Business systems (uk) ltd – annual conference 2010, jo causon


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Institute of Customer Service chief executive Jo Causon's presentation to the BusinessSystems annual conference. It explains how service fits into the UK's economy.

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  • Thank you XX for your kind introduction – and thank you for inviting me back again.
    Almost exactly 12 months ago I addressed this event.
    I had been with the Institute barely six months at the time and I talked about the challenges I saw facing organisations in providing top-class customer service.
    So it is timely that I share some of my views on those changes with you today. And how that landscape has changed in 12 months.
    But before I do that, let me tell you something about the Institute.
  • In case you don’t know what the Institute of Customer Service is or does, let me give you a brief overview.
    Organisations membership split approximately 70% from the private sector, 30% from the public and third sectors
    We work with these organisations to help them identify and capitalise on opportunities to deliver excellent customer service.
    Include some of best know brands - Virgin, first direct, BT, Vodafone, Waitrose, BMW, British Council etc. Many large government department, local authorities and other organisations such as police forces, NHS hospital trusts.
  • It is clear to me - and has been for some time - that we are experiencing a ‘renaissance’ of customer service
    Talking to CEO’s clear that what was once an isolated issue is now moving increasingly onto their agenda and into the board room
    Why ?– recognition of it as a critical element of business performance
    Leads to greater efficiencies
    in private sector = greater profit
    – public sector = more for less – v. important in current economic climate
    But more than this it is as a result of the irrevocable change that is taking place between customer and supplier
    Changing technology
    Changing attitudes
    - basically means the customer holds the reins of power
    – need a new business model to accommodate it.
  • Looking across all sectors the organisations that deliver excellent customer service all have the same characteristics:
    Their people, process and systems are all geared around the customer
    This is borne out in our own research
  • Technology is enabling product and service development to take place at an unprecedented rate
    But –also means product and price differentiation are short lived
    Now have a multitude of channels where we have customer touch points. eg new buzz word converged retailing
    Challenge of consistent customer experience and delivery
    New customer behaviours – browse on the High St.–buy online or vice versa:
    order online collect in store etc.
    Changing relationships – the internet but particularly social media - open and instant feedback
  • Move away from product manager driven , mass marketing model – one way push
    78% of consumer say they trust peer recommendations on social media – only 18% trust advertising
    To customer-manager driven
    - engage individual customers or narrow segments
    building long term relationships
    Note: could promote new mag here via these comments
    Development of customer experience officers – board level – in the US a number of years – now beginning in UK e.g. Lloyds banking; Orange/T Mobile.
    Harvard Business Review estimate over 300+ Chief Customer Officers – up from 30 in 2003.
    Tesco managers spend one week a year working in store with customers as part of Tesco Week in Store (TWIST) programme
    Ronan Dunne ceo of O2 : customers behaviour ‘more chatty’ via social media – organisations need to respond
  • an organisation’s employees influence the behaviour and attitudes of customers, and it is customers who drive an organisation’s profitability through the purchase an use of its products.
    Organisations that have created a competitive advantage through innovation, technology, quality products, and pricing strategies, now view “customer service that exceeds expectations” as their key to success and quality service demands engaged employees.
    Behaviour of customer service sits at the heart of the customer experience of services.
  • Staggering cost of poor customer service
    Affects not just the organisation the consumer leaves –but also the one they join – who have to recoup costs of acquisition/ marketing etc
    One third is entirely lost . Over 90% of web transactions abandoned before the transaction completed
    Becoming more demanding/ greater expectations - younger generation are less loyal
    Biggest losers are financial services and utilities
  • Consumers are becoming more demanding - Why should this be the case ?
    Certainly we as consumers are more willing to complain
    Frequently impatient, intolerant –seeking solutions not barriers – and quickly
    More articulate, technically savvy and selective
    Generation Y: those born in early 1980’s to mid 90’s: joining the marketplace
    This young demographic’s demand is for more –not less- personalised and tailored services
    Often delivered through multiple service options face-to-face, mobile, web and on-demand
  • Also become more willing to compare experiences across sectors – and we share those experiences – share them more readily via technology
    More sceptical – increasing numbers of us believe that organisations don’t encourage complaints.
    Our research published in April shows:
    More than three quarters -77%- spread the word to three or more others, nearly half -48%- to five or more, and a fifth -20%- share their encounter with ten or more people.
    Over 60% of consumers painted the organisation involved in a purely negative light
    Don’t swap stories of bad customer service with friends and neighbours; they post their concerns and experiences on social media networks for millions to read.
    A customer now has the same impact as a newspaper reviewer.
    Our research shows that negative word of mouth is now what organisations need to tackle rather than complaints –
    If traditional customer satisfaction surveys are not redundant they are certainly less important –due to technology.
  • Recession has cleared away many of the organisations which didn’t focus on the customer
    Before we went into the recession UK was a service economy. Will be a service economy as we emerge from the other side
    Strongly believe the conditions are right for a renaissance of customer service –but with a very different focus
    Customer must be at heart of an organisation
    Employees need to be fully engaged around this goal
    Clear link between the performance of individuals, their impact on customer satisfaction and retention
    Also link with performance of UK plc on the world stage which is ever more competitive.
  • We hear much about customer service in the UK – some of it conflicting ‘evidence’
    I am here to tell you that customer service is improving in the UK
    Every 6 months we poll 26,000 consumers: UK Customer Satisfaction Index
    Most robust and comprehensive survey
    Started close to 3 years ago when customer satisfaction stood at 66.
    Now (July) 76 – up one point from January 2010
    UKCSI covers 13 sectors ; private and public sector.
    Scores out of 100 . 80+ equals world class service
  • UKCSI also provides us with valuable insight into loyalty of customers
    Se a clear link between customer satisfaction and customer loyalty – both overall and each sector.
    If  customer satisfaction is 55 then the loyalty index is 55
    If customer satisfaction is 80then the loyalty index is 83
    Link between repurchase, retention and reputation
    Can drill down into this information
    Key issue now – recession fewer/ more careful customers
    Continue to be an issue in the future
  • See some of these effects in the top 10 UKCSI organisations :
    John Lewis a perennial front runner – also interesting to see Waitrose –its sister company topped the retail food sector – and both have reported strong financial figures during the recession
    Waitrose fastest growing supermarket chain in UK – at a time when discounters making market gains.
    This time 38 named organisations have achieved a CSI over 80; seven are over 85 – 80 = world class customer service
    It’s no coincidence that the retail and tourism sectors are so strongly represented here, but First Direct are not the only strong performer in financial services—BUPA and SAGA led the insurance sector, and The Co-operative Bank also scored well.
    Every sector with the exception of Utilities has some suppliers who are above the overall UKCSI average, and most have at least one very good organisation.
  • Many of these figures will be familiar to you
    All recognise that it is cheaper to retain customers than to recruit new ones - Estimates vary 3x -6x cheaper
    Last 2 lines:
    Figures taken from the Institute's own research and others shows there is an 85% correlation between was your employees feel about your brand and the way your customers do.
  • Balance of power is shifting - Firmly in favour of the customer
    Aided by technology, particularly social media
    Looking for personalisation – not mass marketing
    Across all touch points – increasingly mobile iPhone; iPad etc
    But same technology is also eroding price differentiation, value for money is a given and technological advances quickly copied customer service is the only true , sustainable differentiator.
    Customers have the power to shape a brand's reputation as never before
    Need to ensure customer management is clearly represented ain the board room
    Need to engage and empower staff
  • Business systems (uk) ltd – annual conference 2010, jo causon

    1. 1. Institute of Customer Service Customer service - in a class of its own Business Systems (UK) Ltd – annual conference 23 November 2010 Jo Causon – chief executive
    2. 2. introducing the Institute of Customer Service We are: • independent, not-for-profit membership organisation • over 300 organisational members • 70% from private, 30% from public and third sectors • more than 7,000 individual memberships We aim: • to lead customer performance and professionalism • to be the first port of call for all issues around customer service We provide: • advice, research, professional networks, products and services, awards, national occupational standards, continual professional development and conferences • including National Customer Service Week
    3. 3. the renaissance of customer service • customer service a critical element of business performance • a key driver of profit • changing relationship between organisations and their customers – customers now hold the power • future of customer service – changing attitudes of we, the consumer – challenges brought by technology – changing business models – changing employee engagement…
    4. 4. what are the key priorities for customers? • overall quality of product / service provided • friendliness of staff • handling problems and complaints • speed of service • helpfulness of staff • handling enquiries • being treated as a valued customer • competence of staff • ease of doing business with • being kept informed
    5. 5. characteristics of organisations that deliver world class service • deal with problems and queries • deliver on the promise • make it easy to do business with • go the extra mile • continually looking at ways to innovate • create customer strategy, service delivery and the right culture
    6. 6. • product development • product and service delivery • customer relationships - social media - visible, instant feedback the role of technology
    7. 7. • shift from transactions to relationships • move away from one-way mass marketing • to customer personalisation, narrow segmentation • two-way communications - what products customer would value most at any given time • in B-2-B world – focus on maximising value of long-term relationship, not sales about building relationships
    8. 8. the direct impact of an engaged workforce • 70% of engaged employees have a good understanding of how to meet customer needs as opposed to only 17% of disengaged employees (CIPD) • engaged employees generate 43% more revenue (Hay Group) • engaged employees: 2.7 sick days per year. Disengaged employees: 6.2 (Gallup) • engaged employees are 87% less likely to leave (Corporate Leadership Council)
    9. 9. the direct impact of an engaged workforce • 67% of engaged advocate their organisations; only 3% of the disengaged do (Gallup) • 9 out of 10 of key barriers to successful change, people related (PWC)
    10. 10. why does service matter? • £15.3 bn - the cost of poor customer service to UK economy annually • business abandoned and lost to entire industry - £5.2bn • customer churn and defections - £ 10.1bn • £248 average annual value of each customer relationship lost • 73% of consumers have ended a relationship due to poor customer service • consumers aged 27-43 most likely to switch • one in four people have left a financial services company or utility provider in the last year following poor customer service Source: Genesys – The Cost of Poor Customer Service: September 2009
    11. 11. we have all become more demanding • customers/clients/people more willing to complain - 2001 - 50% people were willing to complain about poor service - 2006 - that figure had risen to 60% - 2010 – now 75% consumers prepared to complain • more sceptical • reputations hard-won but easily lost • ‘generation Y’ discerning, influential consumers – people power • challenge/opportunity of using new technology Principal source: ICS National complaints culture survey 2006
    12. 12. more willing to complain- more able to do so • more disposed to tell others about bad experiences - 81% - 2001 - 89 % - 2006 - 90% - 2010 • more able to do so • growth of social media - as consumers we can draw down information more easily - seek tailored solutions both offline and online • tell the world when something goes wrong – not just our friends • need to look beyond traditional measures of customer satisfaction
    13. 13. why does world class service really matter now? • economic climate • UK a service economy • renaissance for customer service – feedback is immediate and visible • clear ROI benefits • DNA - Impact on culture people and processes • shortage of skills - keeping the best • clear link between performance of individuals, organisations and UK Plc - service is the differentiator
    14. 14. UK customer satisfaction levels 75.6 80.2 80.2 80.0 79.3 77.4 77.2 76.7 75.3 72.3 72.2 72.1 70.0 69.6 77.7 77.2 76.9 75.3 50 55 60 65 70 75 80 85 90 95 100 UKCSI Retail (food) Services Retail (non-food) Tourism Automotive Finance (insurance) Leisure Finance (banks) Transport Telecommunications Public Services (local) Public Services (national) Utilities Northern Ireland Scotland Wales England Jul-10 Jan-10
    15. 15. loyalty index 76.2 84.5 83.9 79.7 79.1 77.8 77.2 76.1 74.4 73.8 73.0 72.8 71.7 66.1 79.6 78.0 77.1 75.8 50 55 60 65 70 75 80 85 90 95 100 Overall Retail (food) Retail (non-food) Leisure Services Tourism Automotive Public Services (local) Public Services (national) Finance (insurance) Finance (banks) Transport Telecommunications Utilities Northern Ireland Scotland Wales England Jul-10 Jan-10
    16. 16. UKCSI: the top performers • John Lewis (88) • Waitrose (88) • Lloyds Pharmacy (86) • SAGA Holidays (86) • Virgin Holidays (85) • Marriott (85) • Marks & Spencer (food) (85) • Boots (84) • First Direct (84) • Marks & Spencer (84)
    17. 17. what are they doing to get these results? • professionalism • commitment to staff • genuinely empowering • listening • building service cultures • engaging and championing • creating customer strategy, service delivery and the right culture
    18. 18. bottom line impact of good customer service • top box customer satisfaction • 2x likely to renew/stay • 3x likely to recommend • 24% higher net profit margin • 71% higher profit per employee
    19. 19. the challenge is to do more with less • increased demands come against the backdrop of a recession • greater stress among the public • falling morale among staff • important we encourage and build customer focus – led from the top – programmes built with a core focus on service – each customer is an individual and needs to be treated as such – key is to help staff make the right judgement each time
    20. 20. lessons learned • customer management is fast becoming a strategic boardroom issue • only sustainable competitive advantage • customer feedback is immediate and highly visible • consumers have the power to shape image as never before • strong service leadership is crucial • greater empowerment and support for staff
    21. 21. Thank you Jo Causon Institute of Customer Service