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If they can sell vodka at 14X retail, why are you still discounting?

September 8, 2010

When we ask a prospective client for their Customer Service mandate/mission/policies, we typically receive a  PowerPoint full of ’fun place to work’, ‘make customer happy’, and other typical MBA speak.  In this day of few dollars being chased by every still-functioning company, it is amazing to us how Customer Service still often performs two historical missions, seemingly helping the company but actually increasing customer retention risk:

1 – Satisfying customer demands where a corporate strategy would avoid this entirely.  For example, if a company has a confusing series of services and fees, some of which can cost the customer more if not used, why have the customer call to complain about the size of their monthly bill when a simple sweep of all customer bills could highlight those spending more than needed to get a certain level of service?  Which will engender more loyalty – an annoyed customer calls in and has their bill reduced because they complained or the customer receiving a notice that the company, on its own, kept the same service level but reduced the customer’s cost?

2 –Continually fixing orders so they can be processed, hiding either a broken customer facing configurator or a poorly designed product.  If you make a product describable in a brochure or website, there is no reason why Customer Service has to repair orders so they can be processed.  We know of a credit card company’s travel unit which cannot produce a form of invoice needed by most of its customers for expense accounting purposes, even though their own agents say “we hear this need a lot”.   A B2C manufacturing company uses their Customer Service group to repair more than half of all orders placed through a poorly designed in-store configurator/order entry process rather than fix the configurator to get orders properly entered while the customer is standing there, negating the need to call the customer after the fact to get it straightened out.

Google’ing how any Customer Service standards are applied in the USA is illuminating.  So many listings; so much blah-blah. There are multiple standards, in the US and globally, so figuring out Customer Service is not akin to the initial invention of the wheel. In fact, just in the USA, we have:  (per Wikipedia):

ISO 9004:2000, on performance improvement,

ISO 10001:2007, on customer service conduct,

ISO 10002:2004, on quality management in handling customer complaints,

ISO 10003:2007, on dispute resolution,

as well as The International Customer Service Standard (TICSS).

For everyone wondering why IT is so poor at servicing their ‘customers’ while demanding inclusion in the core business (consultants love to sell Alignment Studies since they are rarely enacted, i.e. the consultant cannot be proven wrong in real operating life), there’s ISO/IEC 20000:2005 on IT service management. The UK has standard, BS8477, but which we have seen is not often implemented in the UK.

These standards all have the same basic structures, such as:

  1. Tops-down Commitment,
  2. Requirement for total credibility, not just ‘how do I get them off the phone’ productivity metrics,
  3. A customer service ethos throughout the company,

on and  on and for pages and pages and pages.

Unfortunately, by following these standards in rote like manner, you’re tracking and fixing service levels, not transforming yourself to gain marketshare from your competitors who still don’t get it.

Customer Service has to think of itself as delivering an end to end customer experience, just like the trendiest restaurants.  If you’ve ever gone to any of the highest revenue producing restaurants in the US, there are 2 common denominators.  First, the food is somewhat better than Ok and typically over the top in terms of size and shock value, such as a fortune cookie, filled with chocolate mouse and more than large enough for an entire table. The second and most important factor is the end to end customer experience.  Not just clean tablecloths, over the top food presentation and dramatic lighting; it’s a Disneyland ride while you eat.  It makes the night out special where if the same food was served by your old standby eatery, you would say it was an ‘ok’ meal. Until recently, in NY’s Central Park, there was a restaurant who’s interior, for over 20 years,  was filled with chandeliers and the trees glistened with lights so the experience started as soon as you got out of your taxi (even if the food was not that great, but no one ever went there for the food, anyway). Same applies for the casual dining sector, per a recent CNBC report.  It’s not the food. The most successful casual dining chains manage the experience, thinking how the customer interacts with the business from the moment they walk through the door to the moment they leave.  With the right customer experience, you can sell vodka at 14X retail and have them clamoring for more.

The biggest impediment for many companies to transform Customer Service from ‘us looking out’ to ‘customer looking in’ is typically the standard CRM system or ERP CRM module (and it makes no difference if it’s On-Demand or sitting in your data center).  These are data driven and not problem solving focused (and by this we mean solving the customer’s issue plus avoiding its reoccurrence).  What can upset a customer more than your being able to recall, in detail, their purchase history down to the exact second the enter key was hit but being unable to fix anything while they are on the phone or in a chat session? You can do all the human process redesign work you can pay for but unless the systems are changed to become solution focused on the customer’s behalf, you’re not giving them a solid customer experience worth a repeat visit. Many companies feel compelled to implement a CRM system these days but unless the customer experience is engineered in from the get-go, it becomes nothing but a large tracking device, full of data but not helping improve customer satisfaction.

Case in point: 13 years ago we designed and implemented a customer CRM system for a CPG manufacturer, focused on empowering the local sales representatives in getting on the spot credits, shipment delivery dates, defective product replacements delivered, etc., significantly reducing the incidents of “I’ll get back to you”.  Through this CRM system, they transformed Sales and Customer Service, taking the latter out of a call center and into their customer’s stores.  Customers started having a great experience every time the sales rep walked in.

As Einstein once stated, to paraphrase, the solution is all in how the question is framed in the first place.  In Customer Service terms, a company should decide to improve not Customer Service; it should decide to transform Customer Service, first by renaming the department/function Customer Experience Management.  All customer facing units need to align, from R&D to Product Management to manufacturing to marketing researching packaging and useage at a nuanced level.  You can have all the Mission Statement bromides you wish, but unless everyone is focused outside-in, no meaningful change will take place.  Organization structure, KPI’s and systems will all then fall in line, once you map out a cogent and commonly accepted Customer Experience Value Chain.

During the 1987 market crash, a 60 year old company, with notoriously poor customer service simply went out of business because new customers were not replacing fed up and ‘outta here’ customers.  If outside Auditors are interested in the ongoing business test as a means of certifying health, then the Customer Experience (as a predictor of repeat business) can be tracked as a potential risk factor by internal auditors and reviewed by your Board’s Risk Committee.

Trendy restaurants use the customer’s experience to sell vodka at 14X retail.  Why are you paying for a Customer Service department but still offer promotions?

Rich Eichen is a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.comand is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached at

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