Brands spotlight customer experience

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When Sprint's new CEO Gary Forsee joined the company last March, he wanted to know why hundreds of millions of dollars were being spent on bringing in new wireless customers, while existing unsatisfied customers went out the back door. Mr. Forsee, a 30-year veteran of telephone companies including AT&T and BellSouth, wanted Sprint to put customer service in its place, right next to customer acquisition. So Sprint changed-a lot.

In fact, Sprint business units were completely reorganized around a new focus: the customer experience. No longer are customers acquired and then "thrown over the wall" to customer service. Marketing, customer service and sales are no longer three different silos, but reside in a combined unit, working together.

"When we looked at customer service as a separate organization, we saw that the lack of integration didn't get messages back to marketing and sales. I wouldn't call what we have now just a blurring of lines; there really is no separation anymore. We're marching arm-in-arm for the customer experience," said Vincent DeSantis, director-marketing for Sprint Consumer Services. He compares the new system to a traditional brand-manager system where the brand is in the middle and all functions lead in and out. In the Sprint model, the customer is at the center, with everything else a connected corollary function. Sprint is betting that its products and services, and therefore its bottom line, will benefit from a high level of customer care. So far, churn has already dropped to 2.7% in the fourth quarter of 2003, down from 3.5% in the fourth quarter of 2002. (Churn is a measure of the number of subscribers who leave or switch to another service.)

Customer service and marketing have traditionally been separate functions within most companies, not just telecommunications. One unit publicizes, another sells, and another one answers to the customer. But in today's commoditized world, customer service can be the differentiator for products and services. Wouldn't Starbucks be just another coffee-pusher without its mod cafe service experience? Wouldn't Southwest be just another bus in the sky without quirky pilots cracking jokes and polo-shirted attendants breaking into song?

`lip service'

"Customer service is one of the things that gets more lip service than anything else. It should be at the core of your marketing because smart marketing is built on the idea of `here's what it's like to do business with us,"' said Joe Calloway, branding consultant and author of "Becoming a Category of One." He added that spending money to provide great customer service is some of the best marketing companies can do.

Nick Wreden, author of "FusionBranding" and a consultant on customer loyalty, agrees: "You inevitably pay a price for poor customer service. Research shows if you have a good customer experience, you'll tell four to five people about it. If you're a victim of poor service, you'll tell seven to 13 people about it. Studies further show that people who have a bad customer experience will continue to discuss the brand for up to 23 years," he said.

Mr. Wreden himself is a prime example. He had a "terrible" experience with General Electric Co. as a young ad executive just out of college. While working for a client of GE, an executive at GE was "professionally insulting" to both Mr. Wreden and the photographer on the assignment. "Since then I have never bought a GE product. I'd light a candle before I buy a GE light bulb," he said. "That happened when I was 24 and I'm now 51." Almost three decades is an extremely long time to hold a grudge, but he's far from alone. Almost 70% of people surveyed by the Customer Experience Co. said they would switch to using a competitor's product without giving the company another chance after one bad customer-service experience. (See chart, below.)

So customer service is a crucial marketing function, right? Not in many businesses. In most companies, marketing and customer service may report to the same top boss, but the links between the two are more akin to footbridges back and forth than multilane highways going in the same direction together.

Companies are starting to realize that's a problem. At Verizon, while customer service is not in the marketing department, the company has started to integrate the two. Verizon uses its customer service and sales centers to take calls for marketing campaigns, solicit feedback on those campaigns and measure possible success when crafting product ideas.

"Our customer service reps talk to millions of people, our customers. You can't get that kind of research on the streets," Mark Adams, Verizon director-consumer mass markets, said. For example, several years ago, Verizon used a customer service rep's hesitation about its complicated new proposed long distance plan to re-craft it into a flat rate 10-cent per minute "Timeless" plan-the first of its kind at the time. "One of our customer service people, a woman from Queens, said `This is too hard. I can sell it because I can sell anything, but it's hard to understand.' She was right. We went back and changed it, and in less than a year, had a 36% share of the market" for New York, Mr. Adams said.

His idea of a marketing failure would be to have someone in customer service call him in marketing and ask, "What is this new promotion someone just called about?"

Customer service, or the lack of it, has been a key issue in the super competitive cable and satellite business as well. The cable industry "spent $80 billion in infrastructure upgrades, we have a record number of new products like digital cable and high definition, but along with that is the recognition that we need to make customer service a priority," said Dave Watson, exec VP-marketing and customer service for Comcast Cable.

To that end, Comcast beefed up its all in-house customer service centers on the premise that the new services (digital, HDTV and DVRs) will need solid operational support-15 new or expanded call centers and 3,000 new reps added in the past year.

The company recently rolled an internal mission, "Think Customer First," along with an ad campaign from Richards Group that takes that feeling to Comcast's local markets. The campaign, "That was then. This is Comcast," even pokes fun at the fact that maybe things didn't always work well for cable customers. "It's a humble approach and recognizes that there were legacy issues ... and now we're closing that gap," Mr. Watson said.

"What I'm seeing more and more is that companies are saying it doesn't make sense to have people in separate, different arbitrarily made up positions and divisions," Mr. Calloway said. "It is all ultimately marketing; it all ultimately ties together in terms of what that customer experience is. It's a more holistic view about how that customer experience relates to every thing from product conception to marketing."

That's the big picture, of course, and revising thinking and reorganizing a company takes time. So what can marketers do here and now to help employees who talk to your customer or interact with them on the Web?

customer experience

Jeffrey Horn, managing director of Omnicom Group-owned Interbrand's Customer Experience group, offers five things that make the difference for customer-facing employees. Find the right talent, reward them, develop their talent, communicate with them and give them leadership that vocally values great customer experiences. "Look at organizations that are crumbling, and you can probably trace it back to them screwing up the customer experience," Mr. Horn said.

Mr. Wreden suggest some things like good old-fashioned line management. Banks and grocery stores do this by managing the number of open teller windows and funneling checkout lines, but it can also be done for phone calls and Web inquiries. Another line-management strategy is to use psychology. Make waiting a good, or at least OK, experience. Microsoft help lines feature a disc jockey to wile away the minutes; Disney entertains its customers who are waiting in line. Another customer service hint from Disney: Don't be afraid to overpromise and underdeliver. Disney lists a wait time for its amusement rides that's always higher than the actual estimated time. Amazon does the same with package deliveries, telling customers items will arrive in four days when they will in two.

who gets what

If it's about money, and it usually is, consider customer segmentation. In other words, figure out who are your best customers and cater to them. With limited budgets and limited capital, it's becoming common for companies to make choices about who gets the best customer service. The bottom line is that hand-holding costs: Every phone call to a live agent costs about $15, every interactive voice help line call tallies about $5, and self-service Web help costs about 28¢, according to Sage Research director Chris Neal. So where would you direct a customer with a free account? Both popular free e-mail services Yahoo! and Hotmail refer all help inquiries to e-mail addresses. In fact, there are no published help telephone lines for either one.

"The fact is customer service is becoming more automated to be more cost effective. Companies are trying to reduce costs, but not at all costs. They're trying to balance a certain level of customer service and a self-support system," Mr. Neal said.

But marketer beware. "Any company that says, `Look, we've made it as easy as we can and if customers can't figure it out, that's too bad.' I'd call that brand suicide," Mr. Calloway said.

Sprint understands that too, and in fact, includes customer exits in its plan for good customer experiences. "There is the possibility they may come back, if they find the service they switched to isn't as good as promised. So we want to make sure when they exit, they have a pleasant experience," Mr. DeSantis said. "Customers deserve to be treated right, fairly and with respect at all times."

And while most companies would agree, there is still a long journey between what is said and what is actually delivered. Mr. Horn refers to it as the "Say-Do" gap.

"People just haven't drawn the links between customer service, profitability and brand," said Mr. Wreden. "They have to realize it all rests on customer service-without that you won't retain customers who in essence, are your brand. So you won't have profitability or a brand. Hell, you won't have a business either."

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