Q&A with St.George Bank Limited - Customer Service Institute of ...
Q&A with St.George Bank Limited - Customer Service Institute of ...
Q&A with St.George Bank Limited - Customer Service Institute of ...
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customer service<br />
excellence<br />
The Official Journal <strong>of</strong> the <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
Australian issue # 28<br />
NOVEMBER 07<br />
New 100%<br />
Government<br />
Funding for<br />
CSIA <strong>Customer</strong><br />
<strong>Service</strong><br />
Excellence<br />
Programs<br />
Q&A <strong>with</strong> <strong>St</strong>.<strong>George</strong><br />
<strong>Bank</strong> <strong>Limited</strong><br />
Antoine Casgrain<br />
and Paul Fegan<br />
Enrol in<br />
Australia’s<br />
only Certified<br />
<strong>Customer</strong> <strong>Service</strong><br />
Manager Course.<br />
CSIA- Australia’s Peak <strong>Customer</strong> <strong>Service</strong> Association.
Contents<br />
02<br />
08<br />
15<br />
Q&A <strong>with</strong> <strong>St</strong>.<strong>George</strong> <strong>Bank</strong> <strong>Limited</strong><br />
New 100% Government Funding for CSIA <strong>Customer</strong><br />
<strong>Service</strong> Excellence Programs<br />
Measuring the Financial Cost <strong>of</strong> Bad <strong>Service</strong><br />
Art Director<br />
Tiffany Mehnert<br />
Editor<br />
Christine Churchill<br />
Contact CSIA<br />
info@csia.com.au<br />
www.csia.com.au<br />
(02) 9386 4477<br />
Welcome to the 28 th edition <strong>Customer</strong> <strong>Service</strong> Excellence Magazine!<br />
We are excited to have on our cover this issue, the new CEO <strong>of</strong> <strong>St</strong>.<strong>George</strong><br />
<strong>Bank</strong>, Paul Fegan and Antoine Casgrain General Manager <strong>of</strong> <strong>Customer</strong> Contact<br />
Centres for <strong>St</strong>.<strong>George</strong> <strong>Bank</strong>. Both Paul and Antoine were part <strong>of</strong> <strong>St</strong>.<strong>George</strong><br />
<strong>Bank</strong>’s successful Australian <strong>Service</strong> Excellence Award judging visit and we are<br />
very pleased to feature the story <strong>of</strong> one <strong>of</strong> Australia’s Leading <strong>Customer</strong> <strong>Service</strong><br />
Organisations in this issue <strong>of</strong> the magazine.<br />
We congratulate Paul Fegan on his new appointment and we are impressed that<br />
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong> is maintaining its tradition <strong>of</strong> appointing CEO’s who can deliver<br />
<strong>Customer</strong> <strong>Service</strong> Excellence.<br />
In addition, we have included Brett Whitford’s white paper on the Cost <strong>of</strong><br />
Bad <strong>Service</strong>. This insightful article will make it clear, even to the skeptics, the<br />
importance <strong>of</strong> investing in customer service team members and the absolute<br />
importance <strong>of</strong> sublime customer service. Make no mistake that customer<br />
service team members are the heart and soul <strong>of</strong> an organisation.<br />
Don’t forget to talk to us about our new CSIA accredited government funded<br />
training opportunity. This outstanding program will set you apart in the industry.<br />
Wait until you hear all we can for you! And at no cost to you or your organisation!<br />
As always, we seek and welcome your feedback — please email any contributions<br />
or ideas to info@csia.com.au. If you are interested in reviewing a book or<br />
contributing an article for one <strong>of</strong> our upcoming magazines, please let us know.<br />
Happy reading!<br />
Christine<br />
The <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia was established in 1997 to serve the needs <strong>of</strong> all Australians who work in customer service. Today<br />
it is our nation’s peak customer service body and secretariat for the International Council <strong>of</strong> <strong>Customer</strong> <strong>Service</strong> Organisations. ICSSO is an<br />
international collective <strong>of</strong> organisations promoting service excellence through the International <strong>Customer</strong> <strong>Service</strong> <strong>St</strong>andard certification program<br />
and the International <strong>Service</strong> Excellence Awards.<br />
Our members include CEO’s, business owners, government employees and <strong>of</strong> course customer service pr<strong>of</strong>essionals. High quality customer<br />
service is universally regarded as imperative for long term business success. To enhance customer service in your organisation join the CSIA.<br />
We are driven by and committed to the development <strong>of</strong> people, systems and standards to improve customer service.<br />
The CSIA is a not-for-pr<strong>of</strong>it company limited by guarantee.
<strong>St</strong>.<strong>George</strong><br />
<strong>Bank</strong> <strong>Limited</strong><br />
Antoine Casgrain, General Manager<br />
<strong>of</strong> <strong>Customer</strong> Contact Centres for<br />
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong>, and Paul Fegan,<br />
CEO <strong>of</strong> <strong>St</strong>.<strong>George</strong> <strong>Bank</strong><br />
Q<br />
Briefly describe your position<br />
and role in the company.<br />
My position is <strong>St</strong>.<strong>George</strong> General Manager<br />
<strong>Customer</strong> Contact Centre (CCC), I am<br />
responsible for the <strong>St</strong>aff, <strong>Customer</strong> &<br />
Financial results <strong>of</strong> <strong>St</strong>.<strong>George</strong> <strong>Bank</strong>’s multisite<br />
Contact Centre. My role is to guide &<br />
develop a team <strong>of</strong> six business managers<br />
to achieve these outcomes.<br />
Q<br />
What training and development<br />
programs exist to drive<br />
development in <strong>Customer</strong> <strong>Service</strong><br />
at all levels <strong>of</strong> the organisation<br />
All our training initiatives must support our<br />
vision to become the ‘most respected service<br />
organisation in Australia’. The Contact<br />
Centre’s overarching goal is to achieve formal<br />
accreditation from the <strong>Customer</strong> <strong>Service</strong><br />
<strong>Institute</strong> <strong>of</strong> Australia (CSIA) <strong>with</strong>in 18 months.<br />
All our day to day training initiatives feed<br />
nicely in the organisation’s vision and the<br />
CCC’s objectives:<br />
‘e-Luminate’ Online Training Courses are<br />
mandatory for all staff members, the first<br />
being <strong>Customer</strong> <strong>Service</strong> Fundamentals, which<br />
provides a broad understanding <strong>of</strong> “Our<br />
Roadmap” and the <strong>St</strong>.<strong>George</strong> <strong>Customer</strong><br />
Experience Model. This session also provides<br />
a foundation for understanding the servicebased<br />
initiatives underway across the Group.<br />
The second <strong>of</strong> the series is ‘Living <strong>Customer</strong><br />
<strong>Service</strong>’, this helps the staff member to<br />
understand what we need to do around<br />
customer service to maintain our differentiation<br />
and identify what they can do to shift our<br />
customers to the “Zone <strong>of</strong> Delight”.<br />
Further to this, Contact Centre-specific<br />
training modules have been developed to<br />
enhance s<strong>of</strong>t skills in customer facing staff,<br />
such as <strong>Customer</strong> <strong>Service</strong> Fundamentals and<br />
CUSTOMER SERVICE EXCELLENCE<br />
THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA<br />
2
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong> <strong>Limited</strong>…continued<br />
Q<br />
Smile in the Voice & Conflict Resolution. This<br />
training is delivered online and is divided into<br />
short modules <strong>of</strong> 15-20 minutes to allow<br />
consultants to complete them through the<br />
course <strong>of</strong> normal business in quiet times.<br />
Our Leaders and Senior Consultants also<br />
attend a 2 day workshop on Developing Great<br />
<strong>Service</strong> Turnaround Skills, for example how<br />
we respond when someone complains is<br />
a real “moment <strong>of</strong> truth” for the customer,<br />
and an opportunity to show true service<br />
differentiation, re-win the customer’s loyalty<br />
and advocacy and even gain business.<br />
We also work <strong>with</strong> external training providers.<br />
One <strong>of</strong> our most effective courses is the<br />
‘Impromptu Counsellor’ provided by Helen<br />
Cummins. The course looks at development<br />
<strong>of</strong> skills and self-awareness essential in the<br />
successful handling <strong>of</strong> customer complaints<br />
and difficult customer interactions. We have<br />
also invested in the art <strong>of</strong> ‘taking responsibility<br />
and control <strong>of</strong> issues’ <strong>with</strong> a most engaging<br />
Sports Psychologist Dr. Phil Jauncey. And just<br />
recently we have done some NLP work (Dr.<br />
John Gora) to provide verbal tools to better<br />
engage <strong>with</strong> the customers over the phone.<br />
Q<br />
What management techniques<br />
are used, describe the best<br />
aspects <strong>of</strong> employee relations and<br />
the managerial style <strong>of</strong> the company<br />
I hold quarterly <strong>St</strong>aff Briefings <strong>with</strong> all staff, to<br />
set the scene and the expectations for the<br />
months to come. We’ve built a transparent<br />
culture where individual and team results are<br />
publicly shared and celebrated. I believe this<br />
underpins the <strong>St</strong>.<strong>George</strong> ‘ExCITE’ values <strong>of</strong><br />
excellence, customer focus, integrity, ,<br />
teamwork and valuing each other.<br />
The style <strong>of</strong> the CCC Leadership team is<br />
very consultative <strong>with</strong> monthly focus groups<br />
(called Fireside Chats) and staff committees<br />
are formed whenever significant change<br />
management is required.<br />
CUSTOMER SERVICE EXCELLENCE<br />
THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA<br />
3
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong> <strong>Limited</strong>…continued<br />
The program demonstrates<br />
to frontline staff<br />
that the <strong>St</strong>.<strong>George</strong><br />
Executive management<br />
team are committed<br />
to the <strong>St</strong>.<strong>George</strong><br />
service culture.<br />
I put aside one full day per fortnight to be on<br />
the floor to listen to calls and touch base<br />
informally <strong>with</strong> staff. Other avenues for staff<br />
to provide feedback and suggestions are their<br />
own team meetings, the ‘CCC feedback’<br />
email address and the very popular ‘Roz Wall’<br />
situated at the entrance <strong>of</strong> each Call Centre.<br />
<strong>St</strong>aff are invited to write comments which<br />
I personally respond to <strong>with</strong>in 24-48 hrs.<br />
Q<br />
Has the workforce been<br />
involved in developing<br />
strategies for success What areas<br />
were identified by employees to<br />
improve the company’s operations<br />
Every one <strong>of</strong> the CCC staff members speaks<br />
to between 60 to 100 customers per day.<br />
<strong>St</strong>aff are an invaluable source <strong>of</strong> Business<br />
and <strong>Customer</strong> Intelligence. My first action<br />
whenever an issue arises is to walk the floor<br />
and seek the staff’s, and thus the customer’s,<br />
perspective on the situation. We recently<br />
found that staff were consistently commenting<br />
on our ‘hold music’ and ‘on-hold messages’.<br />
Investigation indeed confirmed that our<br />
approach was fragmented and inconsistent<br />
between various phone queues. We thus<br />
set out to completely review the ‘in-queue<br />
customer experience’ for our customers.<br />
The early results are most encouraging <strong>with</strong><br />
customers now pro-actively commenting<br />
about the music and the ‘pleasant voices’<br />
on the messages on hold.<br />
Q<br />
What systems and processes<br />
exist to promote ongoing<br />
<strong>Customer</strong> <strong>Service</strong> improvement<br />
across the organisation<br />
The CCC’s Listening Post program invites<br />
more than 200 <strong>St</strong>.<strong>George</strong> Group executives<br />
and key stakeholders to listen to calls for 90<br />
minutes and participate in a 30 minute debrief<br />
session to provide feedback. The program<br />
demonstrates to frontline staff that the<br />
<strong>St</strong>.<strong>George</strong> Executive management team are<br />
committed to the <strong>St</strong>.<strong>George</strong> service culture.<br />
The experience is also invaluable for them as<br />
they get to regularly monitor the pulse <strong>of</strong> our<br />
customers first-hand. Of course, CCC staff<br />
love showing <strong>of</strong>f their good skills and the CCC<br />
management never miss an opportunity to<br />
lobby particular executives for their time and<br />
resources to address specific issues that need<br />
prompt attention!<br />
We also launched the ‘Business Rule<br />
Challenge’ (BRC) where staff are invited to<br />
challenge any unfriendly or cumbersome<br />
process or protocol. The CCC staff raised<br />
CUSTOMER SERVICE EXCELLENCE<br />
THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA<br />
4
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong> <strong>Limited</strong>…continued<br />
Every quarter up to 10 colleagues<br />
become <strong>Customer</strong> <strong>Service</strong><br />
Super<strong>St</strong>ars…They have shown that<br />
they consistently provide exceptional<br />
service to their customers and really<br />
do go above and beyond.<br />
over 1200 BRCs in 2 years. 86% have<br />
now been closed satisfactorily. The BRC<br />
program has provided CCC staff an avenue<br />
to share customer frustrations <strong>with</strong> our<br />
processes as well as a medium to provide<br />
their ideas/suggestions to improve our<br />
customer experience.<br />
Q<br />
How does the organisation<br />
recognise and reward staff in<br />
relation to <strong>Customer</strong> <strong>Service</strong><br />
The <strong>St</strong>ar Awards is a Group-wide recognition<br />
program that provides managers and peers<br />
<strong>with</strong> the opportunity to recognise their<br />
colleagues for providing exceptional service.<br />
Our program consists <strong>of</strong> three categories —<br />
<strong>Customer</strong> <strong>Service</strong> <strong>St</strong>ar Awards, Business<br />
Performance <strong>St</strong>ar Awards and Serious About<br />
<strong>Service</strong> Team <strong>St</strong>ar Awards.<br />
Every quarter up to 10 colleagues become<br />
<strong>Customer</strong> <strong>Service</strong> Super<strong>St</strong>ars. These are<br />
the people who received three or more <strong>St</strong>ar<br />
Awards in the quarter and are selected by<br />
the Peer Panel as a quarterly Super<strong>St</strong>ar. They<br />
have shown that they consistently provide<br />
exceptional service to their customers and<br />
really do go above and beyond.<br />
Our <strong>Customer</strong> <strong>Service</strong> Super<strong>St</strong>ars are<br />
presented <strong>with</strong> their special Award at the<br />
quarterly <strong>St</strong>ar Awards presentation and then<br />
compete to be a ‘<strong>St</strong>ar <strong>of</strong> the Year’ at the end<br />
<strong>of</strong> year awards ceremony.<br />
More specific to the CCC, the ‘Bravo Award’<br />
is a tool that enables anyone <strong>with</strong>in the CCC<br />
to provide immediate feedback to a colleague<br />
for a particular feat, action to a colleague or<br />
to a customer. Our intent is to encourage<br />
everyone to ‘catch someone doing great<br />
things today’. The award is physically split<br />
in two, <strong>with</strong> a first half adorning the staff<br />
member’s desk and the second finding its<br />
way into the team’s ‘Bravo Box’. At the end<br />
<strong>of</strong> each week, lucky prizes are handed out<br />
by picking names form the ‘Bravo Box’.<br />
On a monthly basis each CCC Manager<br />
awards staff in the following categories: Top<br />
Gun, Rising <strong>St</strong>ar, Silent Achiever, Peoples<br />
Choice and ExCITE (<strong>St</strong>.<strong>George</strong> Values).<br />
These awards are chosen by the Manager and<br />
Team Leaders.<br />
Q<br />
How has being a recipient <strong>of</strong> an<br />
Australian <strong>Service</strong> Excellence<br />
Award helped the organisation<br />
Receiving such a formal accolade from the<br />
CSIA reinforced that the CCC was on the right<br />
path to help <strong>St</strong>.<strong>George</strong> ‘become Australia’s<br />
most respected service organisation’. It<br />
rewarded the many ‘educated decision’ and<br />
leaps <strong>of</strong> faith a leader has to take at times<br />
CUSTOMER SERVICE EXCELLENCE<br />
THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA<br />
5
<strong>Service</strong> Manager<br />
<strong>Service</strong> M anager<br />
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong> <strong>Limited</strong>…continued<br />
The public acknowledgment was a great tonic<br />
for the very loyal <strong>St</strong>.<strong>George</strong> CCC staff (average<br />
tenure = 4.3 years) who had toiled dutifully for<br />
years <strong>with</strong>out any industry recognition.<br />
when imbued <strong>with</strong> a clear sense <strong>of</strong> purpose<br />
and direction. The public acknowledgment<br />
was a great tonic for the very loyal <strong>St</strong>.<strong>George</strong><br />
CCC staff (average tenure = 4.3 years) who<br />
had toiled dutifully for years <strong>with</strong>out any<br />
industry recognition.<br />
The formal recognition also provided<br />
further credence and congruence to<br />
<strong>St</strong>.<strong>George</strong> <strong>Bank</strong> leading <strong>Customer</strong> Satisfaction<br />
results as measured by the independent<br />
Roy Morgan index.<br />
Becoming the first Call Centre to ever win the<br />
award two years in a row further cemented<br />
our reputation <strong>of</strong> never resting on our laurels<br />
and always looking for the ‘next best thing’.<br />
For we indeed believe that customer, and<br />
indeed, staff satisfaction alike, is about<br />
identifying and responding to the multitude<br />
<strong>of</strong> ‘little things’ that make a relationship, any<br />
relationship, real.<br />
Become a CSIA Member<br />
customer service<br />
excellence<br />
The Official Journal <strong>of</strong> the <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
Australian issue # 2<br />
Special <strong>Customer</strong> <strong>Service</strong> week edition<br />
October 04<br />
2004<br />
Australian <strong>Service</strong><br />
Excellence Awards<br />
Enter Today!<br />
Managing Motivation<br />
What comes first<br />
People or initiatives.<br />
Enrol in<br />
Australia’s only<br />
Certified <strong>Customer</strong><br />
<strong>Service</strong> Manager<br />
Course.<br />
Servic e Manager<br />
Interview <strong>with</strong><br />
Maxine Horne<br />
Winner Queensland<br />
<strong>Customer</strong> <strong>Service</strong><br />
CEO <strong>of</strong> the Year<br />
<strong>Customer</strong> Focused<br />
Empowerment Pays at<br />
Ritz-Carlton<br />
JoAnna Brandi Questions<br />
<strong>Customer</strong> Loyalty<br />
customer service<br />
excellence<br />
The Offi cial Journal <strong>of</strong> the <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
Australian issue # 10<br />
October 05<br />
It Pays to<br />
<strong>St</strong>art <strong>St</strong>aff Right<br />
Ron Kaufman<br />
2005/06 Australian<br />
<strong>Service</strong> Excellence<br />
Awards<br />
last chance to enter<br />
Enrol in<br />
Australia’s only<br />
Certifi ed <strong>Customer</strong><br />
<strong>Service</strong> Manager<br />
Course.<br />
10 Lessons from<br />
Harley Davidson<br />
Interview <strong>with</strong><br />
The Hon. Joe Hockey<br />
Australia’s most <strong>Customer</strong><br />
Focused Politician<br />
Book Review -<br />
<strong>St</strong>riving & Surviving<br />
Generation Y at Work<br />
customer service<br />
excellence<br />
The Official Journal <strong>of</strong> the <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
Australian issue # 6<br />
June 05<br />
Australian <strong>Service</strong><br />
Excellence Awards<br />
Winners Announced<br />
JoAnna Brandi’s 9 ways to<br />
keep employees engaged<br />
The Opposite <strong>of</strong> Love<br />
Phil Dourado takes a quick<br />
look at the state <strong>of</strong> the loyalty<br />
card market<br />
Enrol in<br />
Australia’s only<br />
Certified <strong>Customer</strong><br />
<strong>Service</strong> Manager<br />
Course.<br />
Australian <strong>Service</strong> Excellence Awards Special Edition<br />
Sonia Hudson<br />
Colorado<br />
QLD CEO <strong>of</strong> the Year<br />
When<br />
<strong>Customer</strong>s Explode!<br />
Ron Kaufman<br />
Enrol in<br />
Australia’s<br />
only Certified<br />
<strong>Customer</strong> <strong>Service</strong><br />
Manager Course.<br />
<strong>Service</strong> Manager<br />
Return on <strong>Customer</strong><br />
Book Review<br />
How To <strong>St</strong>and out<br />
from the Crowd<br />
David & Lorrie Goldsmith<br />
Toop&Toop Real Estate<br />
Medium Business Winner<br />
When <strong>Service</strong> Goes<br />
Wrong.... Bounce Back<br />
Ron Kaufman<br />
JoAnna Brandi’s<br />
9 ways to keep<br />
employees engaged<br />
CSIA- Australia’s Peak <strong>Customer</strong> <strong>Service</strong> Association.<br />
Anthony Toop<br />
CSIA- Australia’s Peak <strong>Customer</strong> <strong>Service</strong> Association.<br />
CSIA- Australia’s Peak <strong>Customer</strong> <strong>Service</strong> Association.<br />
CSIA- Australia’s Peak <strong>Customer</strong> <strong>Service</strong> Association.<br />
CSIA Membership Benefits<br />
Becoming a member <strong>of</strong> CSIA has<br />
many benefi ts and is only $295<br />
inc GST. Membership forms can<br />
be downloaded from our website<br />
www.csia.com.au/membership.asp<br />
or email info@csia.com.au to<br />
request a form.<br />
Discounted access to Australia’s<br />
fi rst pr<strong>of</strong>essional qualifi cation<br />
for customer service managers<br />
- the “Certifi ed <strong>Customer</strong> <strong>Service</strong><br />
Manager Course”<br />
Twelve issues <strong>of</strong> our monthly<br />
e-magazine “<strong>Customer</strong> <strong>Service</strong><br />
Excellence Magazine”<br />
Copy <strong>of</strong> the new edition best<br />
selling book: “<strong>Customer</strong> <strong>Service</strong><br />
Excellence”<br />
Free opportunity for attendance<br />
on the 2 day International <strong>Customer</strong><br />
<strong>Service</strong> <strong>St</strong>andard Licensed<br />
Assessors Accreditation<br />
Course (annual places are limited)<br />
Continuing recognition <strong>of</strong><br />
member’s pr<strong>of</strong>essional<br />
standing through maintained use<br />
<strong>of</strong> the CSIA’s designatory postnominal<br />
letters: MCSIA<br />
Automatic free nomination for<br />
judging as one <strong>of</strong> Australia’s leading<br />
customer service pr<strong>of</strong>essional<br />
through the individual section <strong>of</strong><br />
the prestigious Australian <strong>Service</strong><br />
Excellence awards<br />
Discounts on training, events and<br />
functions<br />
Certificate <strong>of</strong> Membership<br />
7<br />
CUSTOMER SERVICE EXCELLENCE<br />
THE MONTHLY MAGAZINE OF THE CUSTOMER SERVICE INSTITUTE OF AUSTRALIA<br />
6
Retail Area Manager<br />
VIC – South East<br />
Want a career <strong>with</strong> real potential Then look no further. As an Area<br />
Manager you will be responsible for all activities in the retail sales<br />
channel to obtain maximum sales volume across South East Victoria.<br />
As an applicant you must have:<br />
• 5 years multi-site retail management experience<br />
• <strong>St</strong>rong leadership skills<br />
• Proven success in sales environment<br />
• Sound understanding <strong>of</strong> pr<strong>of</strong>it and loss statements<br />
• Ability to analyse KPI’s, budgets and sales figures<br />
Enjoy great benefits including:<br />
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Come and join our award winning team! Apply online at:<br />
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basis-FZR1030
New 100% Government<br />
Funding for CSIA<br />
<strong>Customer</strong> <strong>Service</strong><br />
Excellence Programs<br />
Australian organisations are now<br />
eligible for government funded<br />
customer service training<br />
for managers, team leaders,<br />
supervisors, contact centre<br />
staff and frontline personnel.<br />
The funding can also be used for<br />
certification to the International<br />
<strong>Customer</strong> <strong>Service</strong> <strong>St</strong>andard.<br />
For the first time approval has been given<br />
for FULL Federal government funding <strong>of</strong><br />
customer service programs for large, medium<br />
and small enterprises as well as state, local<br />
and some federal government departments!<br />
This landmark decision has been made in<br />
recognition <strong>of</strong> the importance <strong>of</strong> superior<br />
customer service management qualifications<br />
and systems to the Australian economy.<br />
As Australia’s peak customer service body,<br />
the <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
(CSIA) is pleased to announce its partnership<br />
<strong>with</strong> Federal Government training initiatives to<br />
<strong>of</strong>fer a comprehensive and fully subsidised<br />
customer service training package. By<br />
complying <strong>with</strong> government guidelines, CSIA<br />
delivered customer service training programs<br />
will be 100% funded through government<br />
incentive payments.<br />
CSIA’s Executive Director, Brett Whitford,<br />
is delighted by the announcement and<br />
commented, ‘This is exciting news for<br />
Australian enterprises <strong>of</strong> all types as well as<br />
state government departments and agencies.<br />
Clearly the federal government has recognised<br />
that all organisations need to develop a team<br />
<strong>of</strong> qualified customer service leaders to<br />
champion and manage increasingly complex<br />
customer service management systems.’<br />
The training package has been designed and<br />
approved in consultation <strong>with</strong> the relevant<br />
Government appointed ACC and RTO bodies<br />
to comply <strong>with</strong> the Government’s funding<br />
requirements. The full Government funding<br />
now enables organisations to receive a<br />
comprehensive training suite delivered by the<br />
CSIA — Australia’s expert customer service<br />
authority — that is completely reimbursed.<br />
For example, by enrolling just 60 eligible<br />
candidates* in the CSIA’s Nationally<br />
Accredited Certificate IV in Business for<br />
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<strong>Customer</strong> <strong>Service</strong> Management/Certified<br />
<strong>Customer</strong> <strong>Service</strong> Manager (Level I) Course,<br />
an organisation would receive funding for<br />
a comprehensive and integrated program<br />
<strong>of</strong> customer service training<br />
for managers, team<br />
leaders, supervisors,<br />
contact centre and<br />
frontline customer facing<br />
staff worth $240,000.<br />
* see eligibility criteria in panel<br />
With so many organisations understanding<br />
the need to deliver on their customer service<br />
promises, CSIA believes this suite <strong>of</strong><br />
programs will provide the tools required to<br />
enable them to meet increasing customer<br />
expectations for higher service standards.<br />
“Over the last 10 years the CSIA has<br />
demonstrated it has the experience,<br />
capabilities and resources to assist in the<br />
preparation and implementation <strong>of</strong> these<br />
accredited training programs, and is pleased<br />
to <strong>of</strong>fer its services and advice to assist<br />
all types <strong>of</strong> organisations in a variety <strong>of</strong><br />
industries to improve the service<br />
competencies <strong>of</strong> their teams.<br />
“In this employment market all leading<br />
organisations are seeking to provide<br />
pr<strong>of</strong>essional development for new and existing<br />
staff. Such an investment in people would<br />
really be an investment in service excellence<br />
that would see dramatically improved<br />
retention <strong>of</strong> customer service personnel<br />
leading to greater customer advocacy and <strong>of</strong><br />
course, customer retention as well. The 100%<br />
funding is too good an opportunity for our<br />
leading companies to miss!’ Whitford says.<br />
The funded <strong>Customer</strong> <strong>Service</strong> Training covers<br />
new and existing management, team leaders,<br />
contact centre (if applicable) and frontline<br />
employees. The programs cover all<br />
components <strong>of</strong> effective customer service<br />
management, supervision and delivery:<br />
(i). Course outcomes for <strong>Customer</strong> <strong>Service</strong><br />
Leaders — Managers and Supervisors:<br />
u Understand the strategic value <strong>of</strong> a<br />
customer service philosophy for business<br />
growth and attaining service excellence<br />
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u Develop and assess the success <strong>of</strong> a<br />
<strong>Customer</strong> <strong>Service</strong> Management System<br />
including the International <strong>Customer</strong> <strong>Service</strong><br />
<strong>St</strong>andard and Certification Trustmark Program<br />
u Display <strong>Service</strong> Leadership<br />
u Manage <strong>Service</strong> Personnel<br />
u Understand and Develop <strong>Service</strong><br />
Infrastructure and Technology<br />
u Effectively Utilise <strong>Customer</strong> <strong>Service</strong><br />
Measurement Systems and Tools<br />
u Ensure Integration and Operationalisation<br />
<strong>of</strong> a world class customer service<br />
management system<br />
(ii). Course outcomes for Contact Centre<br />
and Frontline staff:<br />
u Improve internal and external customer<br />
service & communications<br />
u Develop interpersonal service skills<br />
u Enhance telephone skills and etiquette<br />
u Superior customer service skills<br />
u Understand <strong>Customer</strong>s and their<br />
personality styles<br />
u Managing challenging customers<br />
u Conflict management and resolution<br />
u <strong>Customer</strong> focussed email and verbal<br />
communication styles<br />
u First call resolution, ownership &<br />
empowerment<br />
u Managing Complaints<br />
u Choosing your attitude<br />
The training will be carried out by accredited<br />
CSIA trainers in all states. Each <strong>of</strong> the<br />
courses listed above can be customised to<br />
take into account each organisation’s unique<br />
requirements.<br />
The approved CSIA courses have been<br />
designed by some <strong>of</strong> Australia’s leading<br />
customer service thought-leaders in<br />
consultation <strong>with</strong> Chief <strong>Customer</strong> Officers<br />
and senior executives from Australian <strong>Service</strong><br />
Excellence Award winning organisations.<br />
The purpose <strong>of</strong> the programs are to train<br />
managers and frontline staff to deliver<br />
customer service excellence as part <strong>of</strong> the<br />
efforts to improve customer service and<br />
increase customer advocacy.<br />
In return for a government reimbursed training<br />
investment, CSIA will deliver companies <strong>with</strong><br />
managers and employees who are:<br />
u more innovative<br />
u more efficient<br />
u save the organisation money by<br />
understanding the Cost <strong>of</strong> Bad <strong>Service</strong> TM<br />
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u grow the business<br />
u enjoy working <strong>with</strong> your customers,<br />
in fact, building long term relationships<br />
<strong>with</strong> them which encourages customers to<br />
spread positive ‘word <strong>of</strong> mouth’ advocacy<br />
leading to increased referrals.<br />
The CSIA’s <strong>Customer</strong> <strong>Service</strong> Excellence<br />
Training Programs consist <strong>of</strong> face to<br />
face instructed sessions (two days for<br />
management and one day for contact<br />
centre and frontline). Each aspect <strong>of</strong> the<br />
course focuses on achieving specific<br />
objectives through classroom exercises<br />
and are enhanced through each participant<br />
continuing their learning after the training<br />
via ongoing recommended readings and<br />
activities. <strong>St</strong>udents that complete the CSIA<br />
Accredited and Nationally Recognised<br />
courses receive certificates recognising their<br />
achievement in attaining the qualification.<br />
“<strong>Customer</strong> service competency is<br />
increasingly becoming a vital business<br />
issue as organisations realise the benefits<br />
<strong>of</strong> an integrated, strategic customer service<br />
management system for providing effective<br />
customer support. Just as other<br />
pr<strong>of</strong>essions such as accounting and HR<br />
have pr<strong>of</strong>essional qualifications eg.<br />
Certified Practicing Accountant (CPA),<br />
pr<strong>of</strong>essionals working <strong>with</strong>in customerfocused<br />
businesses, or those managing<br />
their organisation’s customer service<br />
function, need to have pr<strong>of</strong>essional<br />
qualifications making sure they keep<br />
informed about the latest techniques and<br />
experiences,” concludes Whitford<br />
For more information on these programs and how to move to a<br />
new stage in your development as a customer service focused<br />
organisation. Please contact CSIA’s executive director, Brett<br />
Whitford on 02 9386 4477, everyone here at CSIA look forward to<br />
working <strong>with</strong> you, and will be happy to provide further information<br />
should you require it.<br />
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*Terms and Conditions based on the Eligibility Guide for Government Incentives<br />
The CSIA have developed the Certified <strong>Customer</strong><br />
<strong>Service</strong> Manager (Level 1) Course/Certificate IV in<br />
Business for <strong>Customer</strong> <strong>Service</strong> Management to be<br />
conducted over 2 days <strong>of</strong> lectures and activities.<br />
During this time the bulk <strong>of</strong> the course workbook is<br />
completed. The remainder <strong>of</strong> the electronic<br />
workbook and assessment must be completed<br />
<strong>with</strong>in 24 months <strong>of</strong> commencement but most<br />
students will complete the course and assessment<br />
early. The majority <strong>of</strong> the course is completed in the<br />
2 days <strong>of</strong> class room time <strong>with</strong> the rest <strong>of</strong> the<br />
program including readings completed by the<br />
student at work or at home.<br />
The CSIA and its Government appointed ACC and RTO<br />
partners will manage every aspect <strong>of</strong> the administration<br />
and approval process; deliver the training, certification<br />
and arrange reimbursement. This will further reduce the<br />
administrative requirements <strong>of</strong> your organisation to<br />
manage the funding process.<br />
There are two categories <strong>of</strong> Federal Government<br />
incentives, New Employees and Existing Employees.<br />
Employers receive the $4,000 incentive payment for<br />
both eligible New Employees and eligible Existing<br />
Employees. Payment is made in two parts:<br />
u Employers will be eligible for up to $4,000.00<br />
in Government Incentive payments for each eligible<br />
candidate*. This Government Incentive payment is<br />
paid as follows:-<br />
– The Commencement Payment <strong>of</strong> $1,500.00 is paid<br />
to the employer 3 months after the enrolment<br />
application is made and the course is commenced.<br />
– The Completion Payment <strong>of</strong> $2,500.00 can be paid<br />
to the employer approximately 10 months after the<br />
first payment is made and is only payable if the<br />
employee has completed the Course and is still<br />
employed.<br />
Availability <strong>of</strong> the qualification that government<br />
funding may be applicable.<br />
Candidates can come from across Australia and the<br />
program will be delivered in each state but candidates<br />
which are existing employees in Western Australia,<br />
Victoria and Northern Territory are not considered<br />
eligible candidates for funding. New employees<br />
(employed for less than 3 months) which meet the other<br />
criteria are eligible in all states and territories except<br />
Western Australia.<br />
*Eligible candidates<br />
To be considered an Eligible Candidate for Government<br />
incentive funding the candidate must complete a PRE-<br />
ASSESSMENT OF INCENTIVE ELIGIBILITY form and be<br />
interviewed by the Government appointed ACC.<br />
Depending on the candidates’ fit <strong>with</strong> the criteria and<br />
individual circumstances, the ACC will notify the<br />
Organisation and CSIA <strong>of</strong> the eligibility for the<br />
Government incentive payments.<br />
Below is a guide only for eligibility for Australian<br />
Government Incentives.<br />
Final assessment <strong>of</strong> eligibility will be determined after<br />
finalisation & approval <strong>of</strong> the Training Contract.<br />
To be considered eligible as a New Employee:<br />
u At the time they start the course the employee has<br />
been employed <strong>with</strong> your organisation less than 3<br />
months full time or less than 12 months part time or<br />
casual.<br />
u Australian Citizen/New Zealand Passport Holder/<br />
Permanent Resident<br />
u Not currently undertaking any other form <strong>of</strong> study<br />
in the Business Training Package.<br />
u Has not received more than one other<br />
Commencement Payment<br />
u Has not completed a higher than Certificate II<br />
qualification. Candidates may still be eligible if they<br />
have completed a Certificate III or IV over 7 years ago.<br />
(Please note: Qualifications completed in the two years<br />
immediately after finishing high school do not affect<br />
eligibility).<br />
u A candidate may still be considered ‘eligible’ if the<br />
qualification previously awarded is in an unrelated<br />
discipline. The ACC will ascertain this relevance <strong>of</strong> an<br />
existing qualification and provide guidance during the<br />
interview.<br />
To be considered eligible as an Existing Employee:<br />
u At the time they start the course the employee has<br />
been employed <strong>with</strong> your organisation more than 3<br />
months full time or more than 12 months part time or<br />
casual.<br />
u Australian Citizen/New Zealand Passport Holder/<br />
Permanent Resident<br />
u Not currently undertaking any other form <strong>of</strong> study<br />
in the Business Training Package.<br />
u Has not received more than one other<br />
Commencement Payment<br />
u Has not completed a higher than Certificate II<br />
qualification. Candidates may still be eligible if they<br />
have completed a Certificate III or IV over 7 years<br />
ago. (Please note: Qualifications completed in the two<br />
years immediately after finishing high school do not<br />
affect eligibility).<br />
u A candidate may still be considered ‘eligible’<br />
if the qualification previously awarded is in an unrelated<br />
discipline. The ACC will ascertain this relevance <strong>of</strong><br />
an existing qualification and provide guidance during<br />
the interview.<br />
Other government funded initiatives can also apply. For more details contact CSIA.<br />
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Who made your<br />
Season Bright<br />
Let CSIA reward the individuals who help<br />
spread cheer year round!<br />
‘Tis the season;<br />
Long queues, cranky sales people, crowded shops,<br />
you know the scene.<br />
What about the rare twinkling star that you run across,<br />
that truly changes your day and spreads joy to all<br />
around them I found mine at the Chicago airport<br />
during my favourite American holiday, Thanksgiving, the<br />
busiest travel holiday <strong>of</strong> the year. A lovely gentleman by<br />
the name <strong>of</strong> Bryan was spreading joy all around him.<br />
From the moment he assisted me, my entire holiday<br />
experience, crazy family included, was an absolute joy<br />
<strong>with</strong> no headaches, except for the self-inflicted ones.<br />
So, let’s keep an eye out for that individual this year.<br />
Who made you smile Make note, tell them how they<br />
are doing, and send me some details to Christine.<br />
Churchill@csia.com.au and tell me:<br />
Let’s spread some joy and remember the reason for the<br />
season. We will put our favourites on the website and will<br />
choose one winner from your submissions. The winner’s<br />
story will be featured in one our upcoming magazines<br />
and will be presented <strong>with</strong> a complimentary membership<br />
to CSIA and subscription to our online magazine.<br />
The winner and individual <strong>with</strong> the winning story will<br />
also receive one complimentary ticket each to next<br />
year’s National Australian <strong>Service</strong> Excellence Awards<br />
dinner. This event has been sold out for two year’s<br />
running. Don’t miss your chance to get a ticket reserved<br />
in your name today!<br />
u Where you had the experience<br />
u Who the individual was (first<br />
and last name preferred —<br />
but we will take what we can get)<br />
u What they did to make your<br />
experience a ‘brighter’ one<br />
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Certied<br />
<strong>Customer</strong> <strong>Service</strong><br />
Manager Course<br />
Certificate and Diploma for <strong>Customer</strong> <strong>Service</strong><br />
The <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia is<br />
currently taking applications for its two day<br />
Certi ed <strong>Customer</strong> <strong>Service</strong> Manager<br />
Course (CCSM). Some additional course work is required.<br />
The CSIA has worked <strong>with</strong> leading<br />
organisations to develop a training,<br />
assessment and certi cation program leading<br />
to Australia’s first and only formal and nationally<br />
recognised “Certi ed <strong>Customer</strong> <strong>Service</strong><br />
Manager” designation.<br />
Organisations can now benefit from qualified service pr<strong>of</strong>essionals.<br />
The course includes a workbook and a two day<br />
workshop followed by an assessment. By meeting<br />
Government criteria certain candidates may attract incentives <strong>of</strong> up to $4,000.<br />
“I would like to congratulate the<br />
<strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
for putting together such a practical<br />
program in the CCSM Course.<br />
I have found its exibility very valuable<br />
in allowing me to work at my own pace<br />
and in implementing what I have learnt<br />
almost instantly through the workplace<br />
based activities and assignments.”<br />
Anthony Keyes, Baxter Healthcare<br />
For more information<br />
Phone: 02 9386 4477<br />
info@csia.com.au<br />
www.csia.com.au<br />
SSIA C<br />
Certified <strong>Customer</strong><br />
er vice<br />
M anager
Measuring the Financial<br />
Cost <strong>of</strong> Bad <strong>Service</strong><br />
Making the case for service<br />
improvement by accurately<br />
measuring the potential return<br />
on investment<br />
To celebrate CSIA’s National <strong>Customer</strong> <strong>Service</strong> Week 2007 executive director,<br />
Brett Whitford gave a series <strong>of</strong> breakfast lectures on the financial cost <strong>of</strong> bad<br />
service. The following article expands on the topic and encourages CEOs and<br />
executives to make a considered business case for service improvement.<br />
A<br />
study from US Company Coldwell<br />
<strong>Bank</strong>er found that nine out <strong>of</strong> 10<br />
consumers surveyed declared that<br />
great customer service is “very or extremely”<br />
important in deciding whether to give a service<br />
provider repeat business. Additionally, 32% <strong>of</strong><br />
respondents indicated they change providers<br />
because <strong>of</strong> bad service. Despite the importance<br />
<strong>of</strong> satisfying the customer, it does not appear<br />
that US companies are properly gathering<br />
vital consumer feedback, <strong>with</strong> just 25% <strong>of</strong><br />
surveyed consumers reported having frequent<br />
opportunities to voice their opinions on their<br />
service experiences. About 30% reported they<br />
had infrequent opportunities to do so.<br />
According to the findings, the average US<br />
consumer switched businesses they dealt<br />
<strong>with</strong> twice in the past three years due to “bad<br />
service”. The top characteristics <strong>of</strong> companies<br />
<strong>with</strong> “great service” were: Resolving questions<br />
and problems (66%); Knowledge <strong>of</strong> the product<br />
or service (49%); Being easy to reach (35%);<br />
Understanding requirements (35%). The top<br />
characteristics associated <strong>with</strong> “bad service”<br />
were; Inability to resolve questions or problems<br />
(46%); Being unavailable/difficult to reach<br />
(38%); Needing to deal <strong>with</strong> multiple people/<br />
departments to resolve problems (37%); Lack <strong>of</strong><br />
product knowledge (34%); and Unpr<strong>of</strong>essional<br />
demeanour (33%).<br />
A study, entitled “The <strong>Customer</strong> Experience<br />
Report, Great Britain 2006”, reveals that 65 per<br />
cent <strong>of</strong> all respondents moved their business<br />
elsewhere after a bad service experience, while<br />
more than one quarter - 27 per cent - <strong>of</strong> Britons<br />
also indicate that once their custom is lost, it is<br />
lost forever.<br />
On the other hand, positive customer<br />
experiences have a major impact on consumers’<br />
brand perceptions and buying behaviour, <strong>with</strong> 78<br />
per cent <strong>of</strong> participants saying that they would<br />
be most likely to ‘greatly or somewhat’ increase<br />
their custom on the basis <strong>of</strong> consistently<br />
excellent service.<br />
Clearly there are costs associated <strong>with</strong><br />
money wasted on customer acquisition when<br />
customers, after experiencing the service<br />
<strong>of</strong>fered, defect thus reducing revenue because<br />
<strong>of</strong> poor customer retention. This is especially<br />
true as research confirms that long-term<br />
customers are more pr<strong>of</strong>itable to serve.<br />
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Winning back lost custom and<br />
reputation is extremely costly<br />
as well, <strong>with</strong> more than half<br />
<strong>of</strong> respondents saying they<br />
would require evidence that the<br />
organisation’s customer service<br />
had improved<br />
Winning back lost custom and reputation is<br />
extremely costly as well, <strong>with</strong> more than half<br />
<strong>of</strong> respondents saying they would require<br />
evidence that the organisation’s customer<br />
service had improved, and 48 per cent stating<br />
that the organisation would have to prove that it<br />
valued their custom<br />
It is undisputed that customers leave if the<br />
customer experience isn’t up-to-scratch; we<br />
also know that businesses are being mandated<br />
to control or reduce operating costs. You<br />
may feel your organisation is in a Catch-22<br />
situation: it either spends money to improve<br />
the customer experience or cut costs and risk<br />
losing customers. A breakthrough is needed in<br />
management thinking to resolve this service/<br />
cost dilemma by better understanding the<br />
actual Cost <strong>of</strong> Bad <strong>Service</strong> and the effect it<br />
has on cost, revenue, reputation and customer<br />
experience across all key interactions.<br />
Most organisations currently <strong>of</strong>fer some poor<br />
customer experiences and find it challenging<br />
to eliminate the problems that traditionally<br />
roadblock success. These include the service/<br />
cost dilemma, where costs increase in ratio<br />
<strong>with</strong> efforts to boost customer experience,<br />
while slashing costs <strong>of</strong>ten means slashing<br />
service. This mindset is not always correct as<br />
the cost <strong>of</strong> delivering poor service may not be<br />
properly accounted for and allocated across<br />
organisations. A clear correlation between the<br />
<strong>Customer</strong> <strong>Service</strong> Improvement efforts and<br />
savings and pr<strong>of</strong>itability has been established<br />
in many Australian public and private sector<br />
organisations through work carried out by the<br />
<strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia.<br />
While the exact figures and organisations<br />
understandably remain confidential, the following<br />
savings and efficiencies have been obtained<br />
at the same time as customer satisfaction has<br />
increased.<br />
A Major bank reduced its group ‘customer<br />
service’ budget by 17% through eliminating a<br />
number <strong>of</strong> costs associated <strong>with</strong> bad service at<br />
the same time as increasing pr<strong>of</strong>it and moving<br />
towards its goal <strong>of</strong> leading the Roy Morgan<br />
customer satisfaction index<br />
A Major telecommunications group is beginning<br />
to implement <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong><br />
Australia recommendation’s <strong>with</strong> an initial<br />
saving from just one suggestion <strong>of</strong> over $1<br />
million. Future improvements in its customer<br />
service management system will result from<br />
this change.<br />
A Government department has reduced<br />
complaints being made to its Minister and other<br />
stakeholders resulting in significant savings.<br />
Similar examples come from Energy Utilities<br />
and <strong>Bank</strong>s – industries highly regulated by<br />
Ombudsmen.<br />
Long term <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong><br />
Australia members are reporting significant<br />
revenue increases and cost savings in the order<br />
<strong>of</strong> 25% to 30% <strong>of</strong> revenue.<br />
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Clearly an opportunity exists for organisations to<br />
measure the cost <strong>of</strong> non-value adding activities<br />
that are caused by bad service in a manner<br />
that will ensure that the final figure or ‘size <strong>of</strong><br />
the prize’ is accepted by the organisation’s<br />
leadership team.<br />
Such a project will expose problems and wasted<br />
effort arising and being dealt <strong>with</strong> in one place<br />
but caused in another place and time. To fix<br />
the results <strong>of</strong> propagated error, an organisation<br />
has to learn about the ‘hidden operation’. The<br />
re-work and cover ups, the hours and days<br />
<strong>of</strong> wasted time in a company <strong>of</strong> people who<br />
constantly correct mistakes. Every time a<br />
corrective action is taken, you incur unnecessary<br />
re-work. By accepting these events as “just<br />
the way it is”, an organisation mentally hides<br />
all the re-work activities from improvement<br />
potential. The ‘hidden operation happens’ in all<br />
organisations, fixing the problems, correcting<br />
mistakes, dealing <strong>with</strong> complaints and wasting<br />
time and money! Identifying the ‘size <strong>of</strong> the<br />
prize’ and acknowledging the service issues<br />
causing re-work will return these two precious<br />
commodities, time and money, back to the<br />
business.<br />
CSIA has developed a Cost <strong>of</strong> Bad <strong>Service</strong><br />
Methodology to measure the financial cost<br />
<strong>of</strong> bad service and the tangible and intangible<br />
savings and benefits <strong>of</strong> reaching <strong>Customer</strong><br />
<strong>Service</strong> Excellence. The following diagram<br />
outlines the direct and indirect benefits <strong>of</strong> the<br />
<strong>Customer</strong> <strong>Service</strong> Improvement Program and<br />
how the model works to improve pr<strong>of</strong>itability<br />
through reduced costs.<br />
Figure 1<br />
A Model <strong>of</strong> <strong>Service</strong> Quality Improvement and Pr<strong>of</strong>itability<br />
Improvement Effort<br />
<strong>Service</strong> Quality Improvement<br />
Word <strong>of</strong> Mouth<br />
Perceived <strong>Service</strong> Quality and<br />
<strong>Customer</strong> Satisfaction<br />
Attraction <strong>of</strong><br />
New <strong>Customer</strong>s<br />
<strong>Customer</strong> Retention<br />
Cost Reductions<br />
Revenues and Market Share<br />
Pr<strong>of</strong>itability<br />
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A little considered factor in justifying the cost and effort <strong>of</strong><br />
implementing a service improvement program is the fact that<br />
there are many cases where bad service is more expensive to<br />
deliver than good.<br />
As outlined above, word <strong>of</strong> mouth and<br />
reputation risk should not be underestimated<br />
as the following example <strong>of</strong> how the cost <strong>of</strong> a<br />
very simple bad customer experience can be<br />
huge:<br />
One lost book, one disgruntled customer and a<br />
potential million dollar legal fee for Amazon - it’s<br />
the latest in a series <strong>of</strong> morality tales showing<br />
how companies can be hit where it hurts most<br />
due to bad customer experience.<br />
The tale begins in October 2005, when Peter<br />
Calveley from New Zealand ordered a book<br />
from Amazon, which never turned up. One<br />
month later, Peter decided to let loose the<br />
wrath <strong>of</strong> Utu upon the mighty Amazon - Utu<br />
is a traditional Maori ‘obligation to undertake<br />
payment upon others for a wrongdoing’. And<br />
his chosen form <strong>of</strong> payment was to inform<br />
the US Patent Office that Amazon’s famous<br />
patent for 1-click payment was in fact covering<br />
essentially the same idea as a patent filed 18<br />
months earlier.<br />
As if to test Peter’s resolve, the US Patent Office<br />
replied <strong>with</strong> a request for $2,520 - the cost <strong>of</strong><br />
a full patent re-examination. Undeterred, he<br />
posted a request for donations, added a Paypal<br />
button to his blog site and two months later the<br />
fee was in the post.<br />
Fast forward to May 2006 and the request<br />
for re-examination is granted by the Patent<br />
Office. According to Wikipedia a typical patent<br />
infringement case in the US costs $1-3M in legal<br />
fees - not sure if this counts as an ‘infringement’<br />
case but one thing for sure, it’s going to cost<br />
them a lot more than a replacement book and<br />
an apologetic phone call.<br />
The reputation risk makes the problem worse,<br />
once something’s been written about you in<br />
the press and online, it’s very difficult to get<br />
it removed. This means that any prospective<br />
customer who decides to do a search on your<br />
business name could come across it.<br />
A little considered factor in justifying the cost and<br />
effort <strong>of</strong> implementing a service improvement<br />
program is the fact that there are many cases<br />
where bad service is more expensive to deliver<br />
than good.<br />
A lesson about the price <strong>of</strong> bad service<br />
comes from the Secretary <strong>of</strong> Transportation in<br />
Vermont:<br />
‘Reporting to me was a smart Commissioner <strong>of</strong><br />
Motor Vehicles named Bill Conway. When we<br />
were putting together our budget, I was pushing<br />
Bill to cut his expenses. “Tell me what we can<br />
save,” I said, “if we don’t turn around license<br />
renewals almost instantly.”<br />
“It’ll cost us more to do that,” Bill said.<br />
“You’re just trying to protect your budget,” said<br />
I. “How can that possibly be It costs you more<br />
to process more slowly”<br />
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Independent studies reveal<br />
that COBS is costing<br />
companies millions <strong>of</strong> dollars<br />
each year and its reduction<br />
can transform marginally<br />
successful companies into<br />
pr<strong>of</strong>itable ones. Yet most<br />
executives believe that their<br />
company’s COBS is less than<br />
5%, or just do not know what<br />
it is.<br />
“Today,” Bill explained, “our rule is to turn<br />
around every application the day we get it. If it is<br />
complete, it gets processed. If it is incomplete,<br />
it gets sent back for more information. If we<br />
are going to start queuing applications, then we<br />
have to build a queue management system to<br />
track the queue and make sure we don’t lose<br />
stuff that gets held or hold some transactions<br />
forever. But that’s a relatively small expense.<br />
“The greater expense,” he continued, “is in<br />
customer support calls. For every day that<br />
we delay turning something around, a certain<br />
percentage <strong>of</strong> people are going to call us to ask<br />
where it is. So we get more calls. If we are<br />
managing a queue, then we have to be able to<br />
look in it to see where a particular transaction<br />
is. We have to be able to predict when it’ll be<br />
handled. We have to prepare for calls from<br />
legislators who want this constituent or that one<br />
given priority. No queue, no problem. When we<br />
turn things around fast, we get very few calls.<br />
When we do get a call, the status is either ‘we<br />
didn’t get it yet’ or ‘it got mailed back to you on<br />
such-and-such a date.’ No requests to jump<br />
the queue because there’s no queue to jump.”<br />
So he convinced me and I didn’t cut that part<br />
<strong>of</strong> his budget. And notice he was only talking<br />
about direct expense. He wasn’t even talking<br />
about the happy customers who get things back<br />
fast.’<br />
To further underline the cost benefits <strong>of</strong> a<br />
implementing a <strong>Customer</strong> <strong>Service</strong> management<br />
system the following example is <strong>of</strong>fered. A<br />
manufacturing company had annual sales<br />
<strong>of</strong> $250 million. Its finance department was<br />
instructed to calculate the total cost <strong>of</strong> repair,<br />
not getting information right first time, rework,<br />
scrap, service calls, refunds, sales commission<br />
paid on returned product, warranty claims and<br />
complaints. This aggregated cost; called the<br />
Cost <strong>of</strong> Bad <strong>Service</strong> (COBS) amounted to 20%<br />
<strong>of</strong> their annual sales. A 20% COBS implied that<br />
during one day <strong>of</strong> each five-day workweek, the<br />
entire company spent its time and effort making<br />
non-conforming or scrap products, which<br />
represented a loss <strong>of</strong> approximately $100,000<br />
per day.<br />
Experts have estimated that Cost <strong>of</strong> Bad<br />
<strong>Service</strong> (COBS) typically amounts to 5% to 30%<br />
<strong>of</strong> gross sales for manufacturing and service<br />
companies. Independent studies reveal that<br />
COBS is costing companies millions <strong>of</strong> dollars<br />
each year and its reduction can transform<br />
marginally successful companies into pr<strong>of</strong>itable<br />
ones. Yet most executives believe that their<br />
company’s COBS is less than 5%, or just do<br />
not know what it is. All levels <strong>of</strong> executives<br />
recognise that a customer service management<br />
system is an absolute necessity to survive and<br />
succeed in today’s business environment.<br />
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The diagram below provides a framework for calculating COBS as a percentage <strong>of</strong> sales.<br />
Cost <strong>of</strong> Bad <strong>Service</strong> (COBS)<br />
as a % <strong>of</strong> Sales<br />
Unnecessary<br />
Capacity<br />
Rework<br />
Compensation/<br />
Refunds<br />
Warranty Costs<br />
Lost Sales<br />
• Planned overcapacity to<br />
anticipate problems<br />
• Increased FTE to manage<br />
<strong>Customer</strong> <strong>Service</strong> Issues<br />
• Hand<strong>of</strong>fs between silos<br />
• Reliance on cascade<br />
information dilutes<br />
effectiveness <strong>of</strong><br />
communication and training<br />
• Rework Costs and<br />
Restocking costs<br />
• Non-material rework costs<br />
(sorting, handling, downtime<br />
and expedited shipping)<br />
• Cost <strong>of</strong> credit notes<br />
• Product performance not as<br />
specified<br />
• Damage, Inspection Data,<br />
On time accurate delivery<br />
• Warranty costs include<br />
customer credits.<br />
• SLA Penalties<br />
• Cost <strong>of</strong> complaints handling,<br />
Ombudsman/ Ministerial<br />
issues and compensation<br />
• Complaint management<br />
• Lost Revenue<br />
• <strong>Customer</strong> Churn Costs<br />
• Excess Inventory carrying<br />
costs due to fewer sales<br />
• Inaccurate tracking <strong>of</strong><br />
customers<br />
• Poor <strong>Customer</strong> Satisfaction<br />
as surveyed<br />
• 360 degree view <strong>of</strong> the<br />
customer and all products<br />
and interactions<br />
• Cost <strong>of</strong> Repair system<br />
• Not getting it right the first<br />
time<br />
• Cost Per Sale/<strong>Customer</strong><br />
Acquisition.<br />
• Cost <strong>of</strong> Commission on sale<br />
that is later reversed<br />
• Some back-end processes<br />
may not kept pace <strong>with</strong><br />
promises made at point<br />
<strong>of</strong> sale, resulting in the<br />
customer needing to contact<br />
the organisation to correct<br />
errors, clarify information or<br />
to arrange delivery <strong>of</strong> what<br />
was promised.<br />
• Cost <strong>of</strong> incorrect invoicing<br />
The Cost <strong>of</strong> Bad <strong>Service</strong> for an average<br />
company is estimated at about 30% <strong>of</strong> sales.<br />
When reviewing Australian industry, this can<br />
range from:<br />
• under 3% for companies who have achieved<br />
<strong>Customer</strong> <strong>Service</strong> Excellence<br />
• approximately 15%-25% for companies<br />
who have spent one year on their customer<br />
service excellence journey<br />
• approximately 25% to 40% <strong>of</strong> revenue for<br />
companies who have not implemented any<br />
customer service management system.<br />
The savings for non-manufacturing service<br />
companies are potentially larger and less<br />
understood than manufacturing organisations<br />
which have long examined ‘quality processes’<br />
and are better able to currently account for the<br />
Cost <strong>of</strong> Bad <strong>Service</strong>. A large Fortune 500<br />
communications company calculated its Cost<br />
<strong>of</strong> Bad <strong>Service</strong> at 8.6% <strong>of</strong> sales in 2005 and<br />
has set a goal <strong>of</strong> 5.4% for 2007, which will<br />
result in a savings <strong>of</strong> a little less than $1 Billion<br />
per year!<br />
Most service projects require its champions to<br />
build a business case to justify the capital spend.<br />
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In building a business case, the champions<br />
need to capture all tangible benefits that the<br />
company would obtain from implementing the<br />
program and then place a defensible monetary<br />
value on these benefits in terms <strong>of</strong> annual<br />
savings to the organisation. The goal <strong>of</strong> the<br />
business case is to ensure that the project<br />
delivers value greater than the corporate hurdle<br />
rate for capital investments.<br />
Developing Project Metrics<br />
One <strong>of</strong> the crucial elements <strong>of</strong> the project<br />
charter in the defining phase <strong>of</strong> a service<br />
improvement project is the selection <strong>of</strong> project<br />
metrics. Project metrics selected should<br />
reflect the voice <strong>of</strong> the customer (customer<br />
needs), as well as ensure that the internal<br />
metrics selected by the organisation are<br />
achieved. Metrics selected should be simple,<br />
straightforward and meaningful. Metrics<br />
selected should create a common language<br />
among diverse team members.<br />
When drafting metrics for a particular project<br />
one should consider how the metrics are<br />
connected and related to key business metrics.<br />
Typically there is no one metric that fits all the<br />
requirements for a particular situation. The<br />
first step is to identify the actual costs that are<br />
created by bad service. There are two types <strong>of</strong><br />
costs that can be attributed to ‘Bad <strong>Service</strong>’:<br />
Visible Cost <strong>of</strong> Bad <strong>Service</strong><br />
These include the cost <strong>of</strong> complaints handling,<br />
Ombudsman issues and compensation, rework,<br />
cost <strong>of</strong> incorrect invoicing, commission<br />
paid to sales people for services later<br />
cancelled or compensated, absenteeism and<br />
staff attrition, poor ‘word <strong>of</strong> mouth’ requiring<br />
increased defensive advertising resulting in<br />
higher customer acquisition costs, etc.<br />
Invisible Cost <strong>of</strong> Bad <strong>Service</strong><br />
Examples <strong>of</strong> invisible costs <strong>of</strong> bad service are<br />
multiple contacts and hand-<strong>of</strong>fs to deal <strong>with</strong><br />
a single issue or complaint driving increased<br />
<strong>Customer</strong> <strong>Service</strong> FTE, Hidden Activities to<br />
deal <strong>with</strong> poor service problems, lost sales<br />
due to lack <strong>of</strong> confidence in company service<br />
standards and ability to meet requirements,<br />
lost revenue based the lifetime value <strong>of</strong> the<br />
customer when ‘churn’ is caused by service<br />
issues, etc.<br />
When organisations start identifying, tracking<br />
and measuring both the visible and invisible<br />
costs <strong>of</strong> bad service then they can begin to<br />
justify the cost <strong>of</strong> service improvement projects<br />
to deal <strong>with</strong> these issues.<br />
The most common approach used by teams<br />
is to understand the size <strong>of</strong> the prize or total<br />
cost <strong>of</strong> bad service including both visible<br />
and invisible. For each project the team<br />
will brainstorm metrics, and finally decide<br />
what metrics can help them achieve better<br />
performance. The team then reviews these<br />
metrics <strong>with</strong> executive management to ensure<br />
that they are in synergy <strong>with</strong> the overall<br />
strategy <strong>of</strong> the business, and an interactive<br />
approach may be utilised.<br />
Care should be exercised in determining<br />
what is measured. Metrics should be based<br />
on what, in fact, needs to be measured to<br />
improve the process, rather than what fits the<br />
current measurement system. Metrics need<br />
to be scrutinised from the value they add in<br />
understanding a process.<br />
Balanced Scorecard Approach To<br />
Metrics<br />
The <strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
advocate the use <strong>of</strong> a Balanced Scorecard<br />
type <strong>of</strong> approach for the selection <strong>of</strong><br />
project metrics as a method for ensuring<br />
that the project meets both customer and<br />
business needs. The Balanced Scorecard<br />
approach includes both financial and nonfinancial<br />
metrics, as well as lagging and<br />
leading measures across the four areas or<br />
perspectives: Financial, <strong>Customer</strong> <strong>Service</strong>,<br />
Operational Processes, and Learning and<br />
Growth. Lagging measures are those that<br />
are measured at the end <strong>of</strong> an event, while<br />
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leading measures are measures that help<br />
achieve the objectives and are measured<br />
upstream <strong>of</strong> the event.<br />
Most Balanced Scorecard metrics are based<br />
on brainstorming, however the approach<br />
<strong>of</strong> brainstorming can have limited success<br />
in establishing sound metrics that have a<br />
good balance between lagging and leading<br />
measures.<br />
While establishing the right metrics to consider<br />
it is vital to decide on the benefits, financial<br />
and otherwise, <strong>of</strong> your organisation’s service<br />
improvement program and resulting <strong>Customer</strong><br />
<strong>Service</strong> Management System, the total cost<br />
<strong>of</strong> the implementation <strong>of</strong> a customer service<br />
management system requires financial<br />
justification.<br />
From the identified savings the total cost <strong>of</strong> the<br />
system (implementation, training, measurement<br />
<strong>of</strong> financials, additional headcount to manage<br />
the system, annual maintenance etc.) needs<br />
to be subtracted to obtain the Average Return<br />
per annum, remembering savings made will be<br />
ongoing and usually increased over time as the<br />
CSIA’s customer service management system<br />
becomes more effective and improvements<br />
continue.<br />
A well framed ‘request for budget’ that addresses<br />
bottom-up operational needs and top-down<br />
management requirements, along <strong>with</strong> well<br />
quantified financial justification will go a long<br />
way in satisfying all relevant stakeholders to<br />
approve the funding for the <strong>Customer</strong> <strong>Service</strong><br />
Management System.<br />
Financial Justification:<br />
What is the financial return from<br />
the system<br />
Total annual savings from a national customer<br />
service management system<br />
• Total cost recovery savings<br />
• Total savings from reduced rework<br />
• Total savings from reduced complaints and less escalation<br />
• Total savings from better tracking<br />
• Total savings from more accurate information from more<br />
knowledgeable staff<br />
• Total savings from improved equipment utilisation<br />
• Total savings from less expedited and incorrectly routed freight<br />
• Total savings from reduced complaints and ombudsman or<br />
Ministerial issues<br />
• Total savings from reduced credit notes, discounts & compensation<br />
• Total savings from reduced inspections<br />
• Total savings from reduced FTE and staffing turnover<br />
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Case <strong>St</strong>udy in Bad <strong>Service</strong> in the building<br />
industry.<br />
Take a look into the most prevalent <strong>of</strong> the building<br />
industry’s customer service issues, window<br />
and door installation, which was witnessed on<br />
23 percent <strong>of</strong> the 100,000-plus site inspections<br />
Criterium Engineers has carried out. Specifically,<br />
we’ll look at what happens when your windows<br />
and doors are not installed properly.<br />
The Later the Detection, the Greater the Cost<br />
When windows and doors aren’t installed<br />
correctly in your communities, how are the<br />
different areas <strong>of</strong> your business affected How<br />
does timing affect the total cost <strong>of</strong> this quality<br />
issue<br />
Scenario No. 1 (Best-Case): Your Site<br />
Supervisor Identifies the Issue<br />
It’s a clear afternoon, and your site supervisor<br />
is visiting homes throughout your Shady Pines<br />
community to check construction quality before<br />
he gives the trades the green light to install<br />
siding. He notices the windows and doors on<br />
several <strong>of</strong> your homes have not been installed<br />
correctly, leaving gaps for water to enter and<br />
damage drywall, flooring, etc. He stops work,<br />
gets the trade super to check on the issue<br />
and has him realign his team to go back and<br />
fix the problems — which could be 20 or more<br />
installations per home and on tens <strong>of</strong> homes<br />
just in that community.<br />
Scenario No. 2 (Worse): It Becomes a <strong>Customer</strong><br />
<strong>Service</strong> Problem<br />
Say your site super is having an <strong>of</strong>f day, or the<br />
few houses he visits in a community aren’t the<br />
ones affected by the window and door issues.<br />
Six months down the line when many <strong>of</strong> your<br />
homeowners have moved in, problems are<br />
popping up, which could affect up to 23 percent<br />
<strong>of</strong> the Shady Pines community. Homeowners<br />
are pressing your customer service team to fix<br />
the issues; your representative investigates<br />
the root cause, coordinates the repairs, tries to<br />
appease the unhappy customers, and so on.<br />
Scenario No. 3 (worst-case): Insurance Agents<br />
and Lawyers Get Involved<br />
Your <strong>Customer</strong> <strong>Service</strong> team has done its<br />
best, but the situation hasn’t been resolved<br />
to your homeowners’ satisfaction. First, your<br />
homeowner complaints turn into multiple<br />
warranty claims. What’s the cost <strong>of</strong> this quality<br />
issue to your business in the near-term, and<br />
longer-term, given residual annual premium<br />
price hikes Some homeowner claims turn ugly<br />
and end up in lawsuits.<br />
What are your resulting legal costs and possibly<br />
even litigation/punitive damages Liability costs<br />
rise accordingly.<br />
The Ripple Effect: Impact on Your People<br />
and Reputation<br />
No matter when the issue is identified it will<br />
affect two other areas you may not already<br />
have considered.<br />
Marketing And Sales<br />
Word gets around the neighbourhood, your<br />
reputation gets tarnished, you end up <strong>with</strong> lower<br />
referrals and, potentially, lower home sales. This<br />
can have tremendous impact on your brand<br />
value. For many mid-size builders, your brand<br />
equity is a major component <strong>of</strong> your company’s<br />
financial value — especially in a time when<br />
you may want to sell your business. If you’re a<br />
giant, stock market-driven public homebuilder,<br />
poor public perception or “newspaper liability”<br />
can negatively affect your stock price.<br />
Human Resources<br />
You start to lose your best employees because<br />
they’re tired and are losing pride in your<br />
company. You now have to find and hire new<br />
team members, who by HR experts’ estimations<br />
can ultimately cost your business up to three<br />
times the salary for each manager lost.<br />
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A Key Tool in CSIA’s Methodology -<br />
Activity Based Costing (ABC)<br />
Activity based costing is an accounting<br />
methodology that assigns costs to activities<br />
rather than products or services. This enables<br />
resource and overhead costs to be more<br />
accurately assigned to the products and the<br />
services that consume them.<br />
With activity based costing, organisations<br />
can identify where to remove waste, improve<br />
processes and eliminate re-work, as well as<br />
understanding what drives their costs. They<br />
can also see the degree <strong>of</strong> alignment <strong>of</strong> their<br />
cost structure <strong>with</strong> their organisation’s mission<br />
and strategy. CSIA believes that utilising ABC<br />
to establish Activity-Based output data serves<br />
as enabler for ongoing improvement programs.<br />
Key steps in the methodology involve defining<br />
the major business processes and key activities<br />
<strong>of</strong> the organisation using Process and <strong>Customer</strong><br />
Touchpoint Mapping and tracing operating costs<br />
and capital charges to key activities.<br />
The tables below demonstrate the differences<br />
between traditional accounting models (general<br />
ledger style) and activity based cost accounting<br />
models, for an Insurance Company’s claims<br />
department.<br />
Both styles <strong>of</strong> accounting are required, yet that<br />
<strong>of</strong> most immediate value in allowing managers<br />
to make decisions is the one on the right – the<br />
activity-based view. The general difference<br />
between the two is the structure:<br />
Traditional Accounting (General Ledger) View<br />
Claims Processing Department<br />
Actual ($) Plan ($)<br />
Favourable /<br />
Unfavourable<br />
Salaries 621,400 600,00 (21,400)<br />
Equipment 161,200 150,000 (11,200)<br />
Travel Expenses 58,000 60,000 2,000<br />
Supplies 43,900 40,000 (3,900)<br />
Use and occupancy 30,000 30,000 ---<br />
TOTAL $914,500 ($34,500)<br />
Activity-Based View<br />
Claims Processing Department<br />
Key / scan claims $31,500<br />
Analyse and re-work claims $121,000<br />
Suspend claims $32,500<br />
Receive provider enquiries $101,500<br />
Resolve member problems $83,400<br />
Attend training $45,000<br />
Determine eligibility $119,000<br />
Make copies $145,500<br />
Write correspondence $77,100<br />
Process batches $158,000<br />
TOTAL $914,500<br />
As we can see from the above tables, the<br />
activity-based view allows more transparency<br />
<strong>of</strong> where activities that stem from ‘bad service’<br />
exist and how much they cost. In this view,<br />
we can see that “Analyse and re-work claims”<br />
along <strong>with</strong> “Resolve member problems” are<br />
high volume areas. In making one or two<br />
efficiency changes, the organisation has<br />
an opportunity to save money and improve<br />
service to customers.<br />
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ABC doesn’t eliminate or change costs, it provides data about<br />
how costs are actually consumed.<br />
ABC doesn’t eliminate or change costs, it<br />
provides data about how costs are actually<br />
consumed. In the above example, if you wanted<br />
to reduce costs using traditional data you would<br />
have to decrease salaries, or decrease costs <strong>of</strong><br />
supplies. You don’t know enough to change the<br />
forms, processes or overhead costs. In order<br />
to correctly associate costs <strong>with</strong> products and<br />
services, ABC assigns cost to activities based<br />
on their use <strong>of</strong> resources. It then assigns cost<br />
to cost objects, such as products, processes,<br />
rework or customers, based on their use <strong>of</strong><br />
activities. This information assists in making<br />
decisions about pricing, outsourcing, capital<br />
expenditures and operational efficiency.<br />
<strong>Customer</strong> service improvement teams can<br />
use ABC to determine the cost and benefits<br />
associated <strong>with</strong> their reengineered processes<br />
and systems. This cost and benefit analysis will<br />
then become part <strong>of</strong> the overall business case<br />
for the project.<br />
An ABC approach will account for:<br />
• Activities/processes (comparing before and<br />
after the customer service improvement<br />
project)<br />
• The frequency and cost <strong>of</strong> the activity/<br />
process (comparing before and after the<br />
customer service improvement project)<br />
• The do-nothing scenario (what would happen<br />
if we do not do the project)<br />
• Which processes provide value (i.e. are<br />
needed to attract and retain customers,<br />
result in operational savings)<br />
The steps needed to develop ABC data<br />
include:<br />
<strong>St</strong>ep 1: Define the major business processes<br />
and key activities <strong>of</strong> the organisation<br />
(Process and <strong>Customer</strong> Touchpoint<br />
Mapping).<br />
<strong>St</strong>ep 2: Trace operating costs and capital<br />
charges to key activities. Use existing<br />
accounting and financial data which<br />
includes labour and capital equipment<br />
expenses and any other resource that<br />
can be changed/eliminated. Some<br />
reports to analyse include: budget,<br />
general ledger, supplier invoices.<br />
<strong>St</strong>ep 3: Link activities to processes and identify<br />
the cost drivers. The best way to do<br />
this is to actively engage the doers<br />
<strong>of</strong> the process. Have the doers <strong>of</strong> the<br />
process identify where the costs<br />
come from – then seek out data from<br />
that source.<br />
<strong>St</strong>ep 4: Summarise the total costs for each<br />
process.<br />
<strong>St</strong>ep 5: Once processes are reengineered then<br />
the “new” costs must be tabulated.<br />
Finance as a Business Partner<br />
A key decision made at the design stage <strong>of</strong><br />
the customer service improvement project is<br />
that finance has to be involved in the customer<br />
service improvement project from the very<br />
beginning. This may sound easy, but in fact it is<br />
not, especially in the beginning. Many operations<br />
people see the finance people as bookkeepers,<br />
scorekeepers or auditors. Operations people<br />
typically do not like it when “those finance guys”<br />
get involved in operational decisions. This is the<br />
first big barrier to overcome.<br />
Throughout the process, finance works closely<br />
<strong>with</strong> teams to identify the benefits <strong>of</strong> a given<br />
project. Many times projects actually report<br />
more benefits than process owners originally<br />
envisioned due to insight provided by the<br />
finance representatives. During this period,<br />
finance and the process owner agree on how<br />
the benefits will be calculated once the project<br />
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Many times projects actually report more benefits than process<br />
owners originally envisioned due to insight provided by the<br />
finance representatives.<br />
is implemented. At the end <strong>of</strong> the process,<br />
immediately before transferring ownership<br />
<strong>of</strong> the solution to the process owner, there<br />
is a second <strong>of</strong>ficial review by finance and a<br />
recalculation <strong>of</strong> the expected benefits using the<br />
data gathered during the project, the customer<br />
service improvement team does not become<br />
involved <strong>with</strong> calculating the benefit. They can<br />
focus only on the improvement process.<br />
During the 12 months following the date solutions<br />
are implemented, the company captures and<br />
reports the benefits. After that period, a new<br />
baseline is calculated using the already improved<br />
Key Performance Indicator (KPI). From that<br />
time forward, only incremental benefits beyond<br />
the new baseline are captured and reported.<br />
If there is room for additional improvement, a<br />
new customer service improvement project is<br />
generated. While the involvement <strong>of</strong> finance in<br />
a project begins before the involvement <strong>of</strong> the<br />
customer service consultant, it also continues<br />
long after the customer service consultant has<br />
transferred ownership <strong>of</strong> the solution to the<br />
process owner.<br />
Some projects start capturing benefits during<br />
the initial phase <strong>of</strong> the project since some<br />
portion <strong>of</strong> a solution may create immediate<br />
benefits even before the entire solution has<br />
been executed. Every month, all the benefits as<br />
well as the performance indicators are reported<br />
internally in a standard format. By doing this,<br />
there is continuous tracking on the KPIs that<br />
are being improved and also the financial<br />
impact <strong>of</strong> those KPIs on the bottom line. Both<br />
indicators are compared <strong>with</strong> the <strong>of</strong>ficial target<br />
that was agreed to at the time the project was<br />
launched.<br />
By applying financial knowledge, business savvy,<br />
change management and common sense, the<br />
finance department and your organisation’s<br />
management will know <strong>with</strong> certainty that the<br />
organisation’s customer service improvement<br />
program has accomplished beyond what was<br />
targeted both on a customer satisfaction level<br />
and financially.<br />
Conclusion<br />
I trust the points above demonstrate how<br />
organisations, by focusing on the wrong<br />
financial data, actually deliver poorer service<br />
more expensively. I would like to conclude this<br />
overview <strong>of</strong> the cost <strong>of</strong> bad service by providing<br />
an example which demonstrates how not<br />
properly understanding the cost <strong>of</strong> bad service<br />
can be more than a reputation risk.<br />
The story is from Harvard Business School<br />
Pr<strong>of</strong>essor W. Earl Sasser. In this edited<br />
transcript, Sasser discusses how a seemingly<br />
harmless budget trim upended an airline’s plan<br />
to pamper its best customers.<br />
Airline Case <strong>St</strong>udy<br />
“One <strong>of</strong> the companies I’ve had chance to work<br />
<strong>with</strong> is a large global air carrier. And working for<br />
an air carrier is really great, the chance to fly<br />
first class.<br />
At some point, I had to give a presentation to<br />
their top management group. I was going to<br />
give the presentation right at the airport. First<br />
class flight from Boston to that location. It was<br />
really a great meal, great service. Everything<br />
was perfect.<br />
As we pulled into the gate, the plane (was)<br />
met by someone on the ground. The person<br />
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It told me a lot about the pressures <strong>of</strong> an organisation, and the<br />
discontinuity between making budget and not making it.<br />
said, “Would Pr<strong>of</strong>essor Sasser meet the<br />
special service agent”. I was feeling a little<br />
uncomfortable because I was going to talk<br />
about customer service and customer focus<br />
and these folks were really sort <strong>of</strong> showing me<br />
stuff I’d never seen before. They were doing a<br />
really outstanding job, so it was like, “What am<br />
I going to tell these folks”<br />
It told me a lot about the pressures <strong>of</strong> an<br />
organisation, and the discontinuity between<br />
making budget and not making it.<br />
We got into the golf cart. We went through<br />
customs...We took my passport and just sort <strong>of</strong><br />
waved it. We were down in baggage claim in<br />
about ten, twelve minutes. And I said, “Wow,<br />
this is unbelievable.” So I asked the woman,<br />
“This service that you’re giving to me, do you<br />
give to other folks” She said, “Sure. We have<br />
a frequent flyer program, and this frequent flyer<br />
program identifies our very best customers. And<br />
our very best customers <strong>of</strong>ten fly one or two<br />
times a week. Now, you’re not in that category<br />
<strong>of</strong> frequent flyers, but because you’re talking<br />
<strong>with</strong> the top management group, you’re in that<br />
category for the day.”<br />
Now, first thing, is it okay to discriminate in<br />
favour <strong>of</strong> your best customers Can you use<br />
that information You’re not bothered by that<br />
She was trained to handle this service. She<br />
was pumped because she had degrees <strong>of</strong><br />
freedom. She could have rented a limo, written<br />
a ticket for another airline if that was necessary.<br />
Anything it took to satisfy this customer at the<br />
very top end.<br />
So, I kept quizzing her about this and it was<br />
obvious that they’d done a lot <strong>of</strong> homework.<br />
They understood the value <strong>of</strong> this customer to<br />
them. After about twenty minutes, I ran out <strong>of</strong><br />
things to talk about, and the bags still hadn’t<br />
arrived. The first-class folks had just come<br />
down, and I had expected the bags to be there<br />
when the first-class folks arrived. The standard<br />
would probably be that when first class arrives,<br />
have the bags there.<br />
Coach people came, no bags. Now we’re all<br />
waiting, and it takes an hour before the bags<br />
arrive. I’m a little upset because I need to get<br />
on <strong>with</strong> my presentation, getting checked out<br />
and so forth. But, I’m a little happy too, because<br />
now I have something to talk about. And so I’m<br />
holding this little story in my back pocket waiting<br />
for the appropriate time in my presentation.<br />
As I did my presentation, I started talking about<br />
the service bookends. The first encounter and<br />
the last encounter are where the people really<br />
remember—the service bookends. And as I<br />
started describing what had happened to me, I<br />
was very accurate. I told about everything. Up<br />
until this point, the faces were looking up, all<br />
the executives were looking me right in the eye.<br />
And I started telling this story.<br />
Once I got past that it was a great flight ...<br />
and I started waiting in baggage handling—<br />
the eyes—no more eye contact. It’s all gone.<br />
After the presentation people came up to talk<br />
to me. There was a person just standing over<br />
to the side. When the last person finished, this<br />
person walks over and said, “I’m responsible<br />
for baggage handling at the airport.”<br />
And I said, “I’m sorry that I told exactly how it<br />
happened. I didn’t make anything up. I thought<br />
you should know that ... it’s very complicated<br />
when you’re in the airline business, because<br />
there’s so many interactions on the trip. Some<br />
<strong>of</strong> them the airlines control, some <strong>of</strong> them not.<br />
But that last interaction can have a big impact.<br />
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I just wanted to drive home that point. Sorry, if I<br />
caused you any problem.”<br />
He said, “I’m not surprised it happened.”<br />
I said, “What do you mean, you’re not<br />
surprised”<br />
He said, “This is the last week <strong>of</strong> the month.<br />
This is the last month <strong>of</strong> the quarter. I have<br />
deliberately understaffed baggage handling to<br />
make budget.”<br />
Now, what about that He said, “I deliberately<br />
understaffed baggage handling to make budget.”<br />
First question is, did this person make budget<br />
Probably did. Probably it is a cost centre, and<br />
I suspect this person was rather close to either<br />
meeting or not meeting budget.<br />
And it also told me a lot about the pressures on<br />
an organisation, and the discontinuity between<br />
making budget and not making it. Not making it<br />
even by a little bit is bad. Making it is absolutely<br />
great. And therefore, this person did something<br />
because they were close to meeting their<br />
budget target.<br />
What’s the implication <strong>of</strong> this behaviour<br />
Does it have any consequences Economic<br />
consequences What are they<br />
Would someone who was on that airline this<br />
time would consider flying another airline the<br />
next time he or she had a chance to fly Most<br />
likely…<br />
Baggage handling…That’s not going to affect<br />
my revenue, right Whose revenue is that<br />
revenue that I’ve lost It’s my best customer! MEE<br />
BRETT WHITFORD<br />
Executive Director<br />
Brett Whitford<br />
Executive Director<br />
<strong>Customer</strong> <strong>Service</strong> <strong>Institute</strong> <strong>of</strong> Australia<br />
Brett Whitford is the founder and an Executive Director <strong>of</strong> CSIA. He is the author <strong>of</strong><br />
five best selling business books on technology, best practice and customer service.<br />
His business experience is extensive, including joint ventures <strong>with</strong> International<br />
Prentice Hall. Brett is currently completing his new book on customer service,<br />
showcasing some <strong>of</strong> Australia’s top organisations.<br />
Brett founded Beaumont Publishing House at 22 and listed his consulting,<br />
Brett Whitford is the founder a<br />
certification and publishing company on the Australian <strong>St</strong>ock Exchange in December 2000. Director His <strong>of</strong> CSIA. He is the au<br />
experience and expertise makes him a highly sought after speaker and he <strong>of</strong>ten lectures selling for universities,<br />
business books on<br />
international conferences, radio and television.<br />
practice and customer servic<br />
experience is extensive,<br />
Brett, along <strong>with</strong> selected CSIA members, recently wrote Australia’s first <strong>St</strong>rategic <strong>Customer</strong> ventures <strong>Service</strong> <strong>with</strong> International Pr<br />
Management MBA unit for Deakin University.<br />
is currently completing his<br />
customer service, showca<br />
Brett is considered Australia’s leading customer service consultant. He has worked <strong>with</strong> some <strong>of</strong><br />
Australia’s top organisations.<br />
Australia’s, and the world’s, top companies and government departments such as Nokia, Johnson<br />
& Johnson, Defence Housing Authority, Medicare Australia, Aurora Energy, Optus, Telstra, Brett Manitoba founded Beaumont Pub<br />
Telecommunications <strong>Service</strong>s, Energex, Queensland Rail, Brisbane City Council, Manningham 22 and listed City his consulting,<br />
Council, Warrnambool City Council, <strong>Service</strong> Essentials, Westpac, ANZ, AAMI, Yarra Valley publishing Water, company Ergon on the<br />
Energy, Fone Zone, Colorado Ltd., and numerous other organisations.<br />
Exchange in December 2000<br />
and expertise makes him a hi<br />
speaker and he <strong>of</strong>ten lectures<br />
international conferences, rad<br />
brett.whitford@csia.com.au<br />
Ph: +61 2 9386 4477<br />
Brett, along <strong>with</strong> selected<br />
recently wrote Australia’s<br />
<strong>Customer</strong> <strong>Service</strong> Manageme<br />
Deakin University.<br />
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Brett is considered Aus<br />
customer service consultant.<br />
<strong>with</strong> some <strong>of</strong> Australia’s, 14 and<br />
companies and government d