A very interesting yet debatable insight published by the Economist in September 2023, focusing the spotlight on Customer Service since the start of the pandemic, and the deterioration of this sector since.
Rare is the company today that does not “claim” to be customer centric. But how close to reality this is? Individuals who have had the misfortune of seeking assistance and support from large corporations around the globe may question the authenticity of such claims. Interactions with customer service department often leave customers feeling more like the target of corporate maltreatment rather than being at the heart of the company’s concerns. “Frustration, disappointment, anger, you name it.” This sentiment has been exacerbated by the challenges posed by cost cutting, staff shortages and supply chain disruptions during the COVID-19 pandemic. However, it is imperative to acknowledge that the underlying issues have been brewing for an extended period.
The American Customer Satisfaction Index (ACSI), a key indicator of customer contentment, has exhibited a persistent decline since 2018, despite a minor improvement from its pandemic-induced nadir. In essence, all the gains in customer satisfaction achieved since 2006 have been effectively eroded. The Wall Street Journal last year wrote: “Customer Experience Is Getting Worse”.
A year marred by supply-chain delays and staffing shortages has reversed consumers’ improving perceptions of companies and government departments.
The recognition of the imperative of customer satisfaction and retention has been engrained in the business ethos for decades. In 1976, the White House commissioned TARP – a consulting firm, to investigate the state of complaints-handling in the United States. TARP’s findings illuminated the profitability associated with investing in customer service, quantifying the value that loyal customers or so called “Angel Customers” bring through recurrent purchases and referrals across diverse industries. Subsequently, a plethora of companies ranging from American Express to General Motors established contact centers replete with toll-free phone lines to enhance accessibility to customers. This era also witnessed the emergence of a new genre of business literature that extolled the virtues of customer loyalty, accompanied by a burgeoning consulting industry offering strategies to enhance customer service operations.
Why did it go wrong?
Nescafe coffee, another global favorite, undergoes minor recipe adjustments to cater to distinct markets. Marion Irving, of Nestle UK, explains that the French prefer a stronger, fuller-tasting coffee compared to the British.
Electronics
Claes Fornell, the visionary behind ACSI, contends that profitability in a well-functioning market is intrinsically linked to customer satisfaction. The question arises: What factors have contributed to the erosion of this principle? One plausible factor could be the increased concentration within industries, encompassing sectors such as airlines, banking, and telecommunications. Such concentration may undermine companies’ inclination to invest in customer satisfaction due to a weakened competitive landscape. However, it is noteworthy that a substantial portion of this consolidation took place before or during the period when customer satisfaction was steadily on the rise.
Technological advancements are also integral to this conundrum. Research conducted by Genesys, a prominent provider of contact-center software, has identified that, aside from dropped calls, the most common source of frustration in customer-service interactions is the engagement with chatbots. In recent years, numerous companies have fervently embraced automation software in their contact centers, with the intention of reducing human interactions. And you got it right, outcomes have often proven unsatisfactory, both for customers and the companies themselves, according to insights offered by Darci Darnell from Bain, a prominent consultancy. Tony Bates, the CEO of Genesys, highlights that many customer-service operations are hindered by antiquated systems and disorganized data, possibly explaining why newer market entrants, unburdened by legacy technology, consistently deliver more streamlined services, consequently elevating customer expectations across the board.
Customers behavior:
Customers themselves must shoulder some of the responsibility for the current predicament. The National Customer Rage Survey conducted this year revealed that 17% of customers openly admitted to behaving in an “uncivil” manner during interactions with businesses. Scott Broetzmann, who led the survey, expresses concern that this problem is escalating, with diminishing standards of acceptable conduct. Mr. Bates underscores the dearth of empathy exhibited by customers toward contact-center agents. These frontline workers often endure verbal abuse and offensive language, contributing to elevated and escalating attrition rates. As per SQM Group, a software provider, staff turnover in American contact centers reached a record high of 38% in the preceding year. Elevated attrition inevitably translates into less experienced contact-center agents, further exacerbating the deterioration of service standards.
Could generative artificial intelligence (AI) models, akin to ChatGPT, alleviate some of these challenges? These AI tools offer interactions that closely resemble human conversations, surpassing the capabilities of earlier generations of customer-service bots. After being trained on historical call transcripts and other pertinent company data, they exhibit a lower propensity for errors when compared to off-the-shelf ChatGPT versions, as articulated by Ms. Darnell. Nevertheless, the viability of these AI entities as a complete replacement for human agents remains a subject of ambiguity. Jo Causon, representing the Institute of Customer Service, observes that many customers are content with self-service solutions for rudimentary transactions but expect assistance from genuine human agents when grappling with more complex issues.
Could AI be the answer?
As per the Economist, an alternative approach could involve deploying generative AI as a supplementary resource to human agents rather than a wholesale substitute. A recent working paper authored by Erik Brynjolfsson from Stanford University and his co-authors delves into the impact of providing contact-center agents with an AI-based conversation assistant that offers real-time response suggestions. Crucially, human agents retained control over the conversations, exercising the discretion to accept or disregard the AI’s recommendations as deemed appropriate. The findings from this study revealed a notable 14% boost in worker productivity, measured in terms of the number of successfully resolved chats per hour. Furthermore, this productivity enhancement disproportionately benefitted less experienced agents, ultimately translating into a more consistent service delivery for customers.
Beyond augmenting productivity, generative AI yielded additional advantages. Brynjolfsson and his colleagues conducted sentiment analysis on customer interactions and discovered a significant improvement in the treatment of agents by customers, potentially attributable to expedited resolution of their concerns. The study also examined the impact of AI on agent attrition rates, revealing a positive correlation.
In lieu of the anticipated obsolescence of jobs, the current evidence suggests a more sanguine possibility: the integration of generative AI has the potential to augment human workers, leading to the cultivation of enhanced employment opportunities and simultaneously elevating customer experiences. After enduring years of dissatisfaction and frustration, this prospect offers solace to both customers and those engaged in the realm of customer service.
How can we fix this?
Is The Economist, right? Should we keep searching for an enhanced robotic AI service and kill human customer service, for the sake of cost cutting? What are they trying to implement here? And why?
Why can’t we go back to the old way when a human would only communicate to a human in customer service and get individually recognized and extended with a personalized service?
In Jesta Freak, we acknowledge the importance of technology, including AI however up to a limited extend in certain fields if in favor for the consumer, but will always advocate for the irreplaceable powers of human contact, human emotions understanding and human communication in customer service. The only way to reverse this situation is to hire human, well-trained and well-paid customer service agents.
Am Ken, and I think I will have to seriously reconsider my registration at the Economist.
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