Breaking the Vicious Cycle - Part 1

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This is the first blog in a three-part series.

StaircasePoor customer experiences cost companies both customers and revenue. Here are three steps to help companies change course and create a virtuous cycle of satisfaction and profitability.

We all have a story. You know the one. You make a phone appointment to repair your washing machine and when the repairman arrives six hours later after three delays, he apologetically tells you that he brought the wrong part. Or you call your Internet service provider for technical support. You enter your information into the IVR only to be asked for it again by a live associate before you’re transferred to the tech support associate who asks for the same information. You finally hang up the phone. You are frustrated, dissatisfied, and you vow never to do business with that company again. It’s the beginning of the Vicious Cycle.

The Vicious Cycle starts with one bad customer experience. That experience leads to customer dissatisfaction. If the company does nothing to make amends or improve its customer experience, the customer defects. That customer tells other customers. The company loses customers—and money. In turn, the company cuts costs in customer care, which worsens the customer experience. And down it goes from there.

Step One: Just Make it Easy

The good news is that it’s possible to break the cycle, and it’s a lot less complicated to do than most business leaders believe. According to the recent Harvard Business Review study “Stop Trying to Delight Your Customers,” when it comes to service, companies create loyal customers primarily by helping them solve their problems quickly and easily. That means: Get the basics right. Remove the obstacles. Resolve the issue on the first call with a single point of contact. It doesn’t require complicated loyalty programs or surprise and delight strategies.

So, why doesn’t it happen? Companies don’t wake up in the morning planning to frustrate their customers. They don’t sit in board rooms building strategies to drive their customers into their competitors’ arms. Most companies are just not wired for the 21st century. They’re built the old way. Their people, processes, and technology are organized around a supply chain that is designed to support product silos. Add to it bolt-on acquisitions, antiquated systems, a disengaged workforce that is not culturally supported to solve customers’ problems, and disconnected front and back offices and, well, you get the picture.

External experiences that feel fragmented and disconnected to the customer are usually the result of systems and behaviors that are fragmented and disconnected internally. These dissatisfying experiences are the result of complex corporate behaviors and deeply engrained beliefs built around how best to maximize profitability. Consequently, most business processes and systems are designed to meet the internal needs of the company. The processes aren’t actually broken; they were never developed from the customer’s perspective.

From our experience working with companies all over the world, we see the following explanations for why companies are slow to take the steps required to break the Vicious Cycle.
  • Not looking in the mirror: Many companies do not have an accurate view of how they are perceived by their customers. They are proud of their brands and their products and are not keeping up with world-class companies that are improving and becoming increasingly customer centric.
  • We are the best in our industry: A high tide raises all boats. So you are the best in the industry…Who cares? Customers now expect an Amazon experience from the button maker down the street, too.
  • The ostrich syndrome: Some companies have their heads in the sand, afraid to embrace new technology. Outdated technology becomes an impediment to success. Legacy systems and the cost constraints of IT departments slow the required rate of change. The “maybe this will go away” strategy pervades.
  • Where do we start?: Breaking the Vicious Cycle is a complicated area to address since multiple departments are involved. Because it also involves a blend of systems, process, and people, it is difficult to untangle where to begin.
  • Risky business: Most individuals avoid the risk associated with exponential change. In this economy people feel they could get fired for making the wrong decisions, so the tougher decisions are rationalized away. The true innovators separate themselves from the pack by taking educated risks based on in-depth knowledge of the customer.
  • Procurement mentality: Send it to procurement and they will make the tough decisions. Award the customer service contract to the lowest cost provider and the CFO will be pleased.
  • BPO contracts make it too complicated: Some decision makers think that most outsourcers engage in overly prescriptive, overly complicated contract models. They also think outsourcers tend to track far too many metrics, and don’t focus enough on meeting the highest-level business goals or having effective, closed-loop processes in place.