Keeping customers happy during hard times



Skimping on customer service is a common and sometimes costly response to tough economic times. However, by continuing to diligently manage the customer experience, companies can maintain quality while still saving money.

The challenge that the economy is placing on consumer companies (i.e. airlines, banks, and retailers) is the difficult decision of cutting back the service levels that customers now expect in the current market. For Example: such companies are closing retail locations, reducing hours of operation, and making do with less staff in stores and call centres. 

Meanwhile, faced with rising costs, these companies are also increasing prices, either overtly or through fees. As a result, CX research shows that satisfaction scores are actually plunging in a number of industries. Therefore, it’s not surprising that most leading executives think that compromising service levels is a big mistake. 

After operating for 30 years we have found that the majority of business leaders agree that improving the customer experience is growing in importance to their companies, customers, and competitors.

But how can consumer businesses make the required investments in service while facing the pressure on revenues and costs? The team at HOED Research analysed the companies with the best customer service records across ten different industries and found that one key strategy is to minimise any and all wasteful spending while also learning to invest in the drivers of satisfaction. 

It should be a new norm for companies to challenge their beliefs about service and test those beliefs analytically. Many will discover that long-held but rarely-reviewed claims about what customers really want are wrong.

Here is a good example – “average time-to-answer” is one of the most common metrics used in call centres. The service level expectations here are often set by call-centre managers and adequate staffing requirements are calculated accordingly. However, the common issue here is that service levels are challenging to maintain and costly to improve – i.e. Simply raising service levels by 10 percent will require significantly more than a 10 percent increase in staff.

Companies that closely manage the customer experience have taken a meticulous approach to innovating service levels and, in some cases, are actually saving money in the long run. Ultimately, these companies have carefully measured and analysed the “breakpoints” to identify their customers’ true sensitivities to service level changes. 

For example: A company specialising in wireless telecommunications services, found that their customers had two “breakpoints” at X and Y seconds during a call. Answering the phone immediately (< X seconds) produced delight, while customers left on hold for longer (> Y seconds) produced strong dissatisfaction. 

The company considered raising service levels to meet the “delight breakpoint” or reducing them to just above the “patience threshold.” Ultimately, customer-lifetime-value economics pointed to the second option: relaxing service levels but not crossing the patience threshold. The drop in customer satisfaction was trivial, however, the overall savings in staffing were outstanding! the company ended up saving more than $7 million annually, much of which was effectively reinvested into further improvements.

A second area of overinvestment that is often observed involves capital and technology. For example: a bank was investigating a costly ATM upgrade, which aimed to improve the user interface and enhancing user privacy via scree barriers. The banks analysis found that the equipment was moderately important – only driving a 5% increase of overall satisfaction. Alternatively, more mundane factors (i.e. adequate ATM locations and a consistent availability of cash in all machines) were not only 50% more important to customers but also perceived by customers as a bigger problem for the bank. As a result, the bank pulled the plug for ATM upgrades and redirected those funds towards addressing accessibility issues and cash-out conditions.

Finding these savings requires conscientious collection and analysis of customer experience analytics. This is inclusive of but not limited to:

  • Collection of customer-level data.
  • Matching survey responses to actual behaviour, and
  • Statistical analysis that differentiates to the extent possible between correlation and causation.

Sophisticated companies that are motivated to figure out what matters most to their customers, eliminate the investments that don’t matter, and fund the ones that do will flourish and even may find themselves, when the economy balances itself out, with fewer competitors.

Contact us today for help taking your Customer Experience to the next level!