Europe, and potentially the world, stands on the cusp of a revolutionary shift in its customer service sector due to a groundbreaking new Spanish law.
The Customer Service Law, passed in 2022 and set to come into effect in 2024, aims to enhance the customer experience (CX) across all contact points, such as phone, chat and social. It requires businesses to provide immediate customer support, minimize hold times, reduce misrouting of calls, and ensure swift resolution of issues.
The Customer Service Law incorporates the provisions of the EU Directive 2013/11/EU into Spanish legislation. It applies to all companies conducting business in Spain, regardless of the country in which they are established. Which means that if they have Spanish customers, regardless of where their enterprise is headquartered or contact center or agents are located, they must comply with it.
The central aspect of this legislation is businesses’ phone-based customer interactions. Businesses must ensure that 95% of personalized attention requests are addressed within three minutes. Terminating a call due to long hold times is now strictly prohibited under this new regulation.
There are several other critical features of this new law. Companies are mandated to separate their customer service departments from other departments and provide them with sufficient means and human resources to execute their tasks.
In addition, companies are required to provide 24/7 customer service throughout the year. Customers also should have the right to speak to an operator who can respond in real time. The law also stipulates that customer service employees should have specific training in accordance with the sector and activity of the company.
Enforcement
The new Spanish law is expected to impact various sectors that may need to make significant investments to adapt to the new regime and comply with the new obligations, such as providing 24-hour customer service, which might lead to an increase in the cost of employees.
The penalties for companies that fail to comply can be as high as EUR 100,000 (approximately USD 108,000).
The biggest question that businesses and CX leaders face, is, how will the Spanish government enforce these new rules?
Will officials come down with a hammer on companies?
Or are the large fines simply in place to act as a deterrent and to encourage companies to make changes?
Will the Spanish government, or regulatory bodies, set up monitoring mechanisms, and conduct periodic audits?
Or will it require companies to submit reports to ensure compliance?
Will enfocement also be through customer complaints, in which customers can report violations, which regulatory bodies can investigate? That remains to be answered.
A wider discourse is required in Spain yet there is a limited amount of information available at this time.
But one thing is for sure. Large businesses will be nervous and will likely be in communication with members of the Spanish government to figure out a smooth transition.
As for enforcing companies with contact centers and agents located outside of the country, Spain can ensure that its laws are applicable to any company operating within its market.
And that is regardless of where their contact centers are located.
Unearthing the Impact
This reform is particularly relevant for American companies, given that the U.S. is the top investor in Spain.
The U.S. has issued 58.1% of non-ETVE (Spanish international investment company) investment flows to Spain.
The U.S. and Spain also have a strong trade relationship, with exports and imports rebounding strongly after the COVID-19 pandemic (Source: U.S. Department of Commerce, Office of Technology Evaluation).
Other large investors are Australia and France, Switzerland, the U.K., Mexico, and Japan (Source: Government of Spain).
Companies worldwide are struggling to align their customer service operations with the requirements of this new law.
They will have to increase their investments in people and technologies where they serve them both in and out of Spain.
Compliance may require a significant revamp of existing systems and processes, pushing companies to rethink their strategies and implement immediate changes.
Until the law comes into effect in 2024, it’s impossible to determine the ripple effect in other European countries.
But call center wait times is a growing problem everywhere, and a 2023 study in the U.K. found that customers hanging are left waiting for up to 85 minutes.
Companies worldwide are struggling to align their customer service operations with the requirements of this new law.
However, despite the challenge, the law also presents a golden opportunity for businesses to restructure their customer service to provide superior, personalized experiences.
New-Generation CX: A Profound Transition
As we progress into an increasingly customer-centric world, the importance of high-quality, personalized customer service cannot be overstated.
Over time, customers have come to expect superior levels of service.
They seek swift and relevant responses to their queries, exhibiting a preference for interactions that are not just transactional but engaging and meaningful. They should and may not have to wait for their governments to act.
A Comprehensive Overhaul: Facing the Challenges
To meet the requirements of the new Spanish law, and potentially other countries’ future similar laws, companies will have to scrutinize their existing customer service frameworks thoroughly.
An internal audit of the existing customer service infrastructure, including hardware, software, personnel, and processes, will be a critical first step.
Next, businesses must critically assess the data and insights gathered from the audit. The assessment will help identify gaps and opportunities, which will then inform managers of the strategic changes that need to be implemented.
These changes could range from deploying new technologies like artificial intelligence (AI) and automation, to increasing the customer service workforce, or both.
AI and the Future of Customer Service
The new Spanish law could mark a pivotal moment for the future of AI in customer service for several reasons.
- Businesses must reassess call routing in customer service operations, ensuring that systems are capable of connecting customers to the right agent.
- The focus of technology investments will need to shift from call deflection to fulfilling customer requests and offering better service. Interestingly, statistics show that if a bot can provide quicker service than a human, it becomes the preferred medium of resolution.
- AI technology will need to augment its support for live agents by providing real-time insights and relevant data during calls, thereby enhancing efficiency and meeting the three-minute resolution window requirement.
- Serious consideration will be given to transforming legacy IVRs into AI-driven conversational IVRs to help defray additional live agent costs. Several of the most widely used contact center platforms, such as Google, AWS, and Genesys, have plug-ins through partners to transform existing IVRs into a better call routing system.
This last point provides a guidepost for both compliance and providing a positive CX. The success of a global top five tech company in implementing a conversational IVR, which led to a 30% reduction in misrouted calls and a two-minute reduction in AHT with a projected ROI of $39 million, is a testament to the potential of AI in this field.
An Opportunity for Innovation
The new law is, without doubt, a challenge, but it also presents a unique opportunity. It encourages businesses to innovate and adapt their customer service models, push the boundaries of their existing systems, and employ technology to its fullest potential.
In particular, investing in AI-powered customer service technologies can revolutionize a company’s ability to respond quickly and efficiently to customer queries. AI can provide real-time insights, suggesting responses based on past customer interactions and aiding agents to provide quicker solutions.
By using this legislation as a springboard, businesses can transition into a new era of customer service, one that blends human empathy and advanced AI capabilities to deliver superior, personalized experiences.
In the face of this evolution, businesses that are agile and forward-thinking will be the ones who succeed. This new era will reward those who see the legislation not as a hurdle but as a catalyst for innovation and growth. It’s a call to action for all businesses to elevate their customer service and set new benchmarks in customer satisfaction.
The new law...encourages businesses to innovate and adapt their customer service models, push the boundaries of their existing systems...
By aligning their strategies with these emerging expectations and leveraging AI’s potential, businesses are set to traverse the evolving landscape of customer service with confidence.
The dawning of this new era in customer service is an opportunity to improve and innovate. Companies should seize this opportunity or risk being left behind.
This is not merely about complying with a law but about fostering a culture that values the customer above all else. It’s about creating a future where businesses and customers thrive together in a relationship marked by mutual respect and satisfaction.