HR must change how ROI for customer service is calculated, says institute
Peter Crush, January 19, 2011
Human resources departments need to fundamentally alter the way in which return on investment for customer service is measured and reported, according to research conducted by the Institute of Customer Service and Ashridge Business School.
At a launch announcement yesterday of new research into customer service, the institute’s CEO, Joanna Causon (pictured), said: "To position return on investment (ROI) in the boardroom, HRDs must shift customer service away from measuring customer satisfaction and into much more complex areas, such as how customers perceive the value of their relationship with the company."
"We are still measuring what is easy to measure," Causon said. "Stuff that’s hardest to measure will become the stuff of greatest importance.
"Instead of measuring the attitude of staff, we need to measure the attitude and behaviours of staff 'as perceived’ by customers. This is a whole new board game."
The research – which Causon said she nicknamed ‘The Beginning of the Beginning’ – is being billed as the first, seminal study to help elevate customer service as a serious boardroom conversation with real ROI.
During the research, 81% of respondents said they believed that gaining an understanding of service "from the customer viewpoint" is very likely to lead to positive ROI, with 74% saying gathering and acting on customer feedback is what will produce real business ROI.
The report indicates that that the top three measures of service currently analysed are: customer satisfaction, customer loyalty and the importance of service to the customer.
But it also argues that the top three elements that will need to be measured in future to demonstrate real ROI are: customer satisfaction, the culture of service quality and creating as well as enhancing customer relationships.
The research also suggests that HRDs only rate the quality of customer-facing staff as seventh most important, but in the future it needs to be in the top five areas of concern.
"This should inform recruitment, as well as remuneration of front-line staff," says Causon, who indicated these people are under-rewarded compared to the impact they have on financial performance.
At the launch, Graham Heald, director of retail services at Waitrose, said: "This is daunting research. There is a real danger that companies are complacent about customer service."
Cheryl Black, customer service director at O2, said: "It is all too easy to say that what’s good for the customer is good for the business, and leave it at this.
"This report challenges us to start thinking about how we measure changing customer behaviours, and the role our staff have to play in it."
According to the institute, there will be a shortage of 300,000 customer-facing staff in the next three to five years.
The institute also estimates that bad customer service costs the UK economy £50 billion a year, an average of £248 in lost business from every person in the UK.
The research – entitled The Bottom Line – was based on 12 months of quantitative and qualitative research by the institute and Ashridge Business School.
The full report will be launched at the end of February, and will be exclusively reported on in the March issue of HR magazine.