Customer Service: Looking at life through rose-tinted spectacles? Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 1 Table of Contents TABLE OF FIGURES...............................................................................2 INTRODUCTION ...................................................................................3 TELESCOPE OR CRYSTAL BALL?: VISIONS OF THE FUTURE ................................ 4 HALL OF MIRRORS: HOW COMPANIES ASSESS THEIR CUSTOMER PERFORMANCE......8 MAGNIFYING GLASS: A CUSTOMER PERSPECTIVE ........................................ 11 X-RAY: WHAT'S GOING ON UNDER THE SURFACE?........................................... 12 SUMMARY ......................................................................................... 14 CONCLUSION..................................................................................... 14 Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 2 Table of Figures Figure 1: Number of Customer Service Heads expecting customers to increase their use of these channels. (Source: Vanson Bourne/CSC)..............................................4 Figure 2: Assessment of company's performance in customer service (Source: Vanson Bourne/London Bridge Software)..............................................................8 Figure3: Companies' and consumers' contrasting perception of customer service.........................9 Figure 4: Contrasting need for a "Customer relationship" (Source: Vanson Bourne/London Bridge Software)............................................................10 Figure 5: Consumer expectation versus experience (Source: Vanson Bourne/London Bridge Software)............................................................11 Figure 6: Overall performance of e-mail test group............................................................................12 Figure 7: Best performers in e-mail group test.....................................................................................13 Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 3 Introduction I n December of 2000, Datamonitor claimed that the percentage of abandoned online transactions that could be salvaged and converted to sales would reach 8.7% by the end of the year. This translates into USD $10.9 billion in lost eCommerce revenues. They found that: "e-mail response continues to drive the greatest portion of customer dissatisfaction. Shoppers expect immediate response to their inquiries, but e-mail response time remains dramatically inefficient, sometimes taking days. The demand for online satisfaction has become so overwhelming that many companies cannot keep up." Recent studies by software company Amacis claim that while most companies want cosier and more profitable relationships with customers (98% - see figure 4), few have invested in the necessary technology. Technology not to get in the way of the customer but to support the volumes of customer interaction that are likely to result from opening the Internet communication channel. And what about customer wants? Well, Internet shoppers have a realistic expectation that if they have a support issue they should be able to seek redress via e-mail or via the very web site on which they made the order. And yet, almost 50% of consumers said they felt that technology was making them feel more remote. The customer, and how best to service his/her needs, is right at the heart of the business debate. It's been long understood that winning new customers, or, more likely snatching them from competitors until a better offer snatches them away, is costly and ultimately unproductive in the main. At the same time retaining customers and winning their loyalty becomes increasingly more complex as the channels by which they wish to buy and be serviced proliferate. So what ARE companies' intentions, what is their view of the future of Customer Management? This report sets out a number of perspectives on channel proliferation. Current conventional wisdom is that the essence of customer retention is to develop a relationship and to manage it with the aid of technology. What do new technologies promise those responsible for crafting profitable and fulfilling customer relationships? This report questions some of the key assumptions and examines actual performance in one key service sector, banking. This report is based on interviews with large commercial organisations, with dot.coms, with financial institutions, with the proponents of next-generation technology and with consumers. It uncovers how companies are adopting new technologies both today and for the future and analyses the dynamics of the B2C relationship. Sources: A View Obscured: New Horizons and Current Obstacles in Customer Service - Vanson Bourne/ Amacis, November 2000. Building Trust and Value in an Electronic Relationship - Vanson Bourne/London Bridge Software, July 2000. A Tale of Two Citizens - Vanson Bourne/CSC, August 2000. New Channels in Banking - MORI/Amacis, July 2000. E-mail in Banking Mystery Shopping - Vanson Bourne/Amacis, July/August 2000. Mobile Workers; Mobile Consumers; Mobile Businesses? - Vanson Bourne/CSC, May 2000. Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 4 Telescope or Crystal Ball?: Visions of the Future The Company Perspective Although companies recognise the pitfalls and difficulties in creating a unified customer management process, these companies are nonetheless busy taking the steps they hope will help them to achieve just that. Why do they believe this unity to be so important? Well, over the next two years, Customer Service Heads expect all major direct communication channels to increase in use. (Figure 1) Figure 1: Number of Customer Service Heads expecting customers to increase their use of these channels. (Source: Vanson Bourne/CSC) They are expecting all major direct channels to increase in use. And just as the growth of the road network led to gridlock, so will these anticipated increases lead to customer frustration and defection unless companies find a way to join up these communication "stovepipes" and get the 360° view. Even if a high proportion of these extra interactions are to be managed automatically, will companies be ready with the sophisticated customer process systems they believe essential? Change is endemic in customer service departments across UK plcs, and while the future is a foreign land to most, a new breed, the e-business director, has emerged, who everyone else hopes has packed the phrase book. We spoke to a few about their itinerary. They represent a cross-section of business, including banks, bricks and mortar companies and dot.coms. 65% 95% 91% Telephone Email Via the website Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 5 MORI research for Amacis showed that 27% of banks already offer "lifestyle products" as part of their Internet strategy. What will customer channels look like in the future? "There won't be much of a branch network left" (Major retail bank) "The technology is just a tool and it's whoever gives you good customer service who (consumers) will come to in the end" (Clicks and mortar leisure service company) "We're driving consumers towards non-verbal communication, such as e-mail, SMS, because it will give greater efficiencies through economies of scale. Otherwise doubling our business would mean having twice as many phone calls coming in" (Consumer focused dot.com) AND WHAT ABOUT THE NEXT WAVE OF MEANS OF CONNECTING TO THE INTERNET? "We'll definitely use web-chat and voice over IP. We will repurpose for mobile access when bandwidth is available and 3rd Generation mobile (3G) is here." (Consumer focused dot.com) "We are involved (in 3G) . We already deliver our service via WAP and that's going very well. We've got tie-ins with.....who deliver pictures to a mobile. We want to stay as far ahead of our rivals as we can." (Clicks and mortar leisure service company) "We've been on Open since it started. What we're doing ....is designed to be a multi-channel, multi-country environment which supports stores, the Internet, IDTV, m-commerce and whatever else comes along. We've made quite a strategic investment in that sense." (Clicks and mortar electronics retailer) WHAT DIFFERENCES WILL THESE CHANGES MAKE TO THE BUSINESS? MORI research for Amacis shows that 80% of banks think it "essential" to offer telephone banking alongside their internet banking service, although over half still handle e-mail separately from telephone calls. "We'll give customers access to our services via a variety of channels, and let them communicate via those channels in a way that best suits them. We expect a lot of people will use more than one channel, their 'channel of choice' and a back-up." (Major Retail Bank) "The systems will do the banking and we'll be a customer service organisation. We can see ourselves getting involved in all kinds of things." (Major retail bank) Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 6 "It makes international expansion a lot easier for us" (Major reta retail bank) il "With the broadening range of products, we have to be focused both on customer acquisition in some areas and customer retention in others." (Building Society) While not exactly "gung-ho", UK companies are busy with new channels, open to next-step developments and aware of how this potentially changes their business. The upside opportunity is that new channels afford new ways of servicing and delivering product to customers. The obverse is that a decade or so of increased global competition has made managing customers like trying to herd cats and these new channels provide just more flaps through which they escape. This has been a snapshot of how UK plcs see the multi-channel future. What of the vendors of the new technology services? Sound vision? - The proponents of 3 3rd rd generation (3G) mobile services Corporates in consumer-facing sectors have assimilated recent new channels, the telephone call centre, the website and e-mail, as part and parcel of what's needed to do business these days. The next leap forward is data communication on the move, affording wireless consumers the "anytime, anyplace, anywhere" experience. To reinforce the bullish views already quoted, a recent survey by Vanson Bourne for CRM specialists London Bridge Software showed that 92% of E-Business and Customer Service Directors said they will make every channel available to customers, whatever it might be. But are all departments in these companies marching in step? I n a recent survey of Tele- and Datacommunications Managers conducted on behalf of CSC, Vanson Bourne found that only a third of large commercial companies have a mobile communications strategy in place. So, although ebusiness and customer service heads make positive noises about overlaying any new channel as it comes along, they evidently have some selling to do internally to the people who own and run the corporate communications technologies. What words of encouragement can the companies who recently invested billions in third gen generation mobile eration licences add to push that internal debate? Vanson Bourne research for CSC shows that 88% of banks think it important to be able to cross-sell across multiple channels but only 36% think they are doing it well. "It used to take 200 years to set up a bank but now you can launch a brand very easily. One company might get first mover advantage, but others can catch up very quickly." Major retail bank) ( Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 7 HOW WILL 3G MOBILE AFFECT THE BUSINESS BUSINESS-to to-CONSUMER ENVIRONMENT? We talked to these companies about how their business customers will use 3rd generation mobile technology to improve their customer management. The following comments all come from senior managers in mobile service providers that have acquired 3G licences. "It's a key enabler for mobile commerce, we're already seeing that people are looking for more information in the visual world than the verbal world." "They will receive and need to field more mobile communications, we are talking about the death of distance." WHAT ARE THE APPLICATIONS OF 3G THAT BUSINESSES WILL NEED TO DEPLOY FOR CUSTOMER SERVICING? "Look at banks. It's no longer acceptable for customers to be expected to go to a branch at lunchtime. Now they do phone or internet banking because it's convenient. Users will come to demand that kind of access wherever they are. Any business that's provided customer access via the Internet will have to replicate that access to the new mobile hand held device." "Businesses will automate their communications with other parts of the supply chain and the mobile workforce. This will both improve speed and efficiency to customers and reduce costs" "If there's a web web-based application businesses are using to serve or supply customers, then they have to assume that consumers are going to want access to it, and to a really good quality, when mobile." "The speed and bandwidth of UMTS1 make video a serious possibility. Old jeans and a T-shirt won't do if the customer's a retired stockbroker! Call centres will become much more answerable to the public; it's no longer just the PR Manager who's the voice of the company." Although one mobile service provider described what is coming as a "revolution", the reality is that there remain a number of grey areas, not least the cost of 3G connection, given the huge sums paid for licences, and the nature of the hand-held device. Some light needs to be shed on these before either consumers or businesses are likely to form a queue for 3G. However, we expect wireless access to become a fact of life and, as one mobile service provider told us, " You have to embrace m-business because your competitors will. However don't simply take all your existing business processes and make them available to the mobile user. That will need to be developed specifically with the mobile user in mind." Suffice to say that consumers will find new ways of testing companies' ability to know, understand and serve them. Businesses will need to change again, but are the foundations upon which that change must be built, up to it? 1 UMTS - Universal Mobile Telecommunications System "(3G) will make happen (when mobile) whatever currently happens on the Internet, if a company wants to do it. Any application you can build into a website will be accessible by some kind of mobile handheld device." "Predictions are that by 2004 60-65% of devices accessing the Internet will be wireless." "It will revolutionise people's ability to consume certain types of information when mobile." Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 8 Hall of Mirrors: How companies assess their customer performance Companies have already had to move far and fast to change their customer service models. They understand that excellent customer service is a sine qua non these days, as a key means of differentiation in the climate of commoditisation and churn. Customer Relationship Management has become a mantra, the means of underpinning growth objectives. Vanson Bourne's study on behalf of London Bridge Software showed that companies have a rosy view of how well they are performing in customer management terms, as the chart below demonstrates. Figure 2: Assessment of company's performance in customer service (Source: Vanson Bourne/London Bridge Software) Evidence of ostrich syndrome? Although 75% COULD statistically perform better then average in customer processes, it is pretty unlikely. Worse is the proportion that thinks customers are happy with their customer service, as the following evidence will show. 70% 75% 58% Customers are happy with our customer service Our customer processes are better than average for our sector Our customer loyalty is better than average for our sector Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 9 Perception & Reality Figure3: Companies' and consumers' contrasting perception of customer service The same survey showed a marked divergence between companies' perceptions and the experience of consumers, reinforcing the fear of complacency and that investments to date in servicing customers are not generally bringing about the improvements foreseen. In a separate survey for CSC, we found that 70% of consumers had experienced, and could recount the nature of, poor customer service, of which "staff demonstrating a lack of knowledge" was the pre-eminent. Not until sophisticated expert systems are introduced at the customer interface is that issue likely to go away. And what makes us think that all the new channels and interfaces discussed earlier won't aggravate, rather than remedy this situation? Another myth that needs exploding is that all the good work companies do to provide great service and products is, in general, contributing to a "relationship" with the customer. Certainly receiving good service and experiencing quality product naturally inclines consumers to return when there is a need, but no more than th that, at, as the following evidence shows. COMPANIES CUSTOMERS 32% 70% Customers are happy with our customer service Customer service in Britain is better than ever Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 10 Figure 4: Contrasting need for a "Customer relationship" (Source: Vanson Bourne/London Bridge Software) Companies need to redefine the term "relationship", think of a new one, or be doomed to the disappointment of the unrequited. Whatever they decide to do, it is key that they find out what it is about their customer service performance that causes customers to be so unresponsive to their demonstrations of affection. Companies Consumers 43% 98% We want to form and develop a relationship with our customers We want to form and develop a relationship with our regular suppliers Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 11 Magnifying Glass: A Customer Perspective Consumers are very aware of what they perceive as the interposition of technology between them and the companies that serve them. In two separate consumer surveys, each of 1000 individuals across the social scale, less than one third were positive about the increased use of technology while almost a half believed technology is actually making them more remote. Couple these statistics with the number one complaint being about the "complicated automated phone systems" (IVR) and we see that the dream of transparent technology that will allow companies to focus on excellent service remains just that, a dream. At a macro level, here are the three things most consumers consider fundamental to good customer service and how well they think companies are performing in those areas. It makes unpalatable reading for Customer Service Directors, whatever channels they have and plan to have. Figure 5: Consumer expectation versus experience. (Source: Vanson Bourne/London Bridge Software) Younger people are shown to be generally more comfortable with companies' use of technology than their elders. So companies can either wait for the demographic pendulum to swing in their favour, or start figuring out now what they need to do genuinely to make technology transparent and supportive. 72% 33% 65% 19% 70% 31% Being attended to quickly They know about my circumstances without me having to explain every time They can deal with me without passing me on Important Satisfied Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 12 X-Ray: What's going on under the surface? The MORI survey of banks commissioned by Amacis showed that the single most important issue facing retail banking is "the development of new channels"; 38% of banks cited this, the second being "reducing costs/improving productivity" (new channels being a potentially key contributory factor in achieving this one too). They also saw e-mail as the fastest-growing customer channel. To reinforce this, when Vanson Bourne asked consumers (for CSC) which channels they expect to use in the future, e-mail was the most common, particularly in the 15-44 age group. Marrying these two facts together, it was decided to investigate how well banks are handling e-mail NOW. To do this 30 banks, building societies and financial dot.coms in the UK and Ireland were approached, 27 of which do provide an e-mailing facility from their website. All 27 were sent two e-mail enquiries (some retail, some business, depending on the focus of the company in question) and their performance measured against these criteria: ??Primary criteria criteria: Speed & accuracy of response These criteria measured the customer experience, to determine likely levels of satisfaction with banks' performance. ??Secondary criteria criteria: Can you create an unclassified message? Is an auto response generated? Is a case number generated? These criteria measured how well managed the e-mail process was within the organisation concerned, specifically assessing the level of automation of the process. Performance thresholds were applied and a scoring system devised to allow each company to be given an overall performance rating. Before looking at individual companies' performance, the following figure shows how the sample group performed as a whole. Figure 6: Overall performance of e-mail test group Group Repor Report % of companies achieving this standard Responded within 24 hours of first private enquiry 41% Complete and relevant response to that enquiry 52% Responded within 24 hours of second private enquiry (where one was made) 44% Complete and relevant response to that enquiry 44% Responded within 24 hours of business enquiry (where one was made) 33% Complete and relevant response to business enquiry 50% Unclassified mail possible 48% Auto response generated 15% Case number generated 15% Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 13 The impression gained is that companies are hand-crafting e-mail responses, either via a dedicated team or within the "general" call centre. What is it that gives this impression? ??Typically less than half answered quickly, suggesting that the process had to go "off-line" to be dealt with. ??Only in around half the cases was it felt that the response was complete and accurate, meaning that it was probably handled ad hoc by a generalist, rather than by an expert or a rules-based expert system. ??In most cases mails had to be classified, probably so that they could be dropped onto the correct desk, whereas a rules-based system would pick out key words and keyword relationships, making classification at the website unnecessary. ??In few cases were there signs that an e-mail management system was in operation (generating case numbers, creating auto responses etc). Behind the mediocre veneer, something more worrying. Although all of the 27 companies tested apparently welcome e-mail (or provide the facility on their website) fully 30% of the approaching 60 enquiries sent received no reply at all. Six of the 27 companies did not reply to any of the e e-mails sent them. If the MORI poll is to be believed, and introducing new channels IS the key issue for banks, then it is a stinging indictment of customer service processes that such negligence as found here is allowed to persist. Accentuating the positive Of the 27 companies researched, here are the leading companies in the three categories, banks, mortgage specialists/building societies and dot.coms. To explain the scores achieved, if a company's performance was in the top bracket in each category researched then its score would be 100%. Figure 7: Best performers in e-mail group test 57% 50% 43% 63% 63% 63% 51% 71% 63% 51% 51% 46% 46% Cahoot Smile Egg Birmingham Midshires Building Society Bristol & West plc Britannia Building Society Nationwide Building Society Co-operative Bank First Direct Northern Bank HSBC Barclays Bank NatWest Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 14 Most of these managed to respond within 48 hours, some a lot better than that. Considering the several reasonable examples here, imagine how badly some of the rest must have performed to bring the overall scores down to around 40%! It is not our job here to embarrass those who did not perform to their best, but rather simply to point out that there is work to be done in order to handle e-mail well, it being the new wave channel most consumers expect to use more in the future. ******** Summary Most companies think that customers are happy with their customer service and that their customer performance is better than average for their sector (figure 2). Only a small proportion of customers agreed with them (figure 3), highlighting the marked difference between companies' perceptions and the experience of customers. Another contrast is found in that companies almost unanimously want to form and develop a relationship with their customers, whereas less than half of the customers want to reciprocate the relationship (figure 4). The customer perspective is again shown to diverge from that of Customer Service Directors when consumer expectation versus experience is focused on. The three things that most consumers consider fundamental to good customer service, such as being dealt with without being passed on, being attended to quickly, and having representatives know about one's circumstances without having to explain every time, again shows a marked divergence from how well those consumers think companies are performing in those areas. The satisfaction levels are very low (see figure 5). ******** Conclusion Whether companies recognise it or not (and most seem to), yet more waves of change are about to engulf customer servicing and channel management functions in consumer-facing organisations. From an e-business perspective, those changes afford new ways of differentiating and cross-selling in an ever more competitive and commoditised world and, as we saw at the beginning of the report, are being anticipated eagerly by some. Yet, there are issues at the level of consumer satisfaction and when we examine customers' comfort with the apparently less-than-seamless technology interfaces they experience today. As usage of other direct channels increases, the unified view of the customer will become even more complex. Most companies are trying to move with the times, and they should be applauded for it, but as we have seen, customer expectations have risen fast, and companies just can't keep up. This document has highlighted where some of the discrepancies between consumer and company perceptions lie, not to chastise, but in order to encourage and motivate companies to improve dramatically their processes and consequently their level of customer service. Customers need a reason to stay, whereas, more often than not, they are given a good reason to leave. The reality of good customer service is that it IS attainable. Customer Service Directors could then take off their rose-tinted spectacles and see the real technicolour spectrum that makes up their customer base. Customer Service: Looking at life through rose-tinted spectacles? Amacis (c)2001 Amacis White Paper 15 About Amacis Amacis, the e-channel and m-channel management company, is a leading provider of customer relationship management software that transforms the way global enterprises manage customer interaction. Amacis offers a unified e-channel and mobile channel management environment called Amacis Visibility(tm). An Amacis solution allows traditional brick-and-mortar companies and e-business enterprises to maximise customer retention and profitability, through provision of the most scalable and secure customer interaction management environment available. Amacis manages all forms of Internet-based customer contact consistently across a variety of channels and integrates with other corporate customer systems and call centre operations. With U.S. headquarters in Boston, MA, Amacis also has offices in Central London and Basingstoke, in Hong Kong, and its main R&D facility in Belfast, Northern Ireland. For more information visit the Amacis Web Site at www.amacis.com com. For customer queries, e e-mail info@amacis.com com. Amacis North America Amacis Inc 101 Federal Street Suite 1900 Boston MA 02110 T: 1 877 9 AMACIS (Toll Free) F: 1 617 342 7080 E: info@amacis.com W: www.amacis.com (c) Copyright 2001, Amacis Limited. All rights reserved. Amacis Europe Amacis Ltd Berkeley Square House Berkeley Square London W1X 6EA T: +44 (0) 20 7887 6016 F: +44 (0) 20 7887 1423 E: info@amacis.com W: www.amacis.com Amacis R&D Amacis Ltd Falcon Road Belfast BT12 6SJ Northern Ireland T: +44 (0) 28 9087 2000 F: +44 (0) 28 9087 2001 E: info@amacis.com W: www.amacis.com