When it comes to customer service, organisations around the world are knocking on the door of Service NSW to find out how to do it right. The outstanding success of the NSW government’s central agency for an ever-growing number of services and related transactions is now pivotal in the formation of a Department of Customer Service designed to remove the pain points for citizens across all state government departments.
Operating since 2013, Service NSW delivers driving tests, fishing licences, births, deaths and marriage registrations and a multitude of other services online or via 100-plus service centres, some with extended opening hours and a call centre answered by Service NSW staff. Topline statistics summarise the organisation’s transformation:
- One phone number has replaced 8000+
- service.nsw.gov.au website has replaced 900+
- Customer satisfaction is now 97 per cent (up from 69 per cent)
- Average wait time is seven minutes.
Victor Dominello, the recently appointed NSW Minister for Customer Service, reflects on the triumph — rating 97 per cent customer satisfaction as “near perfection” and attributing much to the original decision to build a standalone, agile agency from the outset. “It allowed a service delivery culture to be set up, rather than trying to adapt an existing culture and structure,” he says.
While the agency selectively hired many government employees from amalgamating organisations such as Roads and Maritime, it also employed customer service experts from the private sector to drive the change. What it got right was its leadership, says Raj Mendes, founder and MD of the Customer Experience Company, a Sydney-based consultancy that worked on service design with Service NSW before its launch and has since worked on 60 projects for the agency. “They set about creating a cultural DNA, customer principles that formed the guiding light, followed by the design of the experience,” says Mendes.
Technology did not come first, but was created to support the service environment based on the experience they wanted for customers — for instance, how people are greeted in a centre, “triaged” or queued.
One point from Mendes’ colleague Laurence Crew is that “greenfields” environments in customer service are rare. “Typically, for large organisations [pursuing a customer-centric approach] it’s a change activity,” he says.
It can start small. In fact, having a pilot customer experience program may be the trailblazer a business needs to convince leaders to adopt a more widespread strategy, says Crew.
The Next Data Frontier
The talk is getting louder about exponentially growing zettabytes of data powered by AI and machine learning. It’s greasing the wheels of business, delivering vital insights into the customer alongside scope for personalisation.
However, Andrew Stevens remains sceptical that many organisations are adequately using the data they have.
“What does our data tell us about our customers and prospects and their buying behaviour? That would be a pretty awkward question for our companies.”
Yet a data-related change is coming that will deliver a further call to organisations to move faster on the customer.
Stevens chairs the data standards body for Australia’s Consumer Data Right (CDR), which will allow consumers to direct that data held about them by one organisation be made available to another. It starts with open banking in February 2020. Other sectors will follow.
The CDR is a massive opportunity for business, Stevens believes. “We have a regime coming in that says you can top up the data you have about your customer with data that’s held by someone else. What does that data tell us about customers’ buying behaviour, and what about prospects?”
The most dramatic innovation comes at the convergence of sectors when you create something unprecedented, he notes. “Will organisations be ready to serve underserved customers or provide an aggregation of a whole range of data to benefit the customer?”
With the enterprise currently under challenge over issues of trust and directors considering if they’re working only for the shareholder or customer, Stevens says: “There’s an expectation that vulnerable customers need to be protected by organisations. This is right in the melting pot of the CDR and it says, if you do that well, you’ll be entitled to a return.”
Putting customers at the heart
Customer-centricity — putting customers at the heart of the organisation — has become a mantra. Customers or consumers now hold the power and they’re wielding it, reshaping the future of business in the process. Recognising this, the Australian Banking Association introduced a new Banking Code in July.
Andrew Stevens MAICD, former MD of IBM Australia and New Zealand and now chair of Innovation and Science Australia (ISA) — the independent board of entrepreneurs, investors, researchers and educators that advises the Australian Government on harnessing innovative practices — defines some big-picture drivers.
“We’ve moved from an environment of shortage to abundance — consumers now have massive choice,” he says. Plus, the nature of the “value” customers are buying today is increasingly intangible — it’s confidence, user experience, ease of use or “frictionless”, he says. “The market is now global instead of local and it’s gone from low-information to high-information, largely through social media. Consumers have more information than they’ve ever had before.”
Essentially, companies must innovate with a customer focus or get disrupted, says Stevens, and they need to move fast in understanding how to be different. Indeed, all the household-name disrupters define a unique customer experience — think Uber, Netflix, Amazon, Zappos, for starters.
Stevens says successful businesses — whether business to business (B2B) or business to consumer (B2C) — understand the value of differentiation and what that means for the choice they’re offering the customer.
“Customer-centricity is about choice, value and appealing to the customers at a micro level because ‘I get their need’. The frontier of competition today is about insight on the customer — it’s the main game,” he says.
It’s a topic Stevens, a non-executive director at Stockland, CEDA, Thorn Group and GWS Giants, is exploring closely as he zooms in on business models for the future at ISA. Pending a detailed ISA report, to be released later this year, Stevens draws on observations from his executive career spanning professional services at IBM where he ran consulting for global growth markets and saw businesses “leapfrog” their way to competitiveness off the back of customer insights. “Companies that get customer-centricity, typically have a growing global market share, their margins are expanding and they are highly successful businesses,” he says.
Customer needs and preferences are now manoeuvring corporate competitive strategies. It’s a headline issue for directors, Stevens argues, and it raises basic glaring questions, which he suggests many boards may have difficulty answering: What do our customers want? How have we chosen to compete? How does our innovation investment stack up with our competitive strategy? “To me, customer-centricity is at the heart of it all,” he says.
So who’s doing it well? In B2C, Stevens finds it hard to look past Apple and Samsung. He uses Apple’s iPhone X as a case in point, noting that its manufacturing cost has been estimated as low as five per cent of the sales price — meaning 95 per cent is intangible value.
“It’s in the design of the product, how it feels in your hand, the service, the warranty, the stores that are all about service to the customer, the brand experience, the way people look at you when you’re one of the first people with it, the confidence,” says Stevens. “They are brilliant at it, and when you go into a store they know about you because of your Apple ID.”
While the product is not unique to every person, the iTunes platform enables the customer to tailor their phone to their own use.
Determining what customers want is challenging for organisations everywhere. It’s nuanced, different for every player, but it can be summarised. In its 2018 report, Tomorrow’s Experience, Today: Harnessing a customer first approach in a changing world, KPMG calls out six pillars of customer excellence:
- Personalisation — using individualised attention to drive emotional connections
- Integrity — being trustworthy and engendering trust
- Expectations — managing, meeting and exceeding customer expectations
- Time and effort — minimising customer effort and creating frictionless processes
- Resolution — turning a poor experience into a great one
- Empathy — achieving an understanding of the customer’s circumstances to drive deep rapport.
”For that [consumer advocate voice] to be part of the business’ future it needs to be represented at the highest levels of management. Without that it’s going to be difficult to develop and execute a strategy around customer-centricity.” Helen Nash GAICD
Before her career as a non-executive director (Metcash, Southern Cross Austereo, Blackmores) Helen Nash GAICD spent almost a decade in senior marketing and as COO at McDonald’s Australia. She harks back to the global fast food chain’s deep understanding of 10 things customers valued — “an exceptional visit hasn’t changed that much over 50 years and it starts with fundamentals such as hot, fresh food to fast service, clean toilets, clean restaurant… An external company was employed in every country globally to deploy the same measurement tool to customer experience [based on these requirements],” recalls Nash. “You set up the business to be on a continuous journey of improvement towards that.”
In reality, focusing on the customer can be complicated. Customer experience excellence is not a destination, but a journey, explains KPMG in its report: “It starts with a deep understanding of the customer and the ability to creatively connect technology, people and process to solve an underlying customer need.” Orchestration and connectivity across an ecosystem of partners is critical. A vital part of that is alignment of employees to putting customers first. Many claim it’s the linchpin.
I don’t think there’s a good understanding of what customer-centricity means. Many are struggling because the concept of good customer service has radically fragmented in the past 10 years.” Alan Kirkland, CEO Choice
Grappling with customer concept
“I don’t think there’s a good understanding of what customer-centricity means,” says Alan Kirkland, CEO of consumer advocacy group Choice. “Many are struggling because the concept of good customer service has radically fragmented in the past 10 years.”
Witness the range of approaches, he says. “Some are doubling down on traditional customer service, the human way, while many increasingly rely on purely digital means of serving customers. Others, such as the big online clothing retailers, are fuelled by logistics and ecommerce, making it easy to find and buy online, getting them to you fast and making it easy to return products.”
The challenge begins with gleaning customer insights. “In established businesses they’re often still dealing with data sources that don’t allow them to see a single customer as one person,” says Kirkland. While many increasingly rely on data to drive personalised responses to their customers, personalisation can be inherently impersonal, he says. “By looking at data, you’re trying to determine the needs of the customer.”
Kirkland sees conflict between being data-driven and a very human reaction from customers who just want to deal with a human being. It’s a reality that data and automation can produce really efficient ways of servicing a customer base, he says, pointing to big tech successes such as Airbnb and eBay. “What organisations need to do is work out when that’s not the right approach.”
The executive team in long-term incentives has a customer hurdle performance — and an NPS well above the industry average as one of their hurdles.” Jacqueline Hey GAICD
Loyalty: the new customer pain point
There’s growing debate in Australia and globally around the importance of loyalty, says Choice CEO Alan Kirkland. “There is a deep feeling among consumers that they have been loyal to a business for many years and should be treated well,” he says. “When we talk to Choice members about health insurance, for instance, we see many people who have been paying [premiums] for years, but perhaps not claiming at a high rate. When they need to make a claim, they’re angry when it’s denied or paid at a low rate.”
In 2018, the Productivity Commission found that established customers pay a lot more for their mortgages than new ones. In the age of active customer-centricity, Kirkland cautions against extracting value from what’s perceived to be a passive established customer base.
Grabbing levers for customer-centricity
A customer-centric journey is only possible for an organisation if there’s a consumer advocate voice in the boardroom, insists Helen Nash. “That’s the voice I bring to my four boards, but in order for that to be part of the business’ future, it also needs to be represented at the very highest levels of management. If not the CEO, it needs to be in their direct reports — chief marketing officer, chief growth officer, chief customer officer. Without that it’s going to be difficult to develop and execute a strategy around customer-centricity.
Customer-related KPIs are on the rise. Jacqueline Hey GAICD, a non-executive director at Qantas, Cricket Australia, AGL and Bendigo and Adelaide Bank, where she’ll chair the board from October 2019, believes performance and remuneration provide strong levers to promote customer-centricity. “We’ve included a customer hurdle as a performance measure in our long-term plan,” she says.
“The executive team in long-term incentives has a customer hurdle performance — and an NPS (net promoter score) well above the industry average as one of their hurdles.”
Hey’s appointment comes in the wake of the banking Royal Commission, which highlighted what can happen when profits and shareholder interests in financial services organisations supersede those of customers. Before the Royal Commission, Bendigo and Adelaide Bank had faced pushback from proxy advisors dismissive of such hurdles as soft measures. “We thought it was important for our executive to focus not only on the financial outcomes, but on making sure they meet customer hurdles and performance measures,” says Hey. The Bendigo board also pre-empted the recommendations of the Royal Commission by a decade when it introduced deferred base pay for the managing director and, later, for executives. Employee incentives related to the achievement of sales targets were also eliminated “because they obviously weren’t in the customers’ best interests”.
The incoming chair claims Australia’s fifth-largest retail bank has a natural advantage over the Big Four due to its long-term, overt focus on customers and community. While Bendigo ranked third in the KPMG Global Customer Experience Excellence report, Hey also points to the bank’s consistent Roy Morgan ranking as one of Australia’s top 10 most trusted brands. “That’s across all brands, not just the banks,” she says.
Such rankings come from “not being faceless bankers”, adds Hey, noting that the bank’s executives are highly visible in its heartlands around Bendigo and Adelaide.
“They’re the people at the netball or the football or the cricket, or they’re shopping down the street, which means they hear the good and bad from customers all the time,” says Hey.
“In this environment of heightened importance of trust, authenticity and doing the right thing, we have a terrific opportunity because customer-centricity is part of who we are, where we’re based and how we’ve always worked.”
How employees drive customer-centricity
Customers remember you for the things they weren’t expecting,” says Clive Duncan, director of corporate affairs and business development at Bunnings Warehouse and a company employee for 40-plus years. He points to customer-first principles from the top down as the backbone of its’ organisational growth. The company opened 10 warehouses in Australia and NZ in 2017–2018, for a total 295 stores and 30,000 employees.
Likely on that list of unexpected moments is being served by a senior executive in store or receiving a follow-up phone call from a Bunnings director in the wake of a complaint. And the DIY, garden and hardware retailer dispatches the leaders from its five state support centres several times a year for Hammertime, a program where they work the shop floor to learn about customer experience first-hand. Senior leaders are also expected to call disgruntled customers if a complaint is made.
“It helps them understand where there’s friction or we can do better for the customer,” says Duncan. “We’re strong on alignment of our strategy and our pillars (lowest prices, widest range, best service) through the organisation.”
Further playing to Bunnings customer-centricity is the diversity of those who regularly work the shop floor. It’s a workforce spanning generations, from career beginners to retired tradies, reflecting the ages and life stages of customers.
Duncan recounts tales of team members delivering goods in their own cars to customers “who needed them that night”.
“They’re highly empowered,” he says. “That’s particularly important for a business our size. Our people are empowered to make decisions on the spot — simple things such as returns or needing something over and above.”
The company plays on themes of authenticity and practicality. However, prior to the launch of Bunnings Warehouse 25 years ago, when the decision-makers were dispatched to learn about global best service, Disneyland was on the itinerary.
Bunnings’ takeaways from the famous theme park continue today with in-store cafes and playgrounds, family activities, workshops, free trailer hire, and weekend sausage sizzles. Curiously, beyond a tradie loyalty scheme, Bunnings is comparatively short on data. Its e-commerce play has only just begun, with plans to complete a rollout of 60,000 products online by this Christmas. Digitally-speaking, it’s late to the party.
“It’s time to start building another channel as the customers change,” says Duncan. While it’s early days, he says the aim of the omnichannel approach is “about giving customers choice and the same experience whether they’re researching, or shopping online or in store”.
Note: Bunnings magazine is published by Medium Rare Content Agency.