

Here's an example:

Let's say your turnover cost is $4,200 per employee. Here are the two calculations at 30 percent (present rate) and 20 percent (normal rate):

$4,200 x 30 = $126,000/yr

$4,200 x 20 = $84,000/yr

So, $126,000 - $84,000 = $42,000

This means you could save $42,000 per year just by lowering your bad turnover rate to a normal level. That's probably a figure that would get your boss's attention.

So, how do you reduce turnover? 

I'll cover some ideas in a post next week. If you aren't already, you can subscribe via email so you won't miss a post.

The Biggest Reason Why Employees Don't Do What They're Told

Jose came out to my house to replace a corroded section of gas pipe. Before starting the job, he placed a small fire extinguisher near the work space.

Jose explained it was a new safety procedure. Technicians were required to have a fire extinguisher nearby for all gas repairs.

I marveled at Jose's diligence. 

He had being doing this job for more than 25 years, yet he was following a new procedure even though his boss wasn't watching. 

Many employees, especially those with a lot of experience, find themselves cutting corners. They get set in their ways and don't like to change.

It's frustrating when employees don't do what you ask them to do. You email a new procedure or share an important customer service tip in a staff meeting but employees don't do it. At least not consistently.

The big question is why? 

In many cases, it comes down to how the task was communicated. Here's what can go wrong and how you can fix it.

Communication Assessment

Just for fun, let's do a little communication assessment.

Imagine you had to communicate a new policy or procedure to your employees. It's not overly complicated, but it's something that employees should start doing right away.

Which of the following communication methods are you likely to use?

1. Email or other written communication.

2. Visually demonstrate the new procedure for employees.

3. Discuss the new procedure with employees using open-ended questions.

4. Observe employees using the new procedure to check their understanding.

5. Verbally explain the procedure to employees.

Most managers rely on written communication like email. They might throw in a dash of verbal communication, but they're unlikely to rely on other forms.

Here's how Jose's manager communicated the new safety procedure.

1. He provided everyone with a written copy of the procedure. 

2. The procedure was verbally explained in a team meeting.

3. The explanation was aided by using a fire extinguisher as a visual reference. 

4. Employees discussed the procedure's importance. 

5. The manager verified that employees were following the procedure whenever he visited a job site.

Jose's manager did two things that many leaders don't. First, he used multiple methods of communication to reinforce the message. Second, he ensured that the communication was two-way, so that employees were active participants.

This may seem like a lot of extra work for the manager, but it's essential to take time to make sure employees get the message.

Communication Goals

Employees often don't do what they're told to do because their manager has miscommunicated the task. 

Managers should have two goals when they ask an employee to do something.

1. Ensure understanding

2. Gain agreement

First, you want to be sure your employees understand what you want them to do. That's difficult to achieve with one-way communication like email. 

Jose's manager used the team discussion to ensure that everyone understood the new procedure.

Second, you want to gain your employees' agreement. To achieve this goal, you often need to get employees to understand why you are asking them to do something. Once again, two-way communication is far more effective than one-way communication.

Jose agreed to follow the new procedure because he clearly understood why it was important. He'd been around long enough to know why it made sense to have a fire extinguisher handy when doing work on a gas line.

Additional Resources

Miscommunication is just one of many causes of poor employee performance that can easily be fixed. This quick fix checklist can help you find other root causes too.

Customer service leaders often use my weekly customer service tips to reinforce good customer service skills with their teams. The tips arrive via email, but managers augment that written communication with two-way dialogue in team meetings and one-on-one discussions.

How to Stop Employees From Survey Begging

We've all experienced survey begging.

Sometimes, employees offer an incentive. My nephew was recently offered free food in exchange for giving a fast food restaurant all 10s on their survey.

Other times, employees try to pull on our heart strings. They tell customers they'll get in trouble if they don't receive a good score. 

My friend Halelly recounted a recent experience taking her car into the dealership for service. "The (service advisor) coached me in person when I got the car serviced and has now sent me this email too."

The email warned Halelly that she would be getting a survey from the dealership and possibly the manufacturer. The advisor wrote:

We would greatly appreciate your time to complete the surveys. Anything other than all 10's is considered a fail.

This post explains why employees engage in survey begging. It also explains how you can stop them from this annoying habit.

Survey Begging Defined

Here's my definition of survey begging:

Asking a customer to give a positive score on a survey by explaining how it will directly benefit the customer, the employee, or both.

Here are a few examples:

• Offering customers discounts in exchange for a good score

• Telling customers a bad survey will get you fired

• Displaying "We strive for five" or similar signs

• Directly asking customers for a positive survey score

• Ignoring actual feedback that's not attached to a positive score

Side note: this definition is a first draft, so I welcome your feedback!

Why It's a Problem

Survey begging causes two problems.

First, it's annoying. Customers don't like being begged and cajoled into giving a survey score. This practice reinforces the perception that companies aren't really using voice of customer data to improve service.

The second problem is survey begging can cover up real service issues by artificially inflating scores. Customers might start spending less or stop doing business with a company entirely, without the company ever understanding what's causing the problem.

In other words, survey begging defeats the purpose of using a survey.

Why Employees Survey Beg

It's all about incentives.

Employees engage in survey begging because they have a clear incentive to achieve a high score or a strong incentive to avoid getting a low score.

Some employees have bonuses tied to their average survey score. This incentivizes them to ask customers for good scores because those positive surveys are literally adding to their paycheck. A slightly negative, but truthful survey might prevent an employee from earning their bonus.

Other employees can face disciplinary action if they receive too many low scores. One automotive service advisor told me he only pushes the survey to customers he thinks are happy because he could lose his job if he gets too many low scores.

Survey begging happens in many industries, but it's a particularly big problem in the automotive sector. Here's a great article on Edmunds.com that explains why.

The bottom line is if you want to stop the begging, you need to remove the begging incentive.

Getting Rid of Incentives

Many customer service managers are reluctant to get rid of survey incentives.

They operate under the false assumption that employees need these incentives to be motivated. There's a mountain of evidence that shows this isn't true. In fact, the number one motivator for customer service employees is being able to help their customers.

I wrote about a great example of this in my book, Service Failure. The Westin Portland was achieving consistently high guest service scores. Then General Manager Chris Lorino explained that part of their success came from a resistance to implementing survey score incentives. 

Instead, the hotel made guest service a core part of each associate's job. Here's an excerpt from the book:

"Associates coach and encourage each other to deliver high levels of service that will help them achieve their (guest satisfaction) goals. The hotel's leadership team regularly discusses guest feedback with the associates and encourages people to share ideas that will improve service even further."

Other managers are concerned that eliminating incentives makes it difficult to monitor employee performance through survey scores.

The problem is survey begging artificially inflates survey scores, so you end up rewarding employees who are best at begging, not best at service. 

A better approach is to use survey feedback to manage behaviors. For example, if an employee frequently gets surveys saying they are a little abrupt, you can coach them on ways to create a better impression.

Are Dual Monitors Bad For Customer Service Agents?

You've probably heard about the research.

The line goes like this, "Studies show that employees are more productive using dual monitors than they are using a single monitor." Many contact center leaders believe this strongly enough that they've got their agents all set-up on dual monitor rigs.

There's just one problem. This research isn't really so conclusive.

Many of these studies were commissioned by companies that make monitors. There's this white paper from Dell. NEC produced another study. There's even a study from Fujitsu that suggests we actually need three monitors to get work done.

Then there's Farhad Manjoo. He wrote this article for the New York Times in 2009 championing the need for dual monitors. It was influential enough that Dell quoted Manjoo's article in their research report.

In 2014, Manjoo wrote another article for the New York Times claiming he was wrong. Two monitors really weren't better than one. He realized that using just one monitor allowed him to be much more focused.

Productivity is important in contact centers, but so is focus. So, can these studies be trusted? Or, is the dual monitor trend actually bad for customer service agents?

Source: Joe Grigg

What The Studies Actually Say

The actual studies are very muddled.

The Fujitsu study claims that three monitors increase productivity by 35.5 percent. Unfortunately, the document I found doesn't detail what was tested or how.

The Dell white paper references a 2011 study they commissioned, but I spent some time trying to find the actual text and couldn't locate it.

They did package the results in a white paper that included results from other studies too. The 2011 study measured productivity where participants had to simultaneously work with multiple documents. The activities involved reviewing information in one document (a spreadsheet, text document, website, etc.) and adding information into a second document.

Oddly, the Dell white paper doesn't report any productivity gains from their 2011 study. They instead reference this study from the Georgia Institute of Technology that revealed a 15 percent productivity gain when participants used two monitors instead of one.

The Dell study conspicuously left one big detail out of their report. The Georgia Institute of Technology study also showed that single monitor users performed tasks slightly faster than dual monitor users the second time they engaged in a similar activity. 

Finally, there's the NEC study. 

Like the Dell study, they tested participant productivity while working on multiple documents at the same time. Their surprising conclusion was that a larger single monitor provided even better productivity gains than a dual monitor set-up.

What the studies don't describe is also telling.

None of them that I could find measured productivity when participants were only engaged in one task at a time. And, none of them specifically focused on contact centers.

Dual Monitor Danger

Using dual monitors has one clear drawback: they encourage multitasking. 

Multitasking causes a few problems:

• It takes our focus away from serving customers.

• It negatively impacts our short-term memory.

• It can eventually cause DAF, a problem similar to ADD.

All of these issues can negatively impact key contact center metrics:

• Decreased CSAT due to poor customer focus

• Increased handle time due to poor focus and memory

• Increased turnover due to increased DAF-related burnout

Worst of all, multitasking is addictive. The more we do it, the more we crave doing it.

Giving a contact center agent two monitors is liking putting a huge plate of cookies in front of the Cookie Monster and telling him to eat slowly. It ain't gonna happen.

Contact Center Applications

It seems there are plusses and minus to a dual monitor set-up. There are situations where two monitors make sense in the contact center. There are also situations where they don't.

Let's look at both, using data from the computer monitor manufacturers' studies.

Dual Monitors = Good. Having two monitors can help when agents need to look at two programs or screens simultaneously. For example, an agent might need to view a knowledge base while entering data into a CRM.

Dual Monitors = Bad. Having two monitors can hinder service when agents only need to look at one screen at a time. For example, an agent handling phone calls and using a CRM to handle the entire transaction.

Jeremy Watkin wrote a great post on the Communicate Better Blog about the distinction between using dual monitors and not using dual monitors. One suggestion that Watkin makes is to turn off the second monitor when you're not using it. It's an effective way to discourage multitasking, while keeping the second monitor available for times when it's needed.

My suggestion is to spend some time watching your agents interact with their dual monitor set-ups. Note whether they are truly productivity machines or if they're constantly bouncing their focus from one screen to the next.

Beware! Customers Are Watching These Private Moments

I really enjoy The Profit on CNBC.

It's a reality show where entrepreneur Marcus Lemonis invests in struggling businesses. In each episode, Lemonis investigates a business and then tries to make a deal with the current owners to help them turn things around. 

A recent episode featured a gourmet marshmallow company called 240sweet. Lemonis invested $100,000 in the business, but his relationship with the owners dissolved when he realized they were being dishonest with him. 

One owner in particular came across as abrasive, egotistical, and unethical. I won't spoil the ending, but you can watch the full episode on CNBC.com for a limited time.

The fallout after the show aired was amazing. 

Viewer Backlash

The Profit takes viewers behind the scenes to see how businesses really work. Lemonis goes through the company's financials, their operations, and even their customer service.

If an ordinary investor was doing due diligence on a potential business acquisition, most of those moments would be private. On The Profit, everything is on camera. 

What was shown on television was very unflattering.

240sweet was hit with an avalanche of 1-star reviews on Yelp and Google. Most of these viewers had never done business with 240sweet. They simply wanted to punish the company for what they had seen on television.

You may not have any plans to appear on a reality show, but you still need to beware of private moments when customers are watching.

The World is Watching

240sweet isn't the first business to look bad after their appearance on reality television. (Remember Amy's Baking Company?)

Your actions may still be recorded even when you aren't appearing on a reality show. Who could forget the FedEx package tosser or the sleeping Comcast technician?

You may not recognize the name Anjali Ramkissoon, but you probably remember seeing this video of the Miami doctor going nuts on an Uber driver. Her employer certainly noticed as she was placed on administrative leave after the video went public.

Customers may still be watching even when employees aren't being recorded. Here are just a few examples:

• Employee break areas that are visible to the public

• Employees who commute to work in uniform

• Employees having private conversations in customer-facing areas

Be Careful

A friend of mine recently had an embarrassing moment on her way to work. She was annoyed by another driver and laid on her horn to share her displeasure.

The other driver turned out to be her boss.

These incidents are a reminder to all of us that we never know when a customer, a boss, or anyone with a camera might be watching. 

Introducing a New Course on Innovative Customer Service Techniques

People often ask me what's new in customer service.

They're looking for advanced techniques, cutting-edge research, and frankly, short-cuts. Everyone wants to find a faster, smarter, better way to serve their customers.

If you subscribe to this blog, you know I publish a lot of that research here.

Now, I'm excited to announce that I've just created a new training video on LinkedIn Learning called Innovative Customer Service Techniques.

This post will give you an overview of the course, a preview of the content, and I'll let you know how to watch the training video for free.

Jeff Toister on the set at lynda.com

Overview

Companies often want their employees to think outside the box when it comes to great customer service. Managers and frontline employees, in turn, often want to learn new techniques to boost customer service ratings. 

The Innovative Customer Service Techniques course delivers new and cutting-edge research that can be used to take customer service to new levels.

Topics include:

• Influencing customer perceptions

• Enhancing service senses

• Building teamwork

Sneak Preview

This course was a lot of fun to create because it allowed me to share some of my favorite customer service lessons. I've included links to blog posts that detail the research behind a few examples:

• Jedi mind tricks for reducing customer wait time 

• Why customers should always know your name

• How detoxing our brains can improve customer service

Here's a short video from the course. It provides some tips for improving your powers of observation:

Improving your powers of observation from Innovative Customer Service Techniques by Jeff Toister

Watch It For Free

You generally need a LinkedIn Learning subscription to view these training videos. However, you can get a free 30-day trial account.

Your trial account will allow you to watch all of my training videos. You'll also be able to check-out LinkedIn Learning’s entire library of courses. They offer a wide range of topics including business skills, computer skills, and creative skills like photography.

Five Ways Weekly Customer Service Tips Can Boost Your Team

You can get a lot of great ideas from listening to customers.

A few years ago, I met a client for coffee. She had sent her entire team through my customer service training program and the results were looking good. Still, my client was worried.

"I want to keep my team sharp by continuously reinforcing the skills they learned in training," she said. "My challenge is I don't always know how to do that. I wish I had an easy way to remind them... and to remind me."

We brainstormed a little until we hit upon a simple solution. 

I created an automated system that emailed one customer service tip per week to each person on her team. My client would get the email too so she could follow-up with them.

My Customer Service Tip of the Week email is now available to anyone. Here are five ways you can use it to boost your team's customer service:

#1 Team Meeting Topics

Many customer service teams have regular meetings. You can use the Customer Service Tip of the Week to generate discussion topics to share with the team.

Let's say the current tip was Use Positive Body Language.

You could lead a discussion with your team to brainstorm ways that body language can positively impact your customers. Then, at the next team meeting, you could ask for people to share success stories and challenges they experienced when being mindful of the body language they displayed.

#2 Address A Specific Need

You can also use the tips to address a specific need. It might be something you’re working on personally or something your entire team is working to improve.

Let’s say you’re working on building rapport with customers. You might keep an eye out for weekly tips that are most applicable to rapport and try to implement each one.

You might not want to wait for an applicable tip to come along. That’s why I created the Customer Service Tip of the Week book.

It puts more than 52 of my favorite tips in one collection and organizes them by category. There’s also a chart on pages 12-13 that shows common customer service challenges and tips for addressing them.

#3 Generate New Ideas

The tips are designed to be reminders, but many of the tips contain helpful new ideas that your team can use to elevate their service.

For instance, the Five Question Technique is a terrific way to build rapport with customers while simultaneously identifying additional ways to serve. Best of all, even introverts can use this technique to become skilled conversationalists.

#4 Reinforce Training

The tips were originally designed to reinforce concepts taught in my customer service training programs. The reminders help participants retain what they learn long after they attend the training.

These reminders can also be used to reinforce other training programs because many are so general in nature.

#5 Feed Your Curiosity

Some people just want to know the most cutting edge ideas in customer service. That's why most of my weekly tips contain a link to a blog post or a helpful resource.

One of my recent tips was Tell The Truth. The email contained a link to a bonus blog post that detailed how a service failure and a lie created a customer service uproar that briefly grabbed national headlines.

Sign-up

Anyone can sign-up for the Customer Service Tip of the Week email here. Or pass this blog post on to your team and have them sign-up, too.

What Gift Baskets Taught Me About Customer Service Trade-Offs

When I was in college, I worked for the Boston chapter of a nonprofit organization called AIESEC. Our mission was to foster international and cultural understanding by finding short-term jobs in our local area for members from other countries. 

One of my responsibilities was running a fundraiser. We sold gift baskets to parents of undergraduate students at Boston University. The parents gave these baskets full of fruit and snacks to their kids as an encouraging care package right before Spring finals. 

I was only 18 and very inexperienced the first time I ran it. Through a combination of hustle and luck, the fundraiser was a huge success. 

I was much smarter the second year. We made much less money, but the program was far more successful. We scrapped the program entirely by my third year, and we were happy to do it.

Why step away from a successful program? It's all about trade-offs.

Year 1: Financial Success and Operational Pain

The gift basket program was pretty simple on the surface. 

We sent a direct mail letter to the parents of all undergraduate students at Boston University. The parents were offered a chance to buy a gift basket for their student right before Spring finals. We fulfilled the orders and kept the profit.

Operationally, it was a lot for a college freshman to manage. Keep in mind this happened prior to the internet's rise in popularity. Most people didn't even have email yet.

The direct mail piece had to be written, copied, and sent to the post office so it could be mailed out to more than 10,000 recipients. We had to buy address labels from the University, which required a mountain of red tape.

We saved a ton of money by making the gift baskets ourselves. I bought all the supplies in bulk at Sam's Club and then gathered volunteers to assemble the baskets.

When an order came in, we sent the student a post card letting them know their parents had purchased a gift basket for them. We had an on-campus office, so we set-up pick up dates and times when students could pick up their gift. This was a lot cheaper than mailing gift baskets to each recipient.

Financially, it was a huge success. The fundraiser paid for our entire annual operating budget.

Operationally, there were a few drawbacks. First, it took a ton of time. I spent untold hours on the project, but I also had to get other people to volunteer their time to help me out. This time commitment took us all away from our core mission of getting local companies to hire our members from other countries for short-term job assignments (up to 18 months).

Second, I had to deal with a lot of customer service headaches. Some students didn't bother to come pick up their gift baskets. We instituted a calling campaign to remind students to pick up their gift baskets, but that took up a lot of extra time. 

There were still plenty of students who didn't pick theirs up. This led to a lot of calls from upset parents. They didn't understand (or care) that it was their kid's responsibility to pick up the gift basket. They didn't understand (or care) that we couldn't deliver it and we also couldn't hold pick-up hours indefinitely because we all had finals too. 

These parents were really angry to hear we didn't offer refunds because it was a nonprofit fundraiser. Our direct mail piece stated this explicitly, but it didn't matter. This was my first lesson in the old axiom, "Customers don't read the fine print."

Year 2: Smart Trade-Offs

The fundraiser was an important source of revenue, but I wanted a solution to our biggest challenges for year 2:

• Too much time spent on the fundraiser

• Students were inconvenienced

• Parents weren't happy if their student didn't pick up the gift basket

I realized I could solve all of these problems by outsourcing the entire program. There were companies that specialized in this sort of thing, and they handled everything from sending the direct mail piece to order fulfillment.

Best of all, they shipped the orders directly to each student so there would be no issues with delivery.

The trade-off was there was no way that we'd make as much money. The margin we got running it ourselves was significantly better than we got from the outsourcer.

Here's why those trade-offs still made sense:

The time spent on running the fundraiser could be re-directed towards fulfilling our mission. In fact, we used our time wisely and wound up among the Top 10% of US Chapters in terms of jobs raised that year.

We also avoided a significant risk. You see, if enough parents complained to the University about poor customer service from our in-house gift basket program, the University would shut the program down. So, by improving service through a professionally-run program, we mitigated the risk of losing the program entirely.

The outsourcing plan worked beautifully. Parents and students were happy and complaints fell to almost zero. (The outsourcer handled the handful of tiny issues that did happen.) And, we still made some money, though not as much as the year before.

Year 3: No More Gift baskets

Redirecting saved time towards our core mission worked really well in Year 2. So well, in fact, that we no longer needed the fundraiser by Year 3. 

We had raised more than enough money to cover our operating budget through a combination of raising jobs (companies paid us a fee) and corporate sponsorships. These activities were all a core part of our mission while the gift baskets never were.

Learning

Frances Frei and Anne Morriss wrote an outstanding book called Uncommon Service in 2012. The book details how businesses must choose to do poorly in some areas so they can excel in areas their customers really care about. 

I could immediately relate to the trade-offs discussed in the book. It reminded me that revenue isn't everything, especially if that revenue comes with an opportunity cost.

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.