Maximising return on investment from customer service

A holy grail of a customer service strategy has been to measure the ROI that can be achieved through delivering customer service.  Whilst measuring customer service ROI remains tantalisingly out of reach, following the Institute of Customer Service’s (ICS) research into this area it appears that definite strides are being taken towards it. However, as the ICS report ‘Return on investment in customer service – the bottom line report’ says, “there is no silver bullet”.

After all, customer service is not an exact science and therefore it is not surprising that, when dealing with customers, there is no mathematical formula guaranteeing results and no definitive way to measure the value of customer service. Having said that, the ICS research, conducted by Ashridge Management School, does use a series of case studies to illustrate how some companies are seeing the financial returns from being customer focused and are starting to be able to measure return from customer service. So what do companies see as crucial in being able to maximise their return from customer service?

The 153 interviews conducted within the ICS research highlighted that the focus for delivering customer service  was driven by employee aspects. Three out of the top seven criteria for ROI were employee based attributes:

  1. Training and development of staff in soft skills
  2. Selecting the right staff
  3. Empowering staff

[The perennial debate between whether good customer service starts with recruiting customer orientated employees or whether training should be the focal point to develop the skills with the employee base remains.]

The top two criteria for ‘influencing’ customer service ROI were:

  1. Gaining an understanding from the customer viewpoint
  2. Gathering and acting upon customer feedback (the latter being a challenge that Customer Champions’ own research over the years has highlighted on a regular basis)

There is a recognised concern that companies are comfortable with measuring what is simple to measure, such as operational metrics.  But in order to be able to measure the value of customer service there is an acceptance of the need to move towards measures that greater reflect what the customer is looking for out of the relationship. This would cover aspects such as emotional connection, such as trust, and customers’ perception of value offered. Customer Champions’ own work shows that the value of customer service can be captured through a Customer Value Management programme.

More corporate wide issues were also highlighted such as the positive impact of having an organisation wide vision on the importance of customer service and the value of customer service, and ensuring there is alignment between organisation priorities, the customer strategy and brand identity.

Overall the ICS research suggests that fully trained and empowered employees have a significant role to play in a company delivering a successful customer service strategy which in turn provides a positive customer service ROI for the business.

In our experience, there are other factors that should be considered when looking to identify the ROI of Customer Service:

  • What is the cost of not providing a positive customer experience?  What is the cost of dealing with a customers’ complaint, not only in terms of any direct financial compensation, or the cost of the employees’ time, but the knock-on impact of word of mouth dissatisfaction – made significantly more powerful with the continuing rise of social media?
  • How easy is the organisation to do business with?  With ever increasing competition and a decreasing amount of time available to consumers, they will choose to select businesses that are easy to deal with. From the business’s perspective the less efficient it is in dealing with customers the greater the cost to it and therefore the lower the ROI in that customer interface.
  • Do employee reward and recognition programmes that are aligned to their customer service have an impact? The John Lewis Partnership model is often quoted as providing excellent customer service, but what impact does that rare example of employee shareholding have on employee attitudes?

In our view the overriding factor for consumers will be trust: a high level of trust will result in a good customer service ROI. Consumers are increasingly promiscuous and as they change suppliers they will, through social media, increasingly influence the views of many others. The increasing use of technology in the interface with customers does support the consumer needing access to information where and when they want it, but without combining that effectively with the softer human interface is something being lost in the relationship?  Consumers have to trust a supplier to deliver against its promise. Whether that is providing the best price, a recommendation for somewhere to stay, being available when they are needed, or getting a response to an enquiry, all of these will influence the consumer’s level of trust and, subsequently provide a return on customer service.

Therefore it is a combination of the successful provision of technological developments and human interactions that will deliver trust, but it appears that according to the ICS report into ROI in  customer service, companies see the softer human issues as their primary route to a positive return. Are they in danger of not getting the balance with technology right and losing customers’ trust and ultimately their business?

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