One way to understand consumer behavior is to reflect on how nature works. Studies show that birds have been evolving for a long time now: They grow bigger beaks and longer legs. This phenomenon, described as shapeshifting, occurs because animals are adapting to climate change.
How consumers behave is not that different.
Consumers’ needs, concerns, habits, and preferences evolve. They respond to new technologies, new cultures, or crises like the pandemic. Developing a customer service strategy that addresses those changes is not always black and white.
Change may come with different layers. For instance, in this pandemic, people have to distance themselves from crowds, but at the same time, they are more “connected” than ever before.
PwC’s Global Consumer Insights Pulse Survey in June 2021 shows that in six months, from October 2020 to March 2021, over 50% of the global consumers they surveyed have become more digital. While that suggests less interaction, a meaningful connection somewhere in the transition emerged. Forty-three percent of the respondents have started exploring what their respective regions offer, appreciating local products, and valuing their community more.
Beyond consumer behavior
Consumer behavior refers to how consumers evaluate, choose, buy, and use products and services. As consumers adapt to the changes in their environment, companies are compelled to rethink how they approach customers. However, as consumer behavior trends witness new changes, a one-size-fits-all strategy remains elusive.
The reopening of retail stores in some places and other signs of a return to normalcy could rev up consumer confidence. Or not. Businesses must consider areas where unemployment is high, the ability of the government to minimize the risk of case surges, and how consumers now view and manage their finances.
For the consumers and the businesses, the trends are not just about behavior and how it leads to new systems and strategies. What lies behind these changes is the consumer’s attitude.
Consumer attitudes refer to consumers’ beliefs about, feelings about, and behavioral intentions toward some object. This object could be a product, service, brand, or any area of consumption. Attitude is what drives a consumer’s purchasing decision.
The PwC survey revealed that 50% of the global consumers they asked prefer eco-friendly products, while at-home consumers have become “more environmentally sensitive” than those working away from home. Understanding consumers’ emerging principles, such as sustainability and localism, can affect how customer service agents represent their companies.
The effects of empathy
From financial difficulties to social awareness, the reasons for how consumers behave, think, and feel today call for more flexible, empathetic customer service.
PV Kannan, CEO and co-founder of customer experience software and services company 7.ai, wrote that how the pandemic changed customer service reflects the challenges and difficulties consumers are facing. Some customers ask for extensions on payments, while some request faster delivery of their packages.
Kannan calls on companies to show more empathy, not just because it is a good thing. “If there’s one big lesson we’ve learned, it’s that caring for your customers is good for business,” he wrote.
He made a good point. An empathetic customer service strategy can increase customer satisfaction, loyalty, and revenue. A study published in The Association for Consumer Research affirmed the link between customer satisfaction and a customer’s willingness to pay. Customer experience data suggest that organizations who invest heavily in customer service systems with a human approach experience business growth.
Monitoring customer service capabilities
How will a company know that empathy is working for the business and its customers at the same time?
Empathy can’t be directly quantified. But using key performance indicators (KPI) can help organizations assess and monitor their customer service capabilities.
The KPI Institute has launched The Top 25 Customer Service KPIs – 2020 Extended Edition, which presents the most viewed customer service KPIs based on smartKPIs.com, a database of over 21,000 documented KPIs.
The report can guide organizations as they go through the process of determining the KPIs for their customer service departments. They would be able to further understand how KPIs can improve their performance measurement practices.
The Top 25 Customer Service KPIs reflect three categories.
Complaints handling: It offers an overview of the complaint management system and the ability to reduce customer dissatisfaction.
- % Customer complaints due to poor service or product quality
- # Complaints received
- % Complaints resolved
- # Frequency of customer complaints
- % Customer satisfaction with complaints handling
- # Time to resolve complaints
- % Complaints responded to within a standard time
Customer interaction: It measures the ability to respond and solve clients’ requests.
- % Call completion rate
- % First contact resolution rate
- % Not in good order account applications (NIGO)
- % Interactive voice response (IVR) completion rate
- # Longest delay in queue
- # After call work time
- % Blockage
- # Time from inquiry to response
- % Resolution of queries the same day
Service responsiveness: It indicates how fast and efficiently a company responds to its customers.
- # Speed of answer (SA)
- # Call handling time
- % Customer satisfaction with service levels
- % Calls answered within service level time
- # Longest call hold
- % Customer calls answered in the first minute
- # Pick-to-ship cycle time for customer orders
- % Visit customers served within 3 minutes
- % Call abandon rate
Time, context, and communication skills matter in the customer service process. While companies do not have complete control over the disruptions on consumer preferences and mindset, they can set up strategies, improve their performance, and streamline their processes to influence consumer journeys.
And it starts with knowing what works and what doesn’t.
To view the complete profiles of the 25 most popular customer service KPIs and exclusive in practice recommendations, download the Top 25 Customer Service KPIs – 2020 Extended Edition here.
If you can name one thing, what is the most important driving factor of your business? The answer might be varied depending on your line of work or industry, but there is one answer that would most likely resonate with all: the customer. People who work in customer engagement, sales, and other customer-facing jobs know it best. Yet it might help to take a better look at your customers and their behaviors, regardless of what your market is.
Customer service is an experience
Often overlooked as a complementary part of a business, many failed to consider how important it is to maintain a good relationship with the customers. Looking at it from the customer’s point of view, the service they experience can be a critical aspect that can help decide how certain products or services are valued in a company. A study published by Harvard Business Review concluded that customers do remember good and bad customer service experiences and are willing to reward companies that give them good services.
A similar survey conducted by American Express showed that seven out of 10 consumers in the United States decided to spend more money with a company that offered great customer service. Understanding what a good customer experience seems like a simple job. After all, almost all of us were customers for another’s business at some point. Even so, it is also a fact that bad customer experience has been the downfall of a lot of businesses.
An article written by Amy Gallo pointed out several things that helped determine what a good customer experience is. First, customers value your active presence in any online platform, including social media. The second is that customers value a fast and reliable response; some studies even show that a fast response is directly linked to sales performance.
Third, customers will feel more engaged with the business if they can get a response, regardless if it will be received with a bad, good, or neutral tone. Responding to both positive and negative comments is proven to give a better impact on the customer rather than ignoring them. Finally, it is important to build a personal connection with the customer; remember that customers are human beings too, thus it is important to treat them as a person. It is always helpful to try understanding them by reflecting on how you want to be treated if you were in their position.
The big potential in recurring customers
Acquiring new customers is important, but keeping your existing customer base is also very crucial. Research by Frederick Reichheld showed that a 5% increase in customer retention can boost your profit by 25-95%. It is also important to note that following up with existing customers often costs less than acquiring new ones. Signing up for the Certified Customer Service Performance Professional course can also help in helping your organization perform better with your clients.
It is a given that having a good customer engagement process will definitely help to secure recurring customers. Even so, it may be not enough to build a long-term connection. There are few other things to consider if you want to increase your client retention rate. Regular contact is believed to be the most effective way to maintain relationships and minimizing churn rate.
Keeping them in the loop for new products and taking note of their feedback can also positively impact your relationship with the customers. Similar to any other human relationship, it is always a good thing to feel involved and heard. Other benefits such as discounts or loyalty rewards can also boost sales. In the end, your customers are more than just numbers; they are the driving factors that deserve your attention.
For Rockwater Energy Solutions, the 1980s represented a rough time, with cutthroat competitors wanting to gain an edge on one side and them struggling to reach the finish line among the first, on the other. Nevertheless, despite, or maybe due to this difficult period, Rockwater was able to outgrow its beginnings as a small, low-tech deep-sea repair and construction diving company.
By 1993, Rockwater Energy Solutions, a Brown & Root/Halliburton subsidiary, was a global leader in underwater engineering and construction.
However, before reaching worldwide success, the company had to first face a new competitive landscape, in which the leading oil companies decided that it was more profitable to establish long term partnerships with their suppliers, instead of choosing them based on low-price competition. Because of these new expectations Rockwater needed to shift their focus towards building closer relationships with their customers, and towards strengthening customer relationships.
They decided to use a Balanced Scorecard, so that they could translate their strategy into definite goals and actions. The company’s senior management team developed a new vision statement that placed emphasis on customer relationships:
“As our customers’ preferred provider, we shall be the industry leader in providing the highest standards of safety and quality to our clients.”
They also developed five strategic elements to support this vision:
- Services that surpass customers’ expectations and needs;
- High levels of customer satisfaction;
- Continuous improvement of safety standards, costs and effectiveness;
- High-quality employees;
- Realization of shareholder expectations.
These five elements were then developed into four different perspectives:
Rockwater’s senior management team adapted each perspective to the company’s profile, thus forming the Rockwater Balanced Scorecard set of performance measures.
- The Financial Perspective included three measurements that were meant for:
- long and short-term shareholder value;
- cash flow monitored short-term returns.
These three measurements revealed Rockwater’s intentions to predict and manage longer-term performance.
- The Customer Perspective was based on the company’s two types of customers:
- Tier I customers – oil companies who wanted to build long-term relationships with suppliers. For this type of customers, they employed an independent organization to conduct monthly and annual customer satisfaction surveys.
- Tier II customers – oil companies that chose suppliers solely on the basis of price. In order to attract this second type of customers, Rockwater used an in-depth price index.
This approach took into consideration both the necessity of staying cost-competitive, and the need to deliver value to those customers who were looking for a more stable relationship.
- The Internal Perspective was concerned with defining the life cycle of a project from launch – when a customer need was recognized, to completion – when the customer need had been satisfied. To ensure that the internal processes were optimal, the team also developed a series of measures to evaluate five phases in each cycle: identify, win, prepare, perform and close out.
If in the beginning, the company placed more importance on performance for each functional department, now the new focus revealed a shift towards measures that integrated key business processes.
By refining the metrics used for the identification stage, the management team acknowledged their wish to have a metric that would make all members of the organization understand the importance of building relationships with and satisfying customers.
- The Growth Perspective included product and service innovation as well as improvement in financial, customer and internal process performance. It was comprised of two measurements:
- percentage increase in revenue from new services – meant to measure the effectiveness of product and service innovation;
- index of a range of improvements in safety and repeat business – which measured financial, customer and internal processes.
To be successful in these two areas, Rockwater realized that they needed empowered and motivated employees. A staff survey was conducted, which measured attitudes, along with metrics that tracked the number of employee-submitted suggestions; on top of this, they also made use of a revenue-per-employee measurement, which quantified the outcomes of employee commitment and training programs.
Ultimately, the Balanced Scorecard has not only helped Rockwater Energy Solutions acknowledge the importance of customer feedback metrics, but it has also transformed the company into a high-value, service and results-driven organization, which caters both to long-term customers, as well as to the short-term, price-concerned ones.