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Online, there’s no excuse for bad customer service other than helping your competitors

March 15, 2013

History writes about generals who focus on bold moves, but in the real world successful generals focus on logistics.  Nowhere near as sexy, focusing on reliable communications, ammunition, fuel and food wins wars. With online and mobile digital e-commerce, customer service, that very unsexy area wins the battle for market segment dominance, and not the sheer number of authorized logins, which is a much sexier metric, for sure. Do we have the self-centeredness to think customers will never need any form of customer support other than FAQ’s?

When I first began writing about online customer service issues, I thought this was a secondary subject or perhaps something I was uniquely missing in my e-retail interactions, as well as consistently not seeing any associated customer service costs in otherwise interesting, bold, and spreadsheet centric business plans.  Boy was I wrong.  There’s a definite disjoin between online and mobile executives and their customer’s ongoing real-world customer support needs.

Departures magazine from American Express recently featured an article discussing the effectiveness of brand ambassadors (what used to be called a paid spokesperson, but that sounded too down-market).  Celebrity brand ambassadors appear in ads holding a watch they didn’t pay for or have their picture taken next to the top sales people at the annual quota club get-away. A key takeaway from the article was the need for consistency between the brand ambassador’s public persona, the brand’s story, your service/product and the ongoing public relationship as people buy an end-to-end experience over time. Poor customer service can negate a lot of spend on marketing and PR, through lost repeat revenue and the need to undo negative social media comments.

In our multi-layered online world, platforms and channels are broken down into those you tightly control (your blog, Twitter and company website), those you partly control (such as LinkedIn and You Tube) and those which are a free-for-all and mostly reactive, such as general Facebook, the blogosphere and Glassdoor. Customers generally discount poor super-platform customer support since it rarely applies to them or they just accept it as a fact of online life.  However, they do perceive their online e-commerce experience very personally and are unforgiving if they feel a company takes them for granted, or as just another way to make a buck, one time. All talk and pretty website pictures of operators with headsets aside, give them poor customer service and they will let the world know very quickly.

Let’s first look at online luxury retailer and brand sites, since customer satisfaction and retention are essential elements to justify their margins (losing 1 customer spending $10K per year is a lot harder to replace than 1,000 customers each spending $50 per Annum at a broader market oriented site). In terms of control, these are highly company controlled sites, and per a very interesting ForeSee study on Luxury e-retailer customer satisfaction metrics for this past holiday season, luxury sites, overall had a satisfaction rating of 77, about equal to the 78% attained by all e-retail.  So in this case, the higher-end retailers such as Saks, Nordstrom and Neiman are not much different from the mass market stores, which makes one question if their differentiator is trying to get a higher price than any other retailer for the same item.

Where a brand has its own e-retail presence and controls the end to end experience in line with their brand story, customer satisfaction ratings are much higher.   For example, Tiffany and Coach, both brands selling direct online and, therefore, in high control of the selling experience had 80 ratings.  As over 60% of luxury site visitors return at least once a month, and often more frequently, customer service is a key element in driving revenue over time, contributing significantly to Customer Lifetime Value. They’re pretty sophisticated and expect to be treated accordingly, both online and in particular by customer support channels. The web being the great democratizer, this former higher-end expectation level is tricking down, becoming the new norm where the expected and assumed customer service bar isn’t being raised, it’s being assumed to be ‘table stakes’ for everyone and good customer support costs real green money.  llbean.com, for example, invests in customer support personnel and is in 6th place in the ForeSee 2012 e-retail rankings, with a score of 83, and Zappos is legendary for its commitment to customer service.

Given all the auto-email and FAQ capabilities available to most sites, do we still need people as our Tier 2 level support channel?  Several customer satisfaction research firms have measured the behaviors and preferences of how consumers needing support interact with online and mobile sites. Their surveys all point to an increase in both self-fulfillment/service (low-cost) for routine help situations, but 50-80% of each survey’s respondents stated they would quickly call a contact center person if the self-service function did not address their needs upfront.  While we all want to balance channels based on cost (email and online chat, for example), in many circumstances a person will have to deal with a person, and customer support reps typically cost around $55K, all-in, for a US based employee.  Tied to growth, this expense must be factored in as part of the growth plan, and not as an afterthought. Growth Hackers should also be held to a customer satisfaction standard or most of their new users will be one-timers; you could have numbers but not market segment dominance.

Mobile and Digital Business applications will require increased familiarity with both the core application (very much a Help Desk like function) as well as the ability to unlock a Wallet/account, complete a transaction or unwind an unintended action or error. Contact Center technology, training and perhaps staffing and compensation will all be affected by this knowledge intensive, hybrid role.  Going ’cheap’ here can result in wide scale customer defection and severe negative PR.

From our experience,  and as confirmed by independent researchers, the online and mobile worlds will still require large numbers of Customer Service Representatives (CSR’s), directly affecting customer perceptions of your brand and repeat sales, just as traditional retailers have learned over time.  While there is no hard and fast ratio of CSR’s to revenue or transactions, it goes without saying the more complex the transaction (Mobile or online are just vehicles, after all), the more Tier 2 support will be required.  We highly recommend rather than having Customer Service grow organically,  Lean principles are used to create the most cost effective function possible at each growth point. The same way we map our revenue producing employees to our Top Line goals, we should similarly include Customer Service Reps in that exercise.

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program Rescue and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT/Systems Integration and key initiatives. Return on Efficiency, LLC specializes in those companies and initiatives where technology is the primary means of service delivery and revenue creation.  Email his at richard.eichen@growroe.com

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