Moments Of Truth

Seventy percent of customer-service workers, on average, quit their jobs within a year. But some companies have kept turnover rates low by learning how to engage these crucial employees.

Saturday, December 1, 2007
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You think your job is hard? Try sitting in a cubicle for eight hours a day listening to angry customers, tracking lost orders and answering picky questions, all with a helpful, pleasant demeanor, for $15 an hour.

Most people wouldn't last a day as a customer-service representative. Yet retailers, airlines, banks and legions of other employers rely on these low-rung professionals to keep their businesses humming. Their performance on the phone, on the sales floor and online can make or break customer relationships.

If everyone practiced what's been preached about employee engagement, perhaps there would be no turnover. Obviously, that's not the case among the nation's 2.1 million customer-service representatives -- annual turnover rates of 70 percent or more among that segment of the workforce are common, according to experts. 

Nevertheless, employers known for excellent customer service have gotten their CSRs to stick around. What's their secret? Southwest Airlines, Nordstrom Inc. and other companies that rank high in customer satisfaction trace their success, in part, to the care and feeding of customer-service workers.

Human resource executives can help ensure that success by hiring people with the talent to serve customers, training them -- and their managers -- effectively and driving motivation with worker-directed incentives. In other words, they have a better chance of engaging their customers in repeat business by having customer-service workers who are, themselves, engaged.

"Organizations need to establish the importance of having an engaged and empowered workforce first; then customer service will follow," says Mark Phelps, a senior consultant and engagement practice leader at Development Dimensions International Inc., a human resource consulting firm based in Bridgeville, Pa.

Wheat, Not Chaff

A 2006 article in McKinsey Quarterly (a magazine published by consulting firm McKinsey & Co.) entitled "The 'Moment of Truth' in Customer Service" noted the "moments of truth" that can turn an occasional customer into a lifelong one -- or a loyal customer into a former one. Those moments, involving transactions "when customers invest a high amount of emotional energy in the outcome" -- for example, a lost credit card or a canceled flight -- require superb handling to turn out right.

"By supporting and developing the front-line emotional intelligence of its employees, [an organization] can ensure that more of those moments have a positive outcome," authors Marc Beaujean, Jonathan Davidson and Stacey Madge wrote. However, the spark that ignites customer loyalty too often fails to catch.

Part of the problem is hiring. Given the low priority and high turnover of customer-service jobs, HR often resorts to the warm-body approach. "Some companies spend more time on screening than sourcing," eliminating the chaff instead of attracting the wheat, says John H. Fleming, chief scientist of customer engagement at Gallup Consulting, an arm of the Gallup Organization, based in Princeton, N.J.

Chris Denove agrees.

"[Companies] don't put enough emphasis on someone who's wired with the right personality," says Denove, vice president of J.D. Power and Associates, of Westlake Village, Calif., a marketing information firm that issues customer-satisfaction rankings, and co-author of Satisfaction: How Every Great Company Listens to the Voice of the Customer. "We believe you should hire the person who's got a great personality and train [him or her] to work the phones" rather than someone with great technical skills and no "customer-centric personality."

Some employers have talented applicants but don't hire them because they lack job experience, says Denove.

Companies that are short of the right applicants should examine their compensation structure -- maybe they don't pay enough to attract the best -- and look for people working in other industries who could be trained to work in another business, he adds.

Assessments and behavioral interviews can reveal the desired talents: the ability to listen well, empathize, deal with conflict and take responsibility for customer satisfaction. Adaptability, attention to detail and tolerance for routine are also important, experts say.

T-Mobile USA Inc., ranked tops in its industry for customer care by J.D. Power, uses an assessment tool as well as "scenario-based interviews," in which applicants' performances in role-play is evaluated, says Gina Richardson, HR director at the Bellevue, Wash.-based wireless provider.

"We look for individuals who have a passion for serving others ... who are outgoing and passionate about what they do, no matter the task," says Maria Brous, spokeswoman for Publix Supermarkets Inc., a Lakeland, Fla.-based chain with 143,000 employees in five Southeastern states that was ranked among BusinessWeek magazine's 25 companies noted for customer service and was ranked No. 1 by J.D. Power for supermarket pharmacies.

In interviews and at orientation, prospective and new employees learn about the company's service philosophy and practices, she adds.

But it takes more than innate talent to provide great customer service. Also needed is "a cooperative culture where employees understand what behaviors are positive and what goals they're expected to achieve," says Karen Renk, executive director of the Incentive Marketing Association in Naperville, Ill., a trade association of suppliers of awards for incentive and recognition programs.

Words must be followed by deeds, she says. To say, "We value customers" without the policies and procedures necessary to support customer service undermines a company's image. That makes life hard for customer-service reps, but the best of the best can explain a policy in a way that soothes ruffled feathers instead of ruffling them even more.

The Manager's Role

Few would dispute the well-researched importance of employee engagement. In short, engaged employees deliver better customer service, ensuring satisfied customers who buy more products and services and drive profitability. "There is no question that satisfying customers is a major contributor of financial success," Denove says.

In general, highly engaged employees know what's expected of them, feel that their job is important and have caring supervisors who encourage their development. These are among the 12 attributes of employee engagement identified by Gallup Consulting.

Even more importantly, engaged employees have lower turnover, feel better about their jobs and exert more effort, studies show. Salary and benefits are only part of retention. Other key drivers are advancement opportunities and the company's reputation as a good employer and an inspirational manager, according to a 2006 report by the Conference Board entitled Employee Engagement.

Clearly, having a supportive environment in the demanding world of call centers, stores and other customer-service settings means that effective manager training is crucial. Supervisors who've been properly trained are better able to serve as role models and provide feedback, coaching and a sense of one's place in the company, consultants say.

"You can't take it for granted that people know how to coach," says Pete Ambrozaitis, vice president of sales at Novations Group Inc., a Boston consulting firm. "Many [managers] are managing to the numbers. Without proper training, they won't have the right skills" to coach subordinates.

HR can coordinate and deliver training for both job levels, making sure that people skills are not given short shrift compared to technical and product-knowledge training, as is often the case at many companies, Denove says.

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At Staples Business Delivery, the online and catalog sales unit of office-products retailer Staples Inc., based in Framingham, Mass., every call-center representative reports to a manager to get feedback and practice role plays, says customer-service director Stacy Hansbury. A total of 800 reps and managers work at four call centers, two in the United States and two in Canada.

In-house managerial training focuses on "respect and involvement and participation in coaching," says Krista Soucy, a senior HR manager at Staples. Managers are taught to avoid a blanket approach by learning about individuals' needs and learning styles through discussions with individual employees, she says, adding, "It's part of that connection that managers make on an individual, regular basis."

Behind these practices is a culture of open communication, Soucy adds. "I talk to associates all the time," she says. "I hear what's on their minds." In addition, Staples executives visit call centers yearly to conduct town-hall meetings with employees. "It's face-to-face, 'you matter.' It's not just lip service," Hansbury says.

That kind of communication ultimately bubbles up into better job performance, says Roger H. Nunley, managing director of the Atlanta-based Customer Care Institute, which offers customer-service assessments and training. "One thing companies can do is not just listen to customers, but listen to employees to understand their needs. The better companies have small focus groups or one-one-one meetings to ask, 'What can we do to make your job better?' "

A Few Kind Words

When it comes to assessing customer-service employees, Gallup's Fleming cautions against tying job performance too strictly to metrics such as call volumes; otherwise managers will tend to focus on achieving high scores rather than on training reps to handle more difficult, time-consuming customer interactions. Flexibility and autonomy -- two key components of employee engagement -- should remain part of any customer-service process.

As for the training that customer-service workers receive, consultants point to common weaknesses: It's too boring. There's not enough of it. It's not customized for each employer and type of employee. Even so, many employers want more training. Two-thirds of 2,046 senior HR executives surveyed last winter by the Novations Group reported a rising demand for customer-relations or customer-service training.

Although U.S. spending on employee learning and development has increased -- to $1,424 per full-time employee in 2005 from $1,368 in 2004 (2006 numbers are not yet available) -- the average percentage of learning content focused on customer service has declined somewhat, from 4.7 percent in 2004 to 4 percent in 2005, according to the American Society for Training and Development.

Finally, incentives play a role in motivating many customer-facing reps. With a mean hourly wage of $14.61, or about $30,390 annually, a job well done clearly deserves more in terms of incentives.

Rewards such as gift cards, electronics and trips are popular, but a few kind words from the boss can also go a long way. "It has to be sincere in order to be valued," Phelps says. Individual, specific praise is better than a general group "thank you." And appreciation should be regular -- at least once a week, Gallup recommends.

That said, incentives can boost performance and retention. For example, T-Mobile has used surveys and focus groups to ask customer-service reps what rewards appeal to them.

"It doesn't make sense to build a program without their involvement," says Richardson. Based on their performance, customer-service representatives at the 31,000-person company's 22 call centers earn points, which can be redeemed online for trips, gift cards, airline tickets and other awards.

Business minds have long studied "what works" in employee engagement, but it can be an elusive concept to put into practice. In high-turnover customer-service industries, the challenge is even greater to hire, train and recognize the best employees. For HR executives who get it right, the results -- from outstanding service to higher sales to better retention -- can be substantial.

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