DEVELOPING CUSTOMER SERVICE - TEN YEARS OF LEARNING

In this article the authors draw on their experience from ten years of helping
organisations create a customer focus. They outline the lessons of the
development of customer service in best practice organisations and investigate
what it take to ensure an organisation is truly responsive to its customers.

Customer satisfaction and retention

The British used to be notorious for bad customer service. Then came the ‘80s
and the rise and rise of the customer. Companies who had scorned the idea of
customer service changed their attitude when they discovered that there was
goodwill and business to be won and lost by servicing the customer well.

The consequences of failure to deliver consistently good service can be painful.

This year the number of complaints concerning British Gas has risen exponentially
over previous years and has become the subject of widespread bad publicity for
the company.

Increasingly organisations are recognising the power of satisfying existing

customers. Statistics show just how crucial customer retention can be :

 Reducing customer defects can boost profits by 25 - 85% (Harvard Business

School)

 The price of acquiring new customers can be five times greater than the cost of
keeping current ones (US Office of Consumer Affairs)

 The return on investment in marketing to existing customers can be up to

seven times more than to prospective customers (Ogilvy and Mather Direct)

Old company complaints departments have been transformed. The story of the
makers of Tetley tea bags reflects this. The previous complaints department was
geographically and organisationally remote and procedural. It wrote letters and
shielded managers from customer contact. Now it is part of the marketing function
and services are a key component of the customer relationship which is more
open and accessible, with a freephone number on its packets.

The number of loyalty schemes from Tesco to Airmiles is witness to the

importance companies now place on building continuous relationships with the
customer. Yet rewarding loyalty does not guarantee customer retention. Many
experts believe that few buyers are 100% loyal in a year and those who are tend
to be light users of a product or service.

Customer retention can only be achieved if every aspect of the customer’s contact
with an organisation is focused on their needs. This includes not only the product
or service offering, but how it is priced and promoted, where it is available, the
processes through which it reaches the customer, what it looks like (physical
evidence) and the people who deal with the customer.

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 The Product / Service

Price Place

Promotion People

Physical evidence Processes

In generating long-term relationships, therefore, best practice companies develop

ways of improving all aspects of how they do business with the customer.

Telephone banking service First Direct is an example of an organisation which has

revolutionised the banking industry by its drive to provide a flexible service to the
customer. It offers an attractive product and service to its customers at a
competitive price. Its 24 hour service, 365 days a year means it is constantly
accessible to its customers (place). Its advertising and corporate literature
(promotion and physical evidence) provide a comprehensive overview of its
services. Its processes are unbureaucratic and its people are specially trained to
provide high standards of service.

Average service is not enough

Today, successful organisations rigorously pay close attention to the customer and
do so throughout the company. They are not content with providing average
service to their customers. Various studies show that between 65% and 85% of
customers who have switched their purchases to a new source rate their former
supplier as satisfactory. Organisations such as British Airways, First Direct,
Natwest Life, The AA, TGI Fridays, the Benefits Agency and Rank Xerox
recognise that excellent service is key to customer satisfaction and therefore a
predictor of customer loyalty.

The characteristic of good service organisations

Best practice customer service organisations are characterised by the steps they
take to reinforce a service ethic. These include 10 identifiable characteristics:

Regularly listening to customers

Best practice organisations recognise the need to listen to their customers

because customer service needs to be addressed from the perceptions of the
customer, not the service provider. Only by asking customers for their views will
you see what’s important from their perspective and identify what needs to
improve.

The first step, therefore, in the satisfaction of customers is regularly to canvass

their views on how the business is performing and what needs to change.

Listening to customers has become a key art and science. Reebok in the UK set
up focus groups with its retailers and from these designed a questionnaire which it

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sent customers. The feedback from the questionnaire produced 112 areas for
action.

At the outset of a service improvement programme, Midland Bank sent a letter to

each of its 4.5 million customers asking them what it needed to do to improve. It
later sent out a report of the results and received 10,000 unsolicited letters of
praise and an increase in business.

The challenge for the Midland, like many organisations has been how to sustain
and develop systems, standards and people to meet rising customer expectations.
Canvassing customers’ views on a regular basis allows businesses to monitor
their service delivery over time. Roadside recovery operation the AA has
developed a customer satisfaction index based on customers’ perceptions of its
performance. The index is generated by taking a sample of all breakdown jobs
and mailing customers with a questionnaire approximately 4 to 6 days after they
have received the service. On average 6 to 8,000 members are mailed a month.

Managers who lead by example

Many senior managers make the mistake of exhorting employees to focus on the
customer yet fail to demonstrate through their actions that they are committed.
Words from on high are meaningless unless backed by actions. Unisys UK chief
executive, George Cox, comments : “No CEO is going to say his company ignores
the customer. But the top guy has to believe it in order to get the entire
organisation soaked in the attitude that the customer really matters.”

The key to service success is for managers to model the customer service
behaviours they require from their staff. They must start from the top and be
visible to all management actions.

We recently undertook an employee survey on behalf of a high street retailer.

Senior management had developed a customer service strategy and wanted to
see how this was received at staff level. The survey revealed that employees felt
that the most important parts of their jobs were the tasks they needed to do to get
the stock into the shops. Store managers were doing little to motivate them to
focus on the customer. The survey revealed that this was because their own
mangers were not encouraging them to do so. Typically they only mentioned
service (and them in a critical fashion) if the branch’s mystery shopper results
were poor. They did not provide encouragement or support or recognition of good
service to demonstrate that everyone should focus on the customer.

Customer service requires a different approach to managing. Managers need to

lead by example. In the early ‘80s when Xerox Corporation was fighting back against
fierce competition from Japanese copiers, CEO David Kearns led a culture change in
which customer satisfaction became the number one corporate goal. He reinforced it
emphatically by insisting that he and his senior executive colleagues took it in turn
once a month to answer customer complaints and queries on the 'phone.

Supermarket chain Asda insists on managers ‘leading from the front’, starting with
the style and actions of its Chief Executive Archie Norman. This approach has
enabled the company to instigate a dramatic turnaround in its business
performance. BUPA has instituted a change programme to help continue to be
successful in a fiercely competitive market. It has learned from past experience
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that real change depends on managers actively supporting the changes and
providing leadership through their example.

Best practice organisations recognise that leadership style is key to success. The
‘One-Minute-Manager’ reminded everyone that motivation can come through
simple day-to-day actions of correction or praise. Praise and encouragement are
part of coaching, which has come to be recognised as a valuable element in
implementing improvements in performance. One utility has recognised the role of
managers in coaching employees to make the organisation more open and
flexible, less bureaucratic. Senior managers have attended a people skills
programme covering coaching, open communications and people development.

Glaxo Wellcome is supporting its managers and teams by using team coaches in
parts of its organisation to achieve substantial organisational change in response
to a major shift in customer needs.

Setting and maintaining standards to meet customer expectations

Establishing standards of performance to meet customer expectations provides a

benchmark for all employees to reach on a consistent basis. Every Little Chef
Restaurant displays its service standards as a commitment to customer
satisfaction and this sets an agenda for development of staff continually to meet
those standards.

To be successful standards should be based on feedback from customers on what

is important to them. Staff also need to buy in to these standards. At software
company SCO, service standards were set after extensive discussion and
agreement with all staff and consultation with customers. These form the basis of
periodic performance reviews and development planning sessions with the
employee’s manager. The standards include defined technical and product
knowledge, and explicit ‘soft’ criteria such as flexibility, handling pressured
customer issues and personal leadership on service skills amongst colleagues.

Importantly, organisations should be wary of publishing standards or charters to its

customers which it cannot achieve. One of the authors was in a busy restaurant
and noticed the discrepancy between service actual times and the service charter
it displayed. When it was pointed this out he was told ‘that’s just there as a joke,
we take no notice of that’. This only raised expectations to then disappoint them.
Many organisations are taking a more thorough approach to standards by
integrating customer service into their competency frameworks.

Training and development is embedded into the organisation

The power of commitment and culture has come to be seen as a central

foundation of customer service training. It used to be thought that individual
training was the primary engine for service improvement. Now training the
managers and their teams is seen to be a vital weapon for improvement. This
training often uses the team manager as facilitator. For example Pizza Hut used
250 managers and trainers to deliver a customer service training programme.

Yardley of London recognised it had to improve its business performance and do

more to enhance the service it gave. It did this by training whole teams in

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communication and problem solving skills and imparting a better understanding of
the concept of teamworking. This led to empowered teams making radical
improvements and lifting morale and productivity.

Training and development in customer service has become a lot more refined. For
example, Tesco encourages staff to take NVQ Level 3 in Customer Service. This
assesses members of staff against 16 components of competence which include
maintaining reliable customer service, communicating with customers, developing
positive working relationships, solving problems, initiating and evaluating change
to improve service. At Eurostar Cross Channel Catering, new staff are videoed in
training sessions with existing staff role playing customers for true-to-life reactions.

Increasingly it is recognised that a training course is not enough - feedback and

coaching on the job are important for training to ‘stick’. Companies such as the
mail order clothing company Lands End tape some customer calls as a means to
coach staff using real data.

Focusing on the customer inside and out

Excellent Excellent Satisfied Customer

internal service  external service  customers  loyalty &
quality quality retention

As well as conducting regular surveys of customer satisfaction amongst policy

holders, financial services organisation Natwest Life tracks satisfaction levels
amongst a second set of customers - the parent bank’s dedicated sales force of
personal financial advisors. This is an example of the importance of serving
colleagues : if you feel you are getting a service and support from other
departments you are much more likely to deliver a good service to the external
customer.

Increasingly companies adopting a customer focus or undertaking a total quality

management approach place emphasis on the internal customer. TNT launched a
13-week training programme which included a video following the progress of a
parcel. This helped generate awareness of the total process and transformed
attitudes to the customer, particularly amongst those who had no direct customer
contact and did not always see the consequences of their actions on late delivery
or poor services. Other companies encourage cross-functional team-working and
job shadowing to create a greater understanding of internal customer needs.
During a customer service programme some years ago British Airways stage a
‘Day In The Life Of’ event which allowed employees to gain a better understanding
of each function.

In our experience, unless internal service issues are resolved, time spent focusing
on external customer issues is ill-spent. Much of the work we are required to do
on behalf of clients revolves around facilitating greater management and employee
awareness of internal customer links.

Improving processes

Process analysis is now part of many service improvement initiatives. For

example, building society. National & Provincial reviewed all its business

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processes in an effort to become more customer-focused. Sun Life trained its
revamped customer service teams into multi-skilled groups who handle entire
applications as ‘case managers’ instead of segments of a process on a production
line.

The benefits of process review are that it gives organisations an opportunity to

‘start with a blank sheet of paper’ tracking back its processes from the customer.
This means devising new ways of working, or re-working, which are the least
bureaucratic and complicated for the customer. The result is often greater
flexibility and responsiveness to customer needs. Ashridge Management College
reviewed its key processes and found only two of eight were directly related to
service delivery.

Experience shows that this approach works best when employees are involved in
the design of the new processes and where training and support are provided to
help them acquire new skills.

Empowering employees

Today employees are given a much stronger role in making customer service
changes - after all they deal with customers day-to-day. At Norweb staff rate
themselves against customer service competencies to identify training needs.
Stena Line introduced a new fast-food service on one of its cross-channel ferries.
Managers put together detailed plans by visiting theme restaurants and debating
strategies in workshops and staff then designed new uniforms at training sessions
as one of many decisions they took to make the plans a reality.

Avis understands the need to treat staff in a supportive way and that this impacts
on the customer. It uses the acronym ACTORS to sum up its approach to
empowered service. In its training and its whole philosophy it seeks to ensure
employees have :

 Authority to take decisions

 Confidence and competence to do their job
 Trust from the management
 Opportunities to grow
 Responsibility, to be accountable
 Support from management and team members

The move towards empowerment also coincides with a shift towards greater
recognition of the need to deal swiftly and positively with complaints. Research
shows that organisations who adopt a philosophy of ‘Right First Time’ and
effective service recovery ensure greater customer loyalty.

Many businesses are now empowering their staff to take decisions to resolve
customer problems as they occur. This means that customers need not have the
bother of going through lengthy and bureaucratic procedures to have their
complaints resolved. Recently the authors queried a hotel bill after the credit card
account had been processed. Instead of a cumbersome procedure of cancelling
the old bill and making out new forms, the receptionist simply opened the till and
gave a cash refund.

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Recognising and reinforcing excellent service

Recognising and reinforcing good customer service behaviour is a continuous and

powerful means of demonstrating its importance.

Many best practice service organisations develop reward and recognition schemes
to encourage excellent service. There are a variety of methods which can be used
to reward and recognise outstanding service achievement and the most
appropriate route will depend on the culture of the organisation.

Hi-fi retailer Richer Sounds runs an ABCD scheme which rewards individuals who
have gone ‘ABove the Call of Duty’ with a gold aeroplane badge and a letter of
praise from the chairman. Other organisations emphasise team effort. At car-hire
company, Euro-dollar, Head Office departments can win gold, silver or bronze
awards based on the quality of service they provide their internal customers.

Whatever the reward, the criteria for recognition should be seen to be fair.
Managers need also to remember the power of a simple ‘thank you’ and ‘well
done’ which can often mean a great deal to their staff.

Integrating customer service into all business activities

Successful service organisations ensure that customer service is integrated into all
the activities of the business, so that focusing on the customer becomes part of
the organisational way of life. This means including customer service as a key
component of recruitment, induction, the setting of performance objectives and
competencies, appraisals, reward and recognition, employee communications and
all management meetings. The European Foundation for Quality Management
(EFQM) assessment process reinforces the need to pay attention to every aspect
of the business to improve quality and service. Its framework looks at leadership,
business processes and employee attitudes for example as part of an integrated
approach to improvement. There are numerous illustrations of customer-focused
organisations adopting these integrated routes to business management.

 Restaurant chain, TGI Fridays for example, lays stress on their recruitment
process which includes intensive individual and group assessment to ensure
that they take on customer-focused people. Harvester Restaurants puts
particular emphasis on its induction training which all new staff attend, where
staff are taken through the mission and culture and then are invited to make a
commitment as to what they will do personally to fulfil the vision. This is then
reviewed in the working teams back on the job.

 Organisations such as NatWest have built customer service into its competency
framework. Office equipment company, Rank Xerox has customer service as a
key corporate objective. This forms part of all employees’ key performance
criteria and is a regular feature of performance reviews.

 Allied Carpets, has linked a proportion of employee bonus not solely to carpets
sold but also to customer satisfaction ratings as part of its drive to be more
customer focused. The London Borough of Sutton, publicises success stories
as part of its service quality initiative to demonstrate positive examples of
excellent service to all employees.
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 Some organisations have found that a practical way of making customer service
an integral part of organisational life is to put customer service as the first item
on all team agendas.

Constantly reinforcing the service message

Many companies have faced fierce competition and enormous pressure to reduce
costs. This has led to cut-backs: layers of management have been removed and
so have swathes of employees. Yet there is still a need to produce even higher
standards of service. In times of difficulty the temptation is to forget the service
message. Some, but not all, organisations have seen value in constantly re-
inforcing customer focus as a means to gain greater flexibility and responsiveness.

Tom Farmer, Chairman and CEO OF Kwik-Fit has this to say about the positive
effects of training focused on customer needs, even in recessionary times. “In
difficult times training is even more important because it is a tremendous
motivational factor.”

British Airways transformed its business leading with a major investment in

customer service programmes for all staff. It still continues to invest heavily in
customer service initiatives because it sees the importance of continually
improving its business in a highly competitive world. In common with the
organisations we have described it uses regular systematic feedback from the
customer to ‘keep it on its toes’ and translate deficiencies and opportunities into
development actions.

The lessons

So what have we learned from reviewing best practice in customer service?

Customer service needs to be integrated into the business - its culture, its
language, its role models and its teams and all its management activities.

 The starting point is a sound understanding of customer needs - listening to

customers needs to take place on a regular basis

 Managers must model the customer-orientated behaviours they require in their

staff.
 Standards of service need to be set which are meaningful to the customer -
and employees should be given a chance to be involved in setting these,
including incorporating suggestions for improvements.

 Today’s customer service training needs to focus on every part of the company
- managers, individuals and teams-and be linked to a process of on-the-job
coaching and development

 Excellent external service quality often depends on excellent internal service

quality. An improvement strategy should take account of the total organisation
and its processes

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 Empowerment, reward and recognition are means of creating a customer focus
if used thoughtfully

 The customer service message needs to be constantly re-inforced.

Sarah Cook is Director of customer care specialists, The Stairway Consultancy.

Steve Macaulay is a service and change consultant.

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