The world continued to hone in on customer service as a brand differentiator in 2014, with a number of companies living and dying by the sword that was their approach to delivering customer support.
Comcast arguably suffered most in the US, with a number of revelations about how it dealt with customers in the call centre, while EE was lambasted by many for its left-field tactic in trying to improve its customer contact process in the UK.
However, 2014 was largely about the appraisals companies had to undertake in confronting their approach to service, driven on one level by social media in terms of external communications, but on another by changes to consumer behaviour and the continuing decline of customer loyalty. Not to mention the growing expectations that all brands and their products should somehow be delivering an experience, something that has brought the importance of customer service prominently to the fore.
Sometimes you have to go backwards in order to go forwards, and this appears to have been the case for many top brands in 2014, in terms of the customer satisfaction levels they deliver.
The Institute of Customer Service (ICS) delivered their annual UK Customer Service Index (UKCSI) in July, which highlighted the fact that customer satisfaction levels were at their lowest across all sectors since 2011, a worrying trend.
John Lewis were perhaps the best illustration for the issue facing brands – while the retailer was rated as the customer’s favourite brand in terms of satisfaction, it still saw its UKCSI rating drop from 90.8 to 87.7.
“For us, the biggest trend of the year is that customers are less happy with service compared with a year ago,” says Jo Causon, CEO for the ICS. “What’s interesting is that there are winners and losers within this broad statement, but there were still only 10 organisations in the top 50 that had improved their performance in the UKCSI.”
“Customer expectations are increasing, so organisations are now going forwards or backwards in terms of how they react to the challenge.
“The positive note is, there are organisations that are bucking the downward trend, across all sectors. The organisations that are doing customer satisfaction well understand the importance at board level and focus on it at board level. They integrate their customer service strategy both horizontally and vertically inside their organisations. They measure the right things, they train and develop staff and they’re constantly looking externally to see how they can improve and benchmark themselves outside their own industry sectors.”
Changes to the frontline
As a result of the increasing customer expectations, many brands confronted their strategy for delivering frontline services in 2014, through various means.
Much of the focus has now been placed on the contact centre, which is seeing a continual shift from the ‘cost centre’ philosophy.
This is perhaps best highlighted by the fact that an array of big businesses have been in the process of ‘bringing their boys home’ throughout the year – re-shoring their call centres in a bid to become more customer-centric.
“Looking at the IT Service industry in 2014 particularly, there has been a real acknowledgement that offshoring service centres has not generated the previously envisaged returns,” says Tom Needs, chief commercial officer, Adapt.
“Any savings made through labour arbitrage have been lost through poor customer experience and so in turn there has been a decline in customer loyalty and ultimately, on revenues. Businesses are making a clear distinction between local outsourcing and international offshoring, seeing the importance of employing experts to add value to the service they provide customers.”
However, the re-shoring process is just the tip of the iceberg, and the concepts of relationship hubs and social command centres are also now being driven into many call centres, by a much wider business need to not only appear to be geographically closer to customers, but to better understand them with data analysis across different channels and the removal of silos – by physically placing certain departments and operations closer together.
Founder and chief executive of the Call Centre Managers Association (CCMA), Ann-Marie Stagg believes this change in approach is creating a monumental shift in how organisations view customer service in general, with training and staff development being made a chief requirement in call centres, rather than just simply minimising costs:
“Setting aside any technology or movement into the cloud, the increase in the complexity of enquiries being received by organisations, and their recognition of the fact that their front line teams need to be better equipped to handle these enquiries has certainly been a big trend.
“Linked to this we are seeing growth in the amount of development effort being put into training and developing frontline advisors and first line supervisors. This has a direct impact on the quality of customer service that is being offered and reflects some growing awareness of the need to support and develop front line teams in this changing environment.
“We can see a number of major brands investing heavily in their people development and taking an active part in benchmarking, quality and performance development national programmes. Smaller organisations are seeking to develop their own expertise in call handling techniques and are becoming much more interested in multi-channel trends.”
At the heart of all the changes being applied in contact centres across the globe is the need for businesses to become more omnichannel-focused, as their customers increasingly drifted between online and physical channels throughout their buying journey, and expected brands to provide a joined-up service to cater for the movements at different touchpoints.
According to IDC’s 2014 Retail Insights published in January 2014, IDC’s number one trend was retailers’ focus on creating omnichannel solutions with 70% of the top EMEA retailers focusing on omnichannel solutions in 2014.
The big driver for omnichannel was of course the demands of the consumers themselves through use of technologies such as social media, smartphones and tablets; however, retailers themselves also began seeing the potential profit of being fully omnichannel in 2014. IDC’s research also showed that “omnichannel consumers” spend between 15%-30% more than their counterparts, meaning having good omnichannel solutions were evidently impactful on the retailer’s top line.
“Omnichannel was the buzzword of last year that fully came to fruition in 2014,” says Nick Peart Emea marketing director, Zendesk.
“Creating a seamless approach to the customer experience through all available channels has revolutionised the way we shop and interact with brands forever. At the end of 2013 Zendesk conducted research –which revealed that just 1 in 10 consumers were satisfied with the omnichannel customer service offered to them by brands and the vast majority (87%) believed that brands needed to work harder to create a seamless customer experience. That undoubtedly changed in 2014 as brands slowly approached their omnichannel services – but brands will have to stay on top of it to maintain and build customer loyalty.
“Most savvy businesses have finally stopped taking a siloed approach to customer service by enabling integrated communication channels which serve their customers better and makes their lives easier.”
A battle for customer loyalty
Customer service expert, Chris Daffy believes the reason for so much attention being given to omnichannel service was once again down to the increasing expectations of brands from customers, as well as increasing competition across all sectors; all of which was leading to a decline in customer loyalty.
Loyalty statistics from 2014 do not make good reading for brands. In August, GI Insights reported that 94% of consumers join loyalty schemes, but less than half use them, while a study in September from Emarsys highlighted that customers now have genuine affinity for a maximum of three brands, a sharp decline compared with previous years.
“Today's customers are not the same as yesterday’s and even the existing ones that may have been loyal for many years are more than just older, they are likely to be different in their view of and approach to suppliers,” Daffy states.
“If we wish to build customer loyalty then the things we do when delivering service must also change. But that doesn’t appear to be happening in many organisations. A gap seems to be growing between the expectations of their customers and the actual service that’s being delivered. The gap results from customer expectations growing at an exponential rate, while service delivery from the organisations has only been improving at a linear rate.”
Daffy adds that most of the latest research findings in 2014 suggest that customers are the following:
· More impatient – They want it now.
· Better informed – They’ve looked it up on the Internet.
· More demanding – They expect more - probably for less.
· More prone to complain – They will tell you if they don’t like anything.
· More focused on experiences – They want to enjoy their encounter with you.
· More likely (and able) to tell others about what they view as poor service – They now have instant access to millions via the Internet.
With these points very much at the front of mind, no sector fought more than the supermarket industry in the battle for customer loyalty in 2014. As Tom Needs states, “at one end, the rise of Lidl and Aldi in the UK has shown that people are prepared to forgo service and shopping experience for a better price – no frills has a place as long as the product quality exists.
“At the other end, Waitrose’s dedication to shopping experience and quality attracts a premium which people are happy to pay for. The challenge for those in the middle is to stand out with something – whether it’s price, quality or speciality goods. Whatever they choose, one thing is for certain, a price war has started as grocery retailers fight for customer loyalty.
“Brands now have to figure out exactly what they are and distinguish themselves. High end or low end are winning – middle of the road/ mediocrity is losing. The last 12 months have seen companies re-brand and re-shape in order to stand out from the crowd – in one way or another."
Generation Y takes over
In relation to all of the above trends associated with customer loyalty, satisfaction and customer experience, one key, and most poignant of takeaways from 2014 has been the impact Generation Y has had on driving so much of the year’s customer service change.
It makes sense – the younger generation, or the cohort of people born between 1980 and the mid-2000s, are now the largest generation in the US, representing one-third of the total population. Research through 2014 showed they’re also the most demanding, the least loyal to brands and most technologically savvy.
2014 simply highlighted the problem all brands are having to face up to – that Generation Y are now in charge of defining the ‘Age of the Customer’, and are leading the evolution of customer service from both a consumer and staffing perspective, as Jo Causon and Ann-Marie Stagg explain:
“We’re finding that the people who are least satisfied with their customer service is young people, but what’s interesting in connection to that trend is that young people are far more likely to tell people when they’ve had a good experience with a brand,” says Causon.
“Customer expectations are increasing among Generation Y, especially, so organisations are now going forwards or backwards in terms of how they react to the challenge.”
Stagg adds: “The industry is looking ahead to employing Generation Y and beyond as well as serving them as customers. An understanding of their thinking, their skills and their likely routes to market has led to considerable discussion at the highest level about the challenges of serving the “always connected” generations.
“If organisations don’t address the way that they will interact with omnichannel, portfolio-career based young adults both as customers and employees then they will be left far behind as the Baby Boomer generation declines in numbers, and technology savvy individuals demand 21st century service. In many cases, young people have access to far better and much more powerful technology at home than many organisations have in the workplace!”
About Chris Ward
Chris is Editor of MyCustomer. He is a practiced editor, having worked as a copywriter for creative agency, Stranger Collective from 2009 to 2011 and subsequently as a journalist covering technology, marketing and customer service from 2011-2014 as editor of Business Cloud News. He joined MyCustomer in 2014.