Doing Things Right

The number one priority for great companies is ensuring that their customers are happy. Satisfied customers will buy again and again, and even more importantly help you grow through positive word of mouth, the least expensive form of new customer acquisition. When we met with Bill Price, a customer service guru and the first Global VP of Customer Service for Amazon, and he talked about "the best service is no service", we were curious. In this CEO Topic, Bill provides important insights on how to achieve the right balance of serving customers efficiently, effectively and economically.

Interacting with customers, especially in large volumes online, by phone or in person, is a difficult and challenging business, yet one that is critical for successful companies. Understanding why customers need you, pre-, during or post-sale is an important consideration in setting up the right process, systems and people to optimize customer satisfaction. Getting this right makes a big difference not only to the customer (and your revenue growth) but to your bottom line.

One "killer metric" at Amazon was customer-initiated contacts: those calls that need to handled by a customer service rep, divided by the key driver for those contacts' units shipped for Amazon or policies issued or claims paid for insurance firms, subscribers for mobile carriers, etc. Knowing that our customers didn't contact us unless something was wrong, our goal was to lower that number. We succeeded at Amazon in the early days and in working with many companies over the years realized that the right attention to customer service can place companies on entirely new growth trajectories.

As described in my book The Best Service is No Service: How to Liberate Your Customers From Customer Service, Keep Them Happy and Control Costs (Wiley/Jossey-Bass, 2008), there are four possible actions that your company can take when it receives customer contacts: Eliminate, Automate, Leverage, and Simplify.

By far the most powerful action, and where you need to start down the path toward Best Service, is to Eliminate what we call "dumb contacts." These are contacts that irritate both customers and companies because they deliver no value - in other words, companies are losing money as soon as their reps say "hello, how may I help you?"

Examples of dumb contacts abound, representing 26% of the volume of support costs that we've researched over the past 8 years - a mother lode of opportunity to fix underlying problems such as billing system errors, broken web links or confusing marketing offers. Instead of applying pressure on your customer service teams - who are shouldering a lot of customer upset in the first place, caused by other departments' actions - you should listen to calls or read emails and chat threads, and insist on identifying dumb contacts that can be eliminated at their core. The customers will thank you by not calling or emailing or having to chat with you.

The next category well worth studying are the contacts that you should Automate, which represent more than 35% of the volume of support costs, a staggering figure when companies are scrimping and saving right and left. These are issues that are valuable for your customers, but, like those in the Eliminate category, are simply cost sinks for you. Examples here are quite common, like password re-set (which should be 100% automated, right?), checking account balances, finding the closest retail store to buy or return an item, and less obvious ones like cancelling an order. This last one might surprise you since many companies prefer to force customers to talk with a retention specialist, in what I'll cover next under Leverage, but many companies realize that it's too late to save an upset customer, so they allow - even encourage - cancelling their account, or at least an order within an account.

The issues obtaining the action Leverage are also ones that customers find quite valuable, but now the company also wants to have them handled in a live channel. As just noted this might mean trying to save an account, but more common examples are addressing changes (especially for utilities or mobile carries whose service territories are not the same), serious complaints (that might otherwise find their way onto Twitter or Facebook or onto the desk of Attorneys General), and suggestions for new products, pricing, or features. This category is (or should be) of particular interest to your marketing or product development teams, reinforcing the incredibly valuable sources of information being handled every day in your support channels.

The final action is Simplify, for those customer contacts that are valuable for the company but irritating to the customer. Examples here are product incompatibility (if otherwise unknown; if known, then these contacts should be eliminated), employee performance problems (especially for retail sales or support staff), and pricing plan confusion (but on many occasions we see this also moved into the Eliminate action).

With over 60% of customer contact costs falling into the actions Eliminate and Automate, you can reap huge rewards akin to Amazon's year over year decline in the rate of customer contacts - and commensurate increase in customer satisfaction and customer loyalty - by figuring out the fundamental answers to this simple question: why are your customers bothering themselves (and costing you a lot of unnecessary expense) to contact you with their issues?

For additional thoughts on improving the customer experience, feel free to contact Bill Price or your GA team.

Bill Price is the CEO of Driva Solutions and the author of The Best Service is No Service: How to Liberate Your Customers From Customer Service, Keep Them Happy and Control Costs.