I'll admit, I think a lot of analyst reports are a big yawn. A recent one from Forrester, Customer Service: A Keystone Of Your Corporate Revenue Strategy (pdf), exceeds those expectations. (Although they can't help but fall into the tidy-explanation-of-why-some-companies-fail trap.)*
The report by Natalie Petouhoff begins with "Despite the pressure to become a profit center, most organizations’ customer service and contact centers continue to miss the mark on becoming a strategic business partner and are not considered part of the corporate revenue strategy." She makes some strong points in identifying catalysts to make customer service an "executive-level duty," including:
"Evidence of a direct financial tie to revenue. Studies reveal that customer service and the contact center directly affect corporate revenue.... An Accenture study cites customer service and converting customer information into business intelligence as the business improvement initiatives that produce the highest impact on a company’s financial success. For example, a typical $1 billion business could add $40 million in profit by increasing its customer-facing capabilities by 10%. According to... the American Customer Satisfaction Index, a company’s stock price is related** to customer satisfaction. This means that executive decisions that erode customer service are eroding corporate profitability."
The report is primarily a survey of relevant research, so if you're digging for evidence on this topic, your job just got a whole lot easier. Among the references (pdf) are these:
Good point. Another catalyst is "Direct executive accountability for large expenditures. With the SEC now requiring extensive documentation for executive pay-for-performance shareholder reports, never before have executive compensation decisions been so tightly linked to the decisions they make.... And because results in customer service and contact centers are so easily measured, a well-executed (or poorly executed) strategy can provide excellent SEC report material."
Ahem. Here are my footnotes:
*Figure 3 of the Forrester report, "Continued Poor Executive Leadership Is Responsible For Low Corporate Success Rates," is where they fall into the analyst/consultant trap of identifying why one company failed when others did not. While there is plenty of good stuff in analyses such as this, and lessons to be learned, I think we all know it's not as simple as listing a laundry list of root causes: The evidence is just too fuzzy. I believe the best refutation of the "Let Me Tell You Why" impulse is The Halo Effect. If you haven't read it yet, you should.
**Saying share price is "related" to customer satisfaction doesn't tell us much. I've seen evidence showing that nothing but free cash flow (FCF) truly correlates to stock price -- but arrgh, I can't find the citation right now. I'll keep looking.
Want to know more? Forrester provides a download of their report here (pdf) at no cost.
Tracy-
Evidence Soup is fascinating. I'm not sure I understand it all, but I am intrigued -- and always nicely surprised at the many dimensions of you.
- drew
Posted by: drew | Tuesday, 18 November 2008 at 03:53 PM