Next-Generation Customer Service The New Strategic Differentiator - IQPC

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Perspective   Klaus Hölbling
              Thomas Künstner
              Christina Marsch
              Niko Steinkrauss

Next-Generation
Customer Service
The New Strategic
Differentiator
Contact Information

Beirut                       Houston
Ghassan Hasbani              Kenny Kurtzman
Partner                      Partner
+961-1-985-655               +1-713-650-4175
ghassan.hasbani@booz.com     kenny.kurtzman@booz.com

Bahjat El-Darwiche           Paris
Principal                    Pierre Peladeau
+961-1-985-655               Partner
bahjat.eldarwiche@booz.com   +33-1-44-34-3074
                             pierre.peladeau@booz.com
Copenhagen
Torsten Moe                  Sydney
Partner                      Ian Buchanan
+45-3318-70-02               Senior Executive Advisor
torsten.moe@booz.com         +61-2-9321-2853
                             ian.buchanan@booz.com
Düsseldorf
Thomas Künstner              Vienna
Partner                      Klaus Hölbling
+49-211-3890-143             Partner
thomas.kuenstner@booz.com    +43-1-518-22-907
                             klaus.hoelbling@booz.com
Christina Marsch
Principal
+49-211-3890-257
christina.marsch@booz.com

Niko Steinkrauss
Principal
+49-211-3890-256
niko.steinkrauss@booz.com

                                                        Booz & Company
EXECUTIVE        Across industries and markets, considerable changes in
                 customer expectations are putting new challenges on the
SUMMARY
                 customer service function. To fully understand the demands
                 of next-generation customer service, Booz & Company
                 recently completed a comprehensive survey. The Next-
                 Generation Customer Service study reflects more than 30
                 face-to-face interviews with senior customer service executives
                 (including chief service officers and CEOs)—and a survey of
                 50 senior-level managers—in Europe and the Middle East.
                 Our research uncovered five key challenges to becoming a
                 successful customer service practitioner: Leverage service for
                 revenue growth; innovate the customer interface; integrate
                 customer touch points; drive customer-centricity; and create
                 high-performance operations.

                 Customers are demanding more from customer service;
                 meeting their expectations requires an enterprise-wide
                 understanding and commitment, not simply an isolated
                 departmental upgrade. Leading customer service
                 organizations are emphasizing transparency in service
                 performance and demonstrating its contributions to
                 company-wide strategic targets, consumer engagement,
                 and top-line impact.

Booz & Company                                                                 1
THE NEW    Consumers have never been smarter
           than they are today. They have more
                                                   seen as opportunities for engaging
                                                   more intensely with customers,
CUSTOMER   information than ever before to help    gaining better customer insights,
SERVICE    them make purchasing decisions.
           They are accustomed to, and expect,
                                                   and leveraging service propositions
                                                   for revenue growth. Technology
AGENDA     regular interaction with companies.     innovation supports this trend,
           The breadth of established and new      as large amounts of customer
           channels for customer interaction—in    information can now be generated
           shops, in contact centers, over the     and leveraged more efficiently than in
           Internet, and via mobile devices—       the past.
           is ever-increasing. Over the last
           five years, the ways consumers          Booz & Company recently
           communicate, learn about products,      conducted the Next-Generation
           and make purchasing decisions have      Customer Service study to more fully
           fundamentally changed.                  understand where customer service
                                                   is headed. The study reflects more
           Companies are beginning to              than 30 face-to-face interviews with
           understand these changes in consumer    senior customer service executives
           behavior and are adapting to them       (including chief service officers and
           accordingly—e.g., by changing           CEOs)—and a survey of 50 senior-
           their marketing mix. Customer           level managers—in Europe and the
           service interactions are increasingly   Middle East.

           Over the last five years, the ways
           consumers communicate, learn about
           products, and make purchasing
           decisions have fundamentally changed.

2                                                                         Booz & Company
Through this study and numerous                             their actions, which remain largely                    strategic capabilities. Our analysis
discussions with clients—especially                         focused on incremental enhancements                    points to five key trends that are
those operating in mature                                   aimed at reducing cost and                             shaping the next-generation customer
markets—we have learned that many                           addressing day-to-day performance                      service agenda (see Exhibit 1).
organizations share a new customer                          issues. Service organizations are
service vision, one that fundamentally                      at a critical crossroads that will                     Leverage service for revenue growth.
redefines service as both a key tool                        determine whether customer service                     Best customer service practices seek
to grow the value of the customer                           remains merely a “hygiene factor”                      regular engagement with the customer
base and an important strategic                             or produces a step change toward a                     and take advantage of every customer
differentiator in saturated markets.                        truly customer-centric organization.                   contact. In the past, customer
                                                            Achieving the latter places the head of                service focused on “getting the
However, our study also reveals that                        customer service in a fundamentally                    screen green”—closing one call and
many companies are struggling with                          new role, away from serving as                         moving on to the next one as quickly
a serious disconnect between their                          an operational expert and toward                       as possible. We are experiencing
innovative customer service vision and                      becoming a C-suite peer with strong                    a shift from contact avoidance to

Exhibit 1
Five Trends Drive the Next-Generation Customer Service Agenda

        INNOVATE THE CUSTOMER INTERFACE                        LEVERAGE SERVICE FOR REVENUE GROWTH                  INTEGRATE CUSTOMER TOUCH POINTS

       - Provide multiple channels                           - Employ cross-selling and retention during inbound   - Integrate service channel management across all
       - Employ Web 2.0 methods to engage customers            service contacts                                      customer touch points
       - Apply smart automation to balance human and         - Leverage contacts for customer insights             - Design and execute integrated channel strategy
         automated interaction                               - Use service proposition as differentiator           - Create a seamless service experience
       - Experiment with technology innovations

        DRIVE CUSTOMER-CENTRICITY                                                                                   CREATE HIGH-PERFORMANCE OPERATIONS

       - Establish customer service as a cross-functional                                                          - Increase efficiency, balanced with effectiveness
         hub                                                                                                       - Streamline and synchronize processes and systems
       - Appoint a chief service officer                                     Next-Generation                       - Selectively outsource simple processes
       - Demonstrate the value of service                                    Customer Service                      - Automate responses to standard inquiries
       - Establish a service-minded culture

Source: Booz & Company analysis

Booz & Company                                                                                                                                                          3
smart contact management. The new        Integrate customer touch points.          closely with peers in marketing, sales,
challenges: Engage the customer,         To maximize the value of every            and technology. These executives
manage the relationship proactively,     interaction, distinct silos of customer   establish a cross-functional end-to-
cross- and up-sell to different          touch points are being abolished.         end perspective on customer processes
audience segments, and, in mature        Multi-product companies make sure         with customer service as the key
markets, emphasize service quality as    they can service their entire portfolio   driver for customer-centricity
a brand differentiator.                  across touch points with most contact     in a central coordinating role as
                                         channels being deployed for both sales    the “voice of the customer.” They
Innovate the customer interface.         and service interactions. Best-in-class   establish transparency in customer
Leading customer service companies       players deploy integrated management      service performance and contribution
offer multiple channels to their         of all contact channels in order to       to strategic targets. Some companies
most valued customers, adjusting         align cost and value of interactions      merge the sales and service functions
their channel mix to the customers’      and to ensure that customers enjoy a      in order to avoid counterproductive
communication preferences and            seamless experience.                      rivalry.
striking a smart balance between
automation and human interaction.        Drive customer-centricity. Customer       Create high-performance operations.
They are using Web 2.0 tools to          service sits on one of the largest        Mastering the basics of customer
engage with their target audience and    untapped resources for companies:         service is still the imperative for
offer a series of self-service options   customer feedback and proprietary         customer service organizations that
to streamline the experience for         customer data. Exploiting this            are struggling with poor service
customers and encourage them to          potential throughout the company          and inefficient processes. The key
return. Investments are shifting from    is a significant value driver. The        challenge lies in putting these
back-end automation to front-end         most forward-looking companies are        changes in place while simultaneously
enhancement.                             empowering a strong chief service         maintaining activities that will truly
                                         officer—someone with advanced             create value for the organization.
                                         strategic capabilities who works

                                         Customer service sits on one of
                                         the largest untapped resources for
                                         companies: customer feedback
                                         and proprietary customer data.

4                                                                                                         Booz & Company
LEVERAGE                                                   insights that support individualized
                                                           service—and finally make those
                                                                                                              example, the system displays products
                                                                                                              and services already purchased by the
SERVICE FOR                                                costly customer relationship manage-               customer on the line, automatically
REVENUE                                                    ment (CRM) investments pay off. As
                                                           one of the participants in our study
                                                                                                              proposes new products and services,
                                                                                                              and simultaneously provides the
GROWTH                                                     observed, “Customer service excel-                 agent with a script to help pitch those
                                                           lence means securing and leveraging                recommendations. Agents are then
                                                           know-how about the preferences of                  able to make client-centric offers in 50
                                                           the customer.” The return on that                  percent of incoming calls, at a success
                                                           investment is eminently quantifiable:              rate of 20 to 30 percent.
                                                           “The more customer service insight
A shift in mind-set from contact                           you have, the more revenues you will               Targeted up-selling is already at
avoidance to active contact manage-                        get,” another participant stated.                  work in a number of the telecom-
ment is one of the most fundamental                                                                           munications and financial services
changes in next-generation customer                        Although it often takes advanced                   companies we surveyed. In years past,
service. Rather than decreasing con-                       trial-and-error data analysis and                  the primary goal of customer service
tact time with the customer to reduce                      behavioral profiling to personal-                  was getting the screen green, but our
cost, organizations are discovering                        ize offers, targeted information                   survey results clearly show that that
new value by using each contact to                         helps marketers cross- and up-sell                 companies today have a stronger
generate new consumer insights, build                      customers. One telecommunica-                      focus on active customer management
loyalty, and leverage the interaction                      tions company in our survey claims                 (see Exhibit 2). As a result, leading
for cross- and up-selling.                                 extraordinary success through such                 customer service organizations are
                                                           automated support. Available data                  making a note of every customer
Effective customer interaction                             about incoming callers enables service             contact to increase customer satisfac-
and comprehensive customer data                            representatives to make customer-                  tion, improve the service offered, and
management can help generate the                           specific recommendations. For                      develop customer value.

Exhibit 2
Focus during Handling of Incoming Calls

                         TELECOMMUNICATIONS INDUSTRY                                                  FINANCIAL SERVICES/INSURANCE INDUSTRY

                                                                                                           Both equal
                    Both equal
                                                                                                                        5%
                                   13%
                                                               Minimize contact
                                                   35%         volume and call-
                                                               handling times
                                                                                                           40%
                                                                                     Leverage contact                         55%        Quick resolution
                                                                                     for up-selling/care
                                                                                     activities
                                 52%
      Leverage contact
      for cross- and
      up-selling

Note: Base is 31 telecommunications and 20 financial services/insurance companies.
Source: Booz & Company analysis

Booz & Company                                                                                                                                              5
INNOVATE THE   Across industries, the most successful
               customer service organizations have
                                                                  Again, technology and service
                                                                  innovation is no longer solely used to
CUSTOMER       fixed the basics of service and shifted            enhance productivity and drive down
INTERFACE      their focus to truly reshaping the
               customer interface as a core driver
                                                                  staff costs (see Exhibit 3). State-of-
                                                                  the-art voice recognition systems
               for new value. These leading players               not only understand what customers
               have tapped into third-party services,             say using natural language but also
               and they’ve learned from best-in-                  can detect emotional “vibes” that
               class innovation examples in other                 allow the routing system to deliver
               industries.                                        the call, depending on the customer’s

               Exhibit 3
               Technology Innovation in Customer Service

                      CHANNEL-SPECIFIC                                               CROSS-CHANNEL
                                                         SERVICE CHANNEL
                     TECHNOLOGY TRENDS                                              TECHNOLOGY TREND

                 - Queue management
                 - Automated service stations (kiosks)       In-Store
                 - Podcasts (visualized interfaces)
                                                                                       Joint interaction
                                                                                    of agent and customer

                 - Extended IVR* functionality
                 - Video contact center
                 - Electronic quality assurance/         Contact Center
                   computer-aided customer feedback
                                                                                      Sharing/integration
                                                                                of information across channels

                 - Automated mail processing
                 - Improved personalization
                                                              Mail

                                                                                  Leveraging synergies from
                                                                               cross-channel system integration

                 - Virtual agents
                 - Two-way customer communities              Online
                 - Improved search, database features

               *Interactive voice response.
               Source: Booz & Company analysis

6                                                                                           Booz & Company
mood, to a complaint specialist or      end, shared, consolidated knowledge       unique customer experience. The
sales representative. In addition to    management tools improve both             concept is simple: Turn the ordinary
applying channel-specific technology    the customer experience (customers        business of technology trouble-
innovations, more companies are         receive consistent information across     shooting into a customer adventure.
leveraging technology to enhance        channels) and drive down IT costs         The retailer uses Geek Squaders—
the interplay of channels. On the       associated with maintaining multiple      dressed in Men in Black outfits,
front end, next-generation support      knowledge management systems.             addressing one another with military
systems allow a smooth interaction                                                titles, and driving specially marked
of an e-channel customer (e.g., a Web   Some companies have found that a          Volkswagen Beetles—as a unique
shopper) with a contact center agent,   service offering, in and of itself, can   way to provide customer service to
especially when the customer appears    be an important differentiator and        residential and commercial clients.
to be abandoning his shopping basket,   provide an opportunity to create          More than 17,000 Geek “agents” are
or ensure that shop workers have        an emotional bond with customers.         at work in the U.S., and the program
customers’ full interaction history     Best Buy’s Geek Squad is a customer       is expanding to Canada, the U.K.,
from the contact center. On the back    service differentiator that offers a      and Spain.

                                        Best Buy’s Geek Squad turns
                                        the ordinary business of
                                        technology troubleshooting
                                        into a customer adventure.

Booz & Company                                                                                                           7
Swisscom, Switzerland’s leading          for a price—a premium level of         cost but also generate the customer-
telecommunications provider, offers      customer support. Similarly, BT and    specific insights necessary for value
two innovative service propositions.     BlackBerry have found that customers   creation.
Help Point classes provide product-      will pay for advanced support. Some
use training (e.g., help using a PC      organizations have even found that     Our research shows that interactivity
or cell phone) for specific customer     their business-to-consumer (B2C)       will be a primary driver in upgrading
segments. The service is offered in      customers are willing to take a        call center operations to enhance
specially designed training centers      step up in service and pay for the     the service experience. Web 2.0
or aboard mobile training buses that     programs offered to business-to-       possibilities include wiki-enabled
tour the country on a fixed schedule.    business (B2B) customers.              knowledge databanks, Web chats, and
The HomeService Team helps                                                      in-store visual contacts. The use of
residential customers with computer      Companies are also leveraging Web      these alternative, innovative channels
and network configuration, home          2.0 offerings to actively involve      to reach customers plays an especially
installation, security, data backup,     customers in the service process.      important role in the channel
and general IT topics. The service is    Classic Web service features include   portfolio in the telecommunications
available not only to Swisscom clients   live chats with service agents,        industry, in which 55 percent of
but to anybody who needs help—a          moderated communities and              our interview subjects reported
true market innovation.                  forums, employee and user blogs,       engagement in such services. Striking
                                         and product demonstration videos.      a smart balance between contact
Other companies are experimenting        Two-way interfaces capture customer    automation and human interaction
with paid service as a key element       suggestions and allow service agents   is a key success factor for service
of their value propositions. Apple’s     to comment or directly follow up.      organizations.
ProCare package is an example of a       These tools not only provide high-
service “building block” that offers—    quality customer service at a low

8                                                                                                      Booz & Company
INTEGRATE        As customer service moves from
                 a pure “after sales” obligation for
                                                              across the entire product range,
                                                              based on what different customer
CUSTOMER         individual products or services to           segments need. This yields multiple
TOUCH POINTS     a key driver of value generation
                 and strategic differentiation in an
                                                              advantages: increased customer
                                                              satisfaction, more cross-selling
                 overcrowded marketplace, companies           opportunities, and cost synergies.
                 are pursuing integration strategies for
                 their customer touch points on three       2. Sales and service integration: The
                 levels.                                       days of functional silos are gone.
                                                               Shop does not equal just sales, and
                 1. Product line integration:                  contact center does not equal just
                    More and more multi-product                service. The need to respond to the
                    companies are moving toward                customer segments’ preferences and
                    creating a single interface for their      the desire to maximize the impact
                    customers, away from a product             of every customer interaction make
                    to a customer segment view. For            every customer touch point a sales
                    Deutsche Telekom and many other            and service outlet—be it the shop,
                    telecommunications operators               the contact center, or the Web site.
                    that increasingly sell bundled
                    products, it is not about providing     3. Touch point integration: In an
                    “fixed line” or “mobile” customer          environment where sales processes
                    service, but about delivering a            often engage as many as three
                    comprehensive service experience           different contact channels and

                 Customer service is becoming a
                 key driver of value generation
                 and strategic differentiation in
                 an overcrowded marketplace.

Booz & Company                                                                                   9
customers use very different            that encompasses all touch points         In another example, computer retailer
  service touch points depending          across both sales and service,            Dell integrated the online channel
  on the request, the situation,          although we have so far seen few          with its contact center activities. Live
  or their mood, next-generation          truly best-in-class examples of full      chat helps agents instantly resolve
  customer service means two              integration across touch points as well   customer questions, hence minimizing
  things: First, the ability to provide   as across sales and service functions.    costly dropouts in the sales funnel.
  a seamless customer experience          Some customer service organizations       Furthermore, Dell offers a platform
  across channels—i.e., a smooth          already leverage channel interplay        where customers can provide
  handover of customer transactions       to drive usage to certain channels or     suggestions and solutions to problems.
  starting on the Web site, requiring     to generate more valuable contact         Dell representatives monitor the site,
  assistance by an agent, and             opportunities. For instance, the          providing comments and assistance
  ultimately leading to a sale closing    online portal of U.S. consumer            as needed.
  in a shop. Second, the ability to       electronics retailer Best Buy makes
  formulate and execute a cross-          use of integration with the company’s     While most contact centers today
  channel service strategy, which         stores to foster traffic and sales. The   already integrate sales and service,
  means defining a target service         Web site offers specific functionality,   other channels—shops and the
  portfolio per customer segment and      such as reserving items for pickup        e-channel—still provide attractive
  contact channel, and implementing       at the closest store within the hour.     untapped opportunities to integrate
  steering mechanisms and customer        Meanwhile, in-store customers learn       the two.
  incentives to reach it.                 about the e-channel at online access
                                          points in stores and through special      Meanwhile, some shops are using
Many customer service companies are       online vouchers they receive.             best-practice “premium service” to
taking first steps toward integration                                               promote further cross- and up-selling.

                                          Best Buy’s online portal allows
                                          customers to reserve items for pickup
                                          within the hour at a nearby store.

10                                                                                                         Booz & Company
For instance, Apple’s Genius Bars—        manage service appointments online,       service area generates more sales than
technical support stations located        or make reservations for personal         the e-shop itself.
inside Apple’s retail stores—provide      shopping, workshops, and other
a unique experience that uses service     in-store activities.                      Customer touch point integration also
to attract and retain current and                                                   creates significant challenges at the
new customers. The universally            In the e-channel, more and more           back end of customer service. In our
trained sales and service staff uses      companies realize that online service     survey, we found that more companies
the in-store customer interaction         should be treated as more than a tool     are establishing consistent standards
to promote additional sales. The          to avoid live customer interaction (and   and processes across all contact and
Genius Bar concept represents a           hence reduce cost). Successful online     interaction points to ensure that every
highly successful example of sales        service destinations actually draw        customer receives the same service
and service integration and is referred   customers regularly and decisively        experience. To that end, they are
to by Apple’s management as “the          blur the boundaries between sales         making customer data available across
heart and soul” of the Apple store        and service. Mobile operator O2           the customer’s product portfolio. In
experience.                               Germany, for example, has three           fact, 60 percent of the companies we
                                          times as many online visits per           surveyed believe that making data
In addition, the company’s retail         subscriber as its competitors, and        consistently available across service
stores are integrated with the online     far more sales online. For registered     channels will become more important
channel; customers can schedule and       users, the “contextual selling” in the    in the immediate future.

                                          Apple management refers to its
                                          Genius Bars—technical support
                                          stations—as “the heart and soul”
                                          of the Apple store experience.

Booz & Company                                                                                                          11
DRIVE        So what does all this mean for the
             role of customer service within the
                                                      whereas the majority believe it should
                                                      be embedded in a broader customer
CUSTOMER-    organization? The vast majority          contact function.
CENTRICITY   of interviewees insist that their
             organizations will become more           Most companies in our survey
             service-centric in the future, with      stressed the necessity of interaction
             a focus on increasing customer           among the service, sales, marketing,
             satisfaction. Ultimately, the success    and technology functions, with nearly
             of customer service depends on           three-quarters believing that sales and
             the strength, strategic capabilities,    marketing will become more strategic
             credibility, and influence of the head   customer service partners in the near
             of customer service.                     future. Among telecommunications
                                                      companies, 71 percent believe that
             In our research, we found strong         having detailed customer data will
             support for an institutionalized chief   become increasingly important in the
             service officer role. Of the companies   next two to five years. Since service
             we interviewed, only a third already     accompanies customers along various
             had such a position. Strikingly, among   touch points throughout the entire
             telecommunications companies,            relationship life cycle, it has a unique
             a quarter think customer service         ability to listen to customers and
             should be a separate board function,     understand their needs in a holistic

12                                                                            Booz & Company
way. Hence, in a service-centric               “product factories” that include sales,      it. Today, only 20 to 30 percent
organization, the role of customer             marketing, and service representatives       of customer service organizations
service is to represent the customer           during the development of new                systematically track the success of
and drive improvements aimed at                products and services.                       their cross- and up-selling efforts. On
increasing customer satisfaction                                                            a more positive note, more than 85
across the organization (see Exhibit           Given the new goals of customer              percent of the companies we surveyed
4). Relevant insights can be leveraged         service to retain customers and drive        plan to have some metric in place to
for enhancements in functions such             top-line growth, customer service            measure customer satisfaction within
as product development, marketing,             organizations must make their                the next two years.
sales, and operations. In fact, the            contributions transparent. Although
best customer service practitioners            there is strong evidence that service is     EDS, for instance, uses a proprietary
already have institutionalized this            an integral part of building customer        service dashboard that provides
collaboration with regular cross-              retention and loyalty, there are             management with a reliable, real-
functional exchanges and even                  no precise metrics to substantiate           time overview of service quality

Exhibit 4
Customer Service as “the Voice of the Customer”

   CUSTOMER EXPERIENCE POINTS                                           ORGANIZATION

           Customer
                                                                              Product
                                                                            Development
              Find

              Get
                         Listen to and
                                                                           Communication/
                         understand
             Set Up                                                          Marketing
                         customers
                                         Customer
              Use
                                          Service
                                                       The voice of
            Change                                    the customer             Sales
                                                        as driver for
                                                     improvements
              Pay

             Help                                                            Operations/
                                                                             Back Office

              Exit

Source: Booz & Company

Booz & Company                                                                                                                   13
while also offering insights about                          client organizations. This level of     we asked our interviewees about the
customer preferences. Customers                             commitment to service excellence,       development priorities for customer
are encouraged to document their                            the company insists, is its primary     service capabilities, our respondents
level of satisfaction during the entire                     differentiator in the information       cited listening to and understanding
customer service process, providing                         technology marketplace. EDS’s           customers’ needs (34 percent) and
immediate feedback to the agent and                         objectives—100 percent customer         improving customer service (32
contributing to a growing database of                       satisfaction and 100 percent customer   percent) as their most important
customer preferences.                                       retention—bear witness to this          priorities. By comparison, keeping
                                                            commitment.                             up with technology (18 percent) and
EDS’s customer database is impressive                                                               optimizing systems and processes
and powerful: It includes more than                         Listening to clients—particularly,      (16 percent) were regarded as
2,000 executives from 700 active                            understanding their needs and           maintenance factors—rather than
customer companies. Additionally,                           aligning service offerings to address   breakthrough elements—of next-
EDS conducts yearly in-person                               them—remains the principal item on      generation customer service.
interviews with more than 500                               the agenda to retain customers (see
executives in its top 150 to 175                            Exhibit 5). More specifically, when

Exhibit 5
Top Five Areas for Customer Service Development

 Listening to/understanding the customers’ needs                                             34%

                     Improving customer service                                             32%

                    Trained/knowledgeable staff                                       24%

                     Keeping up with technology                                 18%

                  Optimizing systems/processes                              16%

Note: Base is 31 telecommunications and 20 financial services/insurance companies.
Source: Booz & Company analysis

 14                                                                                                                        Booz & Company
CREATE HIGH-                              staffing. Employee motivation
                                          is a prerequisite for efficient
                                                                                     with two years of experience or
                                                                                     less) dropped from 60 percent to 33
PERFORMANCE                               operations and high-quality service.       percent. And, most remarkably, not
OPERATIONS                                Our study identified several best
                                          practices to develop and retain high-
                                                                                     a single worker reported leaving the
                                                                                     company because of dissatisfaction
                                          performing staff: Cross-train agents,      with Orange’s shifts.
                                          develop specialist roles, prioritize
                                          training and coaching, understand          While stable and efficient customer
                                          what motivates agents, and develop         service operations are indisputably
Customer service organizations            flexible workforce schedules.              an important cornerstone on which
need to put in place a solid service                                                 to build the service vision, many
foundation before moving on to            Orange, the U.K.-based telecommu-          companies pay insufficient atten-
establish best-in-class customer          nications company, provides a good         tion to innovative, forward-looking
service. Our interviews show that         example for workforce flexibility. In      investments. Within organizations,
many companies are still struggling       2007 the company created a strategy        the next-generation customer ser-
to remedy service issues. In some         for managing working hours that            vice vision proves a hard sell as
cases, poor service actually drives       balances the needs of employees with       long as urgent performance or cost
customers away; in others, inefficient    those of the organization. Each of         issues distract from medium-term
processes are inordinately expensive.     the seven newly introduced working         step changes aimed at achieving the
Nearly two-thirds of survey               patterns reflects a different lifestyle.   longer-term vision. However, some
respondents reported that their latest    The company changed its training           interviewees and several of our clients
improvements focused primarily            programs to make them more flexible        have successfully deployed “freed-up”
on changing or optimizing existing        as well.                                   resources for value-generating activi-
operations—processes, systems, and                                                   ties, or have otherwise managed to
staff qualifications.                     The impact was immediate: The ratio        strike a balance between short-term
                                          of part-time employees increased from      incremental investments and commit-
Once the proper tools and processes       9 percent to 29 percent, job applica-      ment to fundamentally redefining the
are in place, the next step in creating   tions rose by 29 percent, and recruit-     role of customer service.
high-performance operations is to         ment costs declined by 30 percent.
optimize organizational structure and     The attrition of new employees (those

                                          Telecom operator Orange has created
                                          a strategy for managing work hours
                                          that balances the needs of employees
                                          with those of the organization.

Booz & Company                                                                                                              15
CONCLUSION                               in creating a high-performance
                                         customer service operation and
                                                                                  Of course, none of this is possible or
                                                                                  practical unless customer service is
                                         generating buy-in for medium-term        an integral part of an organization’s
                                         objectives from top management           value chain. The appointment of a
                                         and front-line customer service staff.   strong chief service officer—someone
                                         Although incremental improvements        who can speak directly to peers in
Next-generation customer service         require financial and organizational     marketing, sales, and technology—is
represents a transformation from         commitment, they should not come         a positive step in the direction of
a necessary function for resolving       at the expense of the overarching        next-generation customer service.
customer problems into a value-          vision. Freed-up resources need to be    Providing that individual with
generating service that is a strategic   reinvested into activities that truly    the resources to coordinate cross-
differentiator in the market.            create value for the organization.       functional information exchanges is
Performance is no longer measured                                                 an essential second step. Merging
solely by cost-to-serve; customer        By taking advantage of every point of    sales and service responsibilities by
satisfaction and margin contribution     customer contact, customer service       creating a “chief sales and service
are now key metrics for success.         can begin to contribute to the larger    officer” is another.
Tomorrow’s value will be driven          goal of positively engaging the
by the ability to leverage service       customer—managing the relationship,      In today’s mature and competitive
to enhance customer interactions,        cross- and up-selling to different       markets, a company’s success in
generate customer insights, and help     audience segments, and using quality     winning and retaining customers
transform the entire company into a      as a brand differentiator in mature      increasingly hinges on its customer
customer-centric organization.           markets. The organizations that          service performance. Only a step
                                         learn to stay ahead of innovation—by     change in customer service approach
Many companies that commit to            using Web 2.0 tools to build an even     and top management commitment
next-generation customer service will    stronger relationship with individual    to invest in service innovations
have to begin with an incremental        customers, for example—will find         will allow companies to deliver on
process-and-tool harmonization.          that service can be a powerful means     their vision of customer service as a
Fixing the basics is the first step      to build consumer loyalty.               strategic differentiator.

16                                                                                                       Booz & Company
Methodology

To explore the increasing demands on customer service, Booz & Company
recently completed a comprehensive Next-Generation Customer Service
study in which we conducted more than 30 face-to-face interviews with senior
customer service executives, including chief service officers and CEOs. We
also surveyed 50 senior-level managers in Europe and the Middle East. We
then created a series of best-practices comparisons across several industries
and used Booz & Company service benchmarks to determine developing
trends and the next generation of customer service best practices.

                                                                                About the Authors

                                                                                Klaus Hölbling is a
                                                                                Booz & Company partner based
                                                                                in Vienna. He supports leading
                                                                                businesses in consumer-oriented
                                                                                industries—such as telecom,
                                                                                high tech, and transportation—
                                                                                in enhancing their marketing,
                                                                                sales, and customer service
                                                                                capabilities.

                                                                                Thomas Künstner is a
                                                                                Booz & Company partner based
                                                                                in Düsseldorf. He specializes in
                                                                                building marketing, sales, and
                                                                                customer service capabilities for
                                                                                telecommunications and media
                                                                                companies.

                                                                                Christina Marsch is a
                                                                                Booz & Company principal
                                                                                based in Düsseldorf. She
                                                                                specializes in enhancing
                                                                                marketing, sales, and customer
                                                                                service capabilities for companies
                                                                                in telecommunications and other
                                                                                industries.

                                                                                Niko Steinkrauss is a
                                                                                Booz & Company principal
                                                                                based in Düsseldorf. He
                                                                                specializes in marketing, sales,
                                                                                and customer service for the
                                                                                media and telecommunications
                                                                                industries.

Booz & Company                                                                                                17
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Booz & Company is a leading global management
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when he established the first management consulting
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©2009 Booz & Company Inc.
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