CUSTOMER

MANAGEMENT

EXCELLENCE

MIKE FAULKNER

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CUSTOMER

MANAGEMENT

EXCELLENCE

MIKE FAULKNER

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Dedicated to Jacqui, for her inspiration, determination and belief

With grateful thanks to Sara for her unstinting help

For Sheila, my Mum, to whom I owe a huge debt of gratitude

And to the other important people in my lifeKatie, Hannah and Samuel

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CONTENTS

Introduction 1

PART I

1 Evaluating a Customer-Centric Approach 11

Generic overview 12Are you price-, product- or customer-driven? 13Transition towards customer focus 16Differentiation through service 17What customer service excellence means to an organisation 19Readiness checklist 19Case study: Unipath 20Case study: London Borough of Newham 22

2 Enter the Customer Service Director 25

Introducing the role of customer director 26Customer elements of a commercial business 27How do service personnel keep touch with the changing

corporate structure? 28

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C O N T E N T S v

What makes customers important enough to have a director? 29Readiness checklist 30Case study: Sun Life Financial of Canada 31Case study: Legal & General Assurance Society 33

3 Recognising the Cultural Needs of a ServiceOperation 35

Recognising the culture within different organisations 36Marrying a culture of profit to a service excellence ethic 37Undergoing a cultural change 39Change management issues 40Top-down approach to service culture 41Readiness checklist 43Case study: Thames Water Utilities 43Case study: The Royal Bank of Scotland 45

4 The Shift from Call Centre to Contact Centre 47

The emerging multichannel call centres 49Managing change while maintaining service levels 51Multitasking CSRs and keeping staff on-message 52Linking the data with the rest of the enterprise 55Readiness checklist 56Case study: Loop Customer Management 57Case study: Newcastle City Council 59

PART II

5 Dealing with Lifetime Values 63

Calculating customer lifetime values 64LTV is a key requisite to realise the full customer value 68Emerging trends in LTV measurement 69Is LTV being realised by companies and if so, how? 70Readiness checklist 71Case study: Carpetright 72Case study: Zurich Financial Services 74

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6 How to Deal with Unprofitable Customers 77

Evaluating your customers value, segment by segment 78How to differentiate the service offering to your top

10 per cent 81Should you continue to serve unprofitable customers? 82How to offload the customers that cost you money 83Creating a knowledge-base about serial complainers 84Readiness checklist 85Case study: Hilton plc 86Case study: Vauxhall Motors 88

7 Complaint (Feedback) Management 91

Proactively managing complaints 92Predicting service shortfalls to reduce complaints 94Establishing transparency in terms of organisational culture 96When to tell the truth, the whole truth and nothing but 97Admitting your failings 98Communication as a tool to deal with disgruntled customers 100Readiness checklist 102Case study: Thomas Cook Retail 103Case study: The Capita Group 105

8 Reputation Management 107

Executing effective damage limitation 108How to distance yourself from third-party actions 109Communicating with customers when you are powerless 111How companies are addressing third-party issues 112The emergence of customer unions 113Readiness checklist 115Case study: Travelcare 116Case study: The Boots Company 118

9 Managing Expectation 121

Customer service excellence increases expectation 122Customer service excellence becomes the norm 125

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Should service be paid for to reduce customer expectation? 125Reducing expectation can lead to reduction in

customer churn 126How organisations are dealing with customer perceptions

and changes in expectation 128Readiness checklist 130Case study: International Rectifier Company (GB) Ltd 130Case study: Powergen plc 132

PART III

10 Empowering Customer-Facing Staff 137

How empowering staff impacts on staff retention 138How empowerment impacts on customer retention 139How to empower staff and to what level 141Building staff confidence to ensure ownership of complaints 142Developing a set of discretionary awards 143Defining exactly how long that extra mile should be 145Readiness checklist 146Case study: Currie & Brown 147Case study: WHSmith 149

11 Service Personnel Adopting the Sales Role 151

A satisfied complainer will remain loyal forever 152Cross-sell and up-sell opportunities with a satisfied

complainer 154How to gain a 360-degree view of the customer 155Identifying when a customer is satisfied 157Interdepartmental communications: internal

collaboration a vital link 159Can service personnel see themselves as sales people? 160Readiness checklist 161Case study: Siemens Communications 162Case study: AON Warranty Group 164

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12 Caring for Your Carers 167

Avoiding jadedness in front-line staff 168Avoiding inconsistent service levels 169Taking a meaningful interest in your staff and their problems 170Promoting openness and discussion in the workplace 172Incentivising staff to go that extra mile 173Acknowledging service excellence through benefits 174Understanding what motivates your staff and rewarding

accordingly 175Readiness checklist 176Case study: National Westminster Bank 177Case study: Mid Kent College 179

The Final Chapter A Summary 181

The process 182And the final words for the doubters 186

6 Case studies featuring main category winners fromNational Customer Service Awards

BT Cellnet 187Eurostar UK 190Midland Mainline 194Sainsburys Supermarkets 197Stannah Stairlifts 200The Trafford Centre 204

Glossary of Terms 209

Index 213

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INTRODUCTION

The past decade has seen a vast upsurge in the importanceattached to customer service from businesses operating in both theB2B (business to business) and B2C (business to consumer) fields.This increased activity has paid major benefits to early adopters.

Differentiation through service is rapidly becoming a vital addi-tion to any business process. Organisations that are at the fore-front are reaping benefits in terms of customer loyalty, customerretention and employee satisfaction. Yet this is just the tip of theiceberg.

Three years ago Quest Media introduced the National Cus-tomer Service Awards. The philosophy behind this was to recogniseand reward organisations that were pushing the barriers of serviceto new limits; to recognise those organisations and individualswho were going that extra mile.

The awards were also designed to lay down some bench-marks, so that others could measure their own achievementsagainst the best of breed. The pursuit of best practice can be a longand arduous one. Through a tough selection process, rigorousjudging and explicit entry criteria, the National Customer ServiceAwards help organisations achieve best practice levels.

This book will reflect some of the current thinking behindtodays front-runners in the service excellence environment. Itwill highlight some current trends and give realistic timeframes

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for implementation and adoption of those trends. It will challengesome thought processes and it will celebrate the achievements ofsome of the most innovative organisations adopting the customerservice excellence mantra.

Before any company can reach the highest recognition foroffering service excellence they will have undertaken several ofthe following steps. Only then will they be positioned suitably tooffer exceptional service. Just because a company has incorpor-ated certain philosophies, success is far from guaranteed. Theservice culture is an on-going phenomenon, it is not a destina-tion, it is a journey. All of the organisations featured in the pagesof this book have decided to adopt a service culture. For thatalone they should be acknowledged.

EFFECTING CHANGE

To adopt a service culture means major organisational change.To drive forward a customer-centric approach needs buy-in fromthe very top echelons of management. It then needs follow-upfrom a designated manager and ultimately buy-in from employees.Much has been written about that hackneyed phrase employeeempowerment, but for a customer-centric approach to workyou really do need to empower your employees. Staff must havethe ability to take ownership of problems, they must feel able tomake decisions to rectify those problems, and they must feel thatthey are contributing.

None of this happens easily. Regardless of the size of theorganisation there are always the doubters. Determined organisa-tions will think of ways to encompass the doubters, to bring themon side and involve them. The whats-in-it-for-me cultureabounds in many established businesses and it is not until manage-ment can tangibly show the benefits of a new culture that thedoubters will start to soften. The real hardliners, however, maynever change. Therefore it is sometimes necessary to be preparedto let people go. The benefits to the business through effective

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customer service are far greater than the loss of a few single-minded employees.

Be brave; be committed.

CUSTOMER RETENTION

It is widely recognised that it takes time and money to attracteach and every new customer. For the first couple of years with a newly acquired customer, every penny they spend with anorganisation has to be offset against those acquisition costs. Onlythen can an acquired customer become profitable. Retaining acustomer to the profit segment of the relationship is the cusp. Ifthey stay longer they are likely to create an emotional bond,recommend friends and remain loyal for some considerable time.Loyalty equals profitability.

The direct opposite of this will be the case if the customerrelationship has not been effectively managed. The customer willfeel no loyalty, have no emotional bond and will actively lookelsewhere for the services and goods that the original company isoffering.

For the organisation this means another round of customeracquisition with its inherent cost implications. Therefore it is farmore beneficial to retain the customers that you have and look toinvest a limited amount in keeping them.

Buy wisely; treat well.

USE ALL AVAILABLE DATA

There is a plethora of information available to businesses todayrelating to customer behaviour. Whether it is buying patterns,buying sequences, product purchase or complaints, data is beingcollected and stored. The sad fact is that too often this data is not

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being utilised. Offering excellent service does not have to start atthe complaint desk. Too many organisations collect data aboutcustomers and use it only for internal purposes without seeing the bigger picture. If a certain segment of customers uses yourservices on Wednesdays only perhaps it would be wise to offerrewards on Wednesdays to that customer segment make thosecustomers feel valuable.

Recognising your customers habits is often the first step tooffering them outstanding service. Look at todays supermarkettrade. Perhaps inadvertently, because of Internet shopping andthe need to deliver, supermarkets are returning to the originalcorner shop mentality where they take orders and deliver free ofcharge. The customers that use this service like this service. Thefact that these customers are probably marginally more affluentthan some others (by virtue of the fact that they have access to theInternet, computer and telephone line) might mean that they are more valuable to the organisation and worth retaining. Whenthese customers next go on-line to place an order, they have theirlast shopping trolley on screen to reorder or remove items. Thisbears more than a passing resemblance to Arkwright in Open AllHours but the important message is to use all the available dataand start thinking of customer service from a proactive stand-point rather than a reactive one.

Analyse data; implement findings.

MEASUREMENT

A fundamental in embarking upon a service culture is knowingwhere you are at the start and planning where you are aiming toget to. Measurement is itself a leveller for many organisations.Knowing what to measure, how to measure and how to interpretfindings can be difficult and disappointing. To embrace a serviceculture, the organisation from the top down needs to beprepared to accept failings. Mistakes happen and when they do,

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they must be addressed. A rewarding occurrence is when anorganisation suddenly recognises that the service culture is beingdriven from the bottom up. This is a real measure of success.

Measuring customer satisfaction is another necessary exercise.It should be measured at the outset, then continually monitoredthroughout the process. This will afford early indicators of suc-cess. It will highlight the implementations that are working andalso those that are less effective.

Measure everything; act on results.

COMMUNICATION STRATEGIES

Be prepared to communicate your intentions in several differentways to several different audiences. The embracing of a serviceculture requires communication at many levels. At the outset theinitial decision has to be communicated at board level. A businesscase for the pursuit of customer excellence must be conveyed sothat the highest echelon of management embraces the decision.

Managers then have to have the decision conveyed to them.They need to know how it will pan out, what responsibilitiesthey will have, how it will be measured, what powers they will have, and in some cases, whats in it for them. The decisionthen needs to be conveyed down the food chain so that everyemployee has the same understanding of what the organisation isaiming to achieve.

Then it is important to convey in yet another way themessage to the customer. You cannot sit back and hope that thecustomer will notice your service culture changes. You have totell them. You have to let them know what your aspirations areand tell them how quickly you aim to get there.

Say it often; say it proud.

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