Customers, it appears, have no shortage of issues: product and service-related, but sometimes customer service-related, to contact companies about and on a growing array of channels.
But are companies listening? Are they responding as well as they should? If not, are there ways to highlight the need to listen and act on customer matters in conversations with them? And what contact channels should senior executives be tuned in on?
For insights we recently had a virtual conversation with John Goodman, Vice Chairman, Customer Care Measurement and Consulting (CCMC).
Q. Are customers’ issues with products and services rising, and if so, why?
Yes, and the three major causes are inflation and price increases, especially in CPG (consumer packaged goods), food in general and housing, and over automation. These three issues then cause frustration.
When customers are frustrated and angry, the blood drains from their heads and they are inherently less rational and restrained. There are two other causes of this frustration:
1. Companies are not equipping their staff to effectively respond to complaints in these areas: and are, in general, failing to adequately empower their staff.
2. Products (e.g., technology and financial services) are getting more complicated while consumers seldom read the directions or contracts, leading to surprises.
“Many companies tell reps they can walk away from or hang up on someone who is abusive. But that does no one any good.”
—John Goodman
I recently asked an audience of over 100 service executives how many had read their homeowners’ insurance policies in detail and only one hand went up. She was the only one who was aware of the surprises in her policy if she has a loss.
Our 2023 National Rage study says the top two frustrations are long messages at the beginning of contact (blame compliance) and reaching a human and applying artificial intelligence (AI) without intense supervision (different than over automation).
At the same time, we are finding that some companies are empowering their front lines, leading to record levels of delight: as many as 40% of consumers complaining to some companies are delighted with the response.
Q. When customers complain, which channels are they using, and is this changing?
For serious problems, over 50% are using digital channels and for less serious issues over 80% are using digital. The rest are using the phone; a recent McKinsey study says that Gen Zers are now starting to use the phone more. Chat is growing because response time is shorter. Also, companies prefer chat to email because customers “run on” with email while chat is succinct.
Chat is probably overall the most effective after self-service. Our data shows that 80-90% of customers go to the website or the mobile site prior to contacting companies. This has been verified by multiple companies.
Q. What is the split that you are seeing about the complaints about products and service, and customer service?
Product matters that consumers complain about the most are price and package shrinkage, and for service are the lack of empowerment (see my comment later on about flexible solution spaces) and failure by the company to respond at all.
For instance, I just rode a Waymo car in San Francisco and they solicited my feedback. I reported the car was too hot (could not see how to change the temperature) and someone had spilled a milkshake on the seat. I never received an acknowledgment – that car may still have the mess - and I don’t know how to control the temperature if I ride again.
“A positive tone could cause delight while a bland, uninterested tone will do damage.”
A surprising finding from our analysis of CPG issues is that face-to-face complaint handling has a lower satisfaction/delight outcome than digital response from manufacturers. Also, digital has higher delight than telephone.
My diagnosis on face-to-face being worse than phone or digital is that employees are not trained or empowered to handle issues face-to-face and are fearful of confrontations. Things are more monitored and systematic in a contact center.
Many companies tell reps they can walk away from or hang up on someone who is abusive. But that does no one any good.
I tell reps to understand that this person is frustrated, angry, and lacking blood to the brain. They are dealing with a crazy person until the customer calms down. The average consumer has seven good yells in her. If she or he calls you seven names, they will then be deflated, and ultimately embarrassed by their behavior when the blood comes back in their brain.
Therefore, the objective is to depersonalize the interaction. At one leading nameless computer company I had reps who had an informal contest with abusive customers (their company had a motherboard that failed but had only a 90 day warranty that was ultimately changed).
The reps would identify the abusers and then hold up their hands to count off the number of expletives they had been called. The question was: “Could you get to seven?”
Once the situations were depersonalized, the reps were no longer damaged by the tenor and were often ultimately able to handle the persons who would apologize for their behavior.
Aside from that, one needs to have a clear, believable explanation for the answer being given. This leads to the customer feeling that they have been treated fairly.
As one size does NOT fit all, we developed what I call flexible solution spaces (FSS), which says there are six ways of handling this depending on the circumstances, you decide which is best in this case. By providing reps with five or six such FSSes for six difficult issues, companies then empower them and give them flexibility.
Paul Zak, at Claremont College, has found that empowered employees with good recognition for initiative have much higher levels of oxytocin in their brains and love their jobs. The correlation with I love coming to work each day is 0.77.
On digital versus telephone, my diagnosis is that the words used are effective without the potential damage of a poor tone of voice. A positive tone could cause delight while a bland, uninterested tone will do damage.
A digital message lacks the potential for both positive and negative tone. Given customers are much more comfortable with digital interactions (kids grow up on Twitter/X) the lack of audible tone of voice is not as necessary.
Phone also has the most customer dissatisfaction due to long waits: virtual queues can help a lot but less than a third of companies use them. Chat and especially video chat is most successful. Video allows eye contact which Intuit found increases trust by 30%.
Q. Are the customer service channels effectively channeling customer complaints, feedback, and suggestions to the C-suite?
There are several problems with feedback channels. Often categories are not granular enough to be actionable. Second, complaints are not extrapolated to the marketplace. See CHART on multiplier by channel for CPG products, as example. Third, data from multiple sources are not integrated into a unified picture.
Q. Are senior managers listening and acting on customer matters? Or are they ignoring them? And are their responses unsatisfactory and why?
Senior managers have failed to appreciate these four items.
1. What they hear is the tip of the iceberg for both consumers and business-to-business (B2B) customers. The broad general multiplier is 10 problems for each one heard by frontline staff, like contact center agents and retail employees, and 20:1 for executives.
The sales force often does not pass back issues because they are too busy and hate paperwork and think it may reflect on them: which it sometimes does, especially in B2B.
Retail is the worst. We’ve put up signs (we can only solve problems we know about) – with text or phone numbers – which helps but local employees sometimes take them down.
Because these executives see/hear few complaints they do not understand the tip of the iceberg effect.
2. Not understanding the impact of these problems on customer loyalty. Overall, for every five customers who have problems, one customer will be lost.
3. The impact of problems on word of mouth – positive WOM is the cheapest and most efficient source of new customers – the most successful companies like USAA, Chick-Fil-A, and Harley-Davidson, get 70% of their new customers from WOM. Management almost never compares the cost to get customers via WOM and great service to the cost of acquisition via advertising and the sales force.
4. Finally, and here’s the crux of the problem, management views voice of customer (VOC) as negative and hates bad news. The bad news is pointing to where more money can be made. One CEO looked at a 94% sat rate and asked, “what in the last 6% can we get because that is all more revenue and profit?”
“Finally, invest in staff to allow reaching a human by chat and/or by phone...”
We’ve found that 70% of companies have decided to be in the pack as opposed to differentiating themselves via service. They still talk service, but they just compare themselves to the pack and say, “we’re no worse and we want to invest elsewhere.” These executives are not realizing the frustration and turnover that environment creates.
Meanwhile 20% of companies have executives who are trying but half of them are not empowered and supported. At the same time, 10% have chosen to compete on price and minimize service offerings.
Things are not bad enough to merit scrutiny; you can make some money with a mediocre offering.
Q. Is it also the case that companies are under the gun to ignore/squeeze customers, no matter how much they complain and threaten to leave, from demanding shareholders and private equity ownership to squeeze more profits?
Private equity groups are a huge problem. We’ve actually started to help a few venture capitalists to assess the health of the customer base in advance, but most are out for a quick buck over three years.
Q. What are your recommendations to organizations to improve their listening to customers, and to minimize and act on customer complaints?
Pick your battles. Identify one or two issues that both customers and employees share and fix one with rigorous measurement to show the payoff. Also, identify simple delighters and implement one or two with measurement of satisfaction and impact on loyalty and word of mouth.
Here’s my shortlist of other recommendations to organizations:
- Better onboarding and more transparency in marketing and sales.
- Understand customer competence with product area and motivate customer to get educated.
- Get feedback from service on percentage and granular issues due to marketing, sales, and expectational issues.
- Provide an index of marketing quality.
Finally, invest in staff to allow reaching a human by chat and/or by phone, but particularly by phone as it is high-touch: only in-person is higher. Do the cost-benefit analysis of cost of phone contact versus the payoff of retaining a customer who otherwise would be lost.
Q. What are, critically, your recommendations of contact center/customer service departments to have customer matters heard and followed up by the C-suite?
Educate management on one or two basic easy issues using the tip of the iceberg and multiplier to quantify the number of customers affected and tie it to storytelling: one or two recorded calls or emails.
Ideally tie the issues to employee frustrations and get a sales/marketing, a quality (or lean Six Sigma) and a finance person to go with you and nod their heads. Get a small win and move forward, letting others get the credit. Better a small success than a big disaster.