Consumerist Interviews Peter Leppik, CEO Of Company That Conducts Those End Of Call Surveys, So You Know He Knows A Little Something About Call Centers And Customer Service

We emailed the CEO of Vocal Labs, a phone survey company that specializes in measuring customer service quality, three simple questions about his business.

Peter Leppik responded with a novel, albeit, one offering a compelling strong insight into why customers often find themselves strangled by the phone tree.

CONSUMERIST: What’s the number one reason for customer service failure through the phone lines?

LEPPIK: We see a lot of the same complaints over and over: automated systems which are hard to use, difficulty reaching an agent, and poor agent skills are the most common.

A lot of people would assume that the root problem for a lot of bad customer service is that the companies aren’t willing to spend the money it takes to provide good service. It is true that if you want to provide Ultimate Customer Service and give each customer his own personal butler you’re going to have to spend a lot of money.

But for providing a reasonable level of competent service–what most customers would expect–the issue usually isn’t money. In fact, incompetent customer service is often more expensive than competent service, since it takes more phone calls and more time to take care of each customer’s problem…


(this isn’t even considering the lost reputation and brand image)…

The real issue is twofold: one is the mistaken belief that better service is more expensive, and the other is a simple lack of management attention to customer service quality.

Since people often believe that better service is more expensive, one common reaction when companies cut costs (and let’s face it, every company is cutting costs all the time) is to make service worse. They do that by trying to force customers to use automated systems (which doesn’t work because customers call back to get to an agent when they need to), cutting agents and training (which just forces longer hold times and more time for less skilled agents to handle questions), and similar techniques.

For more on why forcing customers to use self-service doesn’t work, see here.

What we’ve found in our research is that most consumers are perfectly happy to use an automated system for routine tasks, if the system is easy to use and able to complete their task. So if a company wants to save money by getting more customers to use the automated system, the way to do it is improve the self-service so that customers prefer to use it when possible.

In other words, companies can often save money by improving service levels (in a smart way).

And that brings me to the second point: lack of management attention.

Let’s face it, in some companies customer service and support is viewed as a nettlesome cost center, rather than an integral part of the company’s product or service. Managing the call center isn’t a stepping-stone to the corner office in most companies. (As an aside, if you name the companies with truly outstanding service in their industries–Midwest Air, Apple, Four Seasons, etc., you’ll generally find that these companies (a) view customer service as an integral part of their product or service, (b) spend considerable management time and attention on service, and (c) view outstanding service as an important competitive differentiators which allows them to charge a premium price and earn a higher profit margin.)

One great example of the lack of management attention is the fact that “end-of-call” surveys are so popular these days (“end-of-call” surveys are the automated surveys where the customer is asked to stay on the line after the agent hangs up). This technique is deeply flawed because it is easy for the customer service agent to manipulate which customers take the survey–and the flaws are usually obvious to anyone who spends more than a few minutes looking at the data (one red flag is that the data often shows absurdly high satisfaction rates, numbers 30 points or more higher than anything we’ve ever seen at VocaLabs in five years of surveying). Yet this flawed survey data–supposedly a key driver behind management decisions–often gets accepted without question.

(For more on this particular topic, here’s an overview of survey techniques:
Here’s more on the real-world data we’ve collected.
Here’s a discussion of the reasons why bad surveys often go unquestioned. As you can tell, bad surveys are a topic near and dear to my heart.)

Another great example is the fact that nearly every large call center records at least some calls for quality assurance, but almost no call center has the ability to record entire calls from end to end. In other words, at most companies the recording begins when the call connects to the agent–all the frustration with the automated system is lost forever. At some companies, they can record the agent and the automated system, but it comes out as two (or more) separate, uncorrelated recordings. How many customers experience only the agent (or automated) part of the call? To a very good approximation, zero.

(By the way, you may find it hard to believe that end-to-end call recording is so rare, but we’ve actually had some client projects where the entire project was just to record calls end-to-end, because the call center didn’t have the ability. This despite the fact that we’re a survey company not a recording company.)

But if the CEO says that outstanding customer service is a priority, and backs that up with tough questions and action, then you find that several things start happening: 1) the company does a better job of measuring service levels and generating actionable data about how to improve service; 2) the company does a better job trading off cost vs. quality and stops doing dumb things; and 3) morale in the call center improves because agents feel like they are important partners in the company’s success, not just worker-drones.

CONSUMERIST: Relative to the number of calls you process, are complaints rising or falling?

LEPPIK: We can look at a couple specific industries which we’ve been following for a long time.

In the mobile phone industry, which we’ve been tracking every quarter since the beginning of 2004, there actually has been a long-term trend towards higher satisfaction with customer service, and Verizon, T-Mobile, and Cingular/AT&T are all providing pretty good service these days (pre-merger, the old AT&T Wireless scored relatively poorly).

On the other hand, in the financial service industry, which we’ve been tracking since the beginning of 2005, there’s been no meaningful long-term trend among the handful of mega-companies we’ve been following–though individual companies have gone up and down.

It’s not really meaningful to try to look at customer service trends globally, since every industry and company has its own dynamic. When industries go through a phase where they compete heavily on price (such as the mobile phone industry in the late 90’s), often you’ll see service deteriorate, both because management thinks they can save money by making service worse, and because service is no longer the focus of attention.

On the other hand, when customer retention becomes a priority (such as the mobile phone industry today), better customer service is often viewed as a key driver of retention, so service levels go up.

Another driver is the availability of competitive data about who has better service. It’s surprisingly hard to get high-quality data about which companies in a given industry have better customer service (and more importantly, why), and if a company doesn’t know where it stands relative to its competition, it’s hard for them to know if they need to improve. One of my goals at VocaLabs is to be able to supply reliable and actionable competitive data about customer service quality in a number of different industries. Most existing comparisons (such as the ones Consumer Reports publishes) are based on consumer surveys which often happen months after a customer’s call–that’s OK if you want a general sense of whether people like a company, but it’s useless for trying to figure out why Company X does a better job solving customers’ problems than Company Y.

CONSUMERIST: Do you think people’s experience with the phone systems are affecting their future purchase decisions?

LEPPIK: Every piece of research I’ve ever seen (and some we’ve done in-house) shows that customer service experiences are among the most powerful drivers of brand loyalty and future purchases, both positive and negative.

Unfortunately, most customer service experiences happen after the purchase, which is why some companies have been able to get away with lousy service for so long.

The Internet is becoming a more powerful force for getting information about service into the hands of consumers pre-purchase. For example, it used to be the rule of thumb that a mistreated customer would tell ten friends, but these days, that unhappy customer is just at likely to blog about the experience (or send an e-mail to The Consumerist), exposing the service problem to thousands of other potential customers.

If there’s a critical mass of upset customers, this can snowball out of control–the classic example is Jeff Jarvis’ bad experience with Dell a couple years ago ((Here’s what I wrote at the time, one and two.), which spiraled from blog entry to mainstream media, and likely eventually contributed to a management shakeup at the company.

— BEN POPKEN

PREVIOUSLY:The Most Excruciatingly Painful, Yet Typical, Customer Service Call Ever

Comments

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  1. brew400 says:

    i used to work at a call center, and the lack of education on the products we were providing service for was ridiculous….. to cut cost, of course

  2. oldhat says:

    He’s wrong about the the cost of poor customer service.

    Sure, he has a point, but that’s from the stance of a consultant who gets paid to improve CS depts. I wish more companies hired him.

    But laying off reps, outsourcing, skimping on proper training, paying low wages and benefits so there is high turnover and low morale…companies DO SAVE MONEY and love doing it. And they don’t care how many times you call into the computer system.

    They have studies out the ass documenting that customers don’t care about service as much as they care about price or features of the product.

    Once customers get good service, they expect it, and think it’s normal, that it’s how everyone does it. They get complacent. They see a lower price, and fancy new gadget, and they jump. Every time, and the stats prove it.

    Sort of how when you read the forums, only the folks with bad experiences bother to post. People with no issues don’t bother to go to the Crappy Product web site. They are too busy being satisfied.

    The formula is clear: pay for mediocre support but focus on price/marketing/features as that is what brings in business and what the stock market wants to see. Only when business is stagnant do they worry why folks are leaving/avoiding them in droves.

    But even then, they just know all they need is better marketing, lower prices (due to cheaper labor costs, ie outsourcing) to get them through the next fiscal quarter.

    Support is a cost center, not a profit center. The few companies that turn excellent service into a competitive advantage is clearly the exception, and it’s always a niche market.

    Support sucks because we will not pay for it. Because too many of us thought we payed for top notch support and have gotten burned so we don’t bother any more.

    The same thing applies to schools, government, church, etc. We stopped caring and it’s a race to the bottom.

  3. But for providing a reasonable level of competent service–what most customers would expect–the issue usually isn’t money. In fact, incompetent customer service is often more expensive than competent service, since it takes more phone calls and more time to take care of each customer’s problem…

    So how much does Comcast lose per year on this, exactly?

  4. Wilbert says:

    [C]onsumers are perfectly happy to use an automated system for routine tasks, if the system is easy to use

    Too right, my web host has an old fashioned four option tree (support, sales, accounts, and – importantly – the human at reception). It’s easy to use, I’m never on hold for more than five minutes so it doesn’t piss me off.

    My phone companies tree on the other hand…

  5. Trai_Dep says:

    Old hat: I’m uncertain about how effecting customer support cost-cutting is for a company. I’ve been a long-time Apple customer because their customer service. Calls (though don’t use much lately), the Apple Stores, their excellent web site: they strive to have many touch points for their customers to get help both before and after purchase.

    Of course, it’s part of a broader orientation: Apple has a general expectation that, for every product they do, they at least TRY to do right. So if a customer is having a problem, then it’s a matter of education. Or replacement if a glitch happens.

    Had to buy WinTel for grad school (talk about bad timing – they were dual Apple/WinTel before/after my time there). So I’ve done both. Those types of companies are horrible. The companies really don’t expect their products to work (buy a bigger, better one is the common response), and support is a joke. Large, wealthy companies that should know better.

    I’m happily back in the Apple fold. Precisely because of Apple’s customer service. Which is part of a galaxy of other things they have to get right to be the type of company that emphasizes excellent customer service.

    Saving pennies to lose pounds and short-term “benefits” (for the company, certainly not for the customer) seem to be the drivers for uncaring service.

    And ye gods, this is before the internet, and all the magnifying affects the article mentions.

    There will always be a tier of customers choosing only price as their consideration. Sucks to be a company oriented towards them. For the rest, customer service is vital to healthy growth. IMO.

  6. oldhat says:

    @trai_dep: That’s what i said:

    “Support is a cost center, not a profit center. The few companies that turn excellent service into a competitive advantage is clearly the exception, and it’s always a niche market.”

    And Apple’s support is far from perfect, though better than most. But the more sales and market share they gain, the worse the quality. (I have a MacBook Pro, btw)