English. This is a draft for discussion. Send me your comments, references and examples.

Español. Éste es un borrador en inglés. Por favor, haga sus comentarios. Incluya ejemplos en diferentes países. Gracias.

The Lack of Customer Service: marketing, operational or human problem?

 Author: Rod Biasca, www.biasca.com. Management consultant, specialist in process management and organizational effectiveness.

When we go inside a company, the first thing we notice in most cases is lack of customer service... in the bank, in a retailer, in a supermarket.

Read the second part of the article and send your feedback.

Rodolfo E. Biasca.. First draft: October, 2006

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Actual experience 1: During the last week of the year, Rod asked the Wells Fargo Bank for information on payroll services. Several days later, a person called saying that she would send an e-mail with a quote. When Rod asked for alternatives (there are two basic services) and to waive the install fee (which was offered until 12-30-05), the answer was a sort of “take it or leave it”. No further calls or proposals by e-mail were sent to Rod in the first two weeks of January. The employee is not concentrating on what he/she is doing, he/she is talking to a peer, he/she looks for excuses to interrupt what is being done...

Actual experience 2: Some weeks ago, Rod renewed his subscription of the Wall Street Journal (a major newspaper) via Internet. In the last step, press “Subscribe”, the screen turned white. Consequently, Rod sent e-mail to Customer Service to ask if they had received the payment. As there was no answer, he sent the e-mail again (address was correct). No answer.

Actual experience 3: Quest Diagnostics is sending bills to Rod for a lab test they did for him in April 2005. The insurance company says they paid in August, and indicates a date. Customer Service is unable to solve the problem and cannot tell Rod what to do. Different employees show they do not care (“Send us a copy of the check”, “Contact your insurance company”).

Actual experience 4: Dillard’s. Rod asked an employee why they do not answer the customers and offer suggestions. The sincere answer was: “We do not want to spend time taking with customers, because we can lose a sale to another customer; we are paid according to our sales not by the help we provide customers. Providing advice does not always produce sales”. Is it really true that the “customer is the king”? What is happening to the customer service employees? Are they well trained? The job is not interesting? The boss is too demanding? Pay is miserable? When the employees offer poor quality of service and lack motivation it leads to customer dissatisfaction and ultimately, loss of business and lowered profit margins. Some analysts suggest that by businesses implementing self-service stations, it created non-responsive customer service employees by diminishing their value, worth, and responsibilities.

According to Jeffrey Gitomer, journalist of the Kansas City Business Journal, these are ten basic reasons why service is so bad: (2002) ** Company has the wrong mission statement. It is not understood nor relevant to the customers being served. ** No written principles for customers are established (just a bunch of rules and policies). ** Poor examples set by upper management. They are inaccessible to customers and employees alike. ** Companies allow employees to be rude to customers and tell customers no. We live in an era of responsibility shirkers and blamers (“It is not my job” is the credo) ** Companies value customer “satisfaction” rather than “loyalty”. Satisfied customers will shop anywhere – loyal customers will fight before they switch. ** Low training budget priority ** Concentrate on competitive issues, rather than competitive advantages ** Companies provide company training and policy training, but few offer personal development training ** Failure to realize who is really in sales and service, -- anyone who talks to a customer.

Although his premise holds validity, systems and processes have been developed to measure performance levels within a company, and to provide a collaboration of management and training to oversee and remedy these issues. All types of models and solutions have been developed to address these issues. One new set of procedures that is gaining popularity in service-oriented industries is Customer Relationship Management. It is an automated system that provides a total solution and approach in determining and improving customer satisfaction and loyalty. The technology targets the best customer prospects, identifies customer-buying habits, measures employee performance, and provides performance-training programs, in addition to organizing and managing the administrative and business operations. “The purpose of Customer Relationship Management (CRM) is to enable organizations to better manage their customers through the introduction of reliable systems, processes and procedures for interacting with those customers.” (Wikipedia, 2006)

Actual Experience 5. UPS left an “Infonotice” in Rod’s door saying that a package has been left in the office (the administration of the community). The package was not in the office. Rod sent e-mails and called UPS. They said the information was not enough, that they needed a tracking number. After imaging possible senders, Rod contacted some and found the shipper and the tracking number. With that tracking number he found in the UPS website that somebody whose name nobody knew has signed a receipt. Calling by phone and by mail, UPS repeated what was already in the website. After a couple of days a person living in a far away house that had opened the box, gave Rod the box. The box label was correct; it was delivered to a wrong address. UPS employees did nothing to solve the company mistake.

Kaplan & Norton (2004) explain with their Balanced Scoreboard model how results are obtained in an organization. If sales are poor or complaints are high, one of the value-creating processes could be not well done. The customer management processes is one of them. Customer management consists of four generic processes: select customers, acquire customers, and retain customers and growth relationship with customers. If results are poor, intangible assets are not aligned to enterprise strategy: something is wrong with human resources, information systems or the organization structure. One of the common causes is lack of skills, poor knowledge and lack of motivation.

Poor customer service and operational problems due to lack of training, motivation, engineering design problems and lack of maintenance could be costly for the company. Actual Experience 6. Rod’s son took his new car to Pep Boys in Denver to change the oil and change the oil filter. Two days later, the car stopped after leaking oil. An inspection indicated that the oil filter was not adequately changed and the car has lost all the oil. The damage was severe and anew engine was needed. Pep Boys or its insurance has to pay for a new engine (more than $ 5,000) and a three week car rental. Some of the costs are not easy to track, in this case probably, Pep Boys’ insurance will pay the bill (and this event could increase the insurance cost the following year).

The Harvard Business Review (2003) made a summary of the motivation subject, from the classic approach of F.Herzberg to subjects as empowerment, compensation and supervision. The inadequate use of pay for performance systems, short run objectives, company culture and supervisors that do not motivate are some of the common reasons. Actual Experience 7. Rod is member of a 24 hour Fitness club, inaugurated three years ago. Facilities are nice. But often there is no soap in the showers. In the last two months and estrange additional charge has appeared in Rod’s credit card. Although it was recognized that the charge is wrong, nobody seems to be responsible of fixing it.

Sometimes the best approach may be not the ones recommended by the marketing experts. For example: Albert Schindler describes “Five Secrets of Good Customer Service”: ** Build business to customer loyalty ** Provide true customer service ** The customer is always right. ** Be honest with your customers. ** Educate your staff.

Cultural problems are rarely mentioned. Most American managers assume that what is true for Americans working in the United States is also true for people from other countries. Sometimes it is not. Cross-cultural management is a new field relative to the traditional study of management, and there are not too many examples of failures. Example: some American firms willing to cut costs hire Hispanic personnel (or contract suppliers with foreign personnel), paying them lower salaries or making them work in jobs that Americans do not want to take. But customer related problems are perceived in another way by these employees, supervision is not easy and conflicts developed. You do not manage in the same way a Mexican, a person born in Nicaragua or an employee born in Venezuela.

Sometimes there is lack of good information systems or the information is there, but it is not used. Actual Experience 8. Rod wanted in September, 2006 to buy software from Academic Superstore and wanted to pay the price for professors. A similar purchase was made in July, 2006, but he was required to demonstrate eligibility again.

Actual Experience 9. Rod has an American Express card in Argentina since 1978, and in the US since 2003. In year 2006, he still receives promotions, in both countries, offering cards as if he were not an Amex cardholder.

In a nutshell: this is a real problem that affects companies we know and use; some of them are major companies. There are different opinions and various proposals to implement. The author of this article thinks that Kaplan & Norton (2004) recommendation of concentrating in some causes is the key to solve some customer management process problems. In some companies the orientation is not correct. In a Ritz-Carlton hotel (that is well known for its customer service awards) the hotel manager tried to solve a customer related problem with Rod sending him to the room a big basket with fruit and chocolates.

Face reality. Customer service problems are the peak of the iceberg. Its improvement is something more complex than being nice to the customer. Books, seminars, software have been not enough to solve the situation. Improving involves process definition, engineering design and maintenance, employee selection and training, organizational structure definition with clear responsibilities assigned, supervision, cultural conflict resolution, monetary incentive design, etc. In a competitive world if these problems are not solve, the firm will loose sales and have higher costs.

References.

Gitomer, J. (2002) Why is Customer Service So Bad – Good Question Even Better Answers. Kansas City Business Journal. Retrieved on January 10, 2006 from: http://phoenix.bizjournals.com/kansascity/stories/2002/10/07/smallb3.html)

Wikopedia Encyclopedia (2006) Retrieved on January 10, 2006 from: http://en.wikipedia.org/wiki/Customer_relationship_management

Kaplan R. – Norton D. Strategy Maps. HBS Press, 2004

Motivating People. Special Issue of Harvard Business Review. January 2003.

Schindler, A. E., 5 Secrets of Good Customer Service. Retrieved on January 10, 2006 from: http://sbinfocanada.about.com/cs/marketing/a/custserviceas.htm)