Who won the revolution?

Excerpts from The Service Revolution: Who Won?
Ron Zemke, Management Review

Consumers were promised the end of dull-witted sales help and companies were dazzled by the potential of more loyal customers. But except for a few world-class organizations, the customer-service movement didn't quite deliver all the rewards its proponents had anticipated.

Whatever happened to the customer-service revolution?

• A study by The Conference Board found that 42 percent of consumers rate the companies they deal with as "fair" or "poor" at meeting their needs and only 8 percent as "excellent."
• A study at Car and Truck Dealer magazine found that 14 percent of car buyers switch because of product and 68 percent switch brands because they are disappointed in service and treatment.
• The University of Michigan's American Customer Satisfaction Index (ACSI) has shown a steady, gradual decline in customer satisfaction since the index's inception.
• Howard Levinson, head of a Boston-based mystery-shopping firm, calls the service revolution the customer-service myth. "As quickly as providers have rushed on the bandwagon of the `service, service, service' craze, many can't hack it.

Is the Revolution Over?

We polled several of the United States' leading customer-service researchers to find out. As Benjamin Schneider, professor of psychology at the University of Maryland, put it, "It's not dying, but it is resting--it has certainly plateaued." There are five factors behind this slowdown:

• Rising expectations: At least a part of current consumer disappointment and frustration with service in America comes from the contrast between expectations and experience. "We don't always appreciate the improvements because our standards are rising," says Leonard S. Berry, professor of marketing and director of the Center for Retailing Studies at Texas A&M University.
• Downsizing. Berry points to years of downsizing, reengineering and retrenchment. "Reengineering has had an especially hard effect on service delivery. It is not that downsizing or rightsizing or layoffs in and of themselves are wrong, but the way they have been done has both eroded trust in management and increased work loads on service people in many organizations," he says. "They don't believe the service message and they are tired and overworked. Consequently, they don't work as quickly or carefully, or spend the needed time with customers and their problems." And customers are noticing the absence of attention.
• Commitment. As with every management vogue, there has been a significant amount of superficial fad following and lip service in the service revolution. Mary Jo Bitner, associate professor of marketing at Arizona State University in Tempe, Ariz., says that in many companies there has been a lot of noise, but little commitment and less change. "A number of companies are unwilling to commit to service-improvement results. They try one thing that sounds good; then something else comes along that sounds good [and] then they try that. They haven't committed to a specific, tangible plan for service quality for the long, hard haul."
• Multiattribute Evaluation. Perhaps because it looks so simple when it is done well, many a management team saw a focus on service quality as an easy, cosmetic route to marketplace distinction. But they've been surprised. "There is no more difficult business to manage than a multisite service operation," asserts Michigan's Hart. "Service is very personal. And it is produced by all those mini-factories, staffed with low-paid, part-time workers. If you don't stay on it every minute, the wheels come right off." Berry sees service-quality improvement in a large organization as especially difficult. To improve service in an environment like that is an awesome task. "It is slow, plodding work, and you take one step back for every three steps you take forward."

Harder than we thought

• Bitner suggests that consultants, researchers and managers have all been taken a bit by surprise by the amount of work involved in making a service-quality effort succeed. "Ten years ago we were focused on training and awareness. Make everyone service-conscious and things will work out. Today we know you have to look at systems, processes, reward structures - everything - to make a service effort succeed," she says.
• Schneider agrees: "Early on we thought service quality was pretty simple. Teach people to smile, put someone in the lobby to play the piano, and you were now a service-quality business. Not so. It requires [looking at] the whole system to make it work. The successful companies, especially the ones who were doing great service all along, even before we named it the service-quality thing, made it all look so easy. It isn't easy."
• It is a much harder task, this service-quality improvement job, than most of us dreamed going in. It takes a clear focus on the specific advantage you think you can create, and a commitment of time and resources to the 101 improvement tasks that will be necessary.
• In our research we've seen time and again that managers at all levels must be role models of doing things the right way - from dealing with customers to helping people in other departments succeed. Will Rogers said it best: "People learn more from observation than from conversation." It is certainly true in the service-quality effort. Your people will try no harder, will feel no more commitment to serving customers well, than they see reflected in your behavior, in your attitude, and in your commitment and enthusiasm.

The rewards have not deteriorated

• According to the Strategic Planning Institute of Cambridge, Mass., organizations that focus on the quality of customer care keep customers up to 50% longer, have 20% to 40% lower marketing costs and experience 7% to 17% better net returns.
• Frederick Reichheld of Bain & Co. and W. Earl Sasser of Harvard Business School have demonstrated that organizations which improve customer loyalty by 5% improve profits 25% to 85%. And that customer satisfaction drives customer loyalty.