Strategic Customer Service

Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty, and Maximize Profits

 Strategic Customer Service

Author: John A. Goodman
Pub Date: May 2009
Print Edition: $24.95
Print ISBN: 9780814413333
Page Count: 272
Format: Hardback
e-Book ISBN: 9780814413340

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Why Strategic Customer Service?

EVERY ORGANIZATION’S SUCCESS depends on its keeping customers

satisfied with the goods or services that it offers, yet most executives

tend to view the customer service function of their business as little

more than a necessary nuisance. That strikes me as paradoxical. Companies

that spare no expense to build their brands, improve their operations,

and leverage their technologies often skimp on investments that preserve

and strengthen this final, vital link in their revenue chain. Indeed, leaving

aside the investment aspect, many of these same companies simply

don’t have a customer service strategy to manage the end-to-end customer

experience, from sales to billing.

That is why I have aimed this book at all senior management, with

an emphasis on finance and aspiring chief customer officers. The book

will not focus on answering the phone, but rather on the revenue and

word-of-mouth implications of having or not having a strategic approach

for all customer touches and managing an end-to-end experience.

As we all know from being customers ourselves, poor service can

undermine all of a company’s efforts to retain and expand its customer

base. As customers, we know how we respond to poor service: We go

elsewhere, and we often tell our friends and colleagues to do the same.

But as businesspeople, we undergo a kind of amnesia that prevents us

from seeing how that same mechanism applies to our customers. Not long

ago, I was speaking with the CFO of a leading electronics firm who suffered

from this amnesia. As an engineer, he felt that the superiority of

his company’s electronic products ensured their superior market position.

I then asked him what brand of car he drove and how he liked the dealership.

He scowled and said, ‘‘I hate them! They’re just terrible.’’ When I

pointed out, ‘‘You have customers who feel the same about your company,’’

he immediately saw my point.

Some executive teams, blessed with extraordinary empathy or insight

(or perhaps competitiveness), do understand the role of customer service

in the growth of their revenue, profits, and business. My work with organizations

that consistently excel at this responsibility has led me to conclude

that they have one thing in common: a strategic view of, and

approach to, customer service.

A strategic view perceives customer service as vital to the end-to-end

customer experience, and thus to the customer relationship. This view also

considers customer service to be a full-fledged member of the marketingsales-

service triumvirate. Such a view starts with setting expectations,

moves on to selling and delivering the product in ways that suit the customer,

and extends through superb support and clear, accurate billing. A

strategic approach also recognizes that the service function produces a

wellspring of data on customer attitudes, needs, and behavior. These data,

when combined with available operational and survey data, can be used

as input in virtually every effort to shape the customer experience, from

product development to marketing and sales messages, and from handling

of customer complaints to the overall management of the entire customer

relationship. In these ways, customer service acts as a strategic catalyst

for every organizational function and process that touches the customer.

Why a strategic catalyst?

Strategic customer service stands at the point where all organizational

strategies come to fruition in a great customer experience—or

do not. Product development, operations, marketing, sales, finance,

accounting, human resources, and risk management all affect the cus-

tomer in myriad ways, for better or worse. But when something goes

wrong, customers don’t call the director of product development, the

manager of operations, or the vice president of marketing (and they probably

shouldn’t be calling salespeople—about which more in Chapter 3).

They call customer service. When they do, customer service must preserve

the relationship, gather information, and improve the process,

wherever the problem originated.

As a catalyst, strategic customer service can, like any catalyst, transform

the entities and functions it touches, making the organization more

proactive, accelerating its responsiveness, and boosting its effectiveness.

Service can help marketing, for instance, move from sales messaging to

capitalizing on customer intelligence and improving products and services.

For example, Allstate is now contacting the parents of young

motorists as they turn 16, before they pass their driver’s tests. The company

suggests a parent-teen contract, explains how the impending rate

increase will be calculated, and provides guidance on coaching new drivers

(including an extremely popular Web video whose music has moved

into the mainstream). This program results in calmer parents who feel

more in control and who exhibit significantly greater loyalty to Allstate.

Likewise, strategic customer service can accelerate product development

and uncover new distribution channels. It can relieve salespeople and

channel partners of troubleshooting duties so that they can focus on selling.

It can transform finance from a countinghouse into a funding source

that is supportive of new processes and services that increase customer

retention, positive word of mouth, and market share.

Moreover, strategic customer service is applicable in any market,

from consumer packaged goods and financial services to health care, from

business-to-business environments such as chemicals and pharmaceuticals

to government agencies and nonprofits. TARP has helped organizations

in all of these arenas to benefit from a strategic approach to service,

beyond the tactical service functions of responding to customer inquiries

and problems.


Customer service has come a long way from the days when ‘‘complaint

departments’’ received letters from irate customers and decided whether

to ‘‘make good’’ on some explicit or implied promise. Today’s tactical

service function is often outsourced, offshored, and global, supported by

state-of-the-art technology, aligned with the brand strategy, and integrated

with the customer experience. It is now a support, sales, and relationship

management function. It’s a means of tracking the value of every

customer and, on that basis, satisfying customers, delighting them,

explaining why you’ll have to charge them more, or gently showing them

the door. Service interactions are also the prime generator of the single

most powerful marketing mechanism: positive word of mouth and word of

mouse.1 Companies with great word of mouth incur almost no marketing

expense because they let their customers do their selling for them.

None of this happens by accident or only at the tactical level. It

happens when senior management grasps the pivotal role of service in

the customer relationship and recasts this outcast stepchild of marketing,

sales, and operations as a guide, problem solver, communicator, reporter,

and breadwinner. Often, the executive committee anoints one of its

number as the chief customer experience officer. Where such a position

doesn’t exist, the head of customer service often performs that role.

The evolution begins with an examination of the current customer

experience, all current customer service and customer-touching activities,

and your current sources of information on those activities. Take

market research. Recently a telecom executive told me, ‘‘We’re spending

$12 million a year on surveys, and we have almost no actionable information.’’

Once the company recognized this, it used customer contact data

to supplement the surveys and produced a real-time picture of the customer

experience. This, along with data on product performance and

problems and on customer attitudes and preferences, enabled the company

to identify massive savings while improving the customer experience.

Some companies know the value of customer contact data, yet even

I was surprised to hear Powell Taylor, the General Electric executive who

established the GE Answer Center, say, ‘‘The average GE customer service

rep can provide the input of data equal to about 10,000 completed

market research surveys, because that is how many customers they’ve

talked with.’’ That makes a strong case for compiling and analyzing data

from customer service interactions. That’s also why the GE Answer Center

reports to the Appliance Division’s senior management.

So, in both purpose and functionality, customer service has evolved

far beyond the complaint departments of 30 or more years ago to become

pivotal in building and sustaining customer relationships.

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