Why Service Initiatives Fail

Feb 15, 2006 9:02 PM  By

Companies everywhere are struggling with the dynamics of how to profitably grow their business in a changing economy. Customers continue to demand exceptional service even when sales and profitability are declining. Employees are disgruntled, and shareholders are dismayed. Management is searching for the key to success and finding that all roads seem to lead to customer service.

Companies are buying customer relationship management (CRM) technology—total CRM application investment exceeds $1.5 billion per quarter–but still failing to improve their customer service. Research firm Gartner recently conducted a series of surveys and found that 42% of the companies that purchased CRM technology were not using the applications. What’s more, over 50% of the applications that were being used were considered failures from the customer’s point of view. Failure reasons include:

* Customer service initiatives treat the symptoms instead of the disease. They provide tools and procedures for managing customer complaints instead of identifying and eliminating the source of the complaints. Service should start with product development and continue through every aspect of the business. If a customer is communicating with customer service, then the company has failed that customer.

* Resolutions are being applied before problems are fully defined. Finding the source of a problem requires experience and diligence. Many companies do not have inhouse resources with the expertise or time to determine the problem’s point of origin. They often make capital expenditures when a change in procedure or policy would resolve the issue.

* Management underestimates the time, cost, and commitment involved in CRM implementation. Companies often expect new technology to be “plug and play.” CRM technology requires extensive system modification, training, or both. It is a major project that requires extensive resources.

* Service initiatives are designed from the company’s perspective instead of customers’ expectations. This results in unbalanced service; some expectations are exceeded, while others are unfulfilled.

Companies need to create a corporate environment that inspires management, motivates employees, builds customer loyalty, and generates profits. They must replace clichés such as “the customer is always right” with mission statements, policies, and procedures that equally champion customers, employees, and shareholders.

Every company has its own personality and perspectives, which must be reflected in the corporate culture. The steps are simple:

  • Develop a mission statement.
  • Review every policy and procedure to ensure that it matches the mission statement and has a valid function within the organization.
  • Modify or eliminate any policy or procedures that require change.
  • Identify any issues that are not resolved by the modified infrastructure.
  • Review resources to choose solutions to the unresolved issues.
  • Implement the new solutions.
  • Monitor the progress, revising as needed.

Implementation is not so simple. Plan carefully, communicate thoroughly, expect resistance, and be flexible.

Debra Ellis is a principal at Barnardsville, NC-based operations consultancy Wilson & Ellis Consulting. She is also one of the faculty of MCM Live, a two-day event from MULTICHANNEL MERCHANT magazine that will show you the whys and hows of implementing a multichannel strategy that’s right for your business. MCM Live will be hitting Chicago on March 16-17, New York on June 1-2, and San Francisco on Oct. 5-6. For the complete agenda and more information, visit www.mcmlive.com.