Managing Customer Service Innovation

If the quality of customer service is a powerful way for brands to distinguish themselves, then having that extra something over competition ought not to be left to chance.

But how many of us here in the UK have a thought through policy around customer service innovation and a team charged with that responsibility? Particularly one that spans call centre, online, mobile  and retail channels!

What Does Customer Service Innovation Mean?

By the way I’m not talking about those teams involved with Quality Monitoring, Speech Analytics or even a Voice of the Customer programme. All of them can contribute to an innovation agenda but their main focus is normally about fixing or improving metrics such as SLAs or customer scores.

Innovation is less about improving what you’ve already got. By definition it’s about invention and bringing to market something new. Although every inventor knows to plan their cashflow on a success rate of just 1:10, the few that do get to market will often  shine in spectacular contrast to the rest of a ‘me-too’ market.

Think mpeg players and then think iPod/phone/pad.  In fact, if you know your Apple history, all these had their unsuccessful earlier versions. It was trial and error over time which unlocked the formula that finally worked so well on so many millions of consumers globally.

So the first lesson here is that it’s tough to make innovation happen but the prize is great when it’s achieved. And this is why the topic of customer service innovation is so ripe for the taking.

Options In How To Look The Best Choice For Customers

In crowded markets of similar products, the reason to choose one brand against the rest normally comes down to what? Often price since it’s the easiest to compete on. Unfortunately it’s also the easiest to imitate. So margins get destroyed in the unfolding tactical battle.

Functions and features are the next most obvious source of being different. This has its uses at first. If all you can offer is black, then white might attract more customers. But at what point in the rainbow does choice become counter productive? There are quite a few studies out there that show too much choice paralyses decision-making. Particularly when someone lacks experience because they don’t make that type of purchase very often.

Notice though I did not say extensive choice is always a poor way to compete. There are many online retail stores that work for that very reason. They specialise in having access to everything in the niche they compete in. That’s why the experienced customer comes to them. Precisely for the range of choice that the other mainstream retailers have walked away from. And normally customers are prepared to pay a premium since alternative sources of supply aren’t there to trigger discounting.

So it just depends. But ever since I’ve worked, there has been an ongoing background debate about the value of competing on service. The associated research usually claims service often matters more to customers than price or extra features. Also that it’s tough to imitate as a short-term tactical response, so it’s a defendable position to adopt. On paper it’s a strategist’s dream!

Probably the only factor in that argument that’s changed over thirty years is the extent to which it’s become universally true. In other words, anyone who wants to survive now has to be so good at product based competition that it’s  become an even playing field. So everyone is looking for an edge. And service sounds like a great idea. Trouble is, very few brands tackle it properly.

Maybe that’s an opportunity for you!

Can The Service Industry Learn From Manufacturing?

The reason I started thinking about all this was down to a recent article:  ‘Somewhere To Put Tech Ideas Into Practice’ by Jonathan Guthrie of the Financial Times. It was something that caught my eye as I sped down the railway line  for the forty-two minutes it takes to get from where I live to London’s Euston station.

The article speculated on the government’s current appetite for slash & burn budget reductions. Apparently the UK manufacturing sector has the same sort of problem just discussed. We are good as a nation at producing lots of fresh ideas. But we fall down at the next hurdle which is testing them out. The net result is that too little innovation gets to market.

The manufacturer’s solution takes the form of five industrial innovation centres being built to the tune of £128m. Hence the Treasury’s interest. The centres provide a collaborative space in which university researchers, manufacturers and suppliers can put ideas into practice, using equipment normally too expensive to individually fund.

To my mind the parallels with the customer service industry were immediately clear. In fact, one of the financial service groups I provided in-house best practice forums to during 2008/9 were an interesting example of what I’m talking about.

The audiences I attracted to those sessions were senior across the functional spectrum. They used the sessions to trigger wider debate about next generation customer service capabilities. Although I enjoyed them, I was frustrated. So I asked them before the start of year two why so much talk and so little experimentation? I learnt a lot about why innovation is so tough in their kind of  environment.

In common with the FT manufacturing article, there were plenty of ideas in play. They could see what competition was up to and were in tune with customer demand. While the organisation as a whole might be accused of lacking innovation, this was certainly not true of those individuals.

Their problem was a corporate culture seeped in risk management. An IT group that worked on twenty-four month horizons and did not want to be disturbed with tactical anomalies to their grand plan. And a procurement function that always demanded a cast iron ROI thus destroying any hope of open-ended experimentation.

I’m sure that snapshot hits home in many organisations you’ve worked in!

Innovation, Risk & Internal Renegotiations

So the challenge was to change the way innovation was approached at organisational level: in this case personal motivation was fine. The place to start was getting to grips with how the current set of assumptions and considerations had grown up.

For instance it’s not too hard to understand why a certain form of ROI (read guaranteed savings!) is needed when a full-on investment is being requested. But what happens if a smaller budget is required for action-based research? In other words it’s used up with real customers to innovate new service experiences. Remember most people did not know they needed an iPod till they started using it and it changed their lives musically.

What gets learnt from these innovation experiments is always regarded as a success. Why? Because playing the 10:1 game of converting ideas into successful innovation becomes the new context and assumption for granting the budget. It’s become recognised as ‘worth it’ in the important centres of internal decision-making because of the potential upside.

How else is this new logic applied?

IT’ issues with using unproven technology from vendors that don’t fit the internal strategic roadmap can be also managed in the same way. Redefine the rules. For instance the vendor specific technology for experiments is now assumed to be ‘throw away’. Costed into the price of learning.  Moreover IT retains ownership of the final choice of vendor as and when that particular solution finally turns up on their to do list.

That drives the next set of rules. Keep the technology cheap and unable to infect the live service environment. A good choice these days might be to rent it from the cloud. Or some other way of containing the experiment in a sandbox with a turn on/off pricing and usage policy. In this way a new opportunity can be operationally explored and the chance to innovate with a controlled number of customers. Again without frightening PR and the Customer Experience Director with brand damaging stories.

The principle that I hope is emerging here is one of renegotiating to achieve a new win-win. Traditional concerns become satisfied without squeezing out innovation. The net result of developing a clear policy around customer service innovation is to generate  a new space allowing organisations to become mor more agile and speedy in their response.

Get that up and running and suddenly, the potential value of customer service is transformed with teams actively looking for this year’s new service experience to create a clear difference between you and competition.

As Bruce Temkin would say that’s called ‘experience based differentiation‘. But right now “The difficulty is in getting ideas to market” as one of the manufacturing commenters from the FT article so aptly concluded.