What’s the $ impact of a poor customer experience?

20 08 2009

A new survey conducted by Greenfield Online, has investigated the economic impact of delivering poor customer experiences. The press release on Yahoo! Finance explains how they measured it, but some key take-aways are:

  • 72% of both New Zealand & Australian consumers said they had ended a relationship with a company due to poor customer service.
  • The Australian’s had ended 1.37 relationships each, at an average of AU$403 (US$338)
  • The Kiwis were a little lower, ending 1.17 relationships at an average of NZ$386 (US$257)
  • Indian consumers were the most sensistive to poor service, ending an average of 1.84 relationships each

While I’m always a little sceptical of the results of sponsored surveys (this was was sponsored by Genesis Communications Laboritories), the theme still raises a very interesting thought. It’s a commonly held belief that it’s cheaper to retain a customer than acquire a new one. However, to what extent are companies investing in evolving and innovating their customer experiences, to keep up with customer’s changing expectations?

Call centre’s have been around for a long time, and this research suggests that over half the consumers polled still prefer to use the phone, rather than newer channels such as email or web self-service. But recent call centre innovations seem to focus on developing cost-saving self-service, rather than improved customer experiences. And this survey suggests that it’s these same automated self-services, that feel the most challenging for these defecting customers.

Do you have an example of when a call centre either exceeded or failed to meet your expectations of service?


Poor customer experience from low staff engagement

4 08 2009

Seth Godin posted recently, about employees who take a “dont blame me, all I do is work here” approach to customer service. They distance themselves from the customer’s experience, rather than empathising with (and taking responsibility for) the situation.

Unfortunately, Qantas were proving Godin’s point to me while he was still typing. I was due to fly from Sydney with Qantas last week, arriving back in Wellington at midnight. I even checked-in for the flight, which at that stage was running 45mins late. Still the Qantas employee at the check-in was smiling, helpful and empathised with the impact of the delay. Sadly the empathy wouldn’t last.

When I arrived at the Qantas Club lounge, a deadpan lady told me “your flight has been cancelled”. So deadpan, that I laughed at her joke and kept walking. Alas the joke was on me, and I was dispatched immediately to the Qantas Transfer Desk.

Now if this transfer desk had been a country, it would have been Antartica. Cold and inhospitable. The staff were grumpy, huffing and puffing and barking orders at both customers and each other. Customers stood looking sheepish and confused. One lady asking politely for help, kept being interupted by a staff member with a deep sigh saying “let me start again and explain to you…” not once actually answering the passenger’s question.

Without eye contact or achnowledgement, I was told at one point that I was only wait-listed for a flight out that night. When I asked what would happen if I didn’t get on the flight, I was told with more deadpan delivery “we overnight you, and get you on a plane sometime tomorrow”.

I realise this is standard process for airlines. But how the process is followed doesn’t need to be. After all, queueing for a ride at Disney theme parks is a far from standard experience. Yet the transfer desk staff didn’t acknowledge the impact potential over night delays might have on passengers, let alone appear to care. It was clear the staff weren’t enjoying themselves, and despite them getting me on the flight at the last minute, I left there feeling it was my fault Qantas had cancelled their plane.

So why was the customer experience so bad? The Qantas man whisking me through the airport on the buggy was quick to defend his colleagues. He suggested their attitude came from having to deal with irrate and grumpy customers, and that after a while the body shuts down and they become immune.

But is this true? At what point in the customer experience should the roles switch, and customers be expected to empathise with the impact on staff? If they are responding to an emergency then fair enough, but the transfer process is all too common. The desk is permanent and they are being paid to do a customer facing job.

Airlines are a logistics business, just like postal or express deliveries. But DHL & FedEx have built their brands on employees taking pride in making sure parcels are successfullly delivered. The bigger the problem, the greater the satisfaction there is in a successful outcome. Stories are told, and the people celebrated, of how far staff go out of there way to ensure timely delivery. I doubt anyone was celebrating the efforts of the Qantas staff in getting passengers home that night. But maybe they should start thinking about it, because the experience I got from Air New Zealand when I rushed up to the gate was a stark contrast.

The plane had been held 20mins to collect the reject passengers. I was expecting to be rushed on-board, feeling bad for delaying the plane. But instead the staff were all smiles, greeting frustrated passengers with a warm “glad your here now, you can relax, we’ll get you home on time”. Later, as we disembarked, the usual “thanks for flying with us” announcement wasn’t just a script. Instead they acknowledged that not all of us had had a choice in flying with them, but they were glad that we had and it was their pleasure to serve us. And this despite the fact that the last minute passengers had led to food choices running out. But this too was handled with a smile and a joke.

Empathy has a huge role to play in customer experience, and that can only come when staff feel engaged with a brand. While the Qantas staff took the “I just work here” approach, AirNZ ackowledged how passengers were feeling about the situation and did something about it.

Now some would argue AirNZ were just being nice, to try and win passengers from Qantas. And if they were, they succeeded. Just don’t tell Qantas until they’ve sent over my luggage.

Why are vodafone charging customers to remain loyal?

14 07 2009

I visited my local vodafone store today, to ask about getting an iphone. However, despite being a vodafone customer for nearly 2 years, it’s not as simple as signing a contract extension and paying for the phone. Instead, they wanted to charge me “between $150 and $400” for the privilege of signing up for a longer and more expensive contract.

Charging customers who want to commit to a longer relationship at a higher price, seems a strange strategy. Banks have tried it with mortgages, but the fee is usually compensation for locking in a lower interest rate. Meanwhile local energy companies are falling over themselves to offer customers money to stay or return.

The language vodafone are using reflects the penalty for ‘breaking a contract’, not the benefits of extending a relationship. In contrast, airlines will let customers change a ticket (their contract) for free on most non-budget fares, and they have limited capacity to juggle. And could you image the reaction if a marketer at Sky TV suggested charging customers a break fee to upgrade their package with new channels..?

The point that vodafone appear to be missing, is that customers aren’t lining up outside stores to get the vodafone experience; they’re lining up to get the iphone experience. And until now vodafone were the monopoly that could provide it, and their pricing and in-store attitude reflected it.

But that’s starting to change. Apple New Zealand now sell the iphone online, for $50 less. And Telecom have launched a guerrilla marketing campaign to encourage customers to buy an iphone and then defect. They’re offering a $600 account credit – enough to cover the break fees – and the prospect of the iphone 3GS working at full speed nationwide (apparently the vodafone network drops to GPRS outside urban areas, and inside our building).

So what will stop customers defecting? According to the vodafone spokeman quoted in the NBR article, it won’t be a problem because tethering on the XT Network would be very expensive by comparison. But I have to wonder who sees tethering as a ‘killer app’? The customer wanting access to the mobile internet, or the mobile companies wanting to sell larger data plans?

I’m told I’m geekier than the average person, yet I’ve never once tried to tether my laptop to my phone. For a start, it takes to long to load the pages. So I’m confident that most people buying the iphone, are buying it for experiences other than tethering. And all those experiences are available on any mobile network, at a wi-fi hotspot and even on a plane.

As a consumer, I’m looking forward to watching the competition, and hopefully seeing some price innovation to match the Australian market.

How would customers reinvent your product?

12 07 2009

Too often companies and sports teams take their performance and competition for granted, plodding along with little thought about serious innovation. It’s happened at organisations as diverse as Starbucks and the All Blacks.

Starbucks’ confidence had them rapidly expanding their footprint, rather than evolving their relevance as “the third place”. Equally the All Blacks threw out the innovative conditioning programme and ‘rotation policy’ that developed a large squad of world class players, and within 12 months are lamenting a lack of depth within their squad.

Three recent stories from google, demonstrate that to stay competitive requires a different mindset. One where you consider yourself the challenger, and never the champion.

First up, google took a video camera to Times Square in New York, and asked what many consider a simple question – “what is a browser?”. Yet the responses (see video below), demonstrate that we should never take our customer’s understanding of our product for granted.

Next google have given a sneak preview of google Wave, which has been described as what email would be like if it was invented today. And then last week, google announced that they are developing an operating system, Chrome OS, to rival Windows. This again sounds like great challenger thinking – “what would an OS be like if it was invented today”.

But stretching into operating systems also risks falling into the Starbucks trap. In trying to be everything to everyone, they could leave themselves open to a competitor re-inventing their core product. And ironically, if the Bing search engine takes off worldwide, that challenger could be Microsoft.

AirNZ’s ‘bare essentials’ ad campaign becomes an in-flight experience

7 07 2009

Something wonderfully strange has happened to Air New Zealand – they’ve developed a personality! Following hot on the heels of their nothing to hide ads, comes their bare essentials in-flight safety briefing. I often rave about VirginBlue adding personality to their safety briefings, but AirNZ have successfully stripped away almost everything except the personality!

This is a great example of brand authenticity. They’ve taken what is already a catchy ad campaign and embeded it into their service proposition. The behind the scenes video shows how the campaign has engaged the brave staff in the ad, and my experience last weekend confirmed it (minus the body paint). The staff on my flight from Auckland seemed to be having more fun, the announcements felt less scripted, and they were giving out double helpings of cookies/lollie mix as standard (always a winner for me).

The customers are getting in on the act too, with a website to let them confess their own ‘nothing to hide’ stories. Putting the advert, safety video and bloopers on YouTube has added to the buzz, with overseas media like the NY Times and Daily Telegraph sharing the story.

The outcome has been game-changing. Airlines regularly struggle to get even a captive audience to watch the safety briefings. Yet AirNZ have already gained  3.5 million armchair viewers! Now that’s world-class thinking!

What’s the price of cheap flights? JetStar’s 1st impressions

29 06 2009

I love flying Virgin Blue / Pacific Blue, because they continually remind me that you don’t need to be dull, just because your all competitors are. While most airlines focus on providing a service (A to B, on-time with some food thrown in), Virgin Blue provide a whole experience.

I remember my 1st impression of the Virgin experience, was that more of their staff smiled more often than other airlines. And they made eye contact…as if they were genuinely pleased to see me. This experience continued with safety announcements that were engaging enough to listen to (who says compliance can’t be fun) colourful seat back information cards and unscripted banter.

The point here, is that cheap prices don’t have to mean cheap experiences.

Compare this with the 1st impressions that JetStar passengers have been getting in New Zealand. JetStar launched with lots of cheap or free ticket offers, to gain market interest. But they have been plagued by complaints of long delays, rescheduled flights and bumped passengers.

No doubt JetStar will recover and improve, but their first impressions haven’t aligned with customer expectations. Jetstar took over from parent Qantas, so excuses about untrained staff and strict 30mins check-in cut-offs weren’t what customers expected. What’s more, these experiences are re-setting customer’s expectations in line with the cheap prices. Several people have already said to me “well I can’t complain, the ticket only cost me nine bucks”. Unfortunately, while JetStar see this as just opening offers, customers are starting to see it as a fair price. And while introductory offers can be effective at tempting trial, price alone wont keep them coming back.

Of course, airline service doesn’t have to be great. Ryanair have become very profitable offering overtly ‘cheap service’, to the point of even threatening to charge for toilet visits. But the big difference here, is that their customers are getting exactly what they expect.

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