To win in this economy, businesses must differentiate on service quality

State of Service 2022 Report – As job mobility spiked over the past months and years, service organizations have a renewed focus on skill sets and perks even as economic headwinds signal future challenges.

Digital engagements becoming the norm was one of the 10 key customer service trends that was highlighted in the State of Service 2022 worldwide report gathered insights from over 8,000 customer service professionals to determine how service organizations continue to adapt to an ever more digital-first environment.

Here are the four key findings of the report:

  1. Connection Is the Heart of Service – Customers’ expectations mean service professionals need visibility into the entire customer journey in order to engage empathetically and efficiently. Sixty-two percent of service pros say all departments use the same CRM software.
  2. Digital engagement becomes the norm – The pandemic sent an increasing number of customers to digital channels. As their expectations rise and habits change, they are not turning back. Adoption of video support has increased by 47% since 2020. 02
  3. Customer Service Extends to the Doorstep – The contact center remains critical, but physical, onsite service is an increasingly important factor in delivering customer success. Eighty-six percent of decision makers at organizations with field service say it’s critical to scaling their business.
  4. Labor Dynamics Put Focus on Agent Experience – As job mobility spiked over the past months and years, service organizations have a renewed focus on skill sets and perks even as economic headwinds signal future challenges. Service organizations have experienced an average reported turnover rate of 19% over the past year.

To better understand the impact on business based on these key trends, I connected with one of the world’s top customer service and support experts in the world. Michael Maoz is senior vice president, of Innovation Strategy at Salesforce. Prior to joining Salesforce, Maoz was Research Vice President and Distinguished Analyst at Gartner, serving as the research leader for the customer service and support strategies area. His research focuses on customer strategies and technologies, with an emphasis on the CRM customer service disciplines, collaborative customer strategies, AI and mobile strategies, and cloud-based CRM applications and analytics. I asked Maoz to further elaborate on the State of Service 2022 report with a lens of what mattered most to him, given his deep expertise in this space. Here is a summary of my conversation with Michael Maoz:

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Michael Maoz, Senior Vice President, Innovation Strategy, Salesforce

The new Salesforce State of Service report looks at the views of over 8,000 customer service professionals in 36 countries and across 18 industries. Were there particular trends that got your attention?
It’s great that you used the word ‘Attention.’ There is a quote that I love that goes: ‘Attention is the rarest and purest form of generosity.’ The young French woman Simone Weill wrote it 80 years ago, in a letter to a friend. It is as powerful an idea today as it was then. It was not written to be tweeted and retweeted or turned into a meme or to find its way into a snippet on TikTok. Imagine a business that picked up this thought as the heart of the customer service experience.

Can we see it in the Annual Report or as a measure of customer success? Some day it might, as it is exactly what seems to set some companies apart – the ability to pay attention to the real state of the customer. We saw that in Salesforce’s State of the Connected Customer, Fifth Edition that was published in the Spring. It showed that 88% of customers say the experience a company provides is as important as its product or services. That is up from 80% in 2020.
Let’s look at that more deeply. Could you find any evidence from the survey that this deeper level of care would pay off for a company?

Think of it as a way to set yourself apart. If we step back for a minute, we can say that the Pandemic that started in March 2020 shook up the way we look at our employees and our customers. It accelerated trends towards greater autonomy for employees and more responsiveness towards the customer. We all saw two main shifts. The first was around employees. The companies that responded the quickest in accommodating the needs of workers suddenly working away from the office, and the wellness issues for frontline employees, had an advantage. The second factor was moving to all digital engagement in a way that was safe and convenient to the customer.
Are customers getting more demanding, or has customer service not received the investments that it needs to keep pace with customer behavior, or are they both the same thing?

It’s a great question. Everywhere you look we see why attention spans are down. Consumers (and every business person is also a consumer) spend hours a day checking news feeds and looking at social media posts across channels like Instagram, Twitter, TikTok, Twitter, Reddit and Substack. That is even before they think of the engagement channels that businesses set up. This immediate access to content shows up in customer expectations of the enterprise.

We see from the report that 83% of customers expect to interact with someone immediately upon contact, and 83% expect to resolve complex problems through one person. That set of expectations means that the customer service agent had better be equipped with a single, unified, and real-time customer profile. They also need access to the content needed to answer the customer’s question. Businesses are making great strides to change, yet 78% of service agents say it’s difficult to balance speed and quality in engaging the customer. The situation is far worse, not better, than it was in 2022. Once again, we see a significant gap between the high performers and underperformers in their ability to resolve customer issues in a timely manner.

Does the State of Service survey confirm the advantages of better treatment of the customer service employee and the value of digital engagement?

That’s exactly what we see. Here are a couple of examples. Overall, companies saw a 20% jump in the use of digital channels. Now we can look more closely. Customer service organizations that took the additional steps of empowering their employees with more flexible work schedules and autonomy in decision making saw their performance exceed the average by 14%, and they outperformed the lower tier by 26%. The high performers were also much more likely to raise the bar by digitizing the phone conversations, combining them with email and text input, and then running these through AI. They were able to use the results to improve customer processes.
How can we quantify the value of being a high performer versus a good service organization?

That is something that is seen even in overall corporate performance. We could say that everything that gives you an advantage over the competition is valuable. The gap between first in your industry and second is monumental in how you are perceived. In the same way we remember the Gold Medal winner in an Olympic event, so too in business. A simple list of companies that are first in their category illustrates the point: Amazon, Apple, Disney, Google, Netflix, Nvidia, Salesforce, Starbucks, Tesla. Now think about a second list of who would be in second place in each category. Each company on the list of “Second in their market” might be great, but the gap in business performance is usually substantial, with the number one brand 300%-500% larger and more profitable than their nearest competitor.

That is interesting, but can the same be said of improvements to customer service? Is there a link between great customer service and higher corporate performance?

We know from our State of the Connected Customer survey data that 48% of customers say that they have switched brands for better customer service, and 94% say good customer service makes them more likely to make another purchase. That means that the high performers are taking business away from the average business and the underperformers. We know from organizations like the ACSI that customer satisfaction in the United States peaked way back in 2018 and continues to drop. They have gone further and looked at the cumulative stock returns of the leaders in customer satisfaction versus the S&P 500, and the results are shocking. The findings include: “Over the period from 2006 through 2021, such a portfolio (investing in the companies with the top satisfaction scores) would have generated a cumulative return of 1.788%, compared to the S&P 500 return of 429%. This equates to an annualized return of 20.16% for the ACSI Leaders portfolio, while the S&P 500 had an annualized return of 10.97% over the same timeframe.”

Those are incredible data points. Do you have any final thoughts that you gleaned from the Salesforce State of Service report?

One area that is proving to be where companies can truly differentiate is in the call center (or contact center, or engagement center), depending on the maturity of the function where human agents are speaking on the phone or over a video chat, texting, emailing or posting with the customer! The survey shows the uptick in investment in training, and more latitude in where the agent works. At the same time, the uncertainty in the world as the pandemic loosens its hold and the direction of the world economy is unclear, customers are more anxious.

What does this mean for businesses? It means that the agent needs to have better tools to understand the customer in real time. They need to understand the best resolution to the customer’s issue.

The agent needs the training and the tools, and they also need to relate to the work that they are doing. Customer service agent turnover can be anywhere from 20% to 60% per year on average, yet that is not the case at the world’s best customer service centers. The best recognize their agents. The leadership interacts with the agents. They develop the agents and compensate them at a level that the agent sees as fair. We see organizations like Southwest Airways, Hyatt, American Express, and USAA that score consistently above peers, and consistently their excellence derives from getting all of the above points right! This is great stuff, and I’m sure anyone reading this with a role in customer service will be able to relate. To summarize, the lessons that I’ve heard are:

  • Pay greater attention to the customer, and that would mean an ability to personalize the interaction.
  • Give the employee greater autonomy in their work like and balancing that with the rest of their life.
  • Lean into digital engagement, and use AI to differentiate.
  • Have a single view of the customer, and make sure that you can solve their issues on the channel of their choice, and the first time they engage.
  • Customer service really matters to the top and bottom line.
  • Talent development and empathy towards the customer service agent can drive loyalty and put your business above its competitors.
  • Service organizations should always be asking themselves: 1. Why be second best? and 2.Did I get that right?

The State of Services 2022 Report is quite comprehensive with deep insights into these 10 trends. To learn more you can access the report here.

This article was co-authored by Michael Maoz, Senior Vice President, Innovation Strategy, Salesforce.

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