It Might Be Flat, But You Can Bend It

by Scott Demorest, principal and co-founder, ACME Business Consulting

We now know the world is flat. The competition is global, it’s lightning fast and it’s able to work around the clock. Acquiring a new customer is increasingly competitive; maintaining revenue growth and sustaining margins, while staying competitive, is challenging but essential.

The implication: software companies have to retain and grow the value of every customer by renovating the customer service function and turning it into a profit center.

It’s time to revisit the customer service function if the company is:

• Facing pricing pressure, therefore needs to create value with customer service to drive margins and customer retention.
• Facing high customer acquisition costs, therefore needs to maximize the value of each customer to overcome the cost of acquiring that custom.
• Acquiring new customers at a decreasing rate, therefore needs to generate new revenue from existing customers in order to drive the top line.

Assess people, processes and technology

Take a couple of weeks to interview the team, check the metrics, and – most importantly – talk to the customers. Find out what’s important to customers and their level of satisfaction. Involve the executive team by setting a goal for execs to call the top twenty percent of customers every six months.

Block and tackle

Create self-service channels to drive resolution of straightforward issues by providing tools and information about products that enable customers to resolve their own questions or concerns. Customers like to be self-sufficient, and companies can save by providing those necessary tools online. For example, a troubleshooting page on the company website or, better yet, an automated request and response function for predictable requests.

Next, get proactive about feeding those self-service channels. Close each week by reviewing common customer service themes and find out how you can get ahead of those issues by driving them to a self-service channel. This allows customer service representatives to assist customers with more complex issues that require a higher level of knowledge.

Get passionate about the numbers

Develop key performance measures, then track them, publish them and improve on them. A small set of highly visible, globally understood indicators is enough. You’ve got the right level of passion when every team member knows what the performance measures are and how to improve them.

Make it a team sport

The team has to have the right roles and the right people filling those roles. Developing job profiles with specific knowledge, skills and abilities (KSAs) identified for each profile. Then, assess current talent and match the right people to the right positions. The hiring process should recruit to the job profiles and ensure that the organization is bringing in people with the right KSAs, continually weeding out the bottom tier. Along the way, don’t be afraid to shake up the team and bring in someone from left field. Change in perspective is a good thing.

Pay the team

Matching compensation to the level of talent is important, but recognize the cost of replacement versus the cost of retention. Generally, the total cost of replacing an employee is approximately 100 percent of that person’s annual salary. That includes recruiting, screening, training and then bringing the new talent up to the level of the person who was replaced. Often, it is less expensive to compensate and retain. The best tool is to give frequent small, on-the-spot bonuses.

Create heroes

Celebrate successes and give public recognition. Another great tool is to set a company-wide bonus program that is accelerated by customer satisfaction. Across the company, make a $1,000 bonus increase to $1,200 if customer satisfaction scores are greater than ninety-five percent. Make customer service a company-wide mission, not just the mission of the customer service representatives.

Integrate and cross-sell

Sales, marketing and customer service functions need to be integrated to make cross-selling an active process. Establish processes for cross-selling products and services. Create cross-discipline teams and rotate team members. Train customer service representatives to know when to cross-sell a product or service to an existing customer. The more knowledgeable a customer service representative is, the more effective he or she will be in turning a customer call into a sales opportunity.

Enable with technology

People and process comes first, but technology can raise everyone to the level of the highest performers. Assess your internal technical capabilities in the areas of:

• Customer self-service channels, such as website and voice response
• Automated workflow for routing resolution to the appropriate experts
• Managing escalation within defined parameters
• Customer relations management applications with call notes
• Integrated call routing and telephony.

Own up to your mistakes

The highest ranking customer service companies are those that go over the top to fix mistakes. In fact, they rank higher than companies that don’t make mistakes at all. No stage dives necessary, but when the inevitable happens, go all the way to make it right. Then, have the CEO call to make sure the customer is satisfied.

You’ll see the results where it’s most noticeable: the top line and the bottom line. Cross-selling will create new revenue from existing customers. Customer churn will decrease and offset the cost of acquiring new customers. Margins will be sustainable as customers are willing to pay for higher levels of service.

The world will still be flat, but your territory will be different. It will be profitable, growing and sustainable.

About the author

Scott Demorest is the co-founder of ACME Business Consulting. Founded in 2002 with David Kelleher and Peter Lizotte, ACME Business Consulting advances, improves and streamlines clients’ businesses. Unlike traditional consulting firms, ACME focuses on the success and growth of Portland area-based businesses, using senior-level consultants with Big 5 and Fortune 500 experience. Contact Scott at (503) 830-1358 or sdemorest@acmebusinessconsulting.com