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5 Recession-Busting Customer Service Strategies
New research from Forrester warns companies to invest in customer service — or else.
Posted Feb 23, 2009
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During a time of economic uncertainty, with President Barack Obama's stimulus package yet to take effect and companies still looking for places to cut, new research from Boston-based analyst firm Forrester Research stresses the importance of prudently pumping money into customer service.

[For more on CRM amid the economic downturn, see the February 2009 edition of CRM magazine, The Recession Issue.]

"The one thing that happens in a downturn is that everyone is focused on keeping customers," explains Natalie Petouhoff, senior analyst at Forrester and co-author of the report "The Economic Necessity of Customer Service." "Don't you spend on advertising? Of course you do, and it costs money -- but it has value if it's done well. The same goes for investment in customer service."

A major issue Petouhoff finds with many companies is that the c-level executives do not realize just how important customer service is to the bottom line. In the report, she lists four ways in which service affects organizations' revenue:

  • a good customer experience boosts repurchase probability and long-term loyalty;
  • poor service leads a customer to defect;
  • a lackluster interaction may lead to lost opportunities; and
  • bad experiences also result in hidden costs -- in particular, the additional money required to market and sell to new consumers.

Petouhoff says that the mere fact that most companies don't realize customer service has a tremendous impact on revenue remains a concern. "Companies must understand what their revenue goals are and which areas of the organization contribute or detract from that," she says. "In most businesses, customer service doesn't even come up in that conversation. There's nobody representing this voice saying, 'We need to continue investing in [this area].' "

Petouhoff is quick to explain that investing must be done judiciously and effectively, but nonetheless must be done. "You may still be losing money, but there is going to be a rebound and you don't want to look back on this time and wish you'd made some pretty easy improvements," she says. "You don't want to go out of business because you made all your customers mad."

She highlights five "recession-busting" strategies to keep customer service competitive in today's business world:

  • make self-service work across all channels;
  • be proactive about chat;
  • invest in online social-networking communities;
  • explore unified communications (UC); and
  • empower sales agents with co-browsing tools.

The first point, Petouhoff says -- ensuring self-service works in all channels -- is what she urges companies to tackle first, in conjunction with updating knowledge management (KM). "Don't put manuals up on your Web site and think that alone will work," she warns. "Take the content, figure out what people are asking you, and store that so it can be retrieved. The basis of all self-service and agent productivity is KM." Once KM and self-service are secured, she says, companies can then consider incorporating proactive chat and social-networking communities into their respective repertoires.

Unfortunately, she says, many companies are adding chat before first shoring up KM. "It's frustrating to me, because without good KM forget about the rest," she says, adding that organizations shouldn't even consider graduating to UC and co-browsing until they've reached the appropriate stage of maturity.

Organizations looking to make the most of what customer service can offer in a poor economy must first lay a foundation before bolting on additional software, according to the report. Petouhoff recommends a five-step process, in which software evaluation is the final leg:

  1. Reject the old paradigms that treat a contact center as nothing more than a cost center.
  2. Demand ownership of the customer experience.
  3. Listen to your customers as you create your strategy.
  4. Conduct a gap analysis of your customer service offering and then implement best practices to address those gaps.
  5. Evaluate software with customer experience as the top goal for a business case.

"These steps are common sense, but are difficult to implement because [they require] a change in culture," she says. "It's a level of consciousness. What I hope is that the economy is putting enough stress on individuals to say, ‘OK, I can't keep doing business as usual.' "

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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