Closing the Loop in Closed Loop Customer Feedback

In This Issue

• Closing the Loop in Closed Loop Customer Feedback
• Metrics are Less Important than Process

Closing the Loop in Closed Loop Customer Feedback

Closed Loop is a popular buzzword for customer feedback programs today. It means implementing a formal process whereby customer feedback is used to drive change in the company in order to improve customer feedback.

This kind of cycle is a powerful tool--in fact, I would argue that it's pretty much the only way to build an effective and useful customer feedback process. After all, if the customer feedback isn't being used to drive change in the company, then what's it good for?

But most advocates of a closed loop process aren't really closing the loop. That's because most supposedly closed loop customer feedback processes don't formally consider the customer survey as part of the "loop" to be "closed." In other words, the company never reconsiders whether the survey is asking the right questions of the right people. It is just assumed that the survey should keep doing the same thing no matter what.

In fact, some of the proponents of closed loop processes actually advocate for very rigid and inflexible customer surveys: specific questions, with very particular sampling methods, applied in exactly the same way for every company.

That kind of rigidity (proponents would call it "consistency") is important for cross-company and cross-industry benchmarking, but it's not very helpful when trying to improve a particular customer experience at a particular company. It even sounds a little crazy to suggest that the customer survey which will yield useful, actionable feedback from a customer logging on to a bank website is the exact same customer survey which gives useful, actionable feedback from a customer buying a used car.

Instead, the customer survey itself needs to be part of the closed loop process. As companies examine their feedback they should constantly be asking questions like:

• Are we asking the right questions?
• Are we targeting the right customers for the survey?
• Is this survey yielding useful data?
• Are there issues we should be exploring in more depth on the survey?
• Are the right people getting the right data from the survey to make the best use of it?

The questions to ask, customers to talk to, and how to use the survey data will all change constantly as the company and its business environment evolves. The survey which works today isn't likely to be optimal a year from now, and five years from now it may seem close to irrelevant.

So when you build your closed loop customer feedback process, remember that the customer feedback also needs to change with the company.

Metrics are Less Important than Process

I see a lot of people spend a lot of time and effort making sure they focus on the "right" metric in their customer feedback program. Net promoter? Customer Satisfaction? Customer Effort? Something else? All of the above?

There's often a lot less thought going into what to do with the survey data: who should get it, how often, how will it be used, how will people be coached and compensated, how will you follow up with customers, and so forth.

This is a big mistake, since most of the value of a successful customer feedback program comes from all the things that happen after the data is collected. In my not-very-scientific estimation, I would say that 75% of the value is in the process, with only 25% from the metrics.

I could be wrong, though: I would believe that as much as 90% of the value is in the process.

Even a mediocre metric is going to allow a lot of improvement in a well-designed closed-loop feedback process. But no metric, no matter how good, is going to drive change if there's no follow-through.

So why so much attention to the metric, and not everything else?

I think it's because deciding what metrics to include on a customer survey feels important but doesn't require much hard work. Everyone can advocate for their favorite survey questions, there can be a lively discussion, and an executive can weigh in to break the tie. You get to feel like you had a productive day.

But getting everything else right takes a lot more time, effort, and attention. A successful customer feedback program needs to be actively managed, it requires ongoing executive attention and support, and it requires constant tweaking to adjust to the changing dynamics of the business. You can't just throw money at it.

Most people think that the scarcest resource at most companies is money. That's often true in small companies, but most large companies have plenty of money to invest in the things they think are most important. In big companies, often the hardest resource to obtain is attention--especially executive attention.

So it's easier to pretend that the customer feedback program doesn't need any ongoing attention, that you can make the big decisions once and be done with them.

But that's not a recipe for success. Success requires focusing on the rest of the customer feedback process, and making it an ongoing priority. That's hard. And that's why people spend so much time worrying about the metric.

2012 NCSS Data Released

In This Issue

• NCSS Results for Mobile Phones (2012)
• NCSS Results for Banks (2012)

NCSS Results for Mobile Phones (2012)

Download Executive Summary

We released the latest results for the National Customer Service Survey (NCSS) on Mobile Phone Customer Service this month. We have been interviewing customers of AT&T, Sprint, T-Mobile, and Verizon immediately after a customer service call since mid-2009. This report is based on 9,195 interviews of customers of the four companies over that period.

The most dramatic change in 2012 from 2011 is the significant improvement in the customer service metrics at Verizon. The company gained ten points in overall call satisfaction over the past year, as well as significant improvements in IVR satisfaction, call resolution, and ease of reaching a person.

Historically in our survey, Verizon has consistently posted the top scores for agent satisfaction, while underperforming on IVR satisfaction and ease of reaching a person. With this position, it makes sense for Verizon to improve its IVR to make it easier for customers to reach an agent when needed. This plays to the company's strength of having the best customer service representatives in the industry.

We also saw a continuation of T-Mobile's gradual drop in customer service-related metrics in 2012, with call satisfaction dropping, and customers in our survey reporting that it was harder to reach a person and they had to jump through more hoops to get what they needed on the call.

Sprint's business metrics have been on a gradual upward trend since 2009, and that continued into 2012; however, the company's customer service related scores have not changed significantly in our survey in 2012 as compared to 2011. In our executive summary we take a closer look at the ups and downs of Sprint's customer service over the past several years.

NCSS Results for Banks (2012)

Download Executive Summary

We also released NCSS results for Banks, covering 2011 to 2012. We began collecting customer interviews about Bank of America, Chase, Citi, and Wells Fargo in April 2011, and this report is based on 2,980 interviews collected during the period from April 2011 through December 2012.

Over the past year we observed a general improvement in our survey scores across the industry. None of our nine key metrics dropped by more than one percentage point at any of the four companies. Chase and Citi posted the largest improvements, while scores at Bank of America and Wells Fargo increased by a more modest amount. Since Bank of America and Wells Fargo were ahead on customer service in 2011, the net effect of this was to tighten the race for best service.

Customer authentication in the automated part of the call is a pain point for many of the customers we interviewed in our survey. At each of the four companies, between 2.1% and 4.3% of all customers reported that they had a problem getting past the point in the call where the IVR asked them for an account number or PIN. This represents a surprisingly large percentage of the overall call volume, and since we don't specifically ask about authentication problems, it's likely a lot of customers are having problems who didn't report them on our survey.

What's more, many of the problems customers reported should have been anticipated. We saw many customers calling to report lost or stolen cards who were asked to enter their account numbers--a situation where it's reasonable to expect that the customer might not have an account number handy. We even had one report of a frustrated customer who was asked to enter an account number just to get the hours of the local bank branch.

I applaud the improvements the banking industry made in 2012, especially given than banks do not, in general, have a reputation for stellar service. There is still a lot more room for improvement, and a lot of it boils down to paying careful attention to what customers want and the best way to serve them.

In This Issue

• Service Recovery Done Wrong
• Silos vs. Service

Two Stories

Every company makes mistakes, and what often drives a company's reputation for good or bad service is how it handles the mistakes and weird situations. Were employees empowered to fix the problem, maybe even bend the rules a bit? Or did they fall back on process and bureaucracy, frustrating the customer's attempts to find a way to fix the problem?

This month, we're sharing two stories of what happens when customer service processes break down.

Service Recovery Done Wrong

by Peter Leppik, CEO

"Service Recovery" is the fancy term for making things right when they go wrong. It's a powerful tool for improving brand loyalty when done right, but done wrong it can backfire.

I recently traveled to Las Vegas for a conference. I stayed at the conference hotel, the New York New York--not the swankest place in Vegas by any stretch, but certainbly a respectable hotel for a business traveler.

There was only one problem: by the time I arrived at midnight, the hotel was out of nonsmoking rooms in the room type I had reserved. I'm not a very demanding business traveler: I really only insist on two things. Basic cleanliness and a nonsmoking room. In the year 2012 in the United States, these are things every traveler should expect at any hotel.

Normally this is not a problem. I've had this happen to me dozens of times over the years, and the hotel upgrades me to whatever nonsmoking room is still available. But apparently this is not the policy at the New York New York: they made me pay for an upgrade to a fancy suite as the only way to have me and all my belongings not smell like smoke in the morning. The check-in agent offered no other options (or even much sympathy), so I grudgingly paid for the upgrade.

By this point in my customer experience the hotel had earned a black mark in my book. I don't care so much about the dollars, but I do care that they don't consider a nonsmoking room important for guests who want one. Since a nonsmoking room is very important to me, that's reason enough not to go back. But as a customer I'm still recoverable, if the hotel recognizes its mistake and makes amends.

So the next morning I related my story to one of the conference organizers and several other attendees. The conference organizer passed this along to the hotel management, and the next day I got a call from one of the guest relations people.

Now we are in the Service Recovery phase. The hotel knows they have an unhappy customer and they are reaching out to me to try to make it right. Research as shown that taking care of a customer's problem properly will actually make a more loyal customer, but not taking care of a problem will lead to a disloyal customer likely to spread negative word-of-mouth. So it's important to do this right, and convert that upset customer into a brand advocate.

The representative from the hotel was very polite, listened to my problem, agreed that I should not have had to pay extra just to get a nonsmoking room. And then she offered to refund one night of the two-night upgrade fee.

Wait, what?

If she agreed that this should not have happened, then why is the hotel only offering to fix half the mistake?

The issue in my mind was never the money so much as the fact that a nonsmoking room is, for me, a basic amenity like clean sheets. From the hotel's response, I can only conclude that my initial conclusion--that they don't think a nonsmoking room is all that important--was correct.

So rather than convince me to return, the hotel actually reinforced my initial negative impression. And like the good Detractor that I am, I am telling everyone--including you, my reader--the same thing: If you care about getting a nonsmoking room, don't stay at the New York New York. Because they don't care, and their actions speak very loudly.

And that is how you do service recovery the wrong way.

Silos vs. Service

by David Leppik, VP of Software Development

Customer service isn't something you can master and then forget:  it takes constant vigilance. In our research, we've found that Sprint went from being the worst cell phone company in customer service to being the best—only to drop back down to the worst position again. And I think my story illustrates what I think is going wrong.

I recently got an iPhone 5, but it took far more effort than it should have. My order was blocked by Sprint right before it was going to ship, I spent an hour and a half on the phone with Apple and Sprint customer service, and nobody knew what had gone wrong.

Here's what I think happened: Apple's computers were doing a final, pre-shipment confirmation of my order with Sprint.  Something went wrong. Sprint blocked my order without any indication of why. A person from Apple called me to let me know what had happened (they didn't want me to get the bad news via email) and that I should call Sprint. The Apple rep explained that since the problem might be something like a late payment, Apple wasn't getting involved.

So Sprint made a mistake, and mistakes like this happen.  But what really made it bad is how Sprint handled it.

Sprint's front-end customer service staff were friendly and even enthusiastic about helping me. But because I bought my phone through Apple, my support requests are required to go through Sprint's National Sales Support Desk—and only their channel partners are allowed to speak to that Desk. Or as the Desk rep told the Apple rep, "we can only validate through a store."

The problem was eventually solved by an Apple rep calling an Apple Store employee, who called Sprint's Support Desk. The Support Desk verified that there was no reason for my order to be blocked, and assured me (over a muffled, echoey chain of phone lines) that the next order would not be blocked.  Apple offered to expedite my next order, but I needed to wait 24 hours for the cancelation to go through, so that Sprint wouldn't block the new order as a duplicate.

What should have happened is this:  the first rep I talked to—or her manager—should have been allowed to talk to the National Sales Support Desk. They would have confirmed that my order block was a mistake and then consulted with Apple on how to proceed. This should have taken just a few minutes.

I'm sure there's some good reason why that Desk is kept separate, but there should be some allowance for customer service emergencies. Yet even when everyone involved was able to verify that a loyal customer was being treated wrong, corporate procedure took precedence over doing the right thing.

Every system breaks down from time to time. Courts convict the wrong person. Wars and natural disasters break normal channels of communication. So every bureaucracy tolerates broken rules sometimes. The National Sales Support Desk wouldn't have needed to go through proper channels to respond to their building burning down. And my guess is, when Sprint was at their best at customer service, they would have found a way to do the right thing.

That's what makes great customer service hard. Sometimes you need to bend the rules in the service of the customer. Especially when the rules don't make sense under the circumstances. In the absence of a top-down customer service mandate, bureaucracy takes over. And it can happen incredibly fast.

At Vocalabs, we know from empirical evidence that what matters in customer service is actually serving the customer. Not by being friendly or following etiquette procedures, but by finding a way to help. Apple didn't have a procedure for re-enabling my order, so I had to place a new order. But I didn't mind (much) because they made it clear that they would do whatever it took to fix my problem. Sprint made it equally clear that my problem wasn't their problem.

In This Issue

• Credit Card Complaint Data from the CFPB
• ROI of Customer Feedback

Credit Card Complaint Data from the CFPB

Recently the Consumer Financial Protection Bureau (CFPB) started publishing a data set of consumer complaints about credit cards. As this data complements Vocalabs' National Customer Service Survey data on customer service at major banks, we are republishing the CFPB data as a set of dashboards and reports comparing different companies' credit card complaints in several key metrics. These reports and dashboards will be updated as new CFPB data becomes available.

We have created three graphical dashboards comparing companies' performance on key metrics. The dashboards show graphs for the eight companies with the most complaints in the database (as of September 2012), and we also have interactive tables with complete data for all companies.

• Timely Responses: Shows how often customers received a timely response to their complaints about different companies. View Dashboard | View Table

• Customer Disputed Resolution: Compares the percentage of complaints where customers disputed the resolution offered by their bank. View Dashboard | View Table
• Monetary Resolution: Shows how often customer complaints resulted in the bank paying the customer money in order to resolve the complaint. View Dashboard | View Table

We are also providing other data and metrics in an interactive table format, allowing anyone interested to build their own views of the report and export the data as a spreadsheet. We have pre-built a few tables you can use as starting points:

• Complaint Metrics by Company: All three of the metrics in the dashboards above, included in a single table for convenience.
• Complaint Metrics by Complaint Type: The three metrics in the dashboards, calculated by type of complaint.
• Types of Complaint by Company: The major types of complaints, calculated by company.

We hope you find this a useful tool for better understanding this data set. Please let us know if you have any suggestions for improvements.

ROI of Customer Feedback

The return on investment of a good customer feedback program is more complicated to quantify than, for example, a new speech recognition system or more efficient contact center scheduling.

The ROI comes from a lot of sources. Some of these are hard dollars, and others are squishier:

1. The easiest return to quantify comes from finding and fixing broken processes and systems. It's common to find policies which can be streamlined, self-service processes which make no sense to the customer, and even systems which are outright broken. These cost hard dollars, and customers are usually very happy to tell you about them.
2. It's also easy to quantify the value of better decision-making. A good customer feedback program will give hard data about the customer impact of spending money on different parts of the service experience. For example, how much will customer satisfaction and loyalty improve by streamlining an IVR, and is it worth the money? Without the data, you have to take the vendor's word.
3. Better service leads to a strong improvement in customer loyalty. Our NCSS data consistently shows a 40-45 percentage point gain in customer loyalty among customers who report excellent customer service as compared to those whose service was mediocre or poor. Measuring the quality of the customer service experience is a critical piece in delivering outstanding service.
4. A strong customer feedback program is also a powerful training tool. People respond powerfully to hearing immediate feedback from real customers, and that means measurable improvements in service levels and less time spent in coaching or remediation.
5. The hardest return to quantify, but perhaps the largest, comes in brand image. Many companies (I won't name any but you can probably think of a few names) have seen hundreds of millions of dollars in marketing and brand equity destroyed when the company gets a bad reputation online because of poor service, missteps, and neglecting the basics of taking care of customers.