Out of Service

“If You Think Customer Service Stinks Now, Brace Yourself,” cautioned the headline of a press release that landed on my desk recently. Apparently, we are now to take for granted that customer service can’t be anything but deplorable, and the business of prescribing remedies for it has become a lucrative one. Books — including the one touted in the aforementioned press release — on the subject have proliferated, as have consultants who recommend everything from CRM to loyalty programs to e-mail blitzes. But the problem is complex, involving a variety of financial, personnel, and technical issues. “My perception is that 50%-60% of the call center industry does not meet its service level objective, such as percentage of calls answered in ‘X’ seconds,” says a senior customer service executive. He advocates a service enhancement strategy consisting of accurate forecasts, flexible staffing, and efficient call overflow allocation. Another customer service expert, AMR Research analyst Kevin Scott, points out the strong connection between technology and service quality, noting that “when you take the technology out of the equation, you can’t measure the service.” Therefore, he cautions, don’t offer services if you don’t have the technology or can’t handle it well enough to provide them properly. “If you can’t respond to e-mail, for instance, you’re better off not giving people that option.”

Customer dissatisfaction results largely from shopping experiences that don’t live up to the claims retailers make. The key finding of Operations & Fulfillment‘s survey of CRM and customer service is that for a combination of reasons, many merchants seem unable to carry out what they promise customers. The primary deficiencies we found, discussed below, apply to the entire sample we surveyed; regardless of company size, the results are surprisingly uniform.


Of the 158 respondents to our survey, 69.6% said that the statement “We go out of our way to serve customers” best described their company’s customer service philosophy. (An outspoken 10.8% hesitated to go that far, claiming only to provide “basic, no-frills customer service.”) Whether they actually do so is debatable: 27.2% of the total respondents do not formally measure customer service, and a startling 57.4% of the small firms neglect to do so. Among the respondents who assess service levels, traditional customer satisfaction surveys are most common (71.2%), followed by evaluation of return and cancellation rates (46.8%) and service calls and letters as a percentage of shipments (37.8%).


Considering that almost every responding company has multiple points of contact with the customer, it is notable that the number of avenues for understanding what that customer wants are mostly limited to telephone, fax, e-mail, and postal mail. Nearly 40% of the respondents have no plans to set up customer focus groups or install Web chat, callback, or voice-over IP technology. Chat, in particular, has proven highly effective as a customer-pleasing measure: In a recent study, Forrester Research Inc. heralded it as one of the most promising contact center technologies of the future, forecasting strong growth in chat-for-service users, from 11 million last year to 67.1 million in 2007. According to Forrester, the contact center managers who used chat reported extreme satisfaction with it, citing increased efficiency and higher order size. Only slightly more than a fifth of our respondents, however, have any plans to invest in Web chat applications.


An overwhelming 69% of our respondents train new customer service agents for a maximum of four weeks. Given the multichannel functions that most fulfillment operations need to perform, even an entry-level hire would need to master e-mail, Web chat, telephone skills, and complaint resolution capabilities in one month or less — a virtually impossible task. And not only is CSR training truncated, it is also highly conventional: The most common method is on-the-job instruction, which 86.1% of our respondents employ. Training by supervisors (73.4%), peer mentoring (62%), and on-site classroom instruction (58.9%) are also popular, but leading-edge techniques like computer-based training (27.8%) and self-guided learning (26.6%), which can enhance and reinforce classroom lessons, are less widespread. Other intriguing methods include video and intranet workshops and open houses, but only 3.2% of the respondents mentioned these choices.


A considerable portion of respondents either didn’t answer or didn’t know the answer to questions pertaining to operational finances. The “No answer” category, fairly small in most areas, totaled 27.2% for a question about contact center operations budget allocations. Likewise, questions about customer relationship management drew blanks: 10.9% did not answer the question, “What is your total CRM budget?” and 6.5% responded “Don’t know/not sure.” Of the 70.3% of respondents whose companies have installed CRM technology, 29.7% didn’t know or were not sure when they planned to implement it, and 10.8% did not answer the question. It may well be that inadequate access to financial information across the enterprise — a recurring theme at many logistics conference sessions in the past year — is one of the major obstacles blocking the growth of investment in CRM and other technologies. Money does not seem to be much of an issue: Of the 29.1% of respondents who have implemented CRM, nearly a third are working with a budget of $100,000 or more.


Nearly 75 percent of our respondents view CRM’s main objective as helping to “resolve customer service issues more efficiently”; only 38.6% see one of its important functions as helping to “integrate and automate all business processes.” Over a third of respondents think that CRM will save them money by cutting customer service costs. But an in-depth analysis of CRM would reveal that each of these functions of a CRM system is part of a complex program that analyzes customer demand, behavior, data, and transactions; links databases; monitors e-commerce operations; and integrates systems across the business. The respondents with CRM programs seem to understand the importance of these capabilities — 60.9% have deployed systems that offer business intelligence tools, user-defined reporting, and Web-based self-service; 58.7% own systems that manage marketing campaigns; and 56.5% boast personalization features. CRM users also have contact center scripting (52.2%), sales activity management (45.7%), workflow management (39.1%), and server-to-server database synchronization (39.1%). CRM technologies obviously go far beyond serving the customer, but retailers have yet to understand the full extent of their benefits.

Rama Ramaswami is editorial director of O+F.

Contact Points

Currently Offer Plan to Offer No Plans to Offer No Answer
Telephone 96.8 0.6 0.6 1.9
Fax 96.8 0.6 1.3 1.3
E-mail 91.1 5.1 0.6 3.2
Postal mail 86.7 1.9 3.2 8.2
Direct sales 60.8 4.4 15.2 19.6
Events/trade shows 57.0 10.8 17.1 15.2
In-store contact 34.2 1.3 36.7 27.8
Focus groups 19.6 9.5 41.1 29.7
Web chat 14.6 22.8 37.3 25.3
Web callback 10.8 20.9 39.9 28.5
Voice-over IP 4.4 20.9 41.1 33.5

QVC’s Service Principles

If you think about interactive retailer QVC, what first comes to mind? Numbers. With nearly $4 billion in sales ($285 million of that from e-commerce), 92 million packages shipped, and 133 million phone calls answered last year, as well as daily live broadcasts to 84 million households in the U.S. and over 40 million overseas, QVC is big business — very, very big business.

For the QVC customer, however, the shopping experience is highly personal, and apparently so satisfactory that 40,000 new shoppers come on board each week. Repeat purchases average 44%, and the typical shopper visits the QVC online store 3.5 times a week. QVC’s four U.S. call centers employ about 4,000 reps and handle 120 million calls annually; Germany, Japan, and the U.K. each have a call center as well. Customer service gets high marks from both shoppers and industry analysts.

How does QVC do it? “One of the things that makes us unique is our culture,” says Gary Ormont, QVC’s vice president of operations. “Customer service is only as good as those who deliver it. We’re really employee-sensitive. Our people interact on a first-name basis, and we have constant teamwork, communication, and numerous roundtables and forum meetings at which we discuss issues and trends.”

In addition to a formal training program, which includes five days of classroom instruction and five days of floor training for new hires, service reps receive extensive guidance during their first two or three months on the job. Cross-training in phone, e-mail, live chat, and order entry skills, along with opportunities for internal promotions, limit burnout and keep turnover to 22%, according to Ormont.

Except for its chat program, all of QVC’s call center systems are home-grown. Recently, two of the U.S. facilities were revamped to include intuitive systems that provide scripts and tips for CSRs. Says Ormont: “There are a lot of things we’re doing proactively from a systems standpoint. Our reps are encouraged to take ownership of the call.” He points to a feature called Member Update, which offers unique information to QVC members who call customer service reps with queries.

Measurement also ranks high on Ormont’s list of techniques for service excellence: “We measure all of our interactions and strive for one-call resolutions.” Repeat calls, he says, have dropped to 3% from 15%. QVC monitors customer satisfaction constantly — the vast array of measurement tools includes monthly surveys, focus groups, special online focus groups, live chat exit surveys (hundreds are conducted daily), an annual customer satisfaction survey, and internal assessment of agents by monitoring a sampling of calls. The latter involves evaluation of 33 different elements, on which QVC provides feedback and training. Ormont adds that what makes these measurements so useful is that they explore qualitative as well as quantitative criteria: “It’s not only whether we gave you accurate information. What about the voice tone? Did we use too much jargon? We compare our own measurements with those of our customers. Did we monitor correctly?”— RR


On Oct. 4, 2002, Primedia Business Marketing Research mailed cover letters and two-page questionnaires (each containing 17 questions) to 1,000 domestic O+F subscribers selected by operations, call center, customer service, and corporate management job functions on an nth name basis. A $1 incentive was included in the mailing. By Nov. 4, 158 usable surveys were received, for a response rate of 16.1%. Means and medians were calculated according to standard statistical practices. Results were reported in three categories: companies with annual sales under $10 million, between $10 million and $49.9 million, and $50 million or more.