How Data-Driven Insights Optimize the Service ExperienceKey Findings from 2012 Customer Tolerance Research

Executive Summary/AbstractAll too often, customer service executives trust their gut around customer tolerance when managing their organization’s customer service operations, and specifically contact centers. They speculate about where to invest and which service attributes to adjust. But there is a downside to this guesswork approach. In the rapidly changing service transformation industry, pulling one lever too far might result in an unexpectedly negative impact to customer satisfaction—one that is hard to recover from and may result in churn.

In 2012, Accenture conducted primary customer tolerance research to provide insight into the pivotal question about how much customers will put up with before loyalty slips—and what organizations can do to effectively recover from service failures.

With this groundbreaking research, customer service executives can stop relying on hunches. Instead they can understand the factors behind customer tolerance and make data-driven decisions about which service attributes to emphasize, such as first call resolution, overall wait time, overall handle experience, number of handoffs or offer effectiveness. The research results can also help organizations to identify industry-specific issues that trigger customers to call in for service, such as billing issues or incorrect reservations. With this knowledge, companies can proactively apply the correct service recovery tactics to maintain customer loyalty.

Finding the right balance of these two critical service elements can directly impact an organization’s ability to increase satisfaction, improve retention, and ultimately optimize the customer experience. In time, this action can also drive growth since the customer base will be more stable.

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In the rapidly changing customer service industry, organizations are challenged daily with making the right customer service tradeoffs to balance service levels with customer care costs. Should customer service executives invest in an interactive voice response (IVR) system to quickly identify customer problems and route accordingly? Should they increase customer service representative staffing to reduce call wait time? Or should they modify their organization, processes and technology to allow the first contact customer service representative to complete resolution without handoffs?

To address questions like these and better understand the nuances around customer tolerance, Accenture conducted primary research in January 2012 in the United States and Mexico. The Internet survey was designed to test tolerance across three dimensions (see sidebar “Customer Tolerance a Multi-Dimensional Characteristic”) and thereby to infer the critical service elements that most impact tolerance across five key industries. These industries were gas and electric utilities, retail banking/financial services providers, telecommunications providers, consumer goods retailers, and travel and tourism providers.

The survey asked questions around customer satisfaction and required respondents to assign points in a series of paired comparison tests. The survey also presented respondents with scenarios that tested trade-offs that customers make in a complex service situation, and then measured the impact of variations on five key service attributes to overall customer loyalty.

These attributes were:•First call resolution (FCR) rate—to

determine how much customers value resolving their issue when they first initiate contact via a phone call versus calling in multiple times.

•Overall wait time—to determine the impact of putting a customer on hold one minute, three minutes or five minutes before speaking with a customer service representative, and the point beyond which customer frustration rises.

•Overall handle experience—to determine which factors most contribute to customers losing patience, such as handing them off to another customer service representative or putting them on hold during resolution.

•Number of handoffs—to determine how many handoffs are acceptable before satisfaction lapses.

•Offer effectiveness—when a problem cannot be resolved, to determine if an organization can atone for a service issue by offering the customer something of value.

In total, 1,510 customers responded to the Accenture survey—1,000 customers from the US, and 510 customers from Mexico. The results provide data-driven substantiation of customer tolerance levels around specific attributes of the service experience.

Customer service executives can use this research to make more informed decisions to help drive an optimal experience for customers, while cost effectively managing the complexity of their customer service operations and maximizing the productivity of customer service representatives.

Customer Tolerance a Multi-Dimensional Characteristic

Customer tolerance is a critical area for an organization’s customer service function to understand. Accenture defines customer tolerance as a three-dimensional characteristic that describes:

• Theabilityofacompanytorecoverfrom a service failure.

• Theimpactofcomplexservicetrade-off choices on customer retention.

• Theimpactofserviceexperience on customer satisfaction.

Finding 1: Recovering from Service Issues or FailuresThe Accenture survey results showed that prompt issue resolution was the recommended way to recover from a service issue and retain a customer’s business. In fact, survey respondents across all industries indicated they had a very low tolerance for delays and lapses in service resolution. However, when the resolution process caused some aggravation to the customer or the issue could not be resolved, the Accenture survey results showed that organizations could still make interventions to recover from a service failure.

To illustrate this finding, in one scenario tested in the survey a hypothetical gas and electric utility risked customer churn of 70 percent when the customer service representative indicated they could not reverse overcharges on a customer’s monthly bill. Conversely, the same organization recovered nearly 60 percent of customer satisfaction when a customer service representative acknowledged the problem, corrected the statement for the next billing cycle and offered a five percent discount on the next bill (see Figure 1).

As this example shows, organizations can salvage customer relationships by providing a relevant and effective offer that the particular customer segment

Key Findings from the 2012 Customer Tolerance ResearchAnalysis of multiple data points in the Accenture 2012 Customer Tolerance Research revealed specific insights in three areas related to how organizations can improve the customer experience. These findings were:

•Companiescanrecoverfromserviceissues or failures if resolved quickly and appropriately with an offer valued by the customer.

•Customerswantfirstcallresolution;however, wait times that are longer than three minutes quickly outweigh first call resolution benefits.

•Customersarewillingtobetransferredonce to resolve a problem, but satisfaction declines rapidly if they experience additional transfers or other hassles.

The sections below take a deeper look at the data points to help customer service executives make more informed decisions about which service attribute levers to adjust—and why.

values. Possible interventions include discounts, fee waivers, special benefits, or other complementary products or services. Although these negative and positive data patterns were consistent across the industries surveyed, the best recovery offers should be tailored to the service context and industry. An intervention that works for one organization may not necessarily work for another.

It is important for customer service executives to note that the Accenture research tested generalized service triggers, defined as reasons customers call for support, by industry. While the results provide clear indicators on which actions are effective to respond to a service failure and which will only exacerbate the issue, it is imperative for organizations to identify the specific service triggers for their industry, and product or service lines.

With these defined service triggers, an organization can then decide how to solve the most common customer problems. Most likely this will require establishing new processes to give the contact center clear ownership in resolving the issues. It will also be necessary to equip customer service representatives with offers that are valuable to a customer base. To design these offers, organizations can use direct customer input as well as customer segmentation to articulate customer priorities, values and propensities.

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Figure 1: Companies Can Reduce Churn by Offering Something the Customer Values

Accenture 2012 Customer Tolerance Research

Gas and Electric Utilities

84% 70% 67%11% 9%

Received the correct monthly bill and have no need to contact the company

Overcharged on your monthly bill

Billing department says there is nothing they can do and you are required to pay the quoted amount

You get through to a rep who can correct your statement the next billing cycle. For the inconvenience, the agent offers a 5% discount on your bill for that month

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Figure 2: Organizations Face Trade-offs in Balancing First Call Resolution with Wait Time

Accenture 2012 Customer Tolerance Research

In addition, organizations will need to weigh the financial costs of the offers and determine how much they are willing to spend to retain customer loyalty. For example, if customers call a mobile phone provider about an incorrect bill, a company must decide if it can feasibly offer a free service or a discount on the next bill without cutting too deeply into revenues.

Finding 2: Limiting Wait Time to Three Minutes According to the Accenture survey, when customers initiated contact with a company, they placed a high priority on having their issues resolved on the first call. This finding was tempered, however, by a corresponding statistic indicating customers did not want to wait an extended period of time to speak to a customer service representative.

Across all industries, results showed that customer satisfaction was definitely in peril if the call wait time went beyond three minutes. Given this finding, organizations should generally strive to connect customers in three minutes or less to customer service representatives who can fully resolve their requests. Regionally, Mexican customers showed a slight variation, indicating they were more willing to trade off first call resolution for shorter wait times if the wait was limited to one to three minutes.

To illustrate these findings further, in a scenario comparing the optimum balance between wait time, transfer, put on hold and first call resolution, the results showed that customers of a hypothetical financial service provider were reasonably tolerant (56 percent) of wait times of up to three minutes as long as they resolved their issue on the first call, and were not put on hold or transferred to another customer service representative.

However, when wait time exceeded the three minute margin, and particularly if it involved being put on hold or being transferred multiple times, the survey showed that customer loyalty declined 18 percent with a five minute wait time but no transfer, and 29 percent with a five minute wait time and a transfer—even if customers received first call resolution (see Figure 2).

The message from customers was clear. If companies make them wait, it better be for a valid reason, namely connecting them to experienced customer service representatives who can take care of their requests. In fact, according to recent Accenture consumer research, one of the service characteristics that customers value most was being able to talk with knowledgeable, well-trained and polite customer service representatives. And more than one-third (36 percent) of customers cited a lack of knowledgeable customer service representatives as a top reason to switch providers.1

89%73%

41% 39%

56%

41%

21% 22%

38%27%

12% 14%

Retail Banking/Financial Services Providers

Would definitely want to do business with that company

Overall

FCR vs “Wait Time” trade-off

FCR vs “Wait Time” trade-off

US

ScenarioElementsWait time Least

(1 min)Least

(1 min)Least

(1 min)Least

(1 min)Escalated to 3 min

Escalated to 3 min

Escalated to 3 min

Escalated to 3 min

Escalated to 5 min

Escalated to 5 min

Escalated to 5 min

Escalated to 5 min

Transferred/Put on hold

No Yes Yes No No Yes Yes No No Yes Yes No

Mexico

Call resolution

First call First call Follow up call

Follow up call

First call First call Follow up call

Follow up call

First call First call Follow up call

Follow up call

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Additional survey results of interest included the findings that 1) there were no tangible benefits to connecting customers in less than one minute unless a customer service representative answered immediately upon the first ring, and 2) in all cases, being transferred or put on hold did not make a difference if a customer did not receive first call resolution.

With this data as a guide, organizations can assign a monetary figure on retained satisfaction and make more calculated decisions about additional technology or operational investments in the contact center or other service channels, such as Web, chat or IVR. Setting a service level requirement to resolve customer inquiries in less than five minutes without any transfers or holds to gain a 22 percent increase in

marginal customer satisfaction may not be worth it to some organizations if they have to spend considerable funds. Likewise, an organization may determine that attempting to answer customer calls in less than one minute is not a tradeoff they wish to make in terms of budget and resources.

Finding 3: Reducing Multiple Transfers and Other Hassles According to the Accenture survey respondents, being transferred once had a relatively low impact on satisfaction, but multiple transfers led to a significant decline in satisfaction. One likely reason for this drop is a correlated finding that customers dislike having to repeat information about their issue

to each subsequent customer service representative. Instead they prefer to have customer service representatives know their history based on information previously provided.2 Multiple transfers can also increase overall wait time and further degrade the customer experience.

To make wise use of the one transfer limit, organizations should reevaluate their handoff processes and consider ways to route calls more efficiently, prepare successive customer service representatives with the customer history or smooth the transfer process using computer telephony integration. Another option is to reorganize the contact center into groups or tiers with customer service representatives who specialize in handling common customer inquiries.

Results based on:Satisfaction with companies respondentscurrently do business with“very satisfied” used in analysis

69% 70%

58%

52%

51%

47%

38%

37%

61%

60%59%58%

54%

64%

No Yes, Once Yes, more than once

Gas and Electric UtilitiesRetail Banking/Financial Services ProvidersTelecommunications ProvidersConsumer Goods RetailersTravel and Tourism ProvidersAverage

63%63%62%

59%

Figure 3: Transferring Customers Can have a Marked Impact on Customer Satisfaction

Accenture 2012 Customer Tolerance Research

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In terms of industry variations, the customer tolerance results related to being transferred were most distinct in the telecommunications and utilities industries. The sharpest decline happened in the gas and electric utility industry, in which customers indicated satisfaction of 63 percent if not transferred during a call, all the way down to 37 percent if transferred more than once (see Figure 3). The impact of factors such as first call resolution, wait time and being put on hold on customer satisfaction were also more pronounced in these industries.

Yet another way that organizations can minimize transfers is to reconfigure their customer care processes to retain first contact customer service

representatives, empowering them to be customer advocates who can resolve problems without handoffs. To achieve this, companies may need to rethink their organizational construct, or facilitate access to knowledge management systems that make it easier for customer service representatives to handle more contact types. In some cases, regulations will prohibit companies from making these changes.

Organizations also need to understand customers’ expectations when they have multiple inquiries within a single contact. Based on how related the customers believe the inquiries to be, they may be more or less tolerant of being transferred to another team to resolve the subsequent inquiries.

One way to acquire a detailed, fact-based understanding of customer intentions is to leverage analytics based on demographic, behavioral and retention data. Companies can use this multi-dimensional analysis in novel ways to monitor individual customer inquiry histories, as well as to identify churn “hot spots” related to specific service triggers and the correct retention treatments.3

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Interpreting Customer Tolerance by Industry

Accenture collected and analyzed data by five industries—travel and tourism, consumer goods retailer, telecommunications provider, retail banking/financial services provider, and gas and electric utilities.

Overall, the patterns were remarkably consistent across all five industries, suggesting that these were general patterns of consumer mindset that did not vary much by the circumstance of industry type. In all cases, the majority (66 percent and more) of customers preferred first call resolution. Fifty-one percent or more across all industries preferred not to be transferred or

put on hold. Roughly half preferred a one minute wait time, tapering off to 45 percent or less for a three to five minute wait time.

In reality, consumers make more complex assessments of their tolerance with specific customer service issues. However, a few spikes in the industry data stand out. For instance, in the gas and electric utility industry, first call resolution could always overcome longer wait times, or instances of being put on hold or transferred. According to survey results, positive reactions were lower (25 percent) for first call resolution with a five-minute wait time, then a transfer, than for non-first call resolution with just a one minute wait time and no transfer (37 percent).

Additionally, being put on hold had an impact on customer tolerance. Across the five industries surveyed, the data showed slight declines in satisfaction for being put on hold once. If put on hold more than once, the decline became more pronounced with the most tolerance still being shown for travel and tourism providers, and the biggest decline of 17 percent for telecommunications providers.

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Applying Findings in Your OrganizationWhat can your organization do to optimize customer service while controlling operational costs? In truth, every company is unique, and must identify and understand the key tolerance inflection points for their specific customers. Once this step is completed, you can then make informed decisions for your customer service organization that effectively balances what is good for your customers and your company.

To get started, Accenture recommends the following steps to help your organization strike that balance through an overarching service strategy that optimizes each area to maintain customer loyalty:

1. Define strategy and goals—and stick to them•Understandcustomerprioritiesand

expectations. Define desired customer experiences within these parameters while considering how customer-centric decisions may impact operations (e.g., customer service representative productivity, engagement or attrition).

•Quantifythepossibleoperatingcostsand savings of adjusting different service attributes, such as wait time, handle time or number of handoffs.

•Makesureleadershipdemonstratesongoing commitment to organizational decisions to help prevent the occasional customer complaint from derailing the overarching service strategy.

2. Align processes to strategy and ensure processes are consistently followed•Defineandimprovecustomercare

processes. Review existing customer care processes and eliminate wasted steps.

•Helpcustomerservicerepresentativestofollow refined processes consistently.

•Tiequalitymanagementprocessesto performance measurements to help ensure consistent application and compliance to processes and improvement.

3. Align organization to strategy and goals, and manage staffing to address the goals•Determinerolestohandlecontactsand

assign responsibilities. Define required competencies, behaviors and skills for each role and leverage this in the hiring process to target candidates with the best chance of success in the role.

•Forecastcontactvolumes,takingeventsinto consideration.

•Monitorstatusofqueuesinrealtimetokeep wait times, handle times and service levels in check. Watch transfer rates to understand where transferred calls are going and why.

•Makeimmediateandlong-termadjustments to staffing levels to address service level goals.

•Measureandrespondtoforecastingand scheduling accuracy to allow for course correction as needed (e.g., plan for recurring events, adjust training schedules to handle unexpected events, get ahead of hiring).

4. Align individual and team performance measures and goals with the strategy•Introducebalancedscorecardsto

hold customer service representatives accountable and avoid over-indexing on one metric.

•Makesurecustomerserviceexecutivescan effectively coach customer service representatives. Conduct targeted training for new and established customer service representatives to help ensure customer expectations, service levels and budgets are met.

•Measureandrewardcustomerserviceexecutives based on the performance of their teams. Define clear metrics and goals, and reward using performance-based compensation practices.

5. Continually monitor customer expectations and the ability of the organization to meet them•Buildrobustcapabilitiesaroundcustomer

analytics by implementing speech analytics, text analytics, root cause analysis, voice of the customer responses, balanced performance metrics or cross-channel analytics.

•Assignadedicatedteamtoconductongoing analytics, examine trends, identify root causes of customer contact. Determine how to eliminate or handle issues more efficiently.

Following these steps and using the findings from the Accenture 2012 Customer Tolerance research can help your organization achieve the optimal balance—one that delivers a positive experience to your customers, more effectively manages customer service operations and improves your customer service representatives’ productivity.

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Accenture helped a communications company to cut costs and improve the customer experience through a 36-month customer care transformation. The strategic plan included a national customer care organization design, skill rationalization and site consolidation, and updated telephony and routing infrastructure. The plan also refined the company’s transfers and repeat program, and customer call handling processes.

For workforce management, Accenture introduced performance scorecards integrated with a variable pay program and incentives for approximately 6,500 customer care

representatives and supervisors. The scorecards helped the company to evaluate customer service representatives’ interactions with customers and measure adherence to defined processes.

In a short period of time, Accenture improved yield by nearly 400 minutes per customer service representative and resolution rates by 200-300 basis points, which equated to more than US$7 million in value. The company also deployed new call handling flows for the 24 top call drivers and reduced internal cost per handled minute by 7 percent.

References1. Accenture Global Consumer Research, 2011

2. Accenture Global Consumer Research, 2011

3. Maximizing Customer Retention: A Strategic

Approach to Effective Churn Management,

Accenture, 2011.

Guiding Customer Service Improvements for Clients

Accenture conducted a contact center assessment to help a North American energy provider reduce customer wait times and drive more consistency into its customer service experience. Based on the assessment, Accenture identified quick hit and longer-term changes the utility could make to improve customer service representative management and customer care processes.Recommendations for improvements included:• Implementacustomer-objective-

focused call control program, streamline call handling processes to remove unnecessary steps and implement a warm transfer policy.

• Updateknowledgemanagementsystem content and navigation to increase access to knowledge.

• Promoteself-serviceoptions on calls.

• Implementclearleadershipresponsibilities for coaching customer service representatives.

• Institutealong-rangeforecastand capacity plan.

By focusing on the outlined initiatives, Accenture projected the energy provider would be able to reduce their total annual call minutes handled by 15% while improving service level goals.

About Sales & Customer ServicesSales & Customer Services helps companies acquire, develop and retain more profitable customer relationships. We offer a broad range of innovative capabilities that address every aspect of the customer experience, including pricing strategy and profitability assessment, customer analytics, direct and indirect sales force execution, customer service, field support, customer contact operations, and retail/branch operations. We use these combinations of skills to help our clients accelerate growth, improve sales productivity and reduce customer-care costs—helping increase the value of their customer relationships and enhancing the economic value of their brands.

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.

Contact UsTo learn more about the Accenture 2012 Customer Tolerance research or to discuss ways to optimize the customer experience in your organization, contact Stephanie Helland at stephanie.a.helland@accenture.com.

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This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative. mc341