Every year, a top five priority for most companies is to improve their customers’ experience and loyalty. Unfortunately, most fail. For example, read the American Customer Satisfaction Index results or the Consumer Reports ratings. Considering the potential payoff for improvement, it doesn’t make sense as you review this research.

  • According to Harvard Business Review’s Employ­ee-Customer-Profit Chain, a 1.3% improvement in customer satisfaction scores results in a revenue increase of .5%.
  • The Profit Impact of Market Strategy’s database found that companies who lead in service have 12 times the profit­ability and 9% greater growth than poor service providers.
  • Bain & Co. found that a 12-point increase in the net-promoter score doubles a company’s growth rate.
  • A report by the American Customer Satisfaction Index proved that the leading companies consistently outperformed the market. Customer service leaders outper­formed the Dow by 93%, the Fortune 500 by 20% and the NASDAQ by 335%.

Why do so many companies fail to take advantage of the obvious bottom-line impact for improving service? Here are ten reasons companies fail.

  1. Ignorance is Bliss- Recently, a company executive proudly shared with me that they survey customers twice a year. (What if this company only looked at sales or profit numbers that often?) The company leaders always talked about service but made no serious changes and kept experiencing the same issues with customers and competition.
  2. Vision Without Vitality- One company President said, “We don’t want to be the biggest company, only the best service provider.” The President gave a five-minute speech everywhere he went; however, no plan or action ever followed. The company floundered.
  3. The Panacea Approach- One CEO decided to use a Just in Time production strategy because it worked for his buddy’s company. He did it exactly the same way but failed. As a result he had to layoff a lot of people, and within two years lost his job.
  4. Frontline Fanatics- A major airline responded to customer complaints by notifying customers of their new “Customer First” initiative for employees. In reality, employees weren’t partners they were scapegoats. The airline’s service never got better. It eventually went bankrupt, and was merged with a larger competitor. (According to service gurus, 85-95% of service problems are management related not employee related.)
  5. Do It All and Have It All- One leader happily reviewed with his team three flipchart pages full of customer service improvement initiatives. Not surprisingly, employees were overwhelmed and business stalled. They had no focus and ended up with negative sales results.
  6. I am a Rock – I am an Island- A $27 billion company I know has tried to improve service for a decade, but are still rated near the bottom of their industry. They refuse outside help or assistance. They have settled for dismal service, low stock prices, poor profits and meager growth. Their strategic goals outline a commitment to the customer, but they don’t really mean it.
  7. Drive by Training- Many leaders send their employees to an online course or to a class to get “fixed.” I can’t tell you how many times executives have asked me for that kind of training. They never tried to upgrade organizational design, systems, processes or cross-departmental collaboration. Even though training is a vital pit stop on the way to success, it’s not a one-stop solution.
  8. The Secret is Technology- One retail organization spent millions to improve customer retention through expensive new technology primarily because a big six accounting firm told them to do it. It didn’t help. Their sales growth continued to spiral downward. Investment and support of their people was an afterthought. Now, they are merging with a competitor to survive.
  9. The Tool-Chest Dilemma- One company executive told me that they have consultants for everything. Take your pick from TQM, Six Sigma, The Goal, ISO, Kaizen and numerous other approaches to get better. (You have heard the phrase, “program of the month.”) These multiple efforts were seldom executed well or sustained. Employees were drowning in meetings, data, paperwork and confusion. Guess how well they give service to customers?
  10. The Perils of Poor Execution- How often have you been in a company that implemented a grand strategy (Or, a new customer experience plan.), but failed to achieve the desired result because of poor execution? The promises of change become false exhortations, which of course demonstrates a lack of integrity. The trust within and around the organization dies. I believe companies need to get back to basics of focusing on understanding customer needs and wants, and valuing their employees.

Businessman Ross Perot once said, “Spend a lot of time talking to customers face to face. You’d be amazed how many companies don’t listen to their customers.” And, Doug Conant, former CEO of Campbell Soup added, “To win in the marketplace you must first win in the workplace.”

By the way, do you want to learn a proven approach for improving the customer experience? If so, I suggest you check out this complimentary white paper: Creating Sustainable Customer Loyalty and Sales Growth.

Or, are you going through lots of change at work and want to help yourself or others cope with it better? Then, check out this complimentary eBook: Changing Change Management.