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The Customer Care Revolution
Strategies to reduce operating costs and protect revenues.
Posted Aug 3, 2009
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Customer care historically has been a "back-office backwater" -- but now it's enjoying a renaissance. A real revolution is taking place, mainly because customer care is central to creating a revenue moat around customer satisfaction, retention, and loyalty. While almost every company has a service-delivery function, only the leading companies are engaged in the current Customer Care Revolution.

So what can other companies do to not only join this revolution but profit from it as well?

Look at customer behavior and trends.
Companies hoping to provide a high-quality customer experience will only succeed if that experience is in line with the values of that customer. Once those values are understood, the entire organization can be engaged through workshops, surveys, and intranet discussion forums to develop the company's own values.

Leading companies invariably have a razor-sharp message to communicate their vision. They listen to their customers, use simple techniques, and rally the entire company's support to establish this vision.

Take an enterprisewide, integrated, and consistent view of customer care.
Treating customer care as a siloed function that "fixes" customers' problems is no longer sufficient -- leading companies are embedding customer care as a philosophy within all aspects of their operations.

Staying internally focused may be no problem when designing customer experience strategies, but that approach raises the risk of a competitive blind spot. For example, State Farm missed an important trend in its customers' values -- the need to be self-directed in buying auto insurance -- and, as a result, companies such as Geico and Progressive filled a competitive void that larger, traditional insurance providers failed to act upon.

Reduce customer-care operating costs without compromising customer satisfaction.
Shaving costs from customer-care operations always risks negatively affecting service levels -- but, when done right, the effort can help create a competitive advantage. A successful approach comprises the following three fundamental strategies:

  • Make customers smarter and reduce the load on the service organization. Launch self-service initiatives to capture "customer energy," a strategy used by TiVo, Microsoft, Apple, and Verizon.
  • Make customer-support infrastructure smarter and improve the rate of first-time resolution. Remote diagnostics is one such capability -- deployed by leaders such as IBM, GE Medical Systems, Xerox, and Dell -- that not only improves rates of first-time resolution, but also provides proactive problem prevention.
  • Run service operations like a factory and meet aggressive service-level agreements cost-effectively. Reduce the costs of your services organization through principles of LEAN and Six Sigma.

Protect revenues through a focused account-based plan and give your service organization its backbone.
Armed with a clear understanding of customers' values and a ruthlessly efficient service-delivery engine, a company is well-positioned to grow (or maintain in this tough economic environment) revenues at higher margins. The strategy is pretty straightforward:

  • Grow your top accounts;
  • Increase retention of "good" or high-potential customers, some of which may become future top accounts;
  • Grow hidden gems; and
  • Increase referrals.

It's tough for any customer to ignore a supplier that has demonstrated a unique understanding of her value system -- but the key word is "demonstrate."

Leading and managing the development of a company's services strategy is an enormous task -- starting from a clear understanding of customers' values, to increasing operational efficiency of the service-delivery model, through aligning sales strategies. The goal for that effort should be the creation of an independent and autonomous service organization with clear profit-and-loss responsibilities.

A service organization without the right people will only be a drag on the company's overall selling, general, and administrative costs. Thus, best-practice firms such as Disney, Nordstrom, and Singapore Airlines invest heavily in finding and developing employees who match their respective service values.

It's time for your own Customer Care Revolution.
With technology developing continually, companies that can combine new technology with customer values and leading practices from manufacturing and operations can revolutionize customer care. Excellent execution is vital, so leading companies make sure they have the right set of advisors, planners, and implementers. Once in place, the system can generate higher-quality revenues at lower costs, a reality so addictive that it's difficult to ignore -- and may even become the most exciting function in your company.

About the Author

Sid Dayal is a principal at A.T. Kearney, a global strategic management consulting firm known for helping clients gain lasting results through a unique combination of powerful insight and collaborative working style. Sid specializes in strategic operations across customer care, sales, supply chain, and general and administrative functions. He can be reached at sid.dayal@atkearney.com.

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For the rest of the August 2009 issue of CRM magazine please click here.

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