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Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty, and Maximize Profits

Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty, and Maximize Profits

by John A. Goodman

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The success of any organization depends on high-quality customer service. But for companies that strategically align customer service with their overall corporate strategy, it can transcend typical good business to become a profitable word-of-mouth machine that will transform the bottom line. Drawing on over thirty years of research for companies such as 3M,


The success of any organization depends on high-quality customer service. But for companies that strategically align customer service with their overall corporate strategy, it can transcend typical good business to become a profitable word-of-mouth machine that will transform the bottom line. Drawing on over thirty years of research for companies such as 3M, American Express, Chik-Fil-A, USAA, Coca-Cola, FedEx, GE, Cisco Systems, Neiman Marcus, and Toyota, author Goodman uses formal research, case studies, and patented practices to show readers how they can:
• calculate the financial impact of good and bad customer service
• make the financial case for customer service improvements

systematically identify the causes of problems
• align customer service with their brand
• harness customer service strategy into their organization's culture and behavior

Filled with proven strategies and eye-opening case studies, this book challenges many aspects of conventional wisdom—using hard data—and reveals how any organization can earn more loyalty, win more customers...and improve their financial bottom line.

Editorial Reviews

From the Publisher
[Five Stars] "People involved in company strategy or customer service should drop what they are doing and read this five-star book now. For others, it provides an excellent perspective on the value of customer service. Strategic Customer Service is the best book on customer service, in terms of concepts and practical solutions, I have read in a long time. Goodman's wonderful, well-integrated stories are the frosting on the cake." —Grazadio Business Report

Selected by Customer Service Newsletter as one of the best customer service books of 2009: "If your company's goal is to create a customer experience that builds relationships and increases customer lifetime value, Goodman's book offers the research data to support such an effort and a blueprint for achieving it."

Product Details

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Read an Excerpt


Why Strategic Customer Service?

EVERY ORGANIZATION’S SUCCESS depends on its keeping customers satisfied with the goods or services that it offers, yet most executives tend to view the customer service function of their business as little more than a necessary nuisance. That strikes me as paradoxical. Companies that spare no expense to build their brands, improve their operations a and leverage their technologies often skimp on investments that preserve and strengthen this final, vital link in their revenue chain. Indeed, leaving aside the investment aspect, many of these same companies simply don’t have a customer service strategy to manage the end-to-end customer experience, from sales to billing.

That is why I have aimed this book at all senior management, with an emphasis on finance and aspiring chief customer officers. The book will not focus on answering the phone, but rather on the revenue and word-of-mouth implications of having or not having a strategic approach for all customer touches and managing an end-to-end experience.

As we all know from being customers ourselves, poor service can undermine all of a company’s efforts to retain and expand its customer base. As customers, we know how we respond to poor service: We go elsewhere, and we often tell our friends and colleagues to do the same.

But as businesspeople, we undergo a kind of amnesia that prevents us from seeing how that same mechanism applies to our customers. Not long ago, I was speaking with the CFO of a leading electronics firm who suffered from this amnesia. As an engineer, he felt that the superiority of his company’s electronic products ensured their superior market position. a then asked him what brand of car he drove and how he liked the dealership.

He scowled and said, ‘‘I hate them! They’re just terrible.’’ When a pointed out, ‘‘You have customers who feel the same about your company,’’

he immediately saw my point.

Some executive teams, blessed with extraordinary empathy or insight (or perhaps competitiveness), do understand the role of customer service in the growth of their revenue, profits, and business. My work with organizations that consistently excel at this responsibility has led me to conclude that they have one thing in common: a strategic view of, and approach to, customer service.

A strategic view perceives customer service as vital to the end-to-end customer experience, and thus to the customer relationship. This view also considers customer service to be a full-fledged member of the marketingsales-service triumvirate. Such a view starts with setting expectations a moves on to selling and delivering the product in ways that suit the customer a and extends through superb support and clear, accurate billing. A

strategic approach also recognizes that the service function produces a wellspring of data on customer attitudes, needs, and behavior. These data a when combined with available operational and survey data, can be used as input in virtually every effort to shape the customer experience, from product development to marketing and sales messages, and from handling of customer complaints to the overall management of the entire customer relationship. In these ways, customer service acts as a strategic catalyst for every organizational function and process that touches the customer.

Why a strategic catalyst?

Strategic customer service stands at the point where all organizational strategies come to fruition in a great customer experience—or do not. Product development, operations, marketing, sales, finance a accounting, human resources, and risk management all affect the cus-tomer in myriad ways, for better or worse. But when something goes wrong, customers don’t call the director of product development, the manager of operations, or the vice president of marketing (and they probably shouldn’t be calling salespeople—about which more in Chapter 3).

They call customer service. When they do, customer service must preserve the relationship, gather information, and improve the process a wherever the problem originated.

As a catalyst, strategic customer service can, like any catalyst, transform the entities and functions it touches, making the organization more proactive, accelerating its responsiveness, and boosting its effectiveness.

Service can help marketing, for instance, move from sales messaging to capitalizing on customer intelligence and improving products and services.

For example, Allstate is now contacting the parents of young motorists as they turn 16, before they pass their driver’s tests. The company suggests a parent-teen contract, explains how the impending rate increase will be calculated, and provides guidance on coaching new drivers (including an extremely popular Web video whose music has moved into the mainstream). This program results in calmer parents who feel more in control and who exhibit significantly greater loyalty to Allstate.

Likewise, strategic customer service can accelerate product development and uncover new distribution channels. It can relieve salespeople and channel partners of troubleshooting duties so that they can focus on selling.

It can transform finance from a countinghouse into a funding source that is supportive of new processes and services that increase customer retention, positive word of mouth, and market share.

Moreover, strategic customer service is applicable in any market a from consumer packaged goods and financial services to health care, from business-to-business environments such as chemicals and pharmaceuticals to government agencies and nonprofits. TARP has helped organizations in all of these arenas to benefit from a strategic approach to service a beyond the tactical service functions of responding to customer inquiries and problems.


Customer service has come a long way from the days when ‘‘complaint departments’’ received letters from irate customers and decided whether to ‘‘make good’’ on some explicit or implied promise. Today’s tactical service function is often outsourced, offshored, and global, supported by state-of-the-art technology, aligned with the brand strategy, and integrated with the customer experience. It is now a support, sales, and relationship management function. It’s a means of tracking the value of every customer and, on that basis, satisfying customers, delighting them a explaining why you’ll have to charge them more, or gently showing them the door. Service interactions are also the prime generator of the single most powerful marketing mechanism: positive word of mouth and word of mouse.1 Companies with great word of mouth incur almost no marketing expense because they let their customers do their selling for them.

None of this happens by accident or only at the tactical level. It happens when senior management grasps the pivotal role of service in the customer relationship and recasts this outcast stepchild of marketing a sales, and operations as a guide, problem solver, communicator, reporter a and breadwinner. Often, the executive committee anoints one of its number as the chief customer experience officer. Where such a position doesn’t exist, the head of customer service often performs that role.

The evolution begins with an examination of the current customer experience, all current customer service and customer-touching activities a and your current sources of information on those activities. Take market research. Recently a telecom executive told me, ‘‘We’re spending

$12 million a year on surveys, and we have almost no actionable information.’’

Once the company recognized this, it used customer contact data to supplement the surveys and produced a real-time picture of the customer experience. This, along with data on product performance and problems and on customer attitudes and preferences, enabled the company to identify massive savings while improving the customer experience.

Some companies know the value of customer contact data, yet even a was surprised to hear Powell Taylor, the General Electric executive who established the GE Answer Center, say, ‘‘The average GE customer service rep can provide the input of data equal to about 10,000 completed market research surveys, because that is how many customers they’ve talked with.’’ That makes a strong case for compiling and analyzing data from customer service interactions. That’s also why the GE Answer Center reports to the Appliance Division’s senior management.

So, in both purpose and functionality, customer service has evolved far beyond the complaint departments of 30 or more years ago to become pivotal in building and sustaining customer relationships.

Meet the Author

John A. Goodman (Arlington, VA) is Vice Chairman and co-founder of TARP World­wide, an organization Tom Peters has called “America’s premier customer service research firm.”

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