The Secret Sauce of Customer Care

Back in the mid-70s, my colleague Marc Grainer authored a landmark report, commissioned by the White House, examining the effectiveness of customer complaint handling in America.

Often heralded as a seminal study on the bottom- line impact of customer service, the results of this White House study demonstrated that customer care is a double-edged sword. Done right it can significantly increase customer loyalty. Done wrong it can be a very expensive way to decrease customer loyalty.

Unfortunately, the study also revealed that a vast majority of complaining customers were less than satisfied with businesses’ response to their product and service complaints; only 23% of complaining customers were satisfied with how companies handled their most serious problem. Such a result wasn’t especially surprising. After all, 35 years ago companies devoted scant resources to customer care. In those days, many companies feared being “ripped off” by a few “unreasonable” customers more than they aspired to satisfy the far larger number of their customers who had experienced legitimate product and service problems.

Times have changed. Corporate America got customer care religion. And contrary to conventional wisdom, this conversion probably had less to do with government regulation, Ralph Nader, and the consumer movement. Rather, it was the White House study that legitimized customer care as a marketing activity and repositioned it as a potential profit center. So, in the end, maybe it was just old-fashioned capitalism and the profit motive that caused companies to become more customer-centric.

Corporate customer care investments now exceed many billions of dollars. You can call, e-mail, chat, or tweet to companies around the clock. You can use an automated telephone system, log onto a web site, or visit a kiosk and “serve yourself.” Companies send you more satisfaction surveys than you could ever have an interest in completing, and there are an abundance of new industries that exist solely to make it easier, faster, and cheaper for corporate America to “talk” to you and “manage” its relationship with you. Indeed, the customer care revolution has truly come of age.

The Failure of the Customer Care Revolution But has the revolution succeeded? Are customers more satisfied? Are companies reaping the profits associated with better customer care? The data suggests otherwise.
Since 2003, CCMC has fielded a nationwide tracking survey – the National Customer Rage Survey – to monitor complainant satisfaction in America. Four such surveys have been fielded from 2003 to 2007. More than 4,000 households have been interviewed. The most surprising – and sobering – finding from these surveys was that after 35 years, and the expenditure of tens of billions of dollars, things have actually gotten worse, not better. The average level of complainant satisfaction (for customers’ most serious problems) was only 17%. This is 6% points lower than in the mid-1970s.

The bottom line consequences of complainant satisfaction and dissatisfaction for any individual business are profound. From the glass “half-full” perspective, satisfied complainants are nearly four to as much as 15 times more likely to recommend a company. Looking at the glass as “half empty,” dissatisfied complainants will tell more than 18 other people about their bad experience with a company, more than twice the number that satisfied complainants tell about their experience. Regardless, the economic implications of this finding are devastating to the U.S. economy as a whole. We estimate that the revenue at risk to American businesses (just for households’ most serious problems each year) exceeds $95 billion. Simply put, corporate America is spending a fortune not resolving customer problems and, as a result, is losing billions of dollars of sales and profits.

Solving the Customer Care Enigma: Conventional Wisdom Gone Wrong
Why has satisfaction declined in the presence of such significant investments to improve customer care? Are customer expectations inflated? Are customers more unreasonable? Have customers become total cynics? Have companies invested in the wrong things?

While these may be contributing factors, our own research suggests a much simpler explanation. Despite the best of intentions, this decreased satisfaction is a predictable result of implementing poorly thought out and executed customer care practices. More often than not, these ineffective practices have been formulated in a vacuum of conventional wisdom (i.e., “We didn’t ask customers what they value because we already know”).

To learn more about the impact of such customer care practices on satisfaction, we conducted two nationwide surveys between 2004 and 2005. More than 1,700 households were interviewed by telephone.

In all, we measured the impact of more than 150 customer care practices on satisfaction. Based on their experiences contacting companies about product and service problems in the past year, participants were asked to rate the impact of selected customer care practices using a “0” to “10” point scale. “10” meant that the practice “would significantly increase your satisfaction” and “0” meant it “would significantly decrease your satisfaction.”

We then classified the impact of these practices on satisfaction from having a strong negative to a strong positive impact. Here are just a few noteworthy examples of conventional wisdom gone wrong, and some considerations for engineering a better customer care experience.

Press 1 to Be Ignored, 2 to Be Frustrated
Conventional wisdom says that automated telephone technology is a win-win for companies and customers. Customer satisfaction is increased by giving customers the power to complete transactions quickly, effortlessly, and at their own convenience. Companies improve their customer care return on investment (ROI) by using automation to decrease the cost of service. But things haven’t worked as well in practice as they may have in the laboratory of conventional wisdom. In fact, most of the customer care practices associated with automated telephone technology are dissatisfiers. Being forced to use this technology without an option to talk to a real person had an especially negative impact on satisfaction. This practice scored almost dead last out of all telephone customer care practices being rated. And while voice mail certainly has a personal and commercial value we couldn’t do without, it’s a great disappointment to customers when they call for help with a problem. Yet, there’s some good news.

There are at least two tactics that can promote satisfaction with automated telephone systems. And they both have to do with giving the customer “power” and doing it quickly. Presenting the option to talk to a real person immediately—at the beginning of the automated telephone menu—or announcing the expected wait time both scored strongly positive ratings.

The messages here are quite simple. First, automated telephone systems may work well for repetitive, simple transactions (i.e., checking your bank balance, confirming a reservation, etc.), but they’re considerably less effective for handling customer questions and problems. Second, when used correctly for customer care transactions, automated telephone technology can increase productivity and satisfaction. Used inappropriately, both productivity and satisfaction will suffer, and most likely promote decreased customer loyalty.

You Can’t Always Get What You Want
Conventional wisdom…customers with problems always want “it all,” and they mostly want what companies can’t give them; things like money, compensation for their inconvenience, or free products and services…gone wrong. At least there’s a partial truth among these morsels of conventional wisdom.

Giving complainants everything they ask for (or not) is by far the most significant predictor of their satisfaction or dissatisfaction. The urban legend here is the faulty assumption that all complainants covet money more than anything else.

Findings from our National Customer Rage Survey unequivocally suggest that most complaining customers want much more than money. Most of all, they want the company to “fix” the product or service. And they want to be treated with dignity, respect, and gratitude along the way. Money, damages, and free products or services are all secondary to these relationship-oriented needs. The more disquieting finding from the 2007 National Customer Rage Survey is that 60% of complainants reported that they got “nothing.”

While it may not be possible to give all complainants “everything” that they want, it’s certainly practical to give them something. While getting partial resolution only scored a negative 3.55 rating, it’s almost four times higher than giving complainants “nothing.” And shouldn’t it be especially “easy” to offer them those things that cost nothing (e.g., an explanation, thanks for their business, etc.)?

Is the Devil in the Details?
When it comes to orchestrating an extraordinary customer care experience, certain details matter because while they seem irrelevant, they can negatively impact satisfaction. Conversely, some other minutiae, while seemingly critical, matter very little when it comes to satisfaction. The trick is to appreciate the difference between these two sets of practices.

The Nuance of A Lousy Customer Care Experience

Please repeat after me. One of the most maddening customer care practices is asking customers to repeat information they’ve already provided at least once, like long ID numbers, account details, or their reason for calling. Leading companies find a way to meet their privacy requirements without inconveniencing the customer.

What we have here is a failure to communicate. Customers won’t get what they’re asking for if they can’t understand what’s being offered. Speaking too quickly, too quietly, with a strong accent, or using bad grammar greatly limits customer satisfaction. The best companies understand that representatives are paid to be brand ambassadors, not simply process transactions.

Your call is very important to us. If your customers must endure being put on hold, don’t insult their intelligence in the process with self-serving or patronizing messages while they wait. Endless repetition of the same messages, advertising, directing them to your web site, or telling them that they’re important adds insult to injury. The best alternative? How about a little music?

I can’t get no satisfaction. Over the last three decades, many companies have adopted a rational, customer-driven policy of inviting customers to take a satisfaction survey after they call or e-mail for help. Don’t ask if you plan to ignore them. Unless the company takes action to solve the problems customers identified on the surveys, much of the “opportunity” benefit from such surveys will be lost.

Don’t Sweat the Details

What’s in a name? I have consulted with more companies than I can count who base their “personalization” policy on the practice of calling the customer by name at least three times in every conversation. Some believe it’s better to use the first name and others believe it’s best to use the last name. The truth? It doesn’t matter very much at all. Better you should concentrate on improving other things.

Small talk and humor. Somewhere, somehow, for some reason, many companies placed an unusual emphasis on the “care” in customer care. At these companies, representatives are asked to make “small talk” to fill up the dead air while they look through account details or to give their best effort at standup comedy. Small talk is what it’s named – “small” – and it’s a lot like Muzak (i.e., background noise). And what’s funny to one is not to the other. Maybe it’s a better idea to have representatives practice active listening so as to improve their diagnosis of what customers need.

Where to from Here?

Illustrating “the law of unintended consequences,” American businesses have harnessed plenty of good intentions, made a yeoman’s effort to succeed and spent billions to improve customer care. Disappointingly, they’ve earned a rather meager return on this investment.

Customers are less satisfied with how companies respond to their complaints today than they were 35 years ago. And the bottom-line consequences for both individual business and the American economy are profound and real.

The secret sauce of better customer care may be valuing unconventional wisdom or giving credence to the customer’s point of view instead of relying on notional and company-centric assumptions about what makes for an extraordinary customer care experience.

What do your customers want and expect?

Maybe you should ask them.