Superior customer service is one of the hallmarks of high-performance businesses.  However, great service that leads to satisfied customers is not enough to engender strong customer loyalty, which is the key to profitable growth.  In fact, Accenture has found that too many companies make the mistake of equating customer satisfaction with loyalty—and subsequently are left wondering why customers steadfastly maintain they are “satisfied” with the company as they’re crossing the street to a competitor’s shop.

The truth is, to generate impenetrable customer loyalty, companies must build service capabilities that don’t simply satisfy customers’ immediate requests, but rather help create a compelling, positive overall customer experience.  Such an experience substantially influences customers’ willingness to buy more from a company and serve as company advocates, spreading positive reports about a company and its products and services that strengthen its brand and make it easier to convert prospects to customers. 

In short, loyalty improves the bottom line and grows the top line.  Without strong customer loyalty—built on the backs of a compelling customer experience and superior customer service capabilities—organic growth is extremely difficult (not to mention costly) to achieve.

In this article, we draw on recent Accenture research efforts1 to explore how companies can create superior customer service and contact operations that help create a loyalty-inducing customer experience that ultimately results in stronger overall financial performance.

Loyal customers can have a major, positive effect on a company’s bottom line, but companies are struggling to engender loyalty.

Accenture’s Customer Loyalty survey revealed that loyal customers are good customers.  In this survey of 2,000 consumers in the United States and United Kingdom, 94 percent indicated that they would take some form of positive action for the company. For example, 81 percent of participants said they will continue buying from companies to whom they are loyal, just under three-quarters indicated they would recommend the company to others, and about half said they would buy more or respond to specials from such a company. 

However, our research also shows that these consumers are a restless lot.  A full 90 percent of the consumers surveyed said they could be persuaded to switch or discontinue doing business with a company they currently patronize, depending on the incentive.  Furthermore, nearly 60 percent said they had, in fact, decided to switch or discontinue using at least one type of company included in the survey during the past 12 months.  And as if those findings are not discouraging enough for providers, nearly two-thirds—64 percent—said they are likely or even very likely to switch or discontinue doing business with companies they currently patronize in the next year. 

One of the biggest problems we’ve seen is that companies tend to equate customer satisfaction with loyalty.

These findings may not come as a surprise to some, given the increasing ease—due largely to the Internet—with which customers access product information, compare price and move their business from one provider to another.  What might be surprising, however, is that these 2,000 consumers also reported a fairly high level of satisfaction with many of their providers.  When asked to evaluate whether companies in a range of industries met or exceeded their expectations as customers, approximately three-quarters or more of our survey respondents reported favorable experiences with businesses they patronize.  However, any sense of accomplishment these companies take in meeting or exceeding customers’ expectations may prove fleeting, as it also appears from the survey that satisfied customers do not necessarily mean loyal customers.

For instance, while 82 percent of respondents said their Internet Service Providers (ISPs) had either met or exceeded their expectations, respondents were more likely to have switched or discontinued ISP service during the past year than any other provider category—and they were most likely to switch ISPs in the next year.  Equally surprising was the reverse:  Respondents were least likely to switch life insurance providers, even though life insurance was the category selected least often (57 percent) as meeting or exceeding expectations.

Many factors contribute to high levels of industry churn—maturity, level of competition and technology substitution, to name a few—and these survey results do not reveal these underlying causes.   They do, however, show that the causal relationship between customer satisfaction and customer loyalty is indirect and unpredictable—if it exists at all.  Furthermore, this study plainly shows the disadvantages of tracking satisfaction alone as a management tool for predicting and managing future churn.  In short, any company that believes simply generating a strong level of customer satisfaction will secure its customer base should think again.

An even bigger problem is many companies fail to understand that loyalty is driven by a superior customer experience.

Indeed, the customer experience is a critical linchpin of loyalty:  Accenture’s Customer Loyalty survey revealed that 40 percent of consumers stayed with a provider because they had a positive feeling about their experience, while 34 percent of respondents who had switched providers did so because they had a negative feeling about their overall experience.

A major component of a compelling customer experience is superior service.  And according to executives who have participated in a new Accenture survey of global high-tech companies, customers’ service expectations have increased substantially in recent years.

Yet companies and consumers differ in their impressions of service quality.  High-tech executives in our survey think the after-sale service and support provided by their companies is well above average, and many believe their companies’ efforts have kept pace with customer expectations.  In fact, 80 percent of executives polled said they would describe the customer service satisfaction of their overall customer base as moderately or extremely high.

But consumers have a different opinion.  Those participating in Accenture’s 2006 Customer Service survey are not highly satisfied with any of the principal modes of service delivery commonly provided by companies.  Nor are customers of digital products and services overly impressed, as less than half of those participating in Accenture’s Converged Digital Home survey have a positive impression of such providers’commitment to service.
 
Consumers are especially disenchanted with the impact that the use of technology has had on customer service.  Sixty-one percent of consumers responding to the 2006 Accenture Customer Service survey said technology has not improved the quality of service they get from their providers.

Delivering superior service in the future will mean successfully addressing four critical challenges

In our work with clients around the world, Accenture has found that customer expectations are crossing industry boundaries at an increasing rate—to a point at which the notion of different service standards for different industries is a thing of the past.  Unfortunately, however, the odds often are stacked against companies in their efforts to improve.  Today, many organizations face dual threats from rapid commoditization and increased competition, which are eroding their traditional advantages and undermining customer relationships.  And guess what?  It’s only going to get more difficult in the future, especially given the emergence of two major trends:  the growing complexity of products and service bundles and a massive divergence in needs and expectations as customer segments become more fragmented.  These two trends will be a driving force behind the need for companies to stop making incremental improvements to how they serve customers and, instead, completely reinvent customer contact. 

As part of that effort, companies must address four major challenges that hamper their efforts to provide superior service:

Solving customer problems.  One challenge involves the ability of each representative to solve a customer’s problem by himself or herself.  According to our Customer Service survey, 36 percent of respondents felt the most important aspect of a satisfying customer experience is to have one agent be able to meet their needs instead of forwarding them to other representatives.  Companies must implement new processes and technologies to ensure that customers are routed to the appropriate representative at the outset and, subsequently, are much more likely to experience first-call resolution.

Using technology more effectively.  Technology can either enhance or destroy the service experience.  Judging from our survey responses, it’s doing the latter in many companies.  A majority of participants (58 percent) in our Customer Service survey said they are not at all satisfied with automated telephone customer service, which many companies have implemented in an attempt to control escalating call center costs.  But there’s a difference between simply replacing humans with an IVR system to cut costs and optimizing the use of IVR as part of a larger effort to make an organization more customer centric.

Having more capable and personable agents.  Consumers in our Customer Service survey showed a clear preference for the human touch.  Eighty-two percent of participants said when they seek advice, they call for assistance.  Yet two of the most frustrating aspects of customer service are agents not having the answers customers need and representatives who are not personable.  Furthermore, “the inability of reps to fix the problem” was the top driver of dissatisfaction with digital products and services providers among participants in our Converged Digital Home survey.  To address these issues, companies must more effectively provide agents access to the information (customer, product, and transaction) they need to do their jobs, and institute better agent training and development programs to encourage and reward appropriate behavior.

Creating a superior customer experience.  The majority of customer service experiences are long and painful.   For instance, in our Customer Service survey, 54 percent of consumers likened their interactions with customer service to “driving in city traffic: slow and often requiring alternative routes to reach their destination,” while 24 percent said their interactions were “like being stuck in traffic gridlock with no chance of moving forward or going back.”  These hardly sound like the perspectives of happy customers.  Companies that can break the mold of sub par service and establish a differentiated, positive customer experience will win fans in the short term and competitive advantage over the long haul.

It’s time for companies to step up to the plate and deliver a service home run.

Breaking out of the customer service morass requires an entirely new approach to designing, building and sustaining customer contact operations.  All the incremental improvement in the world won’t create the capabilities necessary to keep customers in the fold. 

As we have seen time and again, service often spells the difference between mediocre companies, poor performers and market leaders.  Given the results of Accenture’s research, one could argue that many, if not most companies are failing the service test today.  This is unfortunate because the tools, approaches and resources exist today for companies to create world-class customer contact operations that live up to customers’ expectations while remaining fiscally sensible.  While such operations may be considered by many companies to be an option today, they will be a competitive necessity tomorrow—especially for those companies seeking to build enduring customer loyalty and achieve high performance in an ever changing world.

Our insights in this article are are rooted in comprehensive, ongoing research that Accenture conducts on related topics—as well as on our extensive client work in the customer support and service arena.  Some of the research efforts we’ve drawn on for this discussion are the following:

• Accenture Customer Loyalty survey (2006):  Survey of more than 2,000 consumers in the US and UK on critical drivers of loyalty
• Accenture Customer Service survey (2005 and 2006): Survey of more than 2,000 consumers in the US and UK on perceptions of customer service across 10 types of providers
• Accenture Converged Digital Home survey (2005 and 2006):  Online survey of more than 10,000 consumers in nine countries on their preferences for digital home products and services
• Accenture Customer Service and Support survey (in progress):  Survey of executives at global electronics and high-tech companies on the organization and performance of their support and service operations

About Brett Anderson……………………………………………………

Brett Anderson is the Managing Director of Accenture’s Global Customer Service and Support  practice in the Communications, Media, and High Tech industry group.  His responsibilities include ensuring the growth and development of the global practice and CRM professionals, developing and overseeing relationships with strategic CRM ventures and alliances, and managing Accenture’s investments in this area.

Anderson specializes in working with global organizations and start ups to quickly and effectively introduce market leading Customer Service and Support capabilities.  He helps deliver significant business results to his clients through implementing solutions that bring them into contact with their customers.  Anderson focuses on bringing together a company’s efforts in support and service in order to identify, attract, and retain the most valuable customers.

Anderson earned his B.S. in Mechanical Engineering from Colorado State University in Fort Collins, Colorado.  He resides in Denver with his wife, Danette.