BUSINESS

Alpha company or also-ran? Using BI for better customer service

June 5, 2007

What do Four Seasons, Cadillac, Hertz, and FedEx have in common? They all made BusinessWeek's list of top 25 customer-service companies.

These A-list businesses put customers first – with personalized service, convenience, faster deliveries, and trained and motivated staff. And they muster their people, technology, and processes to get it right.¹

Happy customers mean higher profits

Why does good customer service matter? Besides the accolades, a reputation for customer care translates into better brand recognition, competitive differentiation, and higher profits.

"Technology is leveling the barriers between alpha companies and also-rans, making great customer service one of the few ways companies can distinguish themselves," says BusinessWeek.²

For angry customers, YouTube offers a global audience

Media sites like YouTube let unhappy consumers share complaints and damage reputations on a wider scale than ever before, says BusinessWeek:

"Companies continue to learn the hard way that poor-customer-service complaints can make their way from niche Web sites to network television before there's time to say "full refund."

For retail especially, a quality consumer experience translates into more sales. So issues like price, service, convenience, and even parking, matter.

And a happy customer is more likely to be a loyal and repeat customer. According to a GM study, customers who receive good service are five times more likely to buy another car from the same company than those who have had a bad experience.³

An added benefit? When call center agents meet the service needs of customers, those customers are more inclined to buy other products. For some telcos, call centers generate up to 60 percent of new revenue.⁴

The perils of poor service

On the flip-side, companies pay a high price for their less-than-satisfactory service. "These 'moments of truth' lie behind much of the customer attrition at banks, mobile carriers, and many other companies," says McKinsey.

Companies pay a price for their less-than-satisfactory service. These "moments of truth" lie behind much of the customer attrition at banks, mobile carriers, and many other companies.
– McKinsey

And when things go wrong, a customer service misstep can spell financial trouble. JetBlue, for example, is still recovering from a February ice storm that left passengers stranded on planes and operations in chaos.

Share prices dropped 5 percent and costs are an estimated $30 million. The company is still working to woo back its lost customers.

Your first steps to improving customer service

How to win customers on the service front? The customer service department is a good place to start.

It gathers a lot of costumer data through CRM software and other support tools, as well as customer surveys and loyalty programs. The benefit is more information. But within the volumes of data, root causes may be hidden.

With business intelligence, companies can aggregate the information and find patterns in terms of customer preferences, information requests, delivery delays, complaints, and claims. All of which can lead to proactive solutions like quality improvements, better operational efficiencies, or new services.

BI lets companies aggregate customer information and find patterns in terms of preferences, information requests, delivery delays, complaints, and claims. All of which can lead to proactive solutions.

Even if companies can't make improvements, they can categorize issues and link information across departments to speed the time to resolve problems. And that can salvage many frustrated customer relationships.

Not all customers are created equal: HBR

Good customer service departments also consider the relative value of their customers – who are the most profitable in terms of the bottom line.

According to Harvard Business Review, loyalty doesn't always equal profitability. A loyal customer, for example, may only buy low-margin products or make infrequent purchases.

To manage both, HBR suggests a measurement system based on event history modeling. This is where pacing (time between purchases) is combined with the average profit customers generate in a specific period.⁵

Determining relative value provides a useful framework to prioritize services and maximize rewards. So a premium level of service might be offered free to high-value customers in return for greater loyalty.

Optimize the customer experience

Harrah's, one of the world's largest casino and hotel empires, leverages customer information to model its Total Rewards® program. With the help of Cognos BI, the program allows management to offer incentives that encourage the most profitable customers to spend more dollars.

"One of our objectives is to make sure the customer experience at our touch points is as rich as possible based on the variety of data and applications we have in the background." – Tim Stanley, SVP, Innovation, Gaming & Technology and CIO, Harrah's

Through the pursuit of customer insight, the company has been able to enrich the consumer experience. And it has built a national portfolio of casino holdings full of loyal clients.

"One of our objectives is to make sure the customer experience at our touch points is as rich as possible based on the variety of data and applications we have in the background," says Tim Stanley, SVP, Innovation, Gaming & Technology and CIO at Harrah's.

Tie employee incentives to performance

Using metrics, organizations can set service performance goals and align them with accountability and incentives. People see what needs to be achieved and what they need to do. They also see results.

Besides motivating staff, service metrics can help companies set priorities for resources. Poor performance in one area may point to the need for greater process automation, or less automation and more personalized service. Or companies may want to improve customer-facing skills and expertise through training or certification initiatives.

Summary

Reliable service or call center queues? By analyzing customer feedback and other data, companies can determine whether client satisfaction is high or low. And they can use that insight to improve the business. By doing so, they may find fewer customers using the help lines and more of them helping the bottom line.