I just published a research report with Andrew McInnes (a researcher on our team) called Consumers Expect Poor Service Experiences. The research, which was based on surveying more than 4,200 US consumers, looked at consumer expectations for getting an issue resolved in 10 different areas (apparel, bank account, hotel, auto insurance policy, TV service, credit card, wireless phone plan, Internet service, computer, and health insurance policy).

It turns out that consumers don’t expect much from customer service. Here are some of the findings:

• In only one of the areas, apparel, did a majority of consumers (54%) expect to have an easy time getting their issue resolved.
• The lowest marks were in computers and health insurance policies, where only 30% of consumers expected customer service to be easy.
• In 6 of the 10 areas, Seniors were the most optimistic about these customer service interactions. But…
  • … in the 4 other industries, hotels plus three technology areas (wireless phone plans, computers, and Internet service), Seniors were the least optimistic about getting an issue fixed.
• Only 23% of Seniors thought it would be easy to get a computer issue resolved — the lowest level we found.
• Not surprisingly, Gen Yers were the most optimistic about customer service in the three technology areas.

The bottom line: Companies need to surpass customer service expectations.

Yesterday was a real “fun” day. When I arrived at the San Francisco airport at noon for my 1:40 flight, I was informed that the flight was delayed until 7:30 PM. After a few seconds it sunk in — I wasn’t going to make it home last night.

The agent didn’t really answer my questions about what had happened and told me that there weren’t any options on any airline that could get me home any sooner (although she didn’t seem to look very hard). She didn’t apologize and didn’t even seem to notice the enormous inconvenience to me.  

After I told her how horrible the situation was, she gave me some vouchers for free food. As a business traveler with an expense account, this gesture did nothing to dampen the prospects of my 6 hour delay. So I asked if she could at least give me a pass into the Admiral’s Club. She said that she couldn’t do that; all she could do is give me the food vouchers (compare this with my post about Ritz-Carlton).

It turned out that the delay was caused by mechanical problems; so it was totally American Airline’s fault. And the plane ended up leaving even later and I got home at 5:30 AM in the morning — about 7.5 hours later than scheduled.

 Here’s how I’d rate American’s customer service with my C.A.R.E.S. model:

• Communication: D
  The airline didn’t provide much information at all about the situation
• Accountability: E
  The airline didn’t try and do anything proactively to remedy the situation (like getting a plane quicker) or offer any options that lessened the inconvenience
• Responsiveness: D-
  The airline didn’t notify me in advance of the delay and didn’t try to rebook me on another flight. 
• Empathy: D
  The pilot was the only American Airline employee that apologized for the inconvenience.
• Solution: D
  A seven hour delay with no real attempt at remedying the situation for travelers is not an acceptable solution.

To put this in perspective, I’m a Platinum member of American’s loyalty program and am very close to reaching the Executive Platinum level (the airline’s highest level). So this is an indication of how American treats its best customers.

While American Airlines can’t avoid all situations where it inconveniences travelers, it certainly can (and must) do much better job with its service recovery process (responding to problem situations) and improve its corporate culture which is not very customer-centric.

The bottom line:  American Airlines does not seem to care about customer experience.

As I mentioned in my previous post, customer service deserves a lot more attention. Well, Customer Service Week also deserves more than one post. So here are a five items on my wish list for customer service operations in 2010:

• Forget about average handle times. If you want shorter calls, disconnect your phones. But if a customer calls you, focus more on making them happy then on getting them off the line.
• Learn from every interaction. Customer service interactions are full of insights about problems and unmet customer needs; stop squandering those extremely valuable insights. 
• Recover quickly and be proactive. A quick solution to a problem generates goodwill, while a drawn-out solution loses customers. Address customer issues immediately and look for ways to eliminate problems before the customer even contacts you – this includes enabling customers to help each other.
• Make customer service a product attribute. Don’t view customer service as an afterthought, think of it as a key component of your offering; so design it like you design other product attributes.
• Engage reps in customer experience transformation. One of my 6 laws of customer experience is that unengaged employees don’t create engaged customers. So make your customer service organization a great place to work, which will cut down on turnover and get reps more involved in customer experience transformation efforts.

The bottom line: Turn customer service into a strategic weapon

Customer service is underapreciated in many companies. So it’s great that we are celebrating Customer Service Week. In honor of the occasion, I’ve collected some of my thoughts (and posts) about customer service:

• Customer Service Attracts Loyal Customers highlights an important fact that consumers that are looking for good customer service are much more loyal than those that are looking for low prices.
• Customer Service Trumps Price shows how consumers prefer good customer service more frequently than low prices across 12 different industries.
• Comparing Price Seekers And Service Seekers shows that most consumers want both low prices and good service, but those that want only good service far outnumber those that want only low prices.
• Don’t Confuse Customer Service With Customer Experience discusses how customer service represents some of the key moments of truth when looking at an overall customer experience strategy.
• Customer Service Champs From BusinessWeek highlighted the list of companies with great customer service like Amazon.com and USAA.
• AOL, Comcast Headline Customer Service Hall of Shame gives a list of companies that aren’t delivering great customer service.
• Discussing Zappos’ Culture With Tony Hsieh gives insights into how you create a culture needed to deliver great customer service.
• Dial 1-800 For Customer Service shows that most consumers want ot get customer service over the phone and that 40 year-olds are the most interested in self-service phone applications.
• With Customer Service, CARES Beats ACES introduces the “CARES“ framework for evaluating customer service interactions:
  • Communication (clearly communicate the process and set expectations)
  • Accountability (take responsibility for fixing the problem or getting an answer)
  • Responsiveness (don’t make the customer wait for your communication or a solution)
  • Empathy (acknowledge the impact that the situation has on the customer)
  • Solution (at the end of the day, make sure to solve the issue or answer the question)

The bottom line: Customer service deserves more than a week of focus.

In a new research report called Service Seekers Are More Loyal Than Price Seekers (based on a survey of about 4,600 US consumers), we analyze the loyalty of four consumer segments that I’ve previously discussed in this blog:

Source: Forrester Research

The report examines the loyalty of these segments across 12 industries: airlines, banks, wireless providers, credit card providers, hotels, insurance firms, Internet service providers, investment firms, health plans, PC manufacturers, retailers, and TV service providers. Across all industries and consumer segments, I analyzed three areas of loyalty: willingness to buy more products, reluctance to switch from current providers, and likelihood to recommend providers to friends and colleagues.

Here are some of the interesting findings from the analysis:

• Across all 12 industries and all 3 measures of loyalty, Service Seekers are more loyal than Price Seekers
• In all 12 industries, the most loyal segment is either Service Seekers or Price & Service Seekers.
• In 10 of the 12 industries, Service Seekers are the most reluctant to switch away from their current provider.
• The gap between loyal Service Seekers and loyal Price Seekers is at least 20% in the following areas:
  • Willingness to buy: Credit card providers, TV service providers, Internet service providers, airlines, and insurance providers
  • Reluctance to switch: Airlines, TV service providers, insurance providers, and hotels. 
  • Likelihood to recommend: TV service providers, credit card providers, medical insurers, Internet service providers, and insurance providers.
• The gap between loyal Service Seekers and loyal Price Seekers is lower than 10% in only the following areas:
  • Willingness to buy: Banks, investment firms, and retailers.
  • Likelihood to recommend: Retailers, banks, and PC manufacturers.

The bottom line: Good customer service attracts more loyal customers.

I left Boston yesterday (Sunday) to make sure that I was in Kansas for a business meeting today at noon. That seemed like a pretty straightforward proposal, but it turned out to be impossible on American Airlines (AA). Despite going from Boston to Chicago without any problems, AA could not figure out how to get me to Kansas City (KC) today. 

I’m writing this post from KC, early on Monday morning, thanks to Southwest Airlines — more on that later. But this experience reminded me of an earlier post I wrote called The Tale Of Two Airlines: Southwest And American.

AA’s ineptitude could fill up a sizable post, but here are some highlights:

• Chapter 1: The impossible standby
  • I tried to get on an earlier flight to KC, but there was no agent at the gate 40 minutes before it was scheduled to leave.
  • When an agent finally arrived, he refused to even talk to me. I finally got him to put me on the wait list, but he was very ornery and wouldn’t tell me how many passengers had checked in (so I could gauge my chances).
  • No surprise, I didn’t get on the flight. Why does AA keep such a long standby list when they know that there are so few openings?
  • At this point, I had to rush to my actual flight.
• Chapter 2: The mysterious wait
  • The plane was at the gate and there were a bunch of AA employees at the desk — a good sign.
  • I waited and waited, 5 minutes passed loading time, 10 minutes past loading time, 20 minutes passed loading time. The board still said that my 6:00 flight would leave on-time. No announcements.
  • Finally, a little before the scheduled departure time, the agent made an announcement that there were some mechanical problems on the plane. Obviously they knew about it long before they told us.
  • After about 90 minutes (and only one status update during that time), we were able to load the plane.
• Chapter 3: The hostage situation
  • We pulled away from the gate and stopped before getting to the runway. There were no announcements, but we sat for about 30 minutes.
  • Finally there was an announcement that we had mechanical problems and needed to go back to the gate.
  • When we go to the gate, they told us that we would be able to leave.
  • At the gate, they told us to sit back down because we could not leave.
  • As the plane started to get warm and stuffy, the flight attendant could be heard pleading with the captain to let us out (our hostage negotiator).
  • The negotiations went well, we were finally released.
• Chapter 4: The black hole
  • We were not told anything about our luggage or next steps; and there were no agents at the gate to help with the situation.
  • All of the passengers left the plane and stood around, we had no idea what was going on.
  • No announcements or instructions. Just needless confusion and frustration.
  • Finally, an hour later, there was an announcement that our flight had been cancelled. We were given a number of options for rebooking.
• Chapter 5: The useless 800 number
  • Since there was already a long line at the desk, I chose the option of calling AA’s 800 number that the agent had announced.
  • The first lady just hung up on me after telling me that there was nothing she could do.
  • On my second call, I asked for the supervisor.
  • She explained that she could only get me to Kansas City on Tuesday (I was going for a meeting on Monday).
  • When I explained my situation, she just didn’t care. She said that there was nothing she could do.
  • I asked about other airlines or other airports closer to Kansas and she told me there were no other options — all airlines were completely booked.
  • So she booked me a flight back to Boston the next morning (gibing up on my meeting in Kansas). When I asked about upgrading me (I’m a Platinum customer), she asked if I wanted to pay for it or use my miles.
  • That’s right, she wanted to charge me for a flight that I didn’t want to take in the first place.
• Chapter 6: Alas, Southwest Airlines
  • Luckily, I had did not trust what I had heard.
  • I checked on line and actually found a 6:00 AM flight on Monday to KC on Southwest Airlines. So I boooked it myself.
  • That’s why I’m blogging from Kansas City, with plenty of time for my meeting.
• Chapter 7: AA’s one ray of hope
  • Now that I had a Southwest flight to KC, I needed to reinstate my flights from KC to Boston.
  • I walked up to a random gate and luckily found Shaista Shaikh at the desk.
  • She went out of her way to rebook me on my flights home. She was very pleasant, and was the first AA employee that displayed any empathy for the frustrations of a weary traveler.

Here’s how I’d rate AA’s performance with my ”CARES” model for customer service:

• Communication: E (we were left in the dark for most of the time)
• Accountability: E (everyone except Shaikh was quick to say they couldn’t help)
• Responsiveness: E (there was nothing but waiting)
• Empathy: D (only Shaikh seemed to care) 
• Solution: E (they couldn’t get me to KC)

The bottom line: While there are some things you can’t control (weather, mechanical troubles), you need to control how your firm CARES.

I recently published a research report called Who Wants Low Prices Or Good Customer Service? that looked at how low prices and good customer service drive consumer decisions. Using survey responses from about 4,600 US consumers, I created four segments of consumers: 

Source: Forrester Research

The analysis looked at this segmentation across 12 industries: airlines, banks, cell phone service providers, credit card providers, hotels, insurance firms, Internet service providers, investment firms, medical insurance companies, PC manufacturers, retailers, and TV service providers. Here are some of the findings from the research:

• Price & Service Seekers dominate. By far, the largest number of consumers say that both low prices and good customer service are important. The percentage of these Price & Service Seekers ranges from 53% for investment firms to 70% for retailers.
• Service Seekers come in second. The second largest segment of consumers is those who look for good customer service but not low prices. These Service Seekers range from 15% for retailers to 34% for banks.
• Price Seekers is the smallest segment. Across all 12 industries, the percentage of consumers who said that low price is important, but good customer service isn’t represents the smallest group. The percentage of Price Seekers ranges from 3% for banks to 10% for TV service providers.

We also looked at the demographics for each group in each industry. Here are some of the overall findings:

• Price Seekers tend to be college-educated males with children.
• Service Seekers tend to have high incomes and don’t rely on recommendations.

The bottom line: To best serve customers, you need to understand what they want (and most want good customer service)

I decided to go to the “way back machine” and look at a (very old) report that I wrote in July 2002 called “Mastering Online Customer Experience.” Here’s an excerpt from the report:

Don’t Deploy Technology — Solve Problems. While companies hope that online service will reduce costs, they mistakenly scrutinize individual interactions instead of studying the collection of contacts required to solve a customer’s problem… Firms must monitor interactions from the customer’s point of view — from the inception to resolution of an issue.

Doesn’t that sound like something you could say today?!?

Here’s another piece of the report that’s still relevant; a  graphic that depicts how individuals make decisions about the channels they use for an interaction:

Customers Explicitly Select Service Channels

The bottom line: Good advice ages well.

In a recent briefing from RightNow Technologies, the SaaS (Software as a Service) CRM provider showcased it’s new functionality called Cloud Monitor. The vendor can now search social networking sites for comments about a company, identify the sentiment of the comment (very negative to very positive), and enable reps to respond to the comments using their normal CRM tools.

Here’s a screen shot (courtesy of RightNow) showing how the tool can be used to respond to tweets:

RightNow Technologies' Cloud Monitor Functionality

My take: This new offering from RightNow is a great example of an important voice of the customer (VoC) trend: The integration of social media monitoring into broader VoC efforts. There’s no reason for social media efforts to look substantially different from how companies handle other forms of feedback.

And this becomes even more important when companies decide to respond. Why should reps have different (and less integrated) tools for responding to Tweets than they do when responding to emails? They shouldn’t. RightNow’s type of solution allows companies to utilize existing knowledge bases, efficiently deal with correspondences, and maintain a centralized record of customer contacts.

While this initial functionality from RightNow is a good starting point, it certainly needs some more enhancements before it matches up with pure brand monitoring tools. Here are some of the areas where it should (and likely will) make improvements: A broader set of sites that it monitors, classification (and agent routing) of comments by topic, identification of the influence level of the commenter, inference of customer details (like is it a customer or not), and tailored text mining tools.

So, for the time being, companies need to make a trade-off between comprehensive brand monitoring tools and integration with CRM applications. But it won’t be long until social media is just another channel that companies interact with through their existing CRM applications.

The bottom line: Everything new that survives becomes mainstream. 

In a recently published research report called “Customer Service Trumps Price,” we asked nearly 4,600 US consumers how they choose the companies they do business with across 12 industries: airlines, banks, cell phone service providers, credit card providers, hotels, insurance firms, Internet service providers, investment firms, medical insurance companies, PC manufacturers, retailers, and TV service providers.

In particular, we asked consumers to rate the importance of two criteria: good customer service and low prices. Here’s some of what we found when we analyzed the data across five generations of consumers:

• Across all 12 industries (and every generation of consumers), good customer service was selected more frequently than low prices as being important.
• Good customer service was most important for banks and insurers, where it was selected by 89% and 87% of the respondents respectively.
• Low prices was most important for retailers, credit card providers and airlines, where it was selected by 78%, 75%, and 75% of the respondents respectively.
• When it comes to the gap between good customer service and low prices, seven industries have double-digit spreads, led by banks (31%), investment firms (26%), and health insurance plans (18%).
• Across all 12 industries, Younger Boomers (43 to 52 year-olds) were the group that most frequently viewed low prices as being important.
• Across all 12 industries, Gen Yers (18 to 28 year-olds) were the group that least frequently viewed good customer service as being important.

The bottom line: Good customer service is a critical component of customer experience.