i CUSTOMER CARE EXCELLENCE HOW TO CREATE AN EFFECTIVE CUSTOMER FOCUS 5th edition SARAH COOK London and Philadelphia ii Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and author cannot accept responsibility for any errors or omissions, however caused. No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or the author. First published by Kogan Page Limited in 1992 as Customer Care Second edition 1997 Third edition 2000 Fourth edition 2002 Reprinted 2003, 2005 Fifth edition 2008 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road 525 South 4th Street, #241 London N1 9JN Philadelphia PA 19147 United Kingdom USA www.kogan-page.co.uk © Sarah Cook, 1992, 1997, 2000, 2002, 2008 The right of Sarah Cook to be identified as the author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988. ISBN-13: 978 0 7494 5066 3 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Cook, Sarah, 1955- Customer care excellence : how to create an effective customer focus / Sarah Cook. – 5th ed. p. cm. Includes bibliographical references and index. ISBN 978-0-7494-5066-3 1, Customer relations. 2. Customer services. 3. Total quality management. I. Title. HF5415.5.C6635 2009 658.8912--dc22 2007038701 Typeset by Saxon Graphics Ltd, Derby Printed and bound in India by Replika Press Pvt Ltd iii Contents Preface vii Acknowledgements viii 1. An introduction to customer care 1 Service in a competitive environment 1 The changing nature of customer service 3 Changing customer behaviour and expectation 3 Customer retention 7 What is excellent service? 16 Personal versus material service 18 Embracing change 20 Contact centres 21 The internet 24 Customer Relationship Management (CRM) 27 The service/va lue chain 33 Summary 37 Action checklist 38 2. How managers need to drive and support a service strategy 39 Start from the top 39 Mission and vision 43 Values 47 Objectives 50 Strategy 51 Summary 87 Action checklist 87 iv Contents 3. Listening to customers 89 Barriers to listening 89 The monitoring of complaints and compliments 91 The value of listening to customers 93 Monitoring customer satisfaction 95 Where and when to measure 118 Measuring customer loyalty 119 Continuous improvement 119 Involving employees when you measure 120 Recognizing achievement 120 Involving head office departments in the measurement process 121 Canvassing the view of other stakeholders 122 Best practice benchmarking 125 Balanced scorecard 128 Summary 129 Action checklist 130 4. Implementing a service excellence strategy 132 Continuous improvement 132 Marketing a service strategy 135 Managers lead the way 139 High or low key? 140 Summary 143 Action checklist 144 5. Empowerment and ownership 145 Valued people value customers 145 Myths about empowerment 146 What should or ganizations do to encourage empowerment? 152 Service recovery and empowerment 156 Employee engagement 159 Summary 160 Action checklist 161 6. The internal customer 162 Everyone has a customer 162 Developing understanding of internal customer needs 163 Process improvement 165 Don’t forget suppliers, alliances and partners 170 Standards and charters 171 Contents v Service-level agreements 177 Suggestion schemes 178 Employee engagement 179 Summary 181 Action checklist 182 7. Training and development for customer service 184 The growing importance of training and development in customer service 184 Identifying training and development objectives 185 Training and development for managers 189 Managers as trainers 191 Customer service training for front-line and support staff 192 The learning organization 197 Build customer service into all training and development activities 198 Review and refresh training and development 207 Summary 207 Action checklist 208 8. Communications 210 Disseminating the message 210 Developing a communications strategy 212 Sell don’t tell 217 Reinforcing the message 220 Tips on effective internal communication 224 A communications case study 225 Summary 229 Action checklist 229 9. Recognition and reward 231 Motivation 231 Performance management 235 Developing a reward and recognition scheme 238 Review and renew 248 Summary 248 Action checklist 249 10. Sustaining a customer focus 251 Problems in sustaining the focus 254 Developing a maintenance strategy 257 vi Contents Reviewing progress 258 Reinforcement 268 Summary 268 Additional sources of information 270 References 272 Index 273 vii Preface In today’s competitive, fast-paced and global economy, the growing demand from service-driven organizations for practical guidelines in developing a customer focus has given me the impetus to write this book. The contents are based on my own hands-on experience of helping many organizations, both big and small, become customer orientated. This book is intended to be practical. It is designed to be used as a reference and source of ideas for managers of businesses who wish to implement service quality as a means of competitive advantage, as well as for those managers in organizations who may already have developed a strategy and wish to implement this further. The book outlines how to plan, introduce and sustain a programme designed to increase customer satisfaction and retention. Technology can help create a customer orientation, yet in essence, service is a ‘people’ issue. How well individuals are inspired, enabled, motivated and recognized by their leaders and managers counts most towards creating a company-wide customer orientation. I believe strongly in the engagement of service providers in order for service excellence to become a way of organization life. Experience shows that the success of a service philosophy depends on continuous commitment to service improvements. I hope you will use this book to measure how customer focused your organization is. I recommend that you regularly review what you have achieved, discuss openly how you could do better and develop a plan of action so that improvements in service excellence can be made on a continuous basis. Sarah Cook The Stairway Consultancy e-mail: [email protected] viii Acknowledgements Many thanks to all the businesses whose quest for service excellence and customer satisfaction and retention have enabled me to utilize them as examples of best practice in this book. My special thanks also to Joyce for all her hard work in typing this manuscript. 1 1 An introduction to customer care We have become a service economy. Yet few organizations are truly delighting their customers. This chapter introduces the concept of service quality and defines what this means to the customer. At the end of this and subsequent chapters, a checklist is provided to allow you to take practicalsteps to develop and sustain a customer focus within your organization. Service in a competitive environment Over recent years organizations have placed increasing emphasis on customer service as a means of gaining competitive advantage. Who would have imagined 15 years ago, for example, that organiza- tions such as Amazon.com could capture market share from the high street by offering the customer a wide selection of value-for-money products backed by a quality service? Or that companies such as First Direct could fundamentally challenge the traditional way customers do business with their bank by offering a friendly, efficient service 24 hours a day, 365 days a year? In 1954 Peter Drucker wrote in The Practice of Management: ‘There is only one valid definition of business purpose: to create a customer.’ He said that an organization’s ability to remain in business is a function of its competitiveness and its ability to win customers from the competition. The customer is the foundation of the business and keeps it in existence. 2 Customer care excellence As competition has become more global and more intense, many orga- nizations have realized that they cannot compete on price alone. It is in these marketplaces that many companies have developed a strategy of providing superior customer care to differentiate their products and services. Surveys suggest that service-driven companies can charge up to 9 per cent more for the products and services they provide. They grow twice as fast as the average company and have the potential to gain up to 6 per cent market share. Through undertaking a major change programme which was intended to focus on the customer, The Royal Bank of Scotland went from near to making a loss to a £200 million incremental profit within two years. Through focusing on the customer, retailer Tesco managed to increase its profitability and market share, becoming the market leader in a highly competitive and cost-conscious marketplace. Financial services is typical of many sectors in its change of focus towards customer service. The nature and number of competitors and the ability of retailers, banks, building societies, insurance brokers, estate agents and other financial service companies to offer similar products at similar prices has led to increasing emphasis being placed on personal service as a means of adding value to customers. However, like very many other market sectors, few organizations succeed in leading the way. Benefits of a customer-centred organization In increasingly competitive marketplaces, best-practice organizations have demonstrated clear benefits of focusing on the customer. Excellent service enables a business to: • differentiate itse lf from the competition; • improve its image in the eyes of the customer; • minimize price sensitivity; • improve profitability; • increase customer satisfaction and retention; • achieve a maximum number of advocates for the company; • enhance its reputation; • ensure products and services are delivered ‘right first time’; • improve staff morale; • increase employee satisfaction and retention; • increase productivity; • reduce costs;