Assess—and act on—your strategic intent for optimum results.
Customer service is emerging as a critical differentiator for businesses. McKinsey suggests that the ability to have more effective customer interactions is hard to replicate and can produce lasting competitive advantage. Another study conducted by Forrester Research confirms the correlation between customer service and loyalty across 12 industries. The social megaphone has further elevated the importance of service to most businesses, with younger demographics, in particular, increasingly going social to bash brands when they have bad experiences. Cutting corners in service is no longer an option.
How can a business excel in customer service? How can customer-facing executives formulate a service strategy and make a business case for investments? To excel in service, you need to pay attention to four essential elements: positioning, proficiency, partners, and process.
Before you strategize in customer service, you need to know the role of service in your company’s positioning and competitive differentiation. Is your company emphasizing service excellence in its annual reports, sales presentations, and employee communications? If you are in senior management, what is your strategic intent for service? Once you have this understanding, you could use a simplified framework like the following, which includes four scenarios, to formulate a service strategy aligned with your strategic intent for service and the competitive service parity in your market space.
Situation: High service parity, high service intent. Strategy: Transform
Your competitive strategy is based on service and you want to excel in service, but you are not differentiating yourself through service. In this case, you really need to transform your service through next-generation technologies and processes, and even by borrowing ideas from service leaders in other industries.
Situation: High service parity, low service intent. Strategy: Improve
Presumably, your business plans to rely more on competencies other than service to differentiate yourself. However, since service is commoditized in your market space and service is increasingly becoming important for all businesses, you do need to improve it at least incrementally.
Situation: Low service parity, high service intent. Strategy: Maintain
You are in a good position, but you do need to defend it and align with your business’s high service intent by “maintaining” your differentiation.
Situation: Low service parity, low service intent. Strategy: Automate
You might be able to get by with your current level of competence, perhaps even automating it more through customer self-service, but you do need to monitor your competitive situation closely to make ongoing adjustments as needed.
The recommended strategy in this framework is the minimum required for success. Based on resource availability and funding, as well as evolving business strategies, companies can always go further. For instance, a company in Situation 3 could “transform” rather than just “maintain” for total domination in service. Also, note that service-centric industries, on average, need to innovate more in customer service versus product-centric industries. There’s also a timing issue that you should take into consideration. In their pioneering work on positioning, Ries and Trout discussed how hard it is to dislodge competitors from established positions. If you do not have first-mover advantage in service, it might be very difficult to get to that position.
Businesses can assess their service proficiency in comparison to that of their peers by “eating their own service dog food.” An effective method is the “mystery shopping” approach, where analysts (in-house analysts or trusted third-party service providers) pose as buyers and seek customer service from your business. They can assess the speed, quality, consistency, and continuity of service across interaction channels—online, social, and phone, for example. They can then determine your market standing in service by repeating the same exercise with your competitors. This approach can help make a compelling business case to your C-suite for service investments.
As you build up and present your business case, it’s a good idea to enlist partners outside your organization to support your cause. Heads of marketing and sales can be your BFFs! Marketing wants to get high Net Promoter Scores and build the brand. The sales organization wants satisfied customers so they can expand the wallet share with those customers. Customer service also includes service before and during the purchase—not just after the sale is made. The sales organization, including the e-commerce team, has a vested interest in making these interactions effective and the purchase experience friction-free for customers.
Optimizing how a customer service query is routed and processed is critical to service excellence. A great way to uncover process gaps is to staple yourself to a customer service query, along the lines of the HBR classic “Staple Yourself to the Order,” where the authors discuss how to identify gaps in the customer order management cycle. You might want to “play customer” and test the most frequent service scenarios. While you are at it, try to get service through a single interaction channel like social or chat, and also go across channels to see if context is preserved in the transition or if you need to start over again and again, a major detractor for superior customer experiences.