Even today too many organisations still view customer service primarily as a cost centre.
For them, it’s a necessary evil where the aim is to provide a minimum acceptable level of service at the lowest possible cost.
Moreover, they invest with an unrelenting focus on efficiency and cost savings.
And yet, companies that are too focused on cost containment can actually put themselves at a competitive disadvantage.
That’s because cost constraints inevitably place limits on the quality of customer care that an organisation can provide.
The latest Zendesk CX Trends survey reports that:
“76% of customers say they would switch to a company’s competitor due to multiple bad customer service experiences”Zendesk CX Trends Report 2022
Moreover, BCG research demonstrates that companies with the highest customer satisfaction scores generate twice as much shareholder value as those with average scores.
Clearly, running customer service as a cost centre risks delivering a poor customer experience that ultimately erodes trust, damages the brand, and stifles revenue growth.
Customer experience (CX) is the key to creating lasting competitive advantage
As long ago as 2017, the Gartner Customer Experience in Marketing Survey found that more than two-thirds of companies were competing mainly on the basis of CX.
Moreover, 81% of respondents said they expected to be competing primarily or completely on the basis of CX within 2 years.
A similar message emerged in 2018 from Salesforce’s “State of Service” report
Importantly, it reinforced the growing importance of customer service in achieving overall business goals.
At that time, a massive 82% of service decision-makers stated their company’s customer service had to transform in order to stay competitive.
Leap forward to today, and there is little doubt that:
“Companies of all sizes – regardless of industry sector – view customer service as the means to deliver exceptional customer experience and gain lasting competitive advantage”
In fact, the 2022 Zendesk CX Trends survey reveals that:
• 73% of business leaders say there’s a direct link between customer service and business performance
• 72% of business leaders say customer service is a critical business priority
• 64% of business leaders say that customer service has a positive impact on their company’s growth
However, there still remains a gap between the rhetoric of what leaders say about customer service and the reality of the service that customers actually experience.
Improving customer service is a long-term journey that consists of these 5 steps:
Step 1 – Shift the leadership mindset
From customer service being viewed as a pure cost centre to being regarded as an essential investment in the future growth of the business.
After all, investing in the customer experience enables companies to create better products and services and to drive revenue.
Step 2 – Develop a culture of customer-centricity
As with step 1, step 2 is not an overnight transformation.
As Mike Ball from Forrester points out:
“The path to transformative customer engagement is a series of small, cost-effective steps that add up to a significantly better customer experience, each with its own solid ROI and benefit to the bottom line”Mike Ball – Forrester
Step 3 – Invest in the systems, processes, and tools
1. Digital transformation
2. AI-assisted operations
3. Agile working practices
However, it’s important to note that companies making these investments do so not to only reduce costs but also to better serve customers.
Step 4 – Re-engineer customer journeys
Rising customer expectations, digital technology, and flexible working patterns have ushered in a new era of always-on omnichannel customer service.
As a result, companies are having to re-engineer customer journeys to ensure customers achieve their goals seamlessly at a time of their choosing and in their preferred communication channel.
Step 5 – Empower service agents
Enlightened organisations are freeing front staff from the shackles of rigid scripts and counterproductive KPIs.
At the same time, they’re upskilling service agents to enable them to become trusted advisors.
Importantly, performance monitoring is also evolving to reflect customer engagement measures such as Net Promoter Score (NPS) and Customer Effort Score (CES).
How to use customer service to gain a competitive edge
Customers are the lifeblood of every business.
Poor quality customer support causes companies to haemorrhage through costly rework activities and lost revenue opportunities. Ultimately, losing employees and customers through high churn.
In contrast, high-quality customer care is the heartbeat of a vibrant, healthy, and fit-for-future organisation.
By choosing customer experience over cost control, companies open themselves up to their greatest source of learning: the genuine voice of the customer.
Of course, these days the conduit for the voice of the customer is not the marketing department or the sales team.
Rather, it’s the customer service function that listens to and communicates the wants, needs, and emotions of customers.
Crucially, by acting on the voice of the customer, organisations gain an invaluable shortcut to the information that they need to further develop their business.
For example, how to:
- Improve customer journeys
- Design better products
- Introduce complementary services
- Reward customer loyalty
All of which build greater brand advocacy and a higher customer lifetime value.
These are two of the essential elements of enduring competitive advantage.
Of course, they take time to build, are hard-won, and are not easy to replicate.
Summary – The future of customer service is bright
Increasingly, customer service is emerging from the tyranny of tight cost control.
Moreover, the pandemic has forced companies to prioritise customer retention over customer acquisition as the driver for long-term growth.
Importantly, this is fuelling investments into new technology and more agile ways of working to satisfy rapidly evolving customer needs.
Those companies that have made the mindset shift from cost centre to competitive advantage are already reaping the rewards in terms of higher customer satisfaction and a stronger bottom line.
Thank you for taking the time to read this article.
Are you working to transform your service operations from a cost centre to a value centre?
If so, Chris Dunn Consulting has the real-world experience to help you achieve your own unique competitive advantage.