Service & Engagement: How to step up and stand out in this era of social and technical change

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1 Service & Engagement: How to step up and stand out in this era of social and technical change

2 In the next few pages, we share our point of view on the drivers that are changing customer expectations and how these trends present opportunities to generate profit, lower costs to serve, gain greater market share and compete differently. We hope that sharing these thoughts will spark dialog within your own organization about how to use Service to better achieve your objectives. 2 PwC Service & Engagement: How to step up and stand out in this era of social and technical change

3 Historically, Service is an area in which companies have sought to reduce costs. That s because Service, at least the way it was managed, had no obvious upside to growth and profitability. Providing customer service was simply a cost born from selling products. For business-to-consumer organizations, customer service was limited by its scope. For business-to-business companies, customer service evolved into having an upside through service contracts, for example. In both cases, a high cost structure and uncreative business models kept Service in the back office, secondary to product, as a growth vehicle. Today technology, connected devices, competition, and innovation are rapidly changing the possibilities of how Service can contribute to priority management results such as profitability and market share. Social and technical changes are driving the new role for customer and commercial service Global trends are fundamentally shifting what we can and should expect, both as business people and consumers, from customer service. The trends that are impacting customer service most sharply are social, technical and competitive in nature. For example: Consumerism: Customers are demanding that interactions center on what they need. Service used to be a reluctant offering to customers. Now consumers expect multichannel access (e.g., phone, forums, self-service). Customers both consumers and commercial accounts also expect to see initiative during their Service experiences. Issue resolution is no longer enough to address their needs; proactive engagement is what turns customers into promoters. With their Digital Experience Community forums, leading brands like Panasonic and retailers like Best Buy in the hypercompetitive consumer electronics space are quickly moving to position the Service experience as part of the brand experience. In these communities, customer interaction drives loyalty through emotional dimensions such as product appreciation and community belonging. Simplification: Barraged with information that is unfiltered and continuous, consumers, business buyers and even internal employees seek simplification in their business relationship experience. Today, ease of doing business is a priority and commands a premium in the market. We see simplification driving customer acquisition, reducing cost to serve and narrowing the gap between competitors. Providing return labels for online purchases (e.g., Amazon) is a case in point as is how long-time customer service leaders like Nordstrom have made it as easy to return a purchase online as face-to-face. Leading industrial products companies are simplifying the aftermarket Service experience delivered to their customers to achieve the same benefits. In particular, we see process simplification and information enablement across (1) parts availability, (2) field service effectiveness and (3) call center support driving work order accuracy, lowering inventory and optimizing field personnel deployment. Improving the customer experience in these areas unleashes profitability and ultimately protects and grows the installed base of equipment sales. Social trends: Negative customer experiences used to be shared with a few people via word of mouth. Today there are no limits to the circulation of customer reviews and commentary. Simply put, today s social connectedness magnifies the stinging and immediate power available to consumers active on social media. Now the consumer of one has the ear of many. In business-to-business settings, we see account teams connected to customer teams (e.g., via mobile devices) creating organic, extended and highly responsive relationships. Cloud: The possibilities are so great for cloud computing that the new horizons of what is possible are still unfolding. What we do know is that we are in a different era and the race is on to apply this enabling technology to unlock profit, distill customer insights and improve the Service experience. In addition to speed, flexibility and cost, there is another driver for the adoption of cloud technology Service personnel (e.g., agents, field techs, or commercial operations representatives). Twenty years ago, Service professionals did not know how to use a mouse. It was not surprising to see agents place a mouse on their monitors or step on it as if it were a foot pedal. Today s field and call center Service professionals have grown up with technology and use it in their homes. As a result, they more quickly adapt to new interfaces, systems and hardware. Many are innovators, helping to define how to use new technology most effectively in their environments. Collectively, these social, technical and mobile adoption trends raise the bar of customer centricity. Perhaps the most profound game changer is social connectedness and social channels customer service performance is now a potentially public matter for which organizations are either punished or rewarded for the level of satisfaction they deliver to consumers. 1

4 A new mission for Service In our work we encounter circumstances in which client service organizations must scale, contract and transform. Often, the emphasis has been on how to operate better but now a growing number of companies recognize the change in customer power as well as the strategic possibilities for Service. They are taking action to redefine Service s mission in the context of helping the enterprise compete, profit and grow market share. The key questions are straightforward. Given the unique circumstances of the organization and its industry, what else should Service be doing? And with competitors innovating on how they conduct business and engage with customers, how can Service organizations contribute to growth and profitability? We believe Service organizations should consider three areas of contribution to the broader business: 1. Reputation: Competitive organizations recognize how delivering on the brand in terms of the product, the service and the full customer experience shapes reputation and impacts market share. For B2C organizations: How good is your customer service? For B2B: What are the services you offer to help your customers succeed? The right Service and business model will drive your reputation, profitability and competitiveness. 2. Revenue: In many organizations, the Service channel interacts with more customers than any other function. Therefore Service is uniquely positioned to drive incremental new revenue and contribute to profitability. In consumer electronics, for example, customers are constantly seeking replacements for unfixable or obsolescent products. In a B2B context, a service contract for a pumping system could generate an annuity of 15% of original equipment costs every year the contract is in place. 3. Retention: It s not news that poor service erodes loyalty. The difference is that, today, social connectedness compresses time. The boomerang of not meeting the service expectations of connected consumers is immediate. The right Service model will design an organization and governance that manages risk while exploiting the opportunity presented by socially connected communities to retain current and attract new customers. More and more companies recognize the change in customer power as well as the strategic possibilities for Service. They are taking action to redefine Service s mission in the context of helping the enterprise compete and grow. The right Service model will help capture this revenue and implement an operating model that can ensure profitability. 2 PwC Service & Engagement: How to step up and stand out in this era of social and technical change

5 Service-driven revenue and retention Industry case examples To redesign Service operations, companies must first embrace a new definition of value and how it is created. To start, what if Service were measured on its contribution to an organization s top and bottom lines? What if the measures were a version of the three areas of contribution we ve discussed? Some leaders are already implementing measures such as these. For instance, Zappos agents are expected to spend 80% of their time talking to customers, which is a metric referred to as personal service time. Agents have the flexibility to use talk time with customers to deliver brand-defining service. The result? More delighted customers, loyalty and revenue. Let s look at two other industries and examine how their Service organizations have adopted the same principles but have achieved them in very different ways. Wireless provider customer service: Consider the wireless customer who calls with a few months remaining on her two-year contract. The agent realizes the customer does not use all of her minutes and offers renewal with a better plan at a lower price point. What just happened? Customer churn is a problematic area for this carrier. Through the agent s proactive engagement, the customer received a tailored offering, relevant to her needs, and signed up for another two years. As a result, the wireless provider retains the customer for another contract cycle thus meeting a major challenge for most businesses that have subscriber-based revenue models. Industrial product customer service/aftermarket: A manufacturing plant manager calls the customer service organization of one of his capital equipment suppliers to report a stopped machine and request a field maintenance technician. The contact center service representative has access to the entitlement warrantee information for this customer and therefore sees that this is the third field deployment of maintenance technicians to one of the manufacturer s facilities. The agent is in a position to convert this customer care contact to a point-of-sale event. He recommends a more suitable service contract that will provide a higher service level and service coverage at the same or lower cost per year. In addition to providing coverage for the current equipment, the agent shares subscription information to help this customer better manage his equipment (asset management). This analytics subscription will give the manufacturer optimum preventative maintenance schedules, based on data uploaded from thousands of similar and internet-connected equipment installs worldwide. What just happened? The industrial products agent provided a solution to the manufacturer and sold a multiyear service contract. Such contracts are typically far more profitable than the industrial product itself. Additionally, the service contract positions the manufacturer to maintain its install base with this customer (share of wallet). In both B2B and B2C environments, Service personnel and digital service channels should be designed to convert a contact into a point-of-sale opportunity that serves the best interests of the customer. What to consider as you move toward Service s new mission Moving toward a differentiated customer service organization is a growing priority for all the reasons we have identified. The path to it will be different depending on the specifics of your industry, your competition and your customer or account base. We have seen some common patterns in this transition journey. Five common challenges arise as companies undertake change in their Service organizations. 3

6 We have seen some common patterns in this transition journey. Five common challenges arise as companies undertake change in their Service organizations. Area of change Strategy Aligning Service strategy to enable broader enterprise objectives such as those in Marketing and Sales. Analytics Incorporating data capture to feed analytics that help the company distill customer insights and improve customer and experience Multichannel/ omnichannel Making deliberate decisions on serving customers/large accounts through multiple channels beyond the phone and toward social networks such as community forums. Lean/effective service Reducing waste and deploying resources to more productive initiatives, such as customer insights for Service, Marketing or Sales effectiveness Technology Revisiting technology, in light of new capabilities and economics available through off-premises solutions Common challenge Too often, Marketing, Sales and Service either are too competitive or don t recognize how they can complement each other in the context of customer experience. Root causes range from traditions of working in silos to the overly narrow compensation programs. Bringing these leadership teams together to define the optimum customer experience and the corresponding contributions of Marketing, Sales and Service in that continuum will help. The most common challenges involve inappropriate technology, disparate data across too many systems and data integrity. To address these challenges, companies are buying and implementing analytic tools. A common pitfall in organizations moving toward a technology and data-centric capability is ensuring that people have the right skills and processes to define, capture and act on the analysis insight. Well-developed customer service organizations tend to be phone dependent. Simply put, that is the status quo. On the other side of the spectrum are organizations that are overly automated the ones applying the 10-branch interactive voice response systems and a quick disconnect for selecting 0 too early. The path forward here is to make a decision on the right customer experience across and within channels based on customer insight. Measurement and performance improvement remain key for decisions, management and improvement. What is important to customers is changing as are the capabilities of the Service organization. As a result, customer service organizations need to refresh their measures and how they are contributing to the commitments to revenue, customer relationship, data capture and other elements we discussed earlier. Technology must deliver benefits in automation, speed, ease, consistency and so on. When existing technology is not supporting the business, alternatives must be sought. The good news is that today s alternatives include breakthroughs in game-changing models such as off-premises cloud computing. 4 PwC Service & Engagement: How to step up and stand out in this era of social and technical change

7 Dramatic social and technical changes are reshaping almost every aspect of our professional and personal lives, across all demographics. As we adapt, we form new habits, preferences and expectations as consumers. From a consumer standpoint, these changes are at the heart of what drives the new expectations we have of commercial relationships an opportunity for many organizations to reposition Service as the benefiting disrupter in their industry. 5

8 PwC professionals Mark Jenson Principal, Customer Practice Consumer, Industrial Products and Services Luis Natal Director, Customer Practice Consumer, Industrial Products and Services (770) (678) Tara Meyer Principal, Customer Practice Consumer, Industrial Products and Services (310) PwC Service & Engagement: How to step up and stand out in this era of social and technical change

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