Best Practices in New-Customer Service
an APQC White Paper | Copyright ©2000 APQC, all rights reserved.

New customers are a delicate client sector for virtually any organization. Because they don't have a history with the company, they have no reason to be loyal-until, through excellent service, the company gives them one.

The American Productivity & Quality Center (APQC) conducted a benchmarking study in 1998, commissioned by Entergy, to learn how leading organizations define excellent customer service and achieve the high levels of service to new customers that lead to their retention.

The scope of the study included discovering how "best-practice" organizations:

• optimize new customers' experiences,
• elevate first impressions,
• improve customer interface,
• provide beneficial new customer services,
• emphasize a focus on the customer, and
• follow up with new customers within six months to one year.

The best-practice companies that shared their processes and data for this study are Hallmark, MCI, Nova Scotia Power, Pacificare, and USAA. The sponsoring organization, Entergy, which also has strong practices in this topic area, provided data from two sections of its organization.

LAYING THE CUSTOMER SERVICE FOUNDATION INTERNALLY

The foundation of any successful customer service organization is the empowered customer service agent. Management in the best-practice organizations recognizes that external customer satisfaction requires granting power to those internal company representatives who serve as the critical link between the company and the customer.

Agent empowerment, the study found, begins with hiring for the proper skills, with attitude, personality, and other customer-focused skills as the first priority, followed closely by critical-thinking skills.

With their position on the front line, agents have a tremendous amount of responsibility for impacting the level of customer service. In fact, in their critical role, agents can make or break a customer relationship. And customer service is not solely reactive. Within best-practice companies, agents are responsible for not only delivering superior customer service but also proactively generating more sales or identifying revenue enhancement potential-leading ultimately to increased customer satisfaction and loyalty. Thus, the longevity of a company can hinge on this complex role.

To ensure that reps are prepared to handle this responsibility, the organization must commit to providing the enablers that make full empowerment possible:

• frequent and integrated communication, through organizational integration and consistency, cross-functional teams, and the customer feedback and employee feedback loops;
• training, including continual representative development and skill focus, as well as process development and assessment;
• technology tools; and
• compensation, rewards, and recognition.

Communication and Feedback
Communication is essential because it increases knowledge and agent buy-in. In best-practice companies, communication takes place in the form of electronic news using e-mail, company TV, and intranet access, as well as through hard copy news and face-to-face interaction. In addition, leading companies use cross-functional teams and streamlined integration as another opportunity to ensure that all employees understand and act on the same information.

Sharing customer feedback with customer service agents and other front-line employees helps them successfully meet the customers' requirements (Figure 1). Customer feedback is communicated through a variety of mediums, the most popular being posted charts and newsletters. Online resources also are employed often.

Employee feedback is critical to the customer and company communication loop. Solicitation of agent feedback provides the company with vital knowledge from those intimately familiar with customer and process details. At MCI, for example, agent task forces are in place to constantly monitor employee feedback and morale. At Nova Scotia Power, management has instituted an employee advisory team of one supervisor and three agents who represent the various call center groups. This team communicates with the agents on the front line, identifies problems affecting the agents, and provides solutions to employee problems.
 

Training
The best-practice companies in this study put tremendous emphasis on providing extensive and frequent training for their customer service agents. Training typically is provided intensively to new employees and offered continually to long-term employees and management (Figures 2 and 3). The training is provided using a variety of methods and includes a wide range of courses. These companies recognize that training:

• makes the employee smarter,
• improves self-esteem,
• enhances loyalty to the company, and
• increases the value of the entire company.

 
USAA, for instance, considers one-on-one training to be the most effective way to train employees for customer service. New agents participate in pipeline training to gain product knowledge, starting with the products in one line of business. During this time, the agent integrates on-the-floor experience with classroom training, observing other agents and participating in calls. Following this training, the agents receive on-the-job training and move into transition units, where their consistency and quality are monitored. Automated coaching and mentoring and managers' side-by-side monitoring also play an important role as agents move through this training process and onto the floor full time.

At MCI, DISC (dominant, intuitive, social, conscientious) training, a soft-skills tool, has been the most effective. This testing and training process allows agents and managers to determine their personality types and therefore facilitates interaction among agents, between agents and their supervisors, and between agents and customers. MCI uses DISC in addition to new hire training and continual skill and new product sessions.

Technology Tools
Information technology is a valuable tool in improving productivity, increasing communication, managing customers' accounts from "cradle to grave," and increasing customer satisfaction. Although only half of the responding study participants report having data files housed in a single, fully integrated database, all but one company reports 100 percent customer service employee access to customer data files.

Study participants report varying degrees of impact resulting from the use of information technology and voice response units (VRUs).

All companies agree, however, that IT initiatives have yielded improved internal communication, more seamless service, and improved single-call resolution.

Using a similar assessment of effectiveness, telephone technology is also cited as a substantially effective enabler for decreasing time of contact, allowing the customer to be routed to the correct service representative and to complete a transaction without other interaction.

Compensation, Rewards, and Recognition
Four of five best-practice companies base a portion of their customer service employee compensation on performance measurement goals, thus ensuring that incentives are linked to customer service work processes-motivating employees to produce the "right" behavior. It is important to note, however, that the best-practice companies use quantitative performance measures primarily as diagnostic tools for the department or team rather than as an individual's performance measure. For individuals, quality measures are considered more important.

In addition to some participants linking compensation incentives to work processes, all study participants frequently use rewards to boost employee morale and recognize agents for the right behavior. USAA compensates agents at year-end with a performance bonus based on their quality and contribution at a department level. The company has found, however, that while individual merit is important, team/department recognition works more effectively than individual acknowledgement. Through its SOAR (Satisfaction, Ownership, Adding Value, and Resolution) program, MCI has emphasized quality and incorporated it in coaching and development, training, performance measures, and rewards and recognition. Total performance measures for the teams, of which quality accounts for half, are assessed regularly and rewarded through a variety of events, financial awards, and plaques.

The Link Between Customer Satisfaction and Employee Satisfaction
With their strong belief in agent empowerment, best-practice companies realize the full potential of satisfied employees. Although they have yet to quantify the link between customer satisfaction and employee satisfaction, all agree it is inherent to the process. Thus, they take great strides to:

• measure employee satisfaction,
• make changes based on the measures, and
• enthusiastically boost employee morale.

In fact, all but one study participant measures employee satisfaction, and four of the six that do measure it have made changes based on the results.

To gather this feedback, at least half of the best-practice companies use team meetings and supervisor reviews. All of the responding organizations reported using surveys for this purpose. A result of this focus on employee satisfaction is a low annual turnover rate for customer service representatives.

BUILDING AND MANAGING CUSTOMER RELATIONS

In an increasingly competitive environment, companies have found that customer service must be their market advantage. Thus, companies are striving ever harder for the customer service nirvana, attempting to build strong customer relationships beginning with the first customer contact. Best-practice companies have made great strides in this area, capitalizing on this opportunity to begin building a strong relationship in the first communication with new customers, often providing unique treatment to this customer segment.

Regardless of how they define new customers (some include additional service or account for existing customers in this category), the majority of study participants employ an arsenal of tactics-from welcome kits to calls to personal visits-to win new customers and successfully launch a long-term, mutually beneficial relationship.

Most critical to the introduction of new customers to the organization are the agent's needs assessment (determining the customer's expectations and cross-selling potential) and population of the customer information database (to capture vital feedback and make future transactions smoother). Half of the participants indicate cross-selling customers during the initial account set-up.

Five of six responding companies indicate accomplishing a one-call resolution, whether through a single contact or transfers, for new customers. The best-practice companies emphasize that when transfers take place, they must be seamless. Thorough documentation in the customer's electronic file is critical to making the transitions transparent. An electronic database also facilitates more efficient and effective customer service when a call-back is necessary.

Four of seven study participants report offering service-level guarantees/agreements (SLGs/SLAs), and three have fees associated with them. All study participants, however, report agent empowerment as the resource for resolution of customers' problems. For those organizations with service guarantees, agents often are responsible for communicating guarantees and always have the power to solve problems-with encouragement to act proactively in anticipating potential problems.

Relationship Building and New-Customer Satisfaction
Relationship building takes priority focus at participating companies. Customers are valued and sought for long-term relationships. In fact, five of the seven study participants offer customer loyalty/retention programs, although the types of programs offered vary substantially.

Nova Scotia Power, for instance, uses a welcome call and "comfort-smart products" to retain its customers. Customers told the company in its semiannual survey that they wanted comfort and efficiency products and an easy way to pay for them, so Nova Scotia Power now offers unique products that agents can sell over the phone. The company finances these products, and payment is deducted automatically from the customers' accounts. Call center agents recommend plumbers and contractors for the products that require them and can set up installations for customers.

Long-term relationships depend on meeting customer expectations and satisfactorily delivering customer service-neither of which can take place without accurately and thoroughly identifying customer expectations. Study participants frequently use customer surveys to gather customer expectations. Qualitative research is commonly used as well, with two participants capturing at least 20 percent of their customer feedback through this in-depth process.

The call center agent plays an important role in this data-gathering process, which has serious consequences for customer service and satisfaction. In the initial contact and follow-up, the agent must thoroughly probe for information to ensure optimal future contact and account penetration.

Study participants find frequent communication with customers to be an integral factor in high customer service levels. From the initial contact follow-up through constant communications to build the relationship, best-practice companies report a wide variety of methods to keep the customer informed, educated, and "in touch." From each relationship's inception, companies strive to convey their customer service philosophy and information to customers. Most frequently, they share policies, mission/vision statements, and standards and goals.

All study participants provide customers the ability to check the status of service/problem resolution. This service is furnished to enable customers to stay informed at all times. When problems and inquiries have been resolved, all study participants notify customers through letters; most use telephone calls as well.

As with accurately identifying and documenting customer expectations and maintaining frequent ongoing communication, capturing customer feedback is a critical link in the customer service process. Without feedback from customers, organizations are unable to manage customer relationships, monitor what is and is not working, or make improvements to improve customer service and raise customer satisfaction.

Although there is little consistency among study participants on how often they aggregate customer feedback, five organizations report this information has "moderate influence" on organizational decision making, and two report it has "great influence." For instance, USAA places great emphasis on its customer feedback loop, automating feedback collection through its ECHO-Every Call Has Opportunity-system and encouraging agents and teams to offer feedback and become involved in process improvements. ECHO captures positive and negative feedback, concerns, and compliments, all of which are routed to the appropriate departments for coaching opportunities and positive recognition.

To round out their efforts to keep new customers satisfied, best-practice organizations identify and address specific dissatisfiers, based on customer feedback, that will drive away customers, as well as segment their customers to determine required customer service levels, target communication, and identify cross-selling potential.

MEASURING CUSTOMER SERVICE SUCCESS

Measurements give definition to a vision, define boundaries for key strategies, act as an element of strategy deployment, and provide the insight needed for decision making. In a customer service call center environment, measurements enable crucial performance evaluation and quick identification of process improvement opportunities.

This study indicates that striking the mix of quantitative and qualitative measures is proving to be a challenge for study participants. Quantitative measures are used more for diagnostics and coaching, while qualitative measures are used most frequently to assess agents' performance in contributing to customer satisfaction. The majority of study participants regularly measure customer service by:

• average time handled,
• call abandonment,
• call quality,
• call resolution,
• employee satisfaction, and
• customer satisfaction.

In establishing baselines for measures, best-practice companies consider historical data, performance data, survey results, industry benchmarks, quality monitoring, and other similar tools.

Accuracy and daily monitoring are priorities at the best-practice companies. Monitoring, however, has taken a new shape within these companies, focusing on quality of customer service rather than viewing quantitative measures in a vacuum. Numbers for the sake of numbers improve little-especially customer service. Granted, many of those numbers are useful in monitoring organizational performance and identifying opportunities for process improvement-customers certainly should not have to "hold" a telephone line for an inordinate amount of time or get lost in the VRU routing "black hole." This is, after all, a significant factor in the customer's experience with the company.

But often those numbers evidence only a symptom, and not the underlying problem.

The deeper, and often much more troublesome, issue is how the customer relationship is built and managed through the human factor. Of course, the ideal agent is knowledgeable, efficient, friendly, and a problem solver. A company can have the most sophisticated VRU, a database with screen pops, and other technology enablers, but these are merely tools. If companies lack adequately trained and empowered agents, satisfactory and efficient call resolution will not occur, and customer relationships will deteriorate. Because that is a high price to pay in an increasingly competitive marketplace, companies are looking more to quality measures to help diagnose and cure customer service ills. Best-practice companies more frequently rely on quality measures to assess agents' customer-focused skills; quantitative measures are most often used for coaching opportunities for agents and trending at a team or call center level. Using quality measures is a recognizably difficult process due to its subjectivity, but it is one that must be developed and refined to meet customer and company needs.

METHODOLOGY

To gather information on best practices in this topic area, the American Productivity & Quality Center study team, along with a study team from the sponsoring organization, developed a list of best-practice candidates through primary and secondary research. The best-practice companies chosen to participate in the study completed data-gathering surveys, as did the sponsor organization, and hosted on-site or telephone interviews.

The APQC study team analyzed the data collected from the secondary research, the interviews, and the site visits to determine best practices in this topic area. The findings from the study were compiled into a report for the sponsor and the best-practice companies; that report served as the basis for the information presented in this document.