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How to measure customer service to improve business performance

3rd Dec 2014
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In November 2014, the Institute of Customer Service published a new piece of research, Beyond Measurement: customer service and business performance. The research aims to help customer service leaders measure service in order to deliver sustained improvement in business performance.

This is the first in a series of articles exploring the themes in the research highlights significant changes in customer behaviour and attitude, suggesting a need for organisations to rethink relationships with customers and how they measure customer experience.

Decline in trust

Levels of trust in organisations have fallen. Recent research from the CBI suggests that few customers instinctively trust business and in a Financial Times poll, nearly two-thirds of UK voters said they wanted the next government to be tougher on big business.

Customers see key drivers of trust as organisations that contribute to the British economy, respected leadership, value for money, delivering on promises, levels of customer service and communicating honestly. Declining levels of trust affects customers and organisations in a number of ways. Customers increasingly use third party reviews and recommendations to inform their decisions. Low levels of trust damages an organisation’s reputation, affecting not just relationships with customers, but adding costs and complexity to how organisations deal with partners and suppliers, shareholders and regulators. 

Diverse customer segments and polarisation of prosperity

New models of segmentation, which reflect the increasing diversity of UK society, are emerging. An enduring legacy of the recession is an intense focus on value. The Institute’s research shows that 60% of customers want a balance of value and service whilst 25% indicate a preference for excellent service, even if it costs more. A minority of customers seek the cheapest possible deals and will sacrifice levels of service to attain them.

Younger age groups, on average, are less satisfied with organisations than older age cohorts. Where they are satisfied, they are more likely to recommend organisations. This suggests that customer expectations, and the propensity to communicate with others about experiences, are set to continue rising.

Changing attitudes to ethics and sustainability

New attitudes to ethical and sustainable business are emerging, partly fuelled by experience of the recession. A study published by Sainsbury’s suggested that because customers are more selective with their spending, they have higher expectations of products and services, including values that are important to them such as quality, integrity and sustainability.

Whilst customers recognise that growth in consumption is important to economic prosperity they are uneasy about overconsumption. Responses to this include greater interest in collaborative approaches such as sharing, bartering, recycling, buying locally produced goods which are seen to benefit the community and buying and selling goods direct to other customers. However, people also see a role for trusted brands in these processes, as guarantors of product quality and transactions between individuals and groups.

Emotional factors

Growing complexity, technological change, the decline in trust and economic pressures have heightened customers’ emotional needs and make it more critical for organisations to find authentic ways of connecting with them. Employee engagement is a key driver of both memorable experiences and purchasing behaviour. Customers who perceive employees to be friendly, helpful, interested in meeting their needs and knowledgeable are much more likely to remember a positive experience and repurchase. There is also evidence that emotional factors are increasingly important in B2B buying decisions, often connected with the consequence of the decision for an employee’s career or job security.

Omnichannel and use of technology

According to Ofcom’s research, over half of UK adults use a mobile phone to go online, more than one in ten use a tablet computer. Many customers – especially active online users – are receptive to personalised services, which anticipate and reflect their needs based on insight about preferences and purchasing behaviour. They are also concerned about data security and receiving inappropriate or excessive marketing messages. They are willing to form, increasingly expect deeper, ongoing relationships with organisations, with the opportunity to be actively involved in co-creating products and services.

This new environment has some important implications for the way in which organisations measure customer service.

Greater transparency of information means customers increasingly benchmark organisations they deal with against leading customer service organisations such as Amazon and John Lewis.

Measuring trust is a key indicator of the state of an organisation’s relationship with its customers, especially in those sectors which have been subject to intense reputation challenges. Value based issues such as sustainability, integrity and contribution to local economies have become increasingly important to customers.

The variety and complexity of customer segments means that organisations will need to invest in insight to understand customer behaviours, preferences and attitudes, combining quantitative and behavioural data to generate insight.

There is a need to understand and measure the emotional factors which influence customers’ buying decisions. Employee engagement has grown in importance – many organisations now recognise the connection between engaged employees, customer satisfaction and business performance and set their measures accordingly.

Customers expect to be able to move seamlessly throughout an organisation. Customer service measures therefore need to be inter-departmental, not just functional, embracing the  impact of experiences across all channels. Increasing numbers of customers expect a deep engagement with organisations they want to do business with and to co-create products and services.

This new environment suggests that there is an ecosystem of measures which organisations need to measure across the value chain. The next article in this series will look at what measures organisations currently use, where there are gaps, and how customer service links to business performance.

Brian Weston is the director of marketing and communications at Institute of Customer Service.

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