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When it comes to a company's financial success, one of the most overlooked drivers is the customer experience. Customer service has a huge impact on the bottom line. Happy customers spend more and provide free word-of-mouth marketing; boosting revenues and lowering customer acquisition costs.
It's no surprise that data from the American Customer Satisfaction Index shows that the stock returns on customer service leaders have outperformed the S&P 500 nearly five-fold over the last 13 years.
However, despite its enormous value to a company, providing great customer service can be an exceedingly difficult code to crack.
While the vast majority of companies would say that they strive to offer a great customer experience, few businesses are able to execute and deliver a world-class experience consistently. It's not that CEOs and their teams don't want to offer great service – no one sets out to disappoint – it's that they have underestimated the challenge and have not spent the requisite time and effort to carefully lay the foundation of a great customer service system.
Looking at companies that have earned a reputation as customer service leaders, five best practices emerge in providing an exceptional customer experience, day in and day out.
Make employee engagement a priority
It all starts with people. If employees aren't happy, they won't provide great customer service. WestJet Airlines Ltd. believes that highly engaged employees, or in its case owners, will go above and beyond to provide a truly memorable experience. Their strategy is spectacularly successful – WestJet has earned a spot alongside only five other companies in Canada's Most Admired Corporate Cultures Hall of Fame, J.D. Power has recognized them as a customer service champion, and they are one of the most profitable airlines in North America.
Telus Corp., another Canadian Corporate Cultures Hall of Fame inductee, reported world-leading employee engagement last year. Telus' highly engaged work force helps to explain why the company receives about 75 per cent fewer complaints than its major competitors according to the telecommunications services complaints commissioner.
Define a clear vision and goals
In 2006, the Commonwealth Bank of Australia was that country's worst-rated retail bank when it came to customer service. The bank set out to transform itself with a manifesto of seven customer promises and a clear goal of having the highest customer satisfaction rates of all major Australian banks by June 30, 2010.
This clear target and timeframe created a sense of urgency, and the need to provide better customer service became real. While they didn't hit this specific objective, the team was focused and driven towards an inspiring vision. It took longer than expected, but by 2012 they reached the top spot and have now held it for 26 consecutive months.
Make customer service an integral part of your brand.
When Jeff Bezos founded Amazon.com, he set out to create "the earth's most customer-centric company." Mr. Bezos' meetings were famous for the empty chair at the table to represent the customers' point of view. When customer service is inextricable from a brand, it cannot be an afterthought – it must influence every decision.
Looking at Canada's retail banking industry, Toronto-Dominion Bank has built into its brand the core concept of making banking as comfortable as a green leather chair. It's not just clever advertising; for eight years, J.D. Power has ranked TD the highest in customer satisfaction among the country's big five retail banks.
Build a system
Successful companies are able to hardwire accountability amongst employees. If there are no measures in place to represent what great service means to the customer, no process for identifying and fixing customer pain points, and no method for linking employee rewards and recognition for achieving customer-focused goals, then companies are reinforcing the wrong types of behaviours.
In the hotel industry, Ritz-Carlton, a subsidiary of Marriott International Inc., is known for its fixation with customer metrics and process improvements. While on the outside, Ritz-Carlton employees seem to be extraordinary at personalized service, the reality is that the company has created a comprehensive customer service program that includes extensive onboarding and ongoing training programs, a robust customer relationship management system, as well as policies and processes that reward employees for going above and beyond to delight guests.
Create cultural norms, not rules
Customer service leaders must strike a balance between micro-managing employees and giving them carte blanche. Letting employees do what they think is best can be risky, but a rigid system of rules and scripts prevents them from being empathetic and creating a connection with customers.
At Telus, employees are guided by a set of commitments it crowd-sourced from its team. When a Telus employee picks up the phone, they know they should be "friendly, helpful and thoughtful" and "take ownership of every customer experience" – but from there they are empowered to let their personality shine through and deliver an unforgettable experience.
Most of us can think of at least one organization that has been so consistently impressive, we've been compelled to tell our family and friends about it. Behind that great customer service, there's a clear vision, strong leadership and a perfect balance of goals, people and systems.
Becoming a customer service leader doesn't happen overnight – it's a long journey that takes focus, persistence and resilience. However, by taking the time to understand the necessary building blocks of a great customer service experience, along with the effort required to get there, companies can crack the code and turn customer service into a powerful and sustainable competitive advantage, creating satisfied customers and happy shareholders.
Mark Colgate is associate dean and associate professor, specializing in service management and marketing, at the University of Victoria's Peter B. Gustavson School of Business (@GustavsonUVic). He also teaches in Gustavson's executive programs and consults for many companies. He can be e-mailed at colgate@uvic.ca.