customer service trends of 2015 & predictions for 2016

Reviewing CUSTOMER SERVICE TRENDS

of 2015 and Looking Ahead to Customer Service Predictions for 2016

©2015 MHI Global, All Rights Reserved

OVERVIEW

The more things change, the more they stay the same. When it comes to the customer service industry, the past few years have seen certain trends evolve, while the fundamentals of customer service remain the same. 2015 was dominated by all things related to creating the outstanding customer experience, yet the concept is hardly new. What has changed is creating exceptional customer experiences across multiple communication channels and learning what customer service means to the millennial generation.

One of the first safety lessons for new drivers is the importance of checking side and rearview mirrors when driving. If drivers only looked forward without understanding what was happening around them, they would likely be involved in more accidents. Essentially, moving forward requires looking around and understanding the bigger picture. The customer service industry is no different. To understand where we’re going, we need to always be aware of what’s going on around us. Each year the MHI Global Customer Experience division hits the pause button so that we can assess what trends dominated the past year and guide our readers to those trends we feel worthy of paying attention to in the coming year.

The stakes for investing in the customer experience couldn’t be higher. Today’s generation of customer is somewhat of a paradox. They want more independence from having to directly interact with a company representative, yet when they do interact, they have much higher customer service expectations than customers in the past. What’s more, today’s customers vote with their wallets, and if a customer experience doesn’t meet their expectations, they’ll quickly go elsewhere. The challenge for companies is to understand how customers perceive they’re being treated. Nearly 88 percent of companies feel they deliver great customer experiences, while only 8 percent of customers feel the same. In 2016 we expect to see companies investing more in closing this gap between perception and reality.

This year’s e-book will delve into the trends that our industry predicted for 2015 and see how they panned out and how companies responded. We’ll also share with you some unexpected trends that popped up during the year. Finally, we’ll look at where we think the industry will be headed in the coming year so your company can prepare budgets and customer service teams can plan ahead and strategize.


CHAPTER 1: Reflecting on the Service Trends of 2015

Reflecting on the Service Trends of 2015The millennial generation has arrived. Although this cohort has been knocking at the door for quite a few years, the industry is really feeling this generation’s influence on all things related to customer care. By 2017 this generation’s spending power will eclipse that of baby boomers, and already there are more millennials in the workforce than Gen-X or baby boomers. There is a lot of money at stake if companies don’t get it right with this generation, with estimates that this cohort will spend $200 billion annually in the U.S. alone.

The status quo of communication channels is not sufficient. Millennials are labeled ‘technological natives’ because technology has largely dominated and shaped their lives since birth. If your company is locked into a 1990’s mindset, you’re already behind the curve. This is a generation that expects brand connectivity 24/7, which means that if they want to inquire about a product at 3:00 a.m., you need to make sure customer service representatives are available to help. The traditional communication channels are still relevant, but they now share equal space with newer channels like social media and SMS/MMS texting (short message and multimedia messaging).

Millennials are particular about what they want their customer experiences to look and feel like, and are also shaping the way customer service is delivered. Many of the trends we saw in 2015 are manifestations of changing expectations and demands for different communication channels to play catch-up to traditional channels.

Let’s take a closer look at them:

TREND #1: Omni-Channel

TREND #2: Proactive and Personalized Customer Care

TREND #3: SMS/MMS Texting



TREND #1: Omni-ChannelIf it feels like the topic of omni-channel service just won’t go away, it’s because many companies are still operating in silos, delivering multichannel experiences but not a singular experience across all channels, which is what an omni-channel experience is all about. Most companies have done a commendable job investing in multichannel experiences, but without coordination across channels, the customer experience will remain compromised.

Providing a consistent and seamless customer service experience across communication channels continues to pose a challenge for companies, especially from the customer’s perspective. While improvement has been made in delivering seamless service across platforms, there is still a lot of work to be done, particularly as new communication channels gain prominence.

In a comprehensive study produced by Loudhouse, of 7,000 consumers in seven countries, many of the surveyed participants felt that companies focused more on providing seamless sales experiences across channels rather than customer service. As a result of cumbersome communication channels that aren’t coordinated, many customers fall back on phoning in for customer support. It isn’t so much that customers prefer to phone into contact centers for support, it’s that they’re forced to because of poor response rates and limitations of other channels. While this may not be a deal-breaker for Gen-X and baby boomer customers, for millennial customers it often is. This group of consumers demands real-time connectivity across channels, as well as robust self-service options.

Customers use many devices for a singular purchasing decision

Omni-channel service matters because today’s consumers research an average of eleven different pieces of content before making a purchasing decision and interact with companies over many different communication channels for one purchasing decision. Google has studied this extensively in its research titled, Zero Moment of Truth or ZMOT. With mobile



connectivity, consumers are always “on” and companies must learn to connect with customers in a mobile-first world. Blanket marketing is less effective, and in order for companies to connect with customers, they must have a strong presence across multiple channels, with each channel giving the customer an opportunity to engage.

Coordinating the customer experience across channels is much more than providing convenience to the customer. There is a major return-on-investment in getting this right. Aberdeen Group published an insight paper showing that companies that delivered a seamless omni-channel experience outperformed the competition that lacked an omni-channel strategy. These companies not only had higher customer retention rates, they also enjoyed higher customer profitability. As millennials make up more of the market share, having an omni-channel strategy will become increasingly important. As a percentage, millennials are more likely to take their business elsewhere if they can’t easily switch from channel to channel and have their history follow them. According to Forrester, they expect to be able to initiate communication with a company and be able to stop, restart, or switch to other devices without losing context.

Let’s look at some examples of companies that have invested in delivering a seamless customer service experience across channels and the accompanying benefits.

REI has been a long-time brick-and-mortar retailer of outdoor and recreational equipment and clothing. The company has 135 retail outlets located in 33 states as well as an online retail presence. What sets REI apart from other retailers is that it has paid attention to the customer journey.

REI is known for the in-store experience it creates for customers with its well-trained staff readily available to answer questions ranging from general to technical. The challenge for REI was creating a virtual customer



experience that didn’t deviate from what its customers expected in person. Although only 23 percent of REI’s sales happen digitally, nearly 75 percent of customers who made an in-store purchase began their journey online, either on the website or mobile app. Armed with this knowledge, REI set out to connect the digital and in-person experiences for its customers and make sure they were seamless. This means that product information is kept up-to-date across all channels, inventory stock is shared between online and brick-and-mortar outlets, and that in-store Wi-Fi is available so customers can easily compare products and check inventory.

Even though most of the dollars spent with REI happens in brick-and-mortar outlets, the company has adopted a mobile-first mentality and has created experiences that reflect their customers’ journeys.

While most of us think of omni-channel as involving contact centers, social media, and other communication channels, it also refers to the instant coordination and updating of customer information. In the case of Starbucks, it gets an A+ for its omni-channel reward app.

The reward app is more than a loyalty card, it acts as a “wallet” that can be reloaded over any channel and any changes are immediately reflected across all channels. It also personalizes the reward accrued to individual users, making this a personalized app that can be used in any Starbucks outlet. It’s no wonder this real-time and seamless app is so popular with users. This app sets the standard for real-time, multichannel coordination.



There are a number of banks that are implementing well-coordinated, seamless experiences across multiple channels, but TD Bank is at the forefront. Similar to REI, TD Bank has made it a priority to provide a seamless experience for its customers, no matter which platform they’re using.

J.D. Power has rated TD Bank as number one among the Big Five Canadian banks in customer satisfaction across multiple channels—ATM, automated and phone assistance, online, and in person. Additionally, Comscore rated TD as the number one bank for mobile banking.

TD Bank is a great example of a company that delivers customer experiences across multiple channels but pays attention to the omni-channel experience. In a Financial Post article highlighting TD’s omni-channel approach to customer service, it said, “TD’s digital channels are not managed as siloed businesses. Instead, they reside in a horizontal, enterprise-wide structure, which helps drive marketing and operational integration, rapid execution and higher system ROI.”

TREND #2: Proactive and Personalized Customer CareGiven how quickly a bad review can circulate across social media, many companies work hard to solve customers’ issues before they escalate into a public relations nightmare. As most companies have likely experienced, sometimes there is no avoiding a customer’s public rant. While this can’t always be avoided, one way that companies stay in good standing with customers is to provide proactive and personalized customer service. Proactive and preemptive customer care anticipates the “who, what, when,



why, where, and how” for customers, and with today’s software options can create personalized flow charts that trigger proactive engagement.

Focusing on the customer experience over the long term and anticipating and addressing customer needs is at the heart of proactive customer care. Providing proactive care can drive down the overall costs of customer care, increase customer loyalty and retention, and reduce employee churn.

Proactive care identifies pain points before they hurt

Thanks to cloud computing there are now numerous options for businesses to better understand where the pain points are in the customer journey and target these areas before they escalate into full-blown customer frustration. There are easy proactive measures companies can take without much investment such as proactive chat, billing reminders, automated text or voice messages, and customizable account preferences. Keep in mind that this merely addresses the low-hanging fruit of proactive care. Providing more personalized, high-value care over the long run requires the help of data. Millennial customers are more willing to share private data and information about their preferences and purchasing history, which can yield highly customizable and anticipatory customer experiences that foster long-term customer loyalty and retention.

Proactive care can be delivered across multiple channels and can ultimately reduce the volume of inbound calls by providing customers with relevant information before it requires a phone call. For instance, when a contract expiration is about to occur, an outbound call, text or email reminder could be placed with the customer to inform the customer of choices for renewal before the contract expires. Remember, it’s much less costly to keep current customers than to gain new ones. As automation continues to evolve, delivering proactive care should be less costly and easier to incorporate into everyday customer care.

Some industry examples of proactive customer care include airlines and Amazon. Proactive care is nothing new to the airline industry, which has been providing this care long before it had a proper name.



If a customer was bumped from a flight or missed a connection, agents would proactively re-book or re-route the customer. Amazon upped its game in 2014 and trained its agents to proactively engage with customers at the time an order is placed, giving the customer an ETA on delivery and personally connecting with the customer by sharing contact information so the customer had a name and number to contact if something went wrong.

Proactive care goes hand-in-hand with self-service. Millennials increasingly prefer to manage their own customer experiences, and providing a self-service forum, such as a FAQ page or community group, goes a long way to satisfying this generation’s needs. Sounds like an oxymoron, but some of the best customer service flies under the radar, and self-service and automated proactive service are no exceptions.

TREND #3: SMS/MMS TextingA majority of digital media consumption now takes place on a mobile device. In a report by ComScore, it has been noted that users now spend more time on mobile apps than on desktops or even mobile Internet surfing. By 2017 it’s anticipated that 87 percent of the worldwide market will connect using smartphones and tablets, with only 13 percent relying on desktops and laptops. There is no getting around the dominance of mobile devices in our daily lives. We’re tethered and connected 24/7. In addition to apps and Web surfing, mobile devices are often used for texting.

Most consumers carry a smartphone and most rely on their mobile devices to stay connected, conduct business, do research, and make purchases. Given our reliance on mobile devices, it’s surprising to see how long it has taken companies to integrate SMS/MMS texting into its inbound/outbound communication channels with customers. Texting options for customer service remain limited, even today, but we expect to see this feature grow in prominence and popularity.



This customer service channel is already in demand by millennial customers who would prefer to see more customer service options available with texting.

A comprehensive report, released by Aspect Software and The Center for Generational Kinetics, found that millennials’ expectations regarding customer service were:

Millennials prefer to engage with companies through social media and text and would rather not communicate face-to-face.

Millennials seek out companies that allow them to communicate in their preferred ways and will abandon companies that haven’t evolved their communication strategies.

All respondents in the study (ages 18-65) said that if given the option, they would increase their use of texting with companies.

Customer support via text is still in its infancy stage, but is quietly gaining steam. Some industries that are finding success with SMS/MMS text being integrated into customer service channels include transportation, airlines, banking, and social networks:

Transportation and AirlinesAirline companies have been using texting services for a while to communicate important flight information to their customers. Some airlines use only one-way messaging, such as Emirates, KLM, Delta, and Qantas to inform passengers and designated recipients of arrival and departure times, cancellations, delays, and general information related to a passenger’s itinerary. Other airlines, like Lufthansa and Jet Airways, have successfully integrated two-way messaging so that customers can request flight information, search for fares, and receive account updates via SMS.

Uber and other taxi companies will alert their customers by text when their taxi or driver has arrived. In the case of Uber, which relies on private drivers using personal vehicles, the company relays important information so the rider can verify the details of the car such as make, model, and license plate number.



BankingA number of banks allow customers to customize text settings so they can select what information they’d like to receive via text. Currently, the functions of text are somewhat limited to viewing account balances and activities, and receiving alerts. There are obvious privacy issues associated with more sophisticated banking transactions being handled through text, although PayPal allows customers to send and receive money via text. It’s expected that this industry will continue to evolve its texting capabilities and we wouldn’t be surprised if in the future customers will be able to initiate certain financial transactions via text.

Social NetworksSocial media sites, such as Facebook and Twitter, give customers the option to use text for account verification and approvals. It works by texting users a one-time use passcode that must be entered in order to gain access to their account. A number of other companies similarly use text for security features, particularly when unusual patterns emerge regarding a user’s account, login locations, or activity.

Companies such as Nexmo and TXTImpact offer texting services to companies that can be integrated and managed into existing customer service channels. As with any channel, be mindful of how your customers expect to use texting features with your company. While more customers want to see more texting options from companies, it doesn’t mean they want to cede control for how texting is used.

As we reflect on the customer service trends over the last year, we see the continued migration of customer service delivery features happening over mobile devices. It still remains that companies can’t simply add a mobile feature without considering how it complements all other customer service delivery channels.

Additionally, we’ve seen the millennial generation dominate every aspect



of our industry, from integrating into the workforce to changing how customer service is delivered. This continues to remain a challenge for long-established companies, especially since many practices and protocols are enshrined in the company culture. We fully expect this generation to continue to shape and influence customer service in the years to come.

At the end of the day, delivering exceptional customer experiences still comes down to the fundamentals. Employees require training and support so they can deliver personalized care as efficiently as possible. Company cultures greatly influence the customer experience, and delivering great experiences first requires companies to look inward.

Remember that customer service isn’t limited to a department, it’s everyone’s job.


CHAPTER 2: Some Surprises From 2015

Some Surprises From 2015A few of the trends that took us by surprise in 2015 had more to do with how quickly they took hold rather than the fact that they were pretty much unknown before now.

The Curated LifeAlso known as the “box” phenomenon, it’s surprising to see how quickly this concept is moving. Essentially, consumers are eschewing research into a deluge of information and choices, and rather than make purchasing decisions for themselves, rely on others to curate purchasing decisions for them. Curation sites are highly personalized and unique to each individual who signs up, but it’s still based on the premise that the consumer relinquishes most or all control to others—bloggers, editors, trusted sources, and specialized websites—in exchange for highly personalized, curated boxes of goods.

Examples of this service include:

Birchbox—This online monthly subscription service sends its subscribers/members a box of four or five selected samples of beauty related products, from cosmetics to make-up to perfume for men or women. The idea is that once consumers try the samples of what was sent, they’ll like the product enough to order full sizes. Subscribers have a lot of customization options when signing up so they can tailor what kinds and types of products they receive.

Stich Fix—This is a personal styling service that charges its members a one-time styling fee and has them fill out an online survey about their style preferences. Based on the results of the survey, the company selects five items and sends out clothes and accessories on a fixed date (hence the name.) Once a shipment is received, members then have three days to decide if they’ll keep the items or return them. Credit goes toward the initial styling-fee charge when items are kept. Members can select how often they wish to receive boxes of items.



Le Tote—This is a monthly subscription rental service to unlimited clothes and accessories, but gives members the option to purchase any or all of the items they receive. Depending on how quickly members return their box of goods, determines when their next box will arrive. Subscribers have the option to click-and-choose items they’d like, or have someone from the company select items for them.

Thrive Market—This company is an amalgamation of Costco and Whole Foods, whereby members pay an annual fee and can shop at discounted rates for health-conscious and green products ranging from food to cleaning products. This company has only just started within the last year and already boasts more than one million subscribers.

Bye-Bye VoicemailSome companies are keeping up with changing behaviors and adopting more social-forward communication channels. By adopting more social practices, companies are going beyond simply having a presence across social media platforms and are looking at fully integrating social media throughout their operations. A prime example of this change, and one we expect to see a lot more of, is Coca-Cola decided to discontinue the use of voicemail in its corporate headquarters and has adopted ways of communicating that are more commonly used.

The tech industry has been predicting the coming end of voicemail for years. Millennials are behind this change in large part because they rarely use voicemail and rely instead on text, messaging, and digital and social sites to stay in contact. Now that millennials make up a larger portion of the workforce, it’s only natural that their habits and behaviors should follow.

Transient Ownership/UseAnother big shift in the way business is conducted and products used and consumed is transient ownership. Once again, millennials are challenging



the notion of needing to own something when it can be rented or used short-term instead. Anything from cars to boats to wedding dresses can now be had by renting or pay-per-use.

While transient ownership has been around a few years, the trend that’s starting to take hold is that now it’s the customer or user who is being reviewed and rated and not just the end-product. This levels the playing field, taking power out of the consumer’s hands and making it a bit more equitable between consumer and product. eBay has done this since its inception, allowing buyers and sellers to rate each other, but for this concept to now spill over into other arenas where the customer was always in the driver’s seat is new. While it’s still too early to know if this notion of publically rating consumers can take hold in other industries, our guess is as more business models are disrupted, the end-user will be scrutinized more than in the past.


CHAPTER 3: Customer Service Predictions for 2016

Customer Service Predictions for 2016We expect 2016 will continue to build upon the trends of 2015: omni-channel service, mobile-first developments, and self-service. The biggest change for companies will be the prioritization of these efforts. It no longer suffices to force-fit new communication channels into old ways of doing business. Moving forward, companies will need to focus on the quality of their solutions, which will entail ramping up self-service options if they are to remain relevant to millennials, and still ensure customer-facing employees are well trained and prepared to deliver personalized, effective service.

Omni-channelOmni-channel is still very real and very urgent. As mentioned in chapter one, many companies still lag behind in coordinating their multichannels into a singular experience for users. And there’s a wide gap between how customers feel about their experiences and how well companies think they’re doing. The investment made in providing seamless experiences pays off. According to a study by Aberdeen Group, companies that have an omni-channel strategy are able to retain up to 89 percent of their customers, as compared to a 33 percent customer retention rate for companies with uncoordinated multichannel engagement.

Mobile-FirstSimilar to omni-channel strategies, mobile-forward customer service is not new, but a lot of work remains for companies to catch up to customers’ expectations. Customers continue to seek customer support via mobile devices even though there’s 90 percent reported poor service over mobile. With mobile users outpacing desktop users, developing mobile-first customer service solutions remains a priority. Those companies that invest in delivering customer service across mobile channels will outperform those that fail to do so.


CHAPTER 3: Customer Service Predictions for 2016

Investing for the futureAny senior executive who is aware of the trends in customer service also understands that re-tooling systems requires significant investment. Even with a majority of companies agreeing that investing in customer experiences is a priority and differentiator, most fail to follow through. Creating better customer experiences begins with data. Collecting and analyzing customer feedback and using analytic software to better understand your customers will allow your organization to better serve your customers.

Your customers are ready for better experiences. Are you ready to achieve customer success?Creating omni-channel experiences, challenging old business paradigms, and delivering customer service over new channels is no easy task. However, the status quo no longer suffices and to remain relevant to today’s consumer requires strategic planning, company buy-in, and comprehensive training and follow-up.

MHI Global’s Achieving Customer Success Program™ was created using the latest research, technology, and best practices in customer experience. This comprehensive learning experience is built around our extensive and ongoing research into a flexible curriculum that delivers measurable and lasting results for your organization.

MHI Global has successfully teamed with hundreds of companies to improve customer experience. We help companies improve their customer service delivery, successfully integrate new technology, reduce employee turnover, and improve metrics.

For more information, please visit us at www.mhiglobal.com or email us at [email protected]

Nick Ingelbrecht, Research Director,

Gartner

“Our findings underline the fact that customer experience improvements are complex undertakings. There is no silver bullet that will, by itself, improve the overall experience. But the combination of projects, if implemented well, can cumulatively contribute to the improvement of an organization’s customer experiences.”

customer service trends of 2015 & predictions for 2016

Data & Analytics