The Dual Roles of Service Recovery & Customer Feedback

For years it has been known that customer retention was a cheaper option to acquisition. Early research suggested it cost ten times more to acquire a new customer but today it ranges from two to 20 times depending on the industry. It therefore makes sound economic sense to raise the profile of Customer Service and to use these guidelines to position and resource the dual roles of service recovery and customer feedback as positive contributors to future organizational performance.

Customer Service is under resourced and under valued

Most organisations (both commercial and not-for-profit) of any size have a designated Customer Service department. It may be called something else (such as complaints, customer service, help-desk or consumer affairs) but its purpose is to deal with customers who have questions about or problems with their organization’s products or services.

Unfortunately Customer Service departments are often under resourced and under valued in the corporate hierarchy. They are perceived as a necessary evil of modern commercial life rather than an opportunity to get closer to customers; an unwelcome cost centre to be contained rather than adding value to corporate performance.

In particular, the joint values of customer feedback and service recovery are rarely appreciated and understood. Customer Service remains a reactive department keeping problems out of the way of senior management but rarely contributing positively to organizational performance. This is quite strange, particularly at a time when the focus of many organisations is on Customer Relationship Management.

CRM rarely addresses existing customers’ needs

CRM is about getting closer to customers in order to understand and meet their needs more effectively. Unfortunately in many cases an admirable business strategy has ended up an ineffective software solution. Typically CRM applications assist the sales process or contribute to marketing data rather than address existing customers’ needs.

Finding out about what matters to existing customers is often left to the Market Research department. Such research, probably valuable in terms of understanding future product requirements and profiling potential customers, is not necessarily geared to understand the issues influencing and the current needs of existing customers. It is also not uncommon for a positive spin to be put on such research in terms of customer satisfaction rather than identifying problems.

Customer Service adds significant value representing the Voice of the Customer

This is where the Customer Service department can add significant value. Listening to customers who have experienced problems – and are committed enough to contact the organization – provides the concentrated feedback that traditional market research cannot reach. It alone has regular contact with customers who have experienced problems or have issues to raise. It knows the issues causing most concern and is best placed to represent the Voice of the Customer in future business decisions.

But unfortunately this voice is rarely heard. There can be a number of reasons for this:

  • Service recovery teams are working flat out to resolve immediate problems and have no time to be proactive with reporting
  • They do not have the data collection, analytical and reporting tools to deliver such feedback
  • Any data collected may only represents a small percentage of the customers who have issues and therefore is not considered important
  • Customer Service is positioned too low down the organization for anyone to hear the messages it tries to send
  • Management may not believe them even if a message gets through

This lack of visibility is partly the responsibility of senior management – undervaluing the payback from Customer Service – but also that of the Customer Service Manager who is guilty of not promoting the potential value of effective service recovery and customer feedback.

The following eight guidelines provide a framework for raising the profile of Customer Service and promoting the value of its dual objectives of service recovery and customer feedback:

Position Customer Service as a profit centre

Firstly, before even considering the pay back from Customer Service there is a requirement to have accurate financial data in the first place. This may demand considerably more attention to financial information than previously. Although cost centres often have limited budgets they also do not experience the same financial planning and reporting requirements of larger departments.

Therefore the first condition for being treated as a profit centre is to act like one and take ownership and control of departmental finances. It is obviously important to maximize performance in terms of productivity and to justify a return on investment.

Proving a positive ROI may not be as easy as it is for other departments (sales for example can compare costs with the value of new business). To identify the ROI of service recovery and customer feedback the calculation will have to include information such as the value of potential customers at risk retained, the impact of both negative and positive word-of-mouth and the financial return from product and process improvements attributable to customer feedback.

The following benefits can be achieved from effective Customer Service:

  • Resolving issues likely to undermine future loyalty promptly and efficiently
  • Retaining customers at risk
  • Increasing corporate goodwill
  • Identifying and rectifying product and service deficiencies
  • Identifying customers’ wants, needs and expectations
  • Contributing “Voice of the Customer” knowledge to future product and service development
  • Representing the “Voice of the Customer” in strategic business decisions

Top Management must be committed

Unless Customer Service has the support of top management it is hardly likely to obtain the buy-in from other departments. It is therefore vital to convince the CEO of the value Customer Service brings to the business and then to blatantly use that support to build internal commitment.

Top management are always happier with numbers than with ideology. Take time to document a business case that justifies the investment in Customer Service resources in terms of future retention and loyalty and organizational improvement.

Keep the CEO fully briefed with topical, concise and actionable Voice of the Customer feedback that provides an insight into customer perceptions and their impact on future business performance.


It starts at the front-line

A centralized Customer Service department is no replacement for front line service recovery. Indeed it is often only the very determined customers who find their way there anyway. Resolving issues at the first point of contact will achieve higher levels of satisfaction and future loyalty.

But the Customer Service department still has an important role in achieving this. It must provide the professional support to make this happen. Firstly it needs to ensure that all front-line staff have the basic customer contact handling skills needed, that they are empowered to resolve most common issues and know the responses to common situations. They also need to have access to Customer Service for advice and guidance on specific issues and, ultimately, as an escalation route.

The Customer Service team therefore provides support to the front-line and act as experts when needed.

Make it easy and pleasant for customers to contact

The objective is to ensure that as many customers as possible who have an issue contact the organization about it rather than take their business elsewhere and tell others about their negative experiences. And when they do contact the experience must be a pleasant one. The following guidelines provide a framework for a customer contact charter that encourages such contacts:

  • Customers should know how to contact – information should be widely promoted on product packaging and documentation, advertisements and marketing literature
  • They should be able to choose whatever contact medium best suits them – letter, telephone, fax, e-mail or face-to face
  • Contacting should be easy, at the customer’s convenience and at negligible cost in both time and money – not necessarily a free-phone but definitely not a five minute wait for the call to be answered
  • Their contact should be received by knowledgeable, polite and empowered individuals who are obviously interested in understanding and meeting customers’ needs
  • Any problem should be rectified with the minimum of fuss and delay
  • Issues raised should not keep reoccurring – the organization learns from its mistakes
  • Information requested should be readily available, easily understood and free of jargon
  • Customers should leave feeling that their contact was valued and their comments appreciated believing that the organization wants to do business with them

There must be effective resolution process

Any investment in Customer Service will be wasted unless both Customer Service department and the front-line achieve high levels of contact satisfaction. Sadly numerous research studies over recent years have reported that satisfaction levels with service recovery remains disappointingly low.

Contacts need to be monitored and performance evaluated to ensure that the majority of customers feel that their issue has been satisfactorily resolved. If this has not been possible they should, at least, be satisfied with the way the contact was handled.

The achievement of this objective requires the provision of an effective contact management process. Although beyond the scope of this paper this would include sufficient trained and experienced staff backed up by effective business processes, technology and information systems.

Contacts need to be adequately recorded and reported

Voice of the Customer feedback relies on an effective process for logging, analyzing and reporting on customers’ contacts. This must include the cost effective capture of front-line contacts.

Although there are a number of very effective proprietary solutions many organisations still lack the capability to effectively log, analyse and report on their contacts.

Data must then be analyzed and reported to the rest of the organisation. Consider the following recommendations for effective Voice of the Customer reporting:

  • Timely reports – at least monthly reporting
  • Actionable findings – identify solutions as well as issues
  • Tailored to needs – adapt reporting to suit the audience, top-line for the board, specific detail to relevant departments
  • Provide an economic imperative to act – identify the financial impact of issues
  • Concentrate on what is important – hone in on key issues
  • Effective presentation – attractive reporting using charts and verbatim comments create interest and enhances quantitative data
  • Participative reporting – regular face-to-face meetings with data users to deliver results allows findings to be questioned and discussed and encourages two-way communication
  • Dedicated Knowledge Manager – appoint an individual to take responsibility for data analysis and reporting and to liase with data users

Develop a relationship and communication channel with internal clients for Voice of the Customer feedback

Customer feedback should be understood and respected throughout the organisation. The views of customers and the issues undermining their satisfaction and loyalty have impact on most departments including marketing, sales, product development, quality, operations, finance and production.

The role of Customer Service and the benefits it contributes to organizational performance should be understood and valued. It is therefore critical that other departments within the business are fully aware of and appreciate the value of Voice of the Customer feedback. This can be achieved by:

  • The prompt identification and reporting of issues undermining customer satisfaction and future loyalty
  • Provision of assistance in developing solutions that resolve such issues promptly and efficiently
  • Consultation with other departments to identify exactly what customer information they want
  • Regular reporting targeted to their specific needs
  • Regular face-to-face meetings to review, question and discuss customer feedback
  • Provision of an expert Voice of the Customer representative who can be consulted on all business decisions impacting on customers (most of them!)

Use the Customer Service channel for soliciting proactive feedback

In addition to reporting reactive feedback from customers who contact, an additional opportunity is available to utilize such contacts for soliciting proactive feedback. When the reason for the customer’s initial contact has been resolved he/she can be asked for their comments on any particular issue of concern to the organisation.

Using basic on-line research tools, up-to-the-minute data on customers’ views, perceptions and suggestions can be recorded and reported almost immediately.

This provides significant added value to the organisation at virtually no cost – only a slight extension to contact time

Amit Nayak
ITESGrads India

March 2004

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