Donna
Siegel

Customer Retention Through Better Customer Service

For most types of business, customers who have purchased from us previously represent a substantial source of new revenue. So, in the face of aggressive competition, customer retention becomes a daily concern. This case study describes how one company, under heavy competitive pressure, grew its sales through a program of Customer Retention Through Better Customer Service. 

Background

In the early 60s, Bill Best found a marketing opportunity in South Florida to sell contracts for home appliance services and repairs. South Florida had a significant population of part-time residents who did not want to spend their time going through the arduous steps of contacting the various appliance manufacturers for service. A contract made such service calls much easier. The resulting company, Best Services (not the company's real name), quickly grew and established itself as a leader in the area.

As is common when someone comes up with a good idea, others followed. With competition came greater requirements for service as well as more price sensitivity from customers. Some competitors were willing to buy their way into the market with very low introductory prices.

The Problem: Customer Retention

Since Best was not willing to compete on price, another approach was necessary to add new customers while retaining current ones. After exploring a number of options, the strategy was adopted to focus on providing the customer with high quality service. In this business, high quality service had two aspects - the helpfulness of the person who took the call for service and the efficiency of the repairs by the field service people.

When appliances stopped working, customers would call the company on their 800 line to request a visit by a technician who could repair the problem. It was the job of the customer service people who took the calls to determine the nature of the problem, check the schedule of available technicians who could fix the specific type of problem, and set up an appointment. By letting the technicians know in advance the type of problem to expect, the technicians could make sure they took the right tools and parts with them on the call.

Then the technicians would go out to the residents, determine the exact nature of the problem, and make the repair on the spot. If it was not possible to make the repair immediately, they would arrange a second visit. And if the problem was too significant to repair, they would arrange for a replacement appliance to be installed.

While customers seemed satisfied with the quality of work of the technicians, they were less pleased with the customer service reps who took their requests for help. The problem was that the representatives appeared to be not very responsive to the customers. Frankly, some of the callers brought this on themselves; they did not treat the customer service reps very well and were apt to get pushy and cranky if they didn't get attention to their problem this minute. They would yell, scream and swear at the customer service reps, demanding immediate service.

And Best's customer service reps thought the customers were being unfair: too demanding. In their minds, they and Best Services were going out of their way to help the customers; their efforts were just not appreciated. They resented the rough treatment and what they felt was undue criticism of the technicians and the company.

Part of the problem was the nature of the business. Certain events or conditions caused the number of calls to go up significantly so that there were more requests for service than people or equipment to handle these requests. The start of the winter season in Florida brings a flood of northerners all at the same time. Malfunctions, which occurred over the summer months from lack of use, would all seem to appear at the same time. Extreme changes in weather would bring out a huge demand for air conditioning repairs or heating system calls. At times like these, requests for technicians would get backed up. A request for service, which under ordinary conditions might be responded to in 24 hours, might require 2 or 3 days.

Clearly, if Best Services was to retain its current customers and continue to grow, the customer service representatives had to do a better job of handling service requests.

What Was Done To Find The Sources Of The Problem

Best's sales and service directors began a thorough investigation of the initial requests for services to try to determine the most significant factors that left customers with negative impressions. All aspects of the system were investigated:

• The automatic call distributor which handled the incoming calls was examined to see if people had to wait too long before they could talk to a representative.
  
  
• The computer systems that supported the customer service representatives were reviewed for their ease of use while on the phone with customers.
  
  

• Finally, the conversation flow between reps and callers were monitored to see if a pattern would emerge as to what was undermining the reps' genuine interesting in helping customers.

The investigation led to some unexpected conclusions. Here is what they found:

People who were calling to request service were not waiting very long at all. Many of the calls were answered right away; most calls were answered by a rep within 2 minutes and almost all within 10 minutes. In comparison with other types of phone centers, these were good numbers. What's more, Best had invested in good on-line messages, so callers had something interesting to listen to if they had to wait for a rep.

There were programs within the computer system to handle all of the information needs of the customer service reps during these customer calls. However, the data was organized to serve reports and other functions of the company. So reps had to go to the customer information part of the data to verify the caller had a current contract. They would then have to wait while the computer was storing this information before they could enter a description of the type of appliance problem and some of the pertinent details. Then they would have to wait again before they could schedule an appointment for a technician to come out to diagnose and fix the problem. A lot of time was being used up simply waiting for the computer.

In order to cut down the amount of time to move from one part of the computer program to another, the customer service reps had gotten into the habit of directing the conversation according to the flow of the computer screens. Since this conversation flow was different from the expectations of callers, people were getting themselves frustrated. Then, if it also turned out that they could not get service within 24 hours, their frustration would turn to anger.

While there were several areas for improvement uncovered, the greatest benefit would clearly come from reshaping the conversation flow.

What Was Done To Address The Problem

Reshaping the conversation flow required two tasks:

• Defining a more effective flow to the conversation.
  
  
• Training the reps in this new flow.

Defining A More Effective Flow

To define a more effective conversation flow, it was necessary to determine what the customers really wanted from those calls. Where were the reps helping them and where were the reps frustrating them? The approach to find the best formula was testing. Using a couple of the best reps, the conversation flow was re-ordered and tested. After several attempts, the following conversation flow proved to be most effective:

1. Find out just enough about the caller to determine if this person has a valid contract with the company.
   
   
2. Help the caller work through the details of the problem.
   
   
3. Arrange for a service appointment if necessary.
   
   
4. Verify address and phone information of the caller.

Training The Reps

Next came the training of all the customer service reps on the new conversation flow. The training included lots of practice in simulated calls with all types of callers and all types of problems. It also included using their computer systems and other tools so they would know how to best use these during a conversation. Following the training, customer service managers continued to monitor their reps to ensure that they stayed with the new format.

The Results

Several changes were noted immediately. The number of frustrated or angry callers declined almost instantly. The reps noted the change in the overall tone from irritation to conversation; calls were now more like conversations they would have with associates or friends, even though they were requests for service.

This led to some changes in the reps. Since callers were now friendlier, the reps found them more enjoyable. This in turn made the reps relax more, which in turn improved the conversations. As the job improved, turnover and absenteeism started to go down.

The number of service appointments went down as well. In more cases, the customer service reps were able to talk callers through a series of steps to diagnose and sometimes fix the problem without requiring a service appointment.

And what about retention rate? As contracts came up for renewal, the higher satisfaction rate converted directly into more renewals.

How You Can Apply What We Learned

How well a company provides customer service has significant impact on its ability to sell its products or services, as well as its ability to retain current customers. While there are many factors affecting the quality of customer service, the flow of that initial request for service is paramount. To ensure that your company is making the most from your customer service contact with current and future customers, here are some things to do:

• Find out what your customers want from your service department. How do they like to tell their story? Where do they want input from the customer service rep?
  
  
• Redesign the flow of the conversation to mirror the needs of the caller.
  
  
• If needed, redesign computer screens or other tools to support the new conversation flow. If you can't redesign the tools, think about how reps can use a notebook to store information temporarily until the right screens come up.

SeaBird Associates Inc
3011 NE 7th Drive
Boca Raton, FL 33431
Phone: 561-750-9233
E-mail: Donna Siegel

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