Customer satisfaction with UK companies is worsening. That’s the stark headline finding from the latest Institute of Customer Service (ICS) UK Customer Satisfaction Index (UKCSI).
Researched every six months, the Index fell in July 2014 for the third consecutive time, with over half of organisations seeing a drop of at least one point in their ratings. Satisfaction levels fell in 12 out of the 13 sectors surveyed and just 28 out of 197 organisations saw their scores rise.
Running since 2009, the UKCSI is based on nearly 41,000 responses from 9,522 demographically representative customers from across the UK. Overall the index score of 76.3 out of 100 is 1.9 points behind the peak of 78.2 from January 2013, and down 0.8 points from 77.1 in January 2014. For the first time responses were broken out by age group, with younger people, on average, less satisfied than the older age groups.
So what is driving this continued fall – and how can it be arrested? The ICS research talks about five areas that could be behind the decline:
1. Higher expectations
The first thing to realise, as the ICS points out, is that consumer expectations are continually rising. Service levels that were considered good six months ago are no longer adequate as customers continually demand more
The impact of the recession is still being felt as previous cuts in customer service budgets have yet to be addressed.
3. Change of focus
During the downturn many companies focused on retaining their existing customers. As we move into growth, there is a corresponding push by companies to expand aggressively and chase new customers, potentially to the detriment of existing business.
4. Evolving needs
We are moving into a genuine ‘relationship economy’ where customers are looking beyond price to areas such as convenience, ease of doing business and speed across multiple channels. Therefore, companies have to engage successfully with changing customer needs if they are to retain them.
There is an increasing focus on how businesses behave, with scandals around operating practices such as tax avoidance, impacting customer perceptions. Stories spread quickly over social media, meaning companies are continually in the public spotlight.
Overall the UKCSI findings point to a need for greater engagement with customers, understanding their needs and quickly delivering what they are looking for, while building an emotional bond between the brand and consumer. Service is at the heart of this and there are four areas that Eptica believe companies should focus on:
1. Lead from the top
The customer experience and satisfaction levels are vital to organisational success. They shouldn’t just be left to the contact centre. The customer relationship is part of everyone’s job so initiatives should start at board level and involve the entire organisation.
2. Move fast
Companies have to be flexible and ready to change quickly as customer needs evolve. At the heart of this is better understanding of what customers want, so companies should look at technologies such as linguistics and customer feedback to analyse interactions on a large scale.
3. Join up service
Organisations have to deliver service across multiple channels, but in a joined-up, consistent way. This means bringing together processes and information so that they can be accessed by everyone involved in the customer journey – whether staff in branches or shops, outsourced contact centre partners or in-house agents.
4. Benchmark beyond your peers
Customers expect the same high levels of service from a utility as a retailer, raising the bar for everyone. Therefore, while organisations should benchmark against their nearest competitors, they must also look further afield and see what they can learn from companies in completely different industries.
The continual fall in customer service is worrying for the whole UK economy – the service sector is responsible for 78% of UK GDP and 70% of the population are in customer facing jobs. Such is the level of concern that the All-Party Parliamentary Group on Customer Service has been set up, with the aim of increasing awareness and increasing the quality of service and engagement. With the move to a relationship-based economy, now is the time for companies to review their processes and get closer to their customers if they want to succeed and escape the downward customer service spiral.
Delivering the right service, products and overall experience has always been central to building a successful business. Companies know that retaining existing customers is far cheaper than winning new ones, and have built systems and processes to ensure that they can provide what customers want cost-effectively.
This trend has been accelerated by two key factors. The recent recession made consumers much more wary about spending money, increasing competition across all markets. And customers are now much more demanding and connected – they will not tolerate poor service and will research and check every purchase, reading reviews, asking contacts on social media and searching for relevant news stories before they commit.
Customers therefore increasingly look to buy from companies that they feel engaged with at an emotional level. As research company Gallup points out, customer engagement – which it describes as “a customer’s emotional or psychological attachment to a brand, product, or company” – is therefore at the heart of business growth. Industry analyst Gartner agrees, recommending that organisations replace their contact centres with Customer Engagement Centers (CEC), that provide the technology, processes and people to underpin customer engagement.
Gallup’s Customer Engagement Score (CES) is based on three questions:
- Company X always delivers on its promises
- I feel proud to be a customer of Company X
- Company X is the perfect company for people like me
Based on responses to these questions, Gallup categorises customers into three groups:
- Fully engaged – emotionally attached and rationally loyal to a company
- Indifferent – neutral towards a company both emotionally and rationally
- Actively disengaged – ready to switch brands and share poor experiences with others
Gallup finds that there is a strong correlation between engagement and profitability. A fully engaged customer represents a 23% premium when it comes to revenue and profitability, compared to a 13% discount for their actively disengaged counterparts. Actual results vary by industry, but in the US Gallup’s research discovered that fully engaged customers delivered 37% more annual revenue to their bank when compared to the actively disengaged. For example, in the insurance sector fully engaged policy holders bought 22% more types of products than the actively disengaged.
At Eptica, we’re seeing this need for greater engagement and an improved customer experience driving increased sales for our innovative, linguistic-powered customer engagement software. We have just announced record quarterly revenues, with Q2 revenue up 30% on the same period in 2013, accelerating the success of Q1 2014.
During our last quarter, Eptica signed new customers in the retail, banking, telecoms and public sectors, including Transport for London (TfL) – Capita, as well as Crédit Agricole, BforBank, Phonehouse and the Ministère de l’Education Nationale in France. In Asia-Pacific, we are expanding staff numbers in its Singapore office to meet growing demand.
Additionally the strength of Eptica’s technology and approach was recognised by Gartner, which positioned the company in its 2014 Magic Quadrant for the CRM Customer Engagement Center. The sole European company in the report, Eptica was one of only two vendors to transition with the same product from the retired Magic Quadrant for CRM Web Customer Service (WCS) Applications. This marks the fourth consecutive year that we have appeared in a Gartner Magic Quadrant.
Gallup’s research demonstrates the growing importance of customer engagement, as companies see the financial benefits of building strong relationships that underpin their entire operations. Now is the time to act and put in place the right strategy, technology, processes and training. This will not only retain existing sales, but will also safeguard future revenues through happier, fully engaged customers.
In most sectors, the customer journey is growing in complexity, spanning interactions across multiple channels with customers interweaving digital interactions with physical (in-store or branch) experiences. Customer service and the customer experience needs to evolve in order to stay on top of these changes.
Previously a lot of information people might have needed before a purchase was delivered face-to-face by an in-store sales assistant. But now a consumer quite often gathers information online on their phone before making a purchase. They might look for what others have said about the product in online reviews, visit a brand’s website or Facebook page, or interact with its customer service channels.
Companies therefore need to understand the evolving customer journey and adapt the customer service experience they deliver – finding ways to provide information, answer questions and interact with the customer digitally either before, during or after they visit a shop.
Management consultant McKinsey and Company suggests that the way companies engage customers in these digital channels matters profoundly—“not just because of the immediate opportunities to convert interest to sales, but because two-thirds of the decisions customers make are informed by the quality of their experiences along their customer journey”.
According to McKinsey, how companies deliver a seamless convergence of digital and physical interactions is critical to success. They paint a picture of a couple that has just bought their first home and is looking to buy a washing machine and a tumble dryer. Mike and Linda visit various websites and build a wish list of appliances on one of them. When they visit the physical store to see the appliances, the retailer has already texted them a reminder link to their online wish list, as well as links to updated specs and prices for the machines they were interested in (captured through their click trails on the retailer’s website). They have also been texted about a special discount on one of the items.
When Mike and Linda tap on the wish list text, the app provides a store map directing them to the home appliances section and a “call button” to speak with an expert. The example ends with the couple making a purchase; taking advantage of the discount they were offered. They leave with a delivery date – knowing they will receive a text reminder on the day of delivery.
How do you prepare for this merger of virtual and physical experiences? Here are some important considerations:
- Use a centralised knowledgebase. Provide a single source of information that is instantly available, whatever the channel. It can be used via self-service on your website, by agents on the phone, email or social media channels or by in-store staff, to give consistent answers, whatever the channel.
- Make sure your systems are joined up. Integrate information across the customer journey, combining all the digital and physical interactions that a customer has with the company to help personalise service and engagement.
- Analyse and automate. The number and frequency of customer interactions with companies is growing rapidly. So use technology such as linguistics to scale your operations, analyse incoming interactions and provide automatic responses where possible. Use linguistics to analyse longer term interactions – what are customers asking and how can you use this to change your products and services?
- Be proactive. Use tools such as proactive web chat in the same way as a shop assistant, triggering online help sessions if customers seem to be stuck. Arm sales staff with mobile access to information so that they can deliver consistent, fast answers in-store as well.
The true, seamless merger of the physical and virtual worlds in the customer journey may still be some way off. But things are changing. Customers now expect to access more information on products and prices while they are shopping and want to engage with customer service while in-store. Post purchase they want to be able to track deliveries so they can plan their day accordingly. Joining up the customer data, channels and systems to create this seamless experience is going to require consistent processes and knowledge and may initially be uncomfortable as companies adapt. But the pain will be worth it, with a seamless experience delivering competitive differentiation, greater efficiencies and increased revenues.
Last month Amazon turned twenty. In 1994 founder Jeff Bezos left his job, drove to Seattle and set up the business in his garage. Originally going to be called Cadabra (as in Abracadabra), the name changed to Amazon after fears that people would mishear it as “cadaver”. It now offers over 230 million separate items for sale in the US alone and had 2013 revenues of $74.5 billion.
Amazon has radically changed how consumers shop, read and watch films, and affected a wide range of industries, from bookselling to video rental, and now, with the new Amazon Kindle Fire phone, mobile telecoms. So what have been the 5 key impacts on the customer experience?
1. Make it simple
As a web-based business Amazon has focused on making the customer journey as straightforward as possible. Ideas like One Click shopping (and now ordering via Twitter) ensure that the checkout process is fast and simple, without consumers having to re-enter credit card details or addresses. This also applies to customer service. If consumers have a query or want to return an item information is readily available and automated, with the maximum use of self-service, supported by channels such as web chat and email.
2. Share the experience
Amazon was the first company to introduce customer reviews and has made them central to the online shopping experience. Now, almost every retailer provides an opportunity to review the product that you have just bought – even down to a pack of nails from a DIY site, while most people won’t make a major purchase without checking relevant reviews on both products and the retailer itself.
3. Offer what customers want
Twenty years ago, customers were limited in what they could buy through the physical size of their local shops. The internet changed all of that, but led to the opposite problem – too much choice. Due to its size Amazon is able to capture a huge amount of data and uses it to deliver personalised offers and recommendations based on previous purchase history, tailoring information to particular customer needs.
4. Keep innovating
When Amazon started, people saw it solely as an online bookstore. However, this was never the long term goal – it was simply a start point to build customer trust in the then new experience of buying online. Since then Amazon has expanded far beyond retail – offering streaming services, digital downloads and physical hardware such as the Kindle ereader, Fire tablet and new Fire Phone. These not only integrate closely with the retail side of the business, but add innovative new features. For example, the Fire Phone has a near 3D screen and the ability to provide information on anything it sees or hears. Amazon has never rested on its laurels, and is continually moving forward.
5. Always put customers first
Compared to competitors with physical stores, Amazon operates on very low margins. From the beginning Jeff Bezos talked about being focused on customers, rather than competitors, and taking a long term view. It is rumoured that its core retail business just breaks even, and overall profits are still small compared to total revenues. Amazon’s strength is that it aims to think like a customer and provide what they want, building loyalty in a crowded market.
The internet has radically changed consumer behaviour over the last twenty years, widening choice and shifting the balance of power between companies and customers. Amazon has been at the heart of this and is helping reshape how we shop, both now and in the future.