Effectively Measuring and Rewarding Customer Service Competency and Performance

1. Effectively Measuring and Rewarding Customer Service Competency and Performance September, 2008 Michael F. Maciekowich National Director, Astron Solutions, LLC www.astronsolutions.com michaelm@astronsolutions.com 212-792-8886

2. Customer Service Mission Statement • Quality service is what our organization must provide through the careful management of our strategies, systems, and people to meet and often exceed the needs and expectations of our current and future internal and external customers.

3. Agenda • Defining “Good” Customer Service • Organizational and Leadership Challenges • Core Competencies • Customer Service and the Balanced Scorecard • Measuring Results • Rewarding Customer Service • Concluding Thoughts

4. Defining Good Customer Service

5. The Moment of Truth • Any episode where a customer comes into contact with any aspect of the organization, no matter how distant, and by this contact, has an opportunity to form an opinion about the organization.

6. Types of Customers • Current Customers: • Customers who do business with your organization now and in the distant past and continue to do so on both a regular and irregular basis. • A satisfied current customer is not just one that comes back to do business but one who is happy to make that choice. • New Customers: • Customers who are coming into contact with your organization for the first or second time. The concept of “moment of truth” impacts these customers the most. • Internal Customers: • Internal customers are those within the organization who do the day-to-day support work within the organization to ensure external customer expectations are met.

7. Key Concepts on Internal Customers • The way we do business with one another within the organization has a direct impact on how we will do business with our external customers. • Helping each other collectively to get the work done will improve the way we take care of our external customers. However, if we are unable to work collectively in a positive fashion it can result in negative external customer service.

8. The Customer Service Triangle • Effective Service Strategy: Tells employees what you expect of them; what the organization will do for them and the customer; and how the organization plans to deliver quality service. • Customer-Friendly Systems: These support employees in everything they do -alone, together, and for the customer. All support systems must be in place to make it easier for the employer to help the customer. • Customer-Focused Providers: Good people, well supervised and well managed employees who are given enough leeway to become customer service agents.

9. Organizational and Leadership Challenges

10. Six Challenges Facing Leaders • 1 - Excellent employee service starts with good selection. It's hiring the right person for the right job. Have you ever encountered a person in a public contact job that just didn't get it? We all have. If you've got a job that requires people skills and optimism, hire an optimistic people person. You cannot train a pessimistic person to be optimistic - it just won't happen. Some people are tempted to hire a good looking person with the personality of a stone for a customer contact position instead of a person with average looks the ready smile and a good word, go for the smile and the good word. • 2 - Excellent employee service creates expectations of performance through leading by example. When that store manager greets everyone who comes into his/her store with a smile and a "How can I help you?" the model for customer service behavior is set. The manager who is too busy to acknowledge their customers cannot expect a high level of customer service - his people will, just like the boss, be too busy to give exceptional service. • 3 - Excellent employee service starts with the conviction that every single person is a contributing member of the team - and everyone is held to a high standard of service. Successful leaders know employee service is inclusive - they put their arms around everybody and include them on the team.

11. Six Challenges Facing Leaders • 4 - Excellent employee service means setting and communicating high standards, training to meet them, and being demanding. High standards bring out the best - they also flush out the worst. They let people know they are in a special place - a place that won't tolerate substandard behavior. People take pride in being part of that kind of organization. • 5 - Excellent employee service recognizes accomplishment- in its many forms. I just had an ultrasound. The technician who did the test has been with her employer for 17 years. Two days before my test she had her appendix removed! She was as nice and helpful as anyone could be - she gave me excellent customer service. She also is extremely proud of her attendance record. Is that outstanding? I think so. I suspect she has stayed at the same place for 17 years because she's been recognized in the past - and she's looking for more - and she will get it. • 6 - Excellent employee service provides feedback to all. Regular "how are we doing" meetings, passing on customer feedback, providing tips on how to help customers, cross training in different jobs - all lead to better qualified and informed employees who will provide a higher level of excellent customer service.

12. Competencies Required

13. Key Management Competencies for Successful Customer Service • Competency 1: Results Focus • Successful managers know that at the end of the day it is not what you do but what you deliver that matters. Having a results focus is about knowing what outcomes are required and focusing yourself and those that you manage on delivering the results. This results focus keeps you on track and reduces the scope for distractions. • Competency 2: Making Change • Leaders regularly set out requirements for change. It might be in terms of process, people, service, ways of doing things to name just a few. While leaders will set out the overall direction, managers are the people who need to make the change happen on the ground. This requires them to overcome the obstacles that without doubt will appear as they try to make change. • Competency 3: Planning • Managers do not have the luxury of just having one thing to do. They have to manage money, people, processes, projects, customer relationships and themselves. This requires them to be able to plan effectively so that they get the best results possible. • Competency 4: Team Development • Managers cannot do everything on their own. They need a team around them that can help them to deliver results. Successful managers recognize that team development is an ongoing activity. People come and go from teams and the dynamics that this creates need to be managed. Many team members want to progress and so creating opportunities for growth and development is important.

14. Key Management Competencies for Successful Customer Service • Competency 5: Risk Management • All areas of business face threats and managers need to become competent at identifying and responding to risk. These risks can range from losing key staff to health and safety issues. Successful managers recognize the importance of identifying and proactively responding to risk. • Competency 6: Decision Making • Until a decision is taken, nothing happens. Managers who procrastinate are a source of frustration to staff. The staff might not always like or agree with the decision that you have made but they will prefer you to make a decision rather than procrastinate. • Competency 7: Communication • Successful managers are effective communicators in 3 areas. They are effective speakers and can put their points forward clearly. They are also effective at getting their message across in writing whether it is an e-mail or report. Finally, they are effective listeners. • Competency 8: Customer Service Focus • Successful managers recognize that they have customers, even if they are not working directly with the end consumer or user of the product or service. Successful IT Managers see the users of the systems as customers. Accounts Department Managers see budget holders, employees whose salaries they process and suppliers they pay as customers.

15. Employee Competencies (Best Practice List) • The employee makes all customers feel welcome. • The employee makes eye contact with, smiles at, and greets all customers he/she encounters. • The employee welcomes customers or acknowledges that this visit is their first. • The employee promptly acknowledges customers waiting at service points. • The employee re-acknowledges waiting customers when volume of business does not permit them to be served promptly. • The employee thanks customers for visiting , using services, and attending programs. • The employee invites departing customers to visit again. • The employee is courteous to all customers. • The employee gives every customer service interaction his/her full attention. • The employee uses a pleasant, low tone of voice in all customer service interactions. • The employee stays calm and patient in all customer service interactions. • The employee uses positive phrasing in explaining problems and rules.

16. Employee Competencies (Best Practice List) • The employee is open-minded and respectful toward customers with problems needing resolution. • The employee refers difficult customer service interactions to supervisory or administrative personnel. • The employee communicates clearly to all customers. • The employee explains rules and procedures using positive phrasing. • The employee explains the steps being taken to resolve a problem. • The employee avoids jargon and substitutes vocabulary the customer will be familiar with.  • The employee apologizes to a customer kept waiting in person or on the telephone. • The employee explains to a customer when a problem or procedure is likely to take more than a few minutes. • The employee offers the customer the choice of waiting for an answer or resolution or being called back later. 

17. Employee Competencies (Best Practice List) • The employee takes all the time needed to assist customers, while using their time effectively to complete other work. • The employee seeks assistance from co-workers to get time needed for complicated customer service interactions, as necessary. • The employee who is unable to assist a customer completely refers them to a staff member who can. • The employee uses open-ended questions to determine a customer’s real need or problem. • The employee uses feedback and paraphrase to clarify a customer’s need or problem. • The employee invites the customer to return to the service point if their need has not been completely met. • The employee uses follow-up problem solving for needs and problems which appear initially cannot be met.

18. Employee Competencies (Best Practice List) • The employee makes good on customer service interactions which have been handled mistakenly or inappropriately. • The employee acknowledges when a mistake has been made. • The employee apologizes when a mistake has been made. • The employee makes every attempt to follow-up on and correct mistakes. • The supervisor makes good on customer service interactions in which even the possibility of a mistake is evident.

19. Customer Competency Assessment Questionnaire See Appendix A

20. Measuring Results

21. General Thoughts on Measurement • Asking customers whether they have been satisfied with a company's services is not as simple as it may appear. Of course, the customer-satisfaction survey must ask the right questions, but also the company needs to know how to interpret customer responses correctly. "Once customer satisfaction is tied to compensation, companies need precision in their measurement system to ensure changes are not based on random statistical fluctuations," says Ross Goodwin, senior business consultant at Hewlett-Packard Co.'s Business Innovation and Transformation Services Group in Windsor, Calif. • To ensure that the right things are being measured, Goodwin adds, "companies need to conduct qualitative research to identify key measures or attributes of what's important to customers." Without this baseline research, companies are guessing at how important a measured attribute may actually be to their customers.

22. Customer Satisfaction Surveys-Establishing a Baseline • Many managers wonder how frequently they should conduct customer satisfaction surveys. The answer depends on the size of the customer base and the purpose of the research. There are two key types of surveys, and they serve very different purposes: • Transactional surveys solicit feedback directly from the product or service user about that particular encounter. They are conducted immediately after each customer transaction. For example, a survey may be administered after a call center experience. • Relationship surveys collect input from people who have an ongoing relationship with the company and have had multiple transactions. They are regularly scheduled surveys-often quarterly. The respondents typically are responsible for deciding whether to continue the working relationship.

23. Best Practice Measurement Methodologies • Internal auditing • In call centers, this is usually called "ghosting" or "whispering." In food and retail locations, this is often called something like "supervisor shopping" or "internal shopping." With this method, employees of the company use their skills to audit a location and/or employee for adherence to processes and procedures. • Pros: Company and policy knowledge, relatively inexpensive.Cons: Subjective and biased, not the actual customer, not continuous. • External shopping • This is often called "mystery shopping," as conducted by "secret shoppers." In this method, third parties are paid to pretend they are a customer. They visit a location and perform detailed reviews of performance against pre-determined standards and specifications. • Pros: Detailed, more areas can be graded, can measure processes.Cons: Questionable quality (because shoppers are not always sufficiently trained), expensive, not the actual customer, very small sample, not continuous, day-to-day inconsistencies will not get noticed. • Customer experience • Sometimes called "customer satisfaction measurement," "customer experience management," "compliance monitoring," or simply "customer feedback." In this method, customers themselves voluntarily leave comments about the experience they just had. • Pros: Feedback from the actual customer, anonymous, inexpensive, continuous, large sample.Cons: Not as precise in measuring compliance to desired processes.

24. The Balanced Scorecard Competency Based Performance Management Model • Financial Performance • Utilization of Resources • Core Competencies Required • Customer Performance • Customer Interactions • Core CompetenciesRequired • Growth Performance • Process Improvement • Core Competencies Required Organization Success • Human Resources Performance • Teamwork/Interaction • Core Competencies Required • Quality Performance • Process • Core Competencies Required

25. Measuring Competencies, Behaviors and Results Review of Best Practice Performance Management Model See Appendix B

26. Rewarding Customer Service

27. Pay For Competency • Competencies are the knowledge-skills and the attitude needed by any individual employee to carry out their job effectively. These can be incorporated into a pay system to reward individuals who positively contribute to the overall values and objectives of an organization. This is competency based pay: rewarding the way people work, not just recognizing what they can deliver. • Most competency based pay systems are determined by performance indicators. Typically, the competencies needed to drive progression are quantified by senior managers through employee interviews, surveys and job analysis. The following competencies are relevant here: • core competencies that apply to any job within the organization and reflect the organization's core values • the technical skills and expertise that are necessary to carry out the job • competencies relating to a specific job category e.g. ‘leadership' for senior managers • competencies that define the contribution an employee makes to their role

28. Pay For Competency • Competencies are assessed through a regular appraisal process to facilitate pay progression within a grade. The best approach is probably to describe each job in terms of the competencies needed to do it. These can be taken from a set of common or ‘core’ competencies. More complex individual competencies will need to be added for more complex senior roles. • Competencies within broad banded pay structures • The band boundaries are defined using job evaluation and market rates. The employees' position in the band is reflective of their competency within their role. Employees' expectations can be problematic in 'open' broad bands. • In some systems employers use market rate and job evaluation factors to split the bands into zones. An employee’s position within the band zone will depend upon their technical competencies. • Competencies within a job family structure • Different pay structures can be established for different job families under occupational or functional groupings. As work activities and basic skills are common within these groups it is possible to set out the different levels of responsibility, skill and competence.

29. Pay For Performance • Success depends on the willingness of individual managers to make objective assessments of their employees. • Managers must be willing to differentiate between performances that meet expectations and those that exceed -- or fall short of -- expectations. • Competency-based systems should measure an employee's performance against a set of core behaviors that have a proven impact on business. • Payouts should be made quarterly or at least more often than annually. • There must be follow-up evaluations. • The plan must be communicated clearly, frequently, and simply. • Success depends on training, reinforcement, and company-wide commitment.

30. Pay For Results • Under turbulent economic conditions, companies continue to change their compensation practices in an effort to control costs, while at the same time further aligning employee behaviors with strategic business objectives. Better alignment means that a company and its employees are financially rewarded. • Typically, performance pay programs using customer feedback operate in a similar way: • Customers answer a survey or complete a questionnaire about their experiences with the company. • Companies often ask key questions regarding overall satisfaction levels. They also ask customers about their products, services and other business attributes. • Overall, the company's aim is to rate itself and its employees on how well they are meeting customer expectations. • This accumulated customer information is then used to create a satisfaction score, which becomes the metric on which performance pay is calculated.

31. The Balanced ScorecardIndividual Incentive Model • Financial Performance • Utilization of Resources • Outcome or Result • $ Value • Customer Performance • Customer Interactions • Outcome or Result • $ Value • Growth Performance • Process Improvement • Innovation • Outcome or Result • $ Value Organization Success • Human Resources Performance • Teamwork/Interaction • Outcome or Result • $ Value • Quality Performance • Process • Outcome or Result • $ Value

32. Spot Bonus Program – City of Denver • The SPOT Bonus Award was created by Mayor Hickenlooper in 2007 to honor employees who have demonstrated exceptional performance that further enhances the goals of the City. • General Services shares the vision of the Mayor and we believe we have many employees that have accomplished this by performing above and beyond what is expected of them.  For example: Some may have made an uncommon contribution to a one-time project; some may have consistently provided higher quality work than what was expected; or, some may have taken a step that was not expected of them to help a customer • You may know one of these employees.  You can also make sure these employees are honored for their exceedingly good performance.  Just complete a General Services SPOT Bonus Nomination Form.

33. Spot Bonus Program – City of Denver

34. Spot Bonus Program – City of Denver • Nominations for Spot Bonus Awards can be made for individual employees, groups, or team, by the employee (himself or herself), a peer, subordinate, supervisor, or a member of the public.  Nominations must be submitted to the Department’s SPOT Award Panel via the established nomination form.  • Your nomination must include a description of the specific action or part of an employee’s performance that makes you feel this employee stands out from others, or/and what unexpected, specific benefit you received from the employee’s service • Spot Bonus Award nominations can be submitted to the Spot Award Panel at any time.  The Panel will meet at least once a month to assess nominations and determine Spot Bonus Award recipients.  Spot Awards will be given to the recipients at a quarterly all staff meeting. 

35. Spot Bonus Program – City of Denver • Awards will be issued based on one or more of the following criteria: • The performance/action exceeded what is normally expected from the employee, group, or team through the responsibilities of their position • The impact of a specific action exceeded the expectations of a customer • To what degree did the employee(s) accomplishments further important goals, which can included one or more of the following areas but is not required: • Service • Accountability • Safety • Teamwork • Respect

36. Spot Bonus Program – City of Denver • Each year the Department’s designated Spot Bonus Award dollars will be distributed in quarterly allotments.  This method ensures that there will be dollars available for Spot Bonus Awards in each quarter of the calendar year.    • A single employee is eligible to receive a Spot Award twice in one year.  Spot Bonus Awards are $75.00; the total dollar award to any one employee shall not exceed $150.00 in one year.  Spot Bonus wards will be paid in the calendar year in which the employee’s performance being recognized is performed.

37. Concluding Thoughts

38. Ten Steps To Successful Customer Satisfaction • 1. TREAT THE CUSTOMER THE SAME WAY YOU WOULD LIKE TO BE TREATED! Provide the customer with the same level of service you would expect if the roles were reversed.2. ANTICIPATE AND ACCOMMODATE YOUR CUSTOMERS’ NEEDS! A nation-wide study asked people what they wanted most as a customer. Approximately 70% indicated that they wanted their needs ands desires met prior to having to ask.3. MAKE THE CUSTOMER FEEL AT HOME! Make your customers feel at home by being courteous and allowing them to feel comfortable and appreciated for doing business with you.4. ALLOW THE CUSTOMER TO GET THE BEST VALUE FOR THEIR MONEY! Customers look for two things: The quality of the product and the quality of the service.5. ACT TO SOLVE ANY AND ALL COMPLAINTS AND PROBLEMS TO THE CUSTOMER’S SATISFACTION! It is not the fact that the customer has experienced a complaint, but the way the complaint was handled that will determine if they will return or not. Handle each complaint in a courteous and professional manner and to their satisfaction.

39. Ten Steps To Successful Customer Satisfaction • 6. ALWAYS BE WILLING TO DO A LITTLE EXTRA! Go that extra mile to satisfy a customer by always providing excellent service at all times.7. ALWAYS SMILE, BE FRIENDLY AND COURTEOUS, AND MAKE EYE CONTACT WHEN SPEAKING TO THE CUSTOMER! This shows the customer that you care about their needs and are glad that they are doing business with you. By providing these services to the customers, they will be more likely to do business with you again.8. NEVER ARGUE WITH THE CUSTOMER! Remember: The customer may not always be right, but the customer will always be the customer. There may be times when the customer is wrong about a certain situation. It is important that you never tell them that they are wrong, but to apologize for their inconvenience and assure them that you will do everything in your power to accommodate them. Again, it’s the approach that is important more than the actual incident itself.9. LISTEN AND HANDLE ALL CUSTOMER PROBLEMS IN A PROFESSIONAL MANNER! Listen with not only your ears but also with your eyes. Make good eye contact so that they are assured that you are listening and care to solve their problems.10. IF YOU CANNOT ASSIT A CUSTOMER, DIRECT THEM TO SOMEONE WHO CAN! Never leave a customer unattended. If you don’t know where something is, find out!

40. Appendix A:Self Assessment Questionnaire

41. Appendix B:Best Practice Performance Management Model

42. Appendix C:Sample Employee Customer Service Training Program

43. Customer Service Tools and Techniques for All Staff

44. Today’s Goals • Learn the techniques you can use when interacting with customers so they will walk away with positive feelings about the experience. • Learn about very specific things you can do in all kinds of customer interactions. • Learn how to deal with difficult customers. • Learn how to approach customers and get the information you will need to better assist them.

45. Basics of Customer Service

46. Customer Service in Every Day Life • Identify the “best” customer service experience you have ever experienced. • List what made this experience memorable:

47. Basic Truths • The person who interacts directly with the customer determines whether that customer perceives that he or she is receiving poor customer service, excellent customer service, or something in between. • If you serve customers directly you have the POWER to affect perceptions. • The customer contact is where “the rubber meets the road.” • Customers will always have opinions so you might as well learn how to create positive opinions.

48. What’s In It For Me (Why spend this time on this topic) • First, very few people can derive any job satisfaction when they feel the time they spend at work is wasted. Most of us want to feel we make a difference. When you do a good job with a customer you feel good about having achieved something. • Second, learning to deliver quality customer service will save you a lot of stress. When you learn and use customer service skills you are far less likely to get into unpleasant and upsetting interactions with customers. • Third, learning and using quality customer service techniques helps form the perceptions of those who may be able to help your career. Managers and supervisors tend to notice when customers ask for you or comment about the customer service delivered. • Others: Discussion

49. Understanding Different Kinds of Customers • Core Definition: • The customer is the person who utilizes the services that you provide. • Better Definition: • The customer is the person next in line who utilizes your services.

50. Understanding Different Kinds of Customers • Four basic types of customers: • External Paying Customers • People who pay for the services of the organization. • Internal Customers • The people who receive output that you create or provide but who are in the same organization. • External Non Paying Customers • These customers who receive services but do not pay directly for them or do not pay at all. • Regulated Customers • Government or public officials that we interact with in providing our services. • Others: Discussion