Tuesday, April 19, 2016

Do you know your Cost of Service?

Peter ElliotPeter Elliot
Senior Consultant – Europe
Customer Service and CRM

There is a largely linear relationship between the Quality and Cost of a customer service operation. Intuitively, the better the quality of service offered, the higher the cost. Take the simple example of answering a customer call. To offer the highest service level, the call will be answered immediately by someone who can resolve the issue. However, this also implies a competent staff member is waiting to take the call, and either they will be interrupting another task, or doing nothing. Both of these have a cost, so to be more efficient and keep staff occupied with customers all the time, they may work to a queue. The queue implies customer wait time, which can vary with peaks and troughs, which may cause a deterioration in service quality.  To avoid staffing up for the peaks, the queue can be used to smooth them out, lower cost again but even higher customer wait times, so lower quality service. Striking the right balance for the business is the grist for the mill of the contact center manager.

Many years ago, I worked for an IT company as a service engineer. This company was renowned for excellent service, and they built a good business on the back of it. We were field-based, and had busy times and slack times. During the slack time, we often just waited for a call – I became an expert at pinball! But customers loved the fact we could respond quickly, and as staff we were pretty satisfied as well. Its great getting constant accolades from happy customers, and appearing in surveys as #1 for service. ‘Whatever it takes to serve the customer’ was our motto.

One day, we were called to a meeting with our VP of Customer Service. He announced the company had decided no longer to be rated #1 for service, but would be happy to be #3 or #4. We were horrified, and thought it was the beginning of the end for the company. Looking back however, it was a sensible business decision. Having established a reputation for good service and products, they had decided to take a calculated business risk to reduce service costs and improve service margin, by changing from being ‘excellent’ to ‘very good’. This change resulted in fewer staff, and we had to cover more customers. No more slack time, more travel, and some customers had to wait longer. Managers now had to earn their salary and make priority decisions. But the business profited at minimal impact to the quality of the service. It was successful for our service teams, and we maintained our reputation for good service, even though we had to work harder. The company subsequently made some poor product decisions and went out of business, but that’s another story!

Most companies aspire to offer the best customer service their budgets will allow. Depending upon other business priorities though, service budgets can suffer. Service managers will typically have to balance their aspirations against requests from the business to cut costs. Where can efficiency be improved that will have the least or no impact on service levels? Do we want to tier our services so we offer the best service to our most valuable customers?  Do we know which customers are most valuable? Which products are costing us most to support, and can they be improved for less than the service cost? Can we deliver the service from lower cost locations or use lower cost channels? Should we invest in a knowledgebase so that customers can help themselves rather than place a call? In order to answer these questions all aspects of the operation must be measured in financial terms to determine where opportunities exist.  Cost per Call, or Cost per Contact can be useful measures to help identify where efficiency can be improved. However, whilst improving your efficiency it is essential to ensure that the quality of your service does not suffer, and there are a number of measures you can adopt such as NPS®, CES, CSAT,  that will ensure you achieve the right balance of Cost vs Quality for your business.

Peter Elliot is an experienced and professional consultant. Peter and his peers at The Taylor Reach Group, assist companies and organizations to overcome business, strategic and operational challenges in their call, contact center and customer facing organizations. 

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The Customer Experience: What Makes the Best the Best Part 1

CT headshot 15-1Good day. My name is Colin Taylor, and in this discussion, we’re going to be discussing the customer experience and what makes the best organizations the best.

First, a little bit about myself and the organization. As I said, my name is Colin Taylor, and I’m the Chairman and Chief Chaos Officer for The Taylor Reach Group. We are an award winning call, contact center and customer experience consulting firm. The company was established in 2003. What we do is we help our clients improve the operational effectiveness and efficiency of their customer facing organizations.

Most commonly, our work involves call or contact centers, but can involve technical support groups or even social media outreach. All of our consultants have a minimum of 20 years, hands on operational experience. We are vendor agnostic, which is to say that we do not take money from anyone but our clients. So we’re not in the pockets of any technology or outsource vendors. The company is based in the Toronto area which happens to be where I live. But we also have offices in New York, Atlanta, Phoenix, Ottawa, Cork, Sydney, and Beijing. For more information on Taylor Reach, please visit our website.

So, what is the customer experience, or as we will often refer to it during the session as CX.

86% of Consumers Are Willing To Pay More for an Upgraded or Superior Service

The formal industry definition for the customer experience is how customers perceive their interactions with your company. IBM defined it as the designed interaction between an organization and an individual. CX includes all channels of communications, and interactions, and all touch points. CX is critical to the success of any organization, consider that 86% of consumers are willing to pay more for an upgraded or superior service, this should speak loudly to all marketers out there. If organizations can differentiate, based on customer experience, then there’s an opportunity to recoup a premium in terms of price and revenues.

85% of Customer Churn Due to Poor Service is Preventable

More startling facts; Eighty-five percent of all customer churn is due to poor service that was preventable. Eleven percent of customer churn could be prevented simply by the company extending outreach and contacting those disaffected or unhappy customers. 67% of customer churn is preventable if a customer issue could have been resolved on the very first contact or first engagement, this really underscores the importance of first contact resolution, or as it’s termed, FCR.

Only 1 Out 26 Will Ever Complain

Seventy-eight percent of consumers actually expect to get an answer from some form of self-service be that on the web or through an IVR, (interactive voice response) unit. And just 1 out of 26 customers will actually ever complain. Most customer will simply vote with their feet. Eighty-four percent of all social media interactions have to be escalated to other channels for a resolution. It’s just not possible to resolve a refund publicly on Twitter, for example. While we may believe that there’s a bias in terms of various contact channels, in fact, more than two thirds or 67% of customers really don’t care what channel is being used.

Of 34% of Organizations Who Have Completed Customer Journey Mapping, Only 2% Report Success

Thirty-four percent of companies at this point have undertaken a customer journey mapping exercise, 2% have reported success in that process. And 72% have said that customer journey mapping really has missed their needs. That, I think, speaks to a broader understanding about how inclusive the customer experience must be. It has to be all touch points and all interactions. Further, it has to be from the customer’s perspective. It can’t just be what we want them to be thinking about us.

Less Than 1% of Organization Can Actually Measure Their Customer Engagement

We in part influence our customers perceptions and their expectations, but their perceptions and expectations are also going to be influenced by online reviews, the experiences of their friends, and their own experiences with other, perhaps unrelated, firms and organizations, and possibly even different verticals. Fifty-eight percent of companies have customer engagement programs in place, but less than 1% of companies can actually measure their level of customer engagement. So certainly there’s some very positive and strong opportunities for an organization that can execute customer experience very well.

But there are also huge risks, and there’s a lot of wreckage on the path to success. As we look at customer experience, we try and keep it fairly simple. It’s really about three elements. Do customers get value without difficulty? That’s ease. Can customers get value from the experience? Is it effective? And do customers feel good about the experience, that’s emotion. So ease, emotion, and effectiveness are the ‘Three Es’ and these are really core tenets to any customer experience initiative. Each of these elements can be exploded down to a far more minute level and can be rolled back up to those three.

CX Components

The customer experience is the perception of the customer is based on emotion, ease, and effectiveness. These elements can be expanded to suggest that under emotion, for example, was the agent they spoke with empathetic? Did they understand where the customer was coming from? Is the website visually appealing? Or was the ambiance in the store and the environment pleasant? From the ease perspective, was the order processed quickly? Was the product information clear and readily available? Was help available in an accessible context, either from an associate in the store, from the FAQs on-line, or from a helpful chat option which presented itself?

Was the process effective? What was the effectiveness? Was the right item offered? Was essential product information available? Was required help available or provided?

From a contact center perspective, we might equate effectiveness to, was the agent knowledgeable about the product or services that we were discussing?
TRG CX GRaphicThe Taylor Reach, has developed a slight variation on Ease, Emotion and Effectiveness, when we look at call and contact centers. Each customer interaction can be viewed across three different dimensions that have the greatest impact on the customers’ perceptions, opinions, and experience of dealing with that agent in that contact center environment.


Customer Effort, Emotional Connection, Rational Connection

We look at Customer Effort and the ability to make a connection, both Emotional and Rational. Was the agent able to make an emotional connection with the customer? Did they ‘get it’? Were they empathetic? Were they able to make a rational connection? From that perspective, what we are really talking about is, was the agent knowledgeable, did they know the products, did they know the policies? And regarding customer effort, how difficult was it to actually get to that right agent who was able to help the customer?


If we have to force customers to go through 14 levels on an IVR or have to transfer the call five times, we certainly have created barriers and restrictions, and increased the amount of effort the customer needs to invest. Now, we know intuitively that better service and better experiences improve the customer relationship. The following graphics below are from HBR. The graphic blow shows that customer experience drives sales and it actually reflects a 140% increase in sales versus the poorest experience.

CX to Sales 1

This chart looks at the customer experience score and the annual revenue of those same customers. The second chart addresses the ability of superior customer experience to drive membership. If we look at things from a subscription perspective, we see that the customer experience score is increasingly predictive of future membership or subscription in future years.

CX to Membership

The chart show over 400% tenure increase versus the poorest experience scores. So we can see that there is dollar value available to organizations that are able to deliver that better experience, as judged by their customers.

Why improve the customer experience? Well we want to improve retention and recover potentially lost customers. We want to engage existing customers in improving their satisfaction. We want to increase cross sell and up sell opportunities and the customers’ success.

All organizations want to reduce the cost of new customer acquisition. We know that engaged customers and increased employee satisfaction leads to increased customer engagement and customer satisfaction. This strongly correlates with a significant improvement in customer experience. We want to reduce the cost of the feedback infrastructure.

All organizations want to make it easier for customers to tell us how we’re doing. In the graphic below, courtesy of Genesis, we see the top three reasons why businesses proactively manage and invest in the customer experience.

CX Gartner

Number one, is to improve customer retention. The second reason was to improve overall customer satisfaction. Number three on the list was to increase cross selling and up selling. Reasons, one and three directly correlate to increased revenues, and number two represents a secondary relationship to increase loyalty, stickiness, and retention. This is not the only voice speaking to the value and importance of investing in Customer Experience. Gartner  reports that in 2016, 89% of marketing leaders surveyed expected to compete mostly on the basis of customer experience.

79% of Customer Experience Leaders Have Better Financial Results

Firms that are recognized as tops in delivering CX, reap huge rewards. Seventy-nine percent of customer experience leaders report better financial results than their competitors. While only 55% of customer experience laggards can report the same. That was a finding from the Temkin Group study in 2015. If we look at the Forrester Customer Experience Index online survey from the same year, we see the brands that ranked tops in customer experience, and there’s a lot of familiar names that are well regarded as having excellent customer experience.


USAA has four mentions on this top CX list!


The distribution of CX index scores, again from Forrester, shows an interesting curve. The smallest number reported on this slide, shows that almost nobody is doing an excellent job. There are a number who are doing a good job, even though that number has actually declined in the third quarter versus the first. We also see that about half or just over half of the firms participating are doing an ‘okay’ job. Yet that leaves 20-25% that are doing a poor or very poor job based on those almost 300 firms that were surveyed.

Dist of CX

Perhaps predictably, marketers look at the customer experience from more of a marketing perspective, and the call or contact center is often not a focal point in their designs and their developments. Frankly, I believe that this can be a fatal flaw. Why is that, you ask? Well more than 50% of all consumer interactions take place through a contact center. If we look at the first channel that individuals employ to communicate with an organization, the graphic on the left, we’re seeing that the call center is the first channel 35% of the times. Followed by website, branch, or retail.

Channel Pref 1

IVR, which is directly connected and usually a part of the call or contact center is 12%. So if we add that to our 35%, we’re up to 47%. We can then add email and chat, also channels that terminate and are processed through our contact centers and we are at 53%. Channel preference for communications with the organization varies by vertical, and it also varies based on the level of complexity of the issue. This is the complexity as perceived by the customer. The two charts below illustrate these facts. If the issue is deemed to be not very complex or non-complex shown on the lower chart, only in the case of satellite and cable, or ISP is call center the first choice.

Channel Pref 2

Complex Issues Equal Human Interaction

That preference may have more to do with the options available to the customer. If you have a cable modem or your Internet service provider is down, it’s difficult to get support through the web. But for other verticals where we presume internet service is available, wireless, credit card, health care, technology, etc., the first channel choice. This preference changes dramatically when we have, or believe we have a complex issue. I think this really reflects human nature. For tasks that we believe are easy, or simple, or straightforward, we’re quite happy to interact with technology to achieve our objectives. But as soon as we think that something is broken or messed up, we really want to talk to a human being. So in every one of those sectors we talked about a moment ago, with the exception of technology, call center becomes the first channel choice for complex issues. And that’s over 50% to more than 60% of the cases.

In most organizations, the customer experience teams are quite small. Temkin found that the number of full time employees is generally at least six.

Size of CX Team

But you can see that the biggest single percentage there is between 3-5 staff and then 6-10 would be the next largest segment. Some very large organizations do have large teams with 15% of reporting organizations have teams in excess of 50 individuals dedicated to the company’s customer experience.

Executive priorities for CX leaders versus laggards can also shed a great deal of light in terms of what they’re focusing on. If you’re a leader, then one of the key priorities you’re going to be working on, is to make the company’s culture more customer-centric and you’ll be looking at fixing customer experience problems. With over 85% and almost 90% respectively focusing on these issues, while only half the CX laggard organizations are focusing on these issues. There is strong alignment in a number of areas where the laggards and leaders respond similarly. Increasing customer retention, acquiring new customers, selling more to existing customers, and improving profitability, are all areas where both groups aligned. Of course what organization isn’t focused on these issues? From a CX perspective however I think that we can probably glean more from the variances than we can from the similarities.


While it seems to those of us in the industry the CX has been with us for a number of years, yet most organizations are still early on in this customer experience journey. In terms of how many companies really view themselves as industry leaders, that’s a very small number, 7%. But how do these same firms expect their CX to be described in three years? 55% believe that they will be industry leaders. In sales this would be called the ‘hockey stick’ as a dramatic increase is anticipated, even though present evidence may belie that prediction. So there’s still lots of gains to be had in the entire milieu for customer experience. Now we’ve focused on the term customer experience thus far in this discussion and in our next installment we will to introduce the relationship between CX and customer centricity.

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Monday, April 18, 2016

SCORE Conference- Join Your Peers in Boston


Special Invitation for Friends of Taylor Reach Group to Attend SCORE Conference 2016

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Register Today and Receive
The Taylor Reach Group Special Pricing!



        The Seaport Hotel

        Boston, MA


Celebrating Over a Decade of Success Bringing CEM Professionals Together


Whether you are new to SCORE or have joined us before, you can’t afford to miss our 14th customer service industry annual event—taking place on May 25-27, 2016 at the Seaport Hotel in Boston.


Nowhere else will you find such a select group of best-in-class industry leaders from companies including AT&T, EMC, Pitney Bowes, CA Technologies, Progress Software, AutoTrader.com, Akamai Technologies, NetScout Systems and Nutanix who will present innovative, yet proven, strategies for driving customer satisfaction, employee motivation and rewards, incentive-based compensation, and customer retention and loyalty. These topics will both strengthen your current CEM strategies and inspire new ideas for your organization.



    Special Offer for Friends of The Taylor Reach Group: $1,000 Discount!


3 Days = $995 per attendee
[regular price = $1,995]
(includes workshops, conference,
lunch, networking reception
NorthFace ScoreBoard Award Dinner)
1 Day (May 26) = $495 per attendee
[regular price = $995]
(includes conference, breakfast, lunch &
NorthFace ScoreBoard Award Dinner)


    Register Here
Or call 1-800-711-5196
(Ask for the SCORE Conference Coordinator)

    Seaport Hotel Accommodations: Special Rate of $279 per night (single/double occupancy) with reservations by April 25, 2016 [reference SCORE Conference].
Call 1-877-SEAPORT or 1-877-732-7678

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    Don’t Miss This Leading CX Industry Event
Register Today!


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Thursday, March 24, 2016

Join me at Call Center Week

We live in an age where convenience is king. This year, Call Center Week taking place June 27- July 1, 2016 at the Mirage, Las Vegas will address the importance of delivering effortless customer experience and shifting from personalizing to predicting customer needs.   http://bit.ly/1Prmlwn

Why Attend & New for 2016
• Our headliner keynote! Chip Conley, Founder of Joie De Vivre Hotels, Head of Global Hospitality & Strategy at AirBnB and best-selling author of Peak. He will share how to understand the motivations of employees, customers, bosses, and investors, and use that understanding to foster better relationships and build an enduring and profitable corporate culture.
• 2,000+ Customer care professionals and 200+ technology solutions under one roof
• The most renown collection of customer service thought leaders in the world today
• Upgraded Zappos contact center site tour featuring a keynote by Jon Wolske, Culture Evangelist
• New Las Vegas Water Valley District contact center site tour that will demonstrate cutting edge ways to connect operational effectiveness to the customer journey
• Eight track streams to customize your learning and align your experience with your top priorities
• Demo Drives to build a vendor strategy that can help you deliver on your top 2016 objectives
• Team Building: Interactive Workshops, Lunch n’ Learns, Wine/Beer Tasting, Book Signings, Dance Parties and so much more!
Download the Agenda: http://bit.ly/21H5M6x
Register now using your 10% discount 17CCW_COLINTAYLOR:
See you in Vegas!
Colin Taylor
P.S. Check out the CCW Attendee Snapshot >>> http://bit.ly/1UkAd40

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